I have wanted to write this article for more than two years, but have been scared to do it.

By Steve Moran

I have wanted to write this article for more than two years, but have been scared to do it. A few weeks ago I was talking to John Cochrane the President and CEO of be.group about it and he encouraged me to put pen to paper.


The reason I have been reluctant to tackle this issue is that when I write, I have an overarching goal of being a positive change agent in the industry. I have been hugely fearful that an article tackling this issue would be divisive in that it would make some for-profit providers feel smug to the point of looking down on their not-for-profit counterparts and that some not-for-profit providers would just be mad.

Yet, this is an issue that qualifies as an elephant in the room that no one wants to talk about . . . so here goes.

Some Background

It hasn’t happened for quite some time . . . or maybe I just missed it, but at least twice in the last three or four years someone representing LeadingAge has taken a serious swipe at the for-profit senior living industry, saying there is incontrovertible evidence that not-for-profit senior living providers provide better care than for-profit senior living organizations.  

The evidence they use comes from the quality measures published by the Federal Government on skilled nursing facilities. And without context, it is absolutely true that not-for-profit skilled nursing facilities, overall have measurably higher quality scores.

Except . . . these writers left out critical data:

  • Generally, not-for-provide providers have a much much higher percentage of private pay and Medicare residents than the for-profit world. This means more resources for staffing and other programs. In fact, many not-for-profit skilled nursing facilities take no Medicaid residents at all.

  • Something like 85% of all the skilled nursing for those without money is done by the for-profit world.

I Got To Thinking

Knowing that many not-for-profits operate mostly upscale senior living communities that target affluent residents I got curious about not-for-profit C-level salaries and went digging. This is not difficult because all not-for-profits are required to file public disclosure reports which include executive salaries.

The research shows that executive salaries are all over the map. There are more than a few organizations with salaries that are well in excess of $500,000 per year and that honestly . . . that is a lot of money for a “mission driven” organization.   

It made me think one word:  “Hypocrites.”  

As with almost everything there is more to the story.

The Reality

The real truth is that there are both great and not so great senior living leaders in both worlds of senior living. If we are honest, there are likely at least as many weak leaders in the not-for-profit world than the for-profit world.

It is likely why in the last few boom years we have seen more financial failures in the not-for-profit world than the for-profit world (my impression, but not fact checked so maybe only more prominent).

It’s a Real Business

Regardless of tax status both types of organizations are real businesses, that have to compete in the same marketplace for both residents and executive talent. In the case of for-profit organizations they have to pay taxes and they have an “obligation” or goal of making a profit for shareholders.    

Not-for-profits don’t have to pay taxes and they don’t have shareholders that expect a return, but they do have a mission that should, in some sense, be seen as the shareholder of record for whom the organization has an “obligation”.

Great Executives

If a not-for-profit organization is going to be great it needs great leaders. In order to get great leaders those organizations need to compete in the entire marketplace for those executives. This means they need to pay market rates or something close to market rates. Not-for-profit hospitals associated with religious organizations fought through this battle several decades ago and figured out paying market compensation for quality executives allowed them to be better at executing their mission.

It turns out that paying market rate for great senior living leaders is a very cost-effective tool for advancing an organization’s mission.

The Ugly Underbelly

Here is the ugliness that does not get talked about. There are more than a handful of small not-for-profit senior living organizations that have leaders that are grossly overpaid for the size of the responsibility of those leaders.

In the current world of senior care many of those organizations would be better served if they were to merge with larger organizations and the only reason or at least the primary reason they stay small is to protect those bloated salaries.   

This is wrong.

It is wrong for the residents; it is wrong for the team members and it is wrong for the mission of the organization.

In fact it really means that the mission is mostly creating jobs with big fat salaries for those leaders, regardless of what the mission statement says.

Being Real

In truth there are some amazing mission-driven for-profit senior living organizations. They treat their residents and team members well. They are innovating and growing and making the industry better. This is also true of a significant number of not-for-profits.  

There are also some “not so good” greedy selfish operators that do a horrible job. Some are in the for-profit world and some in the not-for-profit world. It is sad for residents and team members in both places. At the end of the day regardless of tax structure, good organizations are focused on serving their constituencies well.

We are all in this together and should be celebrating the differences and lifting each other up, not destroying.