Whenever the conversation turns to the big three publicly traded senior living companies — Brookdale, Capital Senior Living, and Five Star Living — everyone (including me) has a theory about what the problem is.
By Steve Moran
I love the senior living sector but some days are really just depressing . . .
Here is what I am seeing:
Capital Senior Living reported earnings and missed again. Their newish COO is now gone and the CEO Kimberly Lody has been on board for just a few weeks.
Five Star Senior Living dropped to $0.35 a share and now can’t seem to crack $1.00 a share. They have also seen a near complete turnover in leadership.
Brookdale’s last earnings were more disappointment, though in fairness, with a sliver of hope.
A Tough Article to Write
Because I believe it is only fair, when writing articles like this, I sent a draft copy to the named companies and the reaction has not been happiness. But because of those reactions, I realized this article needs some additional clarification:
Two of the three organizations are in the midst of significant top leadership changes.
While Brookdale’s leadership change was less recent, it is still pretty early in their leadership change journey. There are some initial indications that things are different.
It is painful to write articles like this because each of these organizations has amazing people working for them and I do not in any way mean to disparage them.
Sometimes great leaders are in the wrong position and it does not make them either bad leaders or bad people. It is only a bad fit. This may or may be true here. Regardless, I do not think any of the current or replaced leaders were bad people that only cared about profits and positions.
Much of what I am suggesting that needs to be different is a matter of degree and boldness.
I HOPE A YEAR FROM NOW . . . Capital, Brookdale, and Five Star can point back to this article and say . . . “Steve Moran is an idiot, look at our occupancy, earnings and turnover to see how wrong he was.”
Alternatively, because I think I am right about the problem and solution, I hope they will come back and say, “You know we were so pissed off when he wrote that article, but we went bold, and it actually worked.”
I get tons of criticism as a blogger and writer who offers opinions . . . I also get lots of praise . . . more praise than criticism and while I like the praise more than the criticism, I learn more from the critics than I do from the fans. Ultimately we all need both.
I also would welcome an unedited rebuttal from any or all three organizations and they will have the freedom to be as blunt as they like.
Lots of Theories
As I knock around the industry having conversations about senior living, it is inevitable that the conversation turns to the big three publicly traded companies and everyone (including me) has a theory about what the problem is. They include . . .
Too much of a focus on cost cutting.
They have lost all their good people. Actually more like . . . senior leadership has driven away all their best talent.
Too big to be able to act and react fast enough.
Too much centralized control.
Being a public company makes it too hard to do the things they need to do.
NO, NO, NO . . . NO, NO, NO, NO . . . NO, NO, NO
While there is some truth in each of these bullets they ultimately miss the big issue. Changing this requires radical change and not incremental change. It requires risk and boldness that is anathema to most public companies.
But this is so, so important right now! And honestly, it is not just a problem in the public companies. They are just the visible tip of the iceberg because they are public.
I know I am more negative than usual. I am just so depressed that we seem not to be as committed as we could be to getting it right.
It Is Not the Business Itself
It is not the business itself. There are some senior living companies out there that are crushing it: Juniper Communities, Atria, Sunrise, Aegis Senior Living, Merrill Gardens, Watermark and a bunch more that are less prominent. It is not because they just have better buildings in better markets or better capital structures or even that they have better people.
It is . . .
They have leaders who are obsessed with doing whatever it takes to have a great organization. And that obsession is founded on a bedrock belief that they can be radically better than average. The fundamentals are easy, the execution is hard, except that . . . for obsessed people, it is also their joy.
We Have to Get This Right
This is not just about money and profits and capital provider returns. THIS IS ABOUT PEOPLE’S LIVES!
Low occupancy means there are seniors who are living at home or in other sub-optimal places, living out the last chapters of their lives in ways they shouldn’t. This is, maybe, even immoral.
When a frontline staff member, regional team member, or local management is required to leave an organization, it is bad for that person and often a financial disaster for their families . . . I am talking spouses and kids here. It is tragic and, maybe, even immoral. (Yep, I know sometimes it has to happen. I am not talking about that.)
When staff turns over, it becomes impossible for residents to have the kind of life they deserve, that they paid for. This, too, is immoral.
Finally, it makes people say bad things about senior living. It makes people see senior living as a last resort rather than the final great adventure in an amazing life.
What Drives Me Crazy . . . It Is Fixable
There are just three things it takes to fix this and they are within the capability of every single leader and organization in senior living:
Top leadership has to be obsessed with being the best. This means having the courage to make radical changes, to say radical things, to do radical experiments, to put their jobs and their reputations at risk.
This means reading books, talking to people, hiring top-quality people. I will tell you that I am a pretty smart guy, and I am obsessed with helping senior living organizations get this stuff right. Not once, ever, has any of these struggling senior living leaders come to me and said, “Can we spend a day together and talk about this stuff?”
Arrogant statement on my part . . . maybe, but I bet I could help fix it, big time. But, if not me, someone who is eating and drinking senior living and culture and is not so close to the organization as not have a new perspective. Someone who will say the hard truths.
Leaders need to stop letting the day-to-day practicalities get in the way of bold, new ways of doing things. Small incremental changes will never, never, never, ever get them there. They need to go big!
Leaders need to listen to their customers. I am talking residents and team members. And every time a customer says . . . “if only you would . . .“ take it seriously, and if reasonable, make it happen immediately.
I Believe . . .
Brookdale, Capital, and Five Star have the ability to be at 98% occupancy and 20% staff turnover, but only by being crazy bold.
I used to also close these articles by saying that Brookdale should put me on the board. Nope, they need to hire me for a day, to lead their senior leadership through the kind of strategic rethinking they need crush it, serving seniors, families, and teams.
The age of senior living is right in front of us if we are willing to grab it, to do the big picture stuff.