A conversation with Bruce Mackey, CEO of Five Star Senior Living about how they are impacting the lives of seniors.
Back in the 1960’s there were two significant rental car companies, Hertz and Avis. Hertz was huge compared to Avis. Not surprising, Avis wanted to close that gap. Their ad agency suggested a very risky, daring and, in the eyes of many Avis executives, suicidal approach:
We’re #2: We try harder
It turned out to be a phenomenal success. Their sales went from a 10% to a 35% annual growth rate. Being Number #2 can be an extremely good place to be. Once the merger of Brookdale and Emeritus is complete that is exactly where Five Star Senior Living will be.
My Conversation
I had plans to spend some time with Bruce Mackey, the CEO of Five Star Senior Living, at ALFA but he ended up staying home to finalize a restatement of Five Star’s previously issued financial statements. We were able to connect by phone a few weeks ago.
Five Star Senior Living
Five Star is based in Newton, Massachusetts. They are publicly traded on the New York Stock Exchange under the symbol FVE and have a current stock price that is a bit over $5.00 per share. Five Star operates 260 senior living communities, including 30 skilled nursing buildings and 50 CCRC rental properties (no entrance fees). The communities they manage are a mix of buildings that include some owned by Five Star, including more than 30 that are free and clear, investor owned buildings (REIT’s and Private Equity).
Today and Tomorrow
I asked Bruce for his take on the state of the senior living industry. Here are the highlights:
- He believes the marketplace will continue to be strong for careful, conservative companies like Five Star.
- Five Star will continue to grow by acquiring existing properties. In particular they look for properties that are in existing markets providing substantial short and long term upsides.
- As he looks at the emerging boomer generation he sees them as being more demanding . . . more willing to express preferences and push for what they want. More ready to tell management how they should be running their senior communities.
- As a company Five Star is particularly focused on activities and wellness.
- I asked Bruce if he was worried that the industry is approaching an overbuilt situation. His response was that he does not see any evidence to suggest this is true.
Creating Unique Value
I am always particularly interested in what senior living companies are doing to differentiate themselves from the competition (The “try harder” stuff). Five Star is focused on creating signature events in significant areas: 1. Creating a Five Star Dining Experience – Renowned Chef, Brad Miller has teamed up with Five Star to redefine senior dining. Five Star is focused on creating exceptional dining experiences for their residents and Brad Miller joined the team earlier this year to make that happen. Five Star’s chefs have been working with Brad to create signature dishes, tips videos, and host chef challenges across the country. The ultimate goal is to create a superior dining experience that is unique to the senior living industry and sets Five Star apart from its competitors. 2. Making Dreams Come True – Second Wind Dreams is a Make-a-Wish style organization for seniors living in senior living communities. Five Star has worked closely with Second Wind Dreams to make dreams come true. Here are some of those dreams:
- Flying an airplane
- Flying a WWII Bomber
- Playing one more round of golf
- Being a radio announcer
- Having an art exhibit
You can read the complete stories here. I have great appreciation for leaders like Bruce who are willing to share their thoughts. It ultimately helps the entire industry do a better job. So what do you think of his view of the industry? What are you doing to differentiate your community or communities?
Steve Moran
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I applaud them for striving to set themselves apart. However, I know that Brookdale is also doing the two things cited in the article. They host chef events throughout the country, featuring their own Signature dishes. They have their own line of cookies, seasonings, sauces, etc. They also have a “Wish of Lifetime” program very similar to Five Star’s Second Wind Dreams. This doesn’t mean that Five Star’s programs aren’t better or more “outside the box.” My point is that other providers are also trying to go “above and beyond,” with trying to raise the bar. I love that the industry is acknowledging that we’ll need to do more to please the boomers as they move into our communities. While these things are certainly a start, I’m just not convinced yet that we’re hitting the nail on the head.