It would be hard to forget the hundreds of negative headlines that erupted across the nation about Brookdale and Emeritus this spring, yet their respective stock prices never took a correlating hit.
Not all are so lucky to have the resources or scale to deal with a public relations nightmare, however. Much depends on the incident itself and the size of the senior living provider involved—as well as how they handle it.
“If there’s not a systemic issue at a company [related to] the quality of care that residents receive, I don’t think it’s a big concern to investors,” says Daniel Bernstein, an analyst with Stifel Nicolaus.
Brookdale, the largest senior living provider, made national media headlines after an incident that took place at Glenwood Gardens, a Bakersfield, Calif. continuum of care community the company operates.
On February 26, a Glenwood Gardens independent living resident collapsed in one of the community’s dining areas. A Brookdale staffer initiated a 911 call, per company protocol, then handed the phone to a nurse.
Throughout the approximately seven minute phone call, the 911 dispatcher repeatedly asked the nurse to either perform CPR on the woman, or find someone else who would, but the nurse refused, saying it was against company policy. The resident ultimately passed away.
When the Bakersfield police department made a recording of the 911 call public on March 2, a media firestorm ensued.
The incident made headlines across the nation, covered by major news outlets such as ABC, CBS, even morning talk shows Good Morning America and The Today Show. Many were disturbed by what they perceived as a retirement community’s failure to help an elderly resident, with most not understanding the different between the levels of care offered at the community.
A policy expert from industry trade group the Assisted Living Federation of America began making the rounds with national news outlets to provide education about senior care and foster discussion about other companies’ moves to examine some of their own policies.
More than a week after the incident took place and about five days after it began receiving media attention, Brookdale released a statement saying it would conduct a full internal investigation along with a company-wide review of policies involving emergency medical care across all communities.
“We will implement our findings in order to maintain our commitment to providing residents with the highest level of care and services,” the statement concluded.
Despite media-fueled public outcry, the incident seems to have had little immediate impact on Brookdale’s financial health, if its stock price is any indication.
“For Brookdale, [most investors] just viewed it as an isolated incident—not that an isolated incident can’t cause monetary damage, if someone decides to take legal action and sue the company,” says Bernstein. “But there aren’t [multiple] incidents happening at Brookdale communities.”
Despite massive amounts of bad press and a Yelp page for Glenwood Gardens filled with one-star ratings based on the nurse’s refusal to give CPR, Brookdale’s publicly-traded stock didn’t seem adversely impacted, although the incident’s impact on occupancy levels is unknown.
During the week following the incident and resulting media scrutiny, Brookdale’s stock rose from the $27 range to over $29 by the time the market closed on Friday, March 9.
“A lot of times [the financial impact] depends on the individual company and how they react, and the extent of the seriousness of the incident,” Bernstein says.
A lot can depend on the involved parties, as well.
The family of the Brookdale resident who died understood the level of care and service offered in the community’s independent living setting, and said they wouldn’t be pressing charges.
Had the deceased resident’s family not been supportive of the community, Brookdale could have been facing a situation similar to Emeritus’ legal battle with the family of a memory care resident they alleged developed multiple pressure sores at an Emeritus community in 2008 before moving to a nursing home and ultimately passing away.
The family alleged the death was connected to the pressure sores and quality of care the elderly woman had received at the Emeritus community, and a jury sided with them, finding the company guilty of elder abuse and wrongful death and slamming them with a $23 million verdict.
Similar to Brookdale, however, Emeritus stock did not register a substantial change in value while the situation played out in the media.
Throughout February, when the case was being heard in court, Emeritus’ stock price had a steady upward trajectory before dipping slightly on March 6, the day after the company was found guilty of elder abuse and wrongful death. In the next five days, during which the $23 million verdict was announced, stock prices climbed more than a dollar.
The reaction of each resident’s family marks a key difference between the two cases: family support for care providers, which is not guaranteed.
In the wake of the Brookdale incident, many senior living providers have clarified certain company policies with employees, residents, and residents’ families to avoid similar issues. As for Brookdale’s own policies, a spokeswoman told SHN she could provide “no additional information beyond the issued statement, since the internal review is still underway.”
Shaping the Narrative
The Brookdale incident and the way the company handled it arguably did not have a substantial impact on its bottom line, but others have seen much different outcomes for their own crises.
The manner in which companies respond to crisis situations can play a large role in how they’re covered by the media, and how the public—and by extension, investors—perceive them, says Todd Harff, president of marketing and public relations firm Creating Results.
One community had a mold issue that displaced several residents, and was advised by its attorneys to not give the press any comment.
“They came across as being entirely unconcerned, and became guilty in the court of public opinion, whereas they could have come across with much more empathy for the people who had been displaced from the mold,” says Harff, who didn’t disclose the name of the community.
As a result, the community went for about a year without any sales, and it took about two years before it starting getting referrals again.
How situations are handled at the offset can determine the trajectory and tone of media coverage, says Jim Janicki, vice president of marketing and communications at Hillcrest Health Services and an accredited public relations professional.
“The most important thing is to acknowledge your commitment to your residents,” he says.
Janicki previously worked for an ElderWood Senior Care community in Western New York where a resident diagnosed with Alzheimer’s walked out the door. ElderWood looked for the resident for four days, with more than 100 volunteers participating in the search, and was able to shape how the media covered the story.
“We didn’t want to fight the battle as to how he got away from the facility,” Janicki says. “The message was, ‘Let’s find him.'”
Unfortunately, by the time the resident was found, he had passed away, prompting another round of media exposure.
However, in this particular case, the family of the resident was supportive of ElderWood and its efforts to find him, he says. With no perceived scandal to pursue, media coverage soon turned to the next newsworthy occurrence, and the community never experienced a drop in census.
“It comes down to how you handle the crisis,” says Janicki. “We could have botched it up, and before you know it, people could have moved their loved ones out. It’s not necessarily the crisis that leads to a drop in census—it’s how you manage the crisis.”
Crisis management can go a long way in mitigating a financial impact, according to Harff, and the opposite is true as well.
“The cost of handling crisis situations poorly is far more than most people realize,” he says.
While the way crises are handled can play a large role in what kind of impact an incident makes, the frequency of incidents and the scale of a company are also factors, Bernstein says.
“If you’re a small operator who operates two or three properties regionally, and you end up with a bad reputation, you may not be able to handle that as well as a national company with 200-300 properties, where one is having problems but the rest are doing well,” he says.
However, if Brookdale and Emeritus were always in the news for poor care stemming from repetitive systemic problems, says Bernstein, ‘that would be a problem.’
“A lot of times it depends on the individual company and how they react, and the extent of the seriousness of the incident,” he says.
Written by Alyssa Gerace