By Steve Moran
We are heading down the road to a disaster for senior living operators, residents, and team members, and only the capital providers can change that.
A Story
A number of years ago I was working in Silicon Valley selling software used to design computer chips. The company I had been working for ran out of money and laid everyone off. I spent months frantically looking for another job.
Then one day there was a job posting by a company that was founded and run by a guy who was well known as a tyrant and bully (maybe the same thing). They had one sales guy who had been there forever — managed to make his quota and stay employed.
About every 12 to 18 months, they would hire a second salesperson who would last about a year and get fired because it was an impossible work situation and an impossible sales environment.
I knew all that when the job was posted, but I went to the interview anyway. And I knew all that when I got a job offer. I knew that it was impossible for me to be successful. I still took the offer, and from the moment I took the job, I knew that I would lose it. I worked hard, got a few deals and a lot more opportunities — that he would then blow.
You’re thinking I am exaggerating, but one time I did something he didn’t like, and he threatened to shoot and kill me with a gun.
From the moment I went to work on my first day until I was fired — oh yes, I was — my big goal was to see how far past the 12-month mark I could make it. I did pretty good. It was month 16 when I was let go. It was horrible, but it was 16 months of cash flow that I really needed.
A Disaster in the Making
Not all capital providers are this way, but too many are. They want cash flow from their properties, because they have to show results. Management companies are told they will be fired if they don’t deliver. So what do management companies do? The same thing I did. Whatever it takes to hold on their contracts another month or two or six. (I am not suggesting they do things that put residents in harm’s way.)
They delay maintenance that should be done; they run their staffing a little leaner than they should; they buy lower quality consumables because it helps cash flow.
The problem with all this is that at some point there is a price to be paid. That deferred maintenance will catch up and become even more expensive to fix. Residents and families will be less happy and become more demanding or tell other people that senior living isn’t worth it.
Better Alignment
Senior living is a long-term game. It can create fantastic returns for investors who are looking for a long-term, above average return on money. As a short-term investment vehicle, it can turn into a horrific car crash that hurts and even kills people.
