By Steve Moran

Let’s start with the bottom line:


Too often, when accountants and MBAs run businesses, they completely screw it up, because they believe the numbers should drive every decision.

This is a massive senior living problem, and it is continuing to unfold. Let’s take a look.

Southwest Airlines

For many years, Southwest was run by Herb Kelleher, who was down on the line working with and talking to team members, working with them to figure out how to make their airline more profitable and more efficient and at the same time give customers a great experience.

When Herb retired, an accountant took over, and no surprise, found ways to make the operations cost less, be more efficient. When that accountant left, another took over, who did more of the same. It worked, except that even with the deeply ingrained culture of Kelleher’s days, team members were a little less happy, and there was a little less concern about making customers happy.

There were discernible warning signs — big warning signs that the infrastructure was broken, that the technology was falling behind. But you can imagine the conversation …

Operations: With all our growth, our scheduling systems need to be updated.

Accountant — Thinking C-Suite: How much would it cost to update the system?

Operations: Doing it right will take an investment of $100 million or so and two to three years.

C-Suite: I know we need to do this at some point, but it is working right now.

Operations: Sure, it is working in fair weather, but look at the last two years: We did worse than any other airline when we had storm events. I am begging you to fix this before it breaks.

C-Suite: I know, but everyone had problems, and people love us more than other airlines, so we can get away with it. Let’s revisit it in 2024. That will save us a lot of money and preserve share price.

Operations: This is a bad idea. We have not had any really major storm events that last two years. It will break when it happens.

C-Suite: You like your job, right? Then don’t question this decision, or you won’t still be here. The numbers tell us that we should wait a year … or 10.

It completely blew up this past week. Tens of thousands of travelers and employees stranded. Real people who didn’t count for anything, because the numbers said it was the right thing to do, had ruined holiday plans. Best estimates are that this will cost Southwest $750 million dollars, and I would not be surprised to see it go over a billion.

They will face massive government scrutiny and likely fines. There will be customers who quit flying Southwest. It will be harder to recruit team members.

The numbers were a false god that led them to perdition.


Over the last few years Welltower has appeared to be this well oiled machine that cranks out profits. The most recent leadership took great pride in the disciplined, numbers-based approach to managing their portfolio of senior living communities.

Like Southwest, it was all about numbers-based decisions.

Maybe not such a good idea.

On December 7, 2022, Hindenburg Research published an article titled “Welltower: Exposing The Shell Game,” and it is explosive and damning. You should read it in its entirety, but in a nutshell:

  • Until November 2022 Welltower’s largest tenant was ProMedica, who represented 12% of their net operating income, and ProMedica was in deep deep financial trouble.
  • In early November Welltower announced that 147 of ProMedica’s nursing homes would be transferred to a new joint venture named Integra Health that would actually pay an additional 4% in rent.
  • Welltower leadership claimed that the leadership of this new venture had deep experience in skilled nursing. All of the evidence suggests the leadership of Integra Health has little if any experience, and the company itself seems to barely exist.
  • The CEO of Integra Health is a 29-year-old by the name of David Gefner who has no publicly documented experience running nursing homes.
  • It also appears that in late 2021 Welltower did the same thing with 21 distressed Genesis HealthCare assets.
  • There are also indications that Gefner has undisclosed relationships with Welltower leadership.

For Years …

At the end of the day, success in senior living comes down to creating great experiences for residents and team members, and using financial performance metrics is a terrible way to make that happen. It is way too easy to look at food costs, life enrichment costs, and staffing costs and decide they are too high — that they are above industry benchmarks and should be cut.

And in high-occupancy buildings this always, 100% of the time results in a short-term, maybe even medium-term boost in profits. The problem is that it also degrades the resident experience, the family experience, and the employee experience.

All of that comes with a long-term price. EACH AND EVERY TIME!

There are so many stories of high occupancy, high profit buildings operated by small regional companies being purchased by bigger companies and “brought into line” that over time slide into mediocrity. All because that is what the numbers told the financial leaders to do. It was the logical thing to do, the right thing to do.

It was the ridiculously dumb thing to do. 

This will continue to be a problem for senior living, until we let operations drive the bus. Until we get down in the trenches and ask residents what they want, what would make their experience better. Until we ask team members what we could be doing better for them and for residents.

The great irony is that if they had let operations drive the bus, profits would actually have been better.


Numbers are not moral creatures. They don’t care if a decision hurts residents and families, that it costs lives. When leaders love the numbers too much, they hurt people, and in senior living, they kill people and destroy lives.

A Price to Pay

We have a glimpse of what this not so brilliant strategy will cost Southwest. I am betting the cost to Welltower will be significant. It is the same with Brookdale. The worst part of it all, is that the leaders of these organizations will all walk away with big fat bank balances that will ultimately be paid for by residents, families, and team members.

It almost makes me want to support Bernie Sanders for president.