By Jack Cumming
Analysts seem to love listening to Brookdale’s assurances that the business is well on its way to recovery from the pandemic. That’s as though “business as usual” was “good enough” for a board and its chosen executives to be complacent. Since when was that the standard for stewardship of the investor’s money and the customers’ best interests? Quick answer: Never.
Time for a Shakeup
It’s time and well past time to shake Brookdale to its roots. If 78.5% occupancy is the best that management can deliver with the current business model, it’s time to bring in the private equity fellas to try a new model. If senior living, especially at Brookdale, is so unattractive, that Cindy Baier and her “team” can only achieve 78.5% when other enterprises have occupancy close to or well over 90%, many with a waiting list, perhaps “senior” living is the wrong way to think of the industry and the business.
Isn’t it time for better living? Isn’t it time for a home where people want to live, instead of one where they have to live after they’re put away “for their own good”? Why doesn’t someone put Brookdale’s complacency out of its pain with a dose of tough love and hard capital?
Personal Disclosure
Like many Brookdale shareholders, I trusted Brookdale at $37 and bought in. Since then, Brookdale’s board has rewarded that trust by dropping the price to under $5 and keeping it there through good times and hard times.
Nonprofit Note
As a nonprofit, or not-for-profit as some prefer, you may be thinking that you’re better than Brookdale because you don’t have the stock market value metric. Think again. Over the long haul, the stock market measures managerial effectiveness. How are you doing?
Does your C-suite team build value or consume value? That’s a question that boards should be asking, though many directors themselves become complacent when they land on nonprofit boards. Just because the IRS and/or state authorities excuse a business from paying taxes shouldn’t make it above accountability.
Few nonprofit executives believe that they would change to greedy misers from generous altruists if their enterprise lost its tax exemption. That public gift of tax exemption should call leaders to higher performance standards, not to a life without accountability.
Lingering Questions
Is Brookdale just the metaphorical canary in the coal mine, calling all senior living providers to rethink their offerings, their image, and their attitude for a new generation of prospective residents? Seniors Housing Business, the France Media publication, trumpets on the cover of its July 2023 edition, “The Silver Tsunami Finally Arrives.” Has it?
Aging is inevitable. Of course, the long-awaited, industry-saving “silver tsunami” is arriving, but is it coming to senior living? Does the very notion of “senior” living put a chill on the market? The “tsunami” article cites ProMatura as concluding that 76% of today’s residents are more likely to move only after reaching 85. Using the central New Jersey market as an example, when they do move, are they more likely to move to Meadow Lakes, or will Princeton Windrows be more attractive?
Change is coming to how those who are aging choose to live. It will take very astute leadership to adapt the product of 2010 to the wishes of 2030. Can Brookdale make the shift? We can’t know, but for now, it seems unlikely.
