John Cochrane, the CEO of Cornerstone Affiliates, is one of the proponents of consolidation. Here is what he had to say . . .

By Steve Moran

Yesterday, we published an article title “Why Consolidation May Not Be All It Is Cracked Up to Be” where I challenge some of the benefits or, maybe more accurately, the premises behind the move toward consolidation.  

John Cochrane, the CEO of Cornerstone Affiliates — which will soon be “human good” — is one of the proponents of consolidation. I sent him a draft of my article and asked if he would be willing to respond . . . providing a counterpoint to what I wrote. Here is what he had to say:

I appreciate Steve’s willingness to listen and express thoughtful, informed opinion. I agree that consolidation needs to be a carefully considered and even more carefully executed strategy to be successful. And, I also agree that there will be strong single-site and even smaller multi-site systems that will continue to do quite well in this rapidly shifting environment. Nevertheless, I believe that for reasons of competitiveness, efficiency, compliance, and healthcare participation, most single-sites and systems will be better positioned through strategic consolidation.

The Complexity Problem

Steve points out that single site CCRCs do everything themselves. That’s fine in an unsophisticated and unregulated market. Unfortunately, that’s not the market in which we find ourselves operating and it doesn’t appear we are going back anytime soon.

The areas of nursing and HR in particular require increasingly sophisticated operational support and expose organizations to risks often underestimated until it is too late. Changes in reimbursements and healthcare generally require operators in urban and suburban areas to have scale and operational systems that make them attractive to the healthcare partners we need to have to operate profitably and effectively. Yes, having those functional areas is costly. Not having them is more so.

Areas of Agreement

But I do agree with Steve that simply consolidating single sites and smaller multi-site systems under one corporate entity without giving careful consideration to how it is organized can lead to unnecessary complexity, increased costs and burdensome processes. That’s why we’re exploring alternative designs of the corporate function that would potentially reduce operating costs, provide access to a broader talent pool, offer corporate team members greater work/life balance, and shift our mindset with respect to the role of technology not just in serving residents but in how we operate as an organization.

One of the big strategic questions in this area is whether to “own” a capability, which can add to corporate complexity and cost, or “lease” a capability from others who are far more expert and focused in a particular discipline. This, of course, comes with its own attendant costs and benefits.

Your turn . . .

As president and chief executive officer, John Cochrane is responsible for the strategic direction of the company, overseeing operations and serving as the primary liaison to the Cornerstone Affiliates Board of Directors. Cochrane served as president and CEO of prior to the company’s affiliation with ABHOW. Before joining, Cochrane worked for Lifespace Communities, headquartered in Des Moines, Iowa, where he served as chief operating officer overseeing 11 retirement communities in seven states. Cochrane previously worked as a practicing attorney specializing in real estate and finance, and as executive director of the $150-million retirement community Oak Crest Village in Catonsville, Maryland. He has his law degree from Northwestern University and a bachelor’s degree in political science from Northern Illinois University.