A Place for Mom’s new CEO, Larry Kutscher, is working to reinvent the company within two years, including by redefining its relationship with senior living providers.
“I had a town hall the first day on the job and said, I don’t see why we call [senior living] communities partners. They’re customers,” Kutscher told Senior Housing News. “They pay us money, and we’ll live and die by making them successful. Listen to them, meet their needs, have open and transparent dialogue.”
A lack of transparency is just one of many complaints that senior living providers have expressed over the years about A Place for Mom, which is the nation’s largest online referral platform for senior housing. Founded in 2000, the company today employs more than 400 advisors and works with more than 18,000 provider communities in the United States and Canada. Its business model hinges on fees that senior living communities pay when leads convert to move-ins.
As its scale indicates, A Place for Mom has been successful in growing in its business, and Kutscher does not intend to reinvent its “core essence,” which involves helping families find senior housing for their loved ones. But he does believe that significant changes and major investments — to the tune of tens of millions of dollars — are needed.
“It felt like a company that had a long history of success and had done well, but quite frankly had reached a point where it needed to be … reinvented,” Kutscher said, of why the CEO opportunity appealed to him. “And if we could do that successful reinvention and rethinking, there was still a lot more opportunity to help communities and customers more, and do better.”
Kutscher realizes that some senior living providers might be skeptical given their past experiences with A Place for Mom.
“They might not yet totally believe that we’re a changed company,” he said. “But I think we are changing … and hopefully, they’re feeling it.”
The friction between senior living providers and A Place for Mom can be traced to several causes.
One of these complaints is that A Place for Mom’s contracts include unfavorable provisions — such as that APFM will own a lead for two-plus years — and that the company has not been willing to negotiate. Rather, it has used its scale to essentially bully providers into accepting its terms, rather than risk having leads go to competitors.
Providers should not expect any sweeping changes in contracts, but Kutscher said he is sensitive to these criticisms. Although A Place for Mom may not budge on all the provisions in question, the company can do better at speaking respectfully to senior living communities in the contract process, explaining the costs that APFM incurs on its side, and the outcomes that it can drive for its senior living customers.
“We may not always do what they want us to do, [but] when it comes to contracts overall, we’ll have more of a discussion,” he said.
On the two-year clause specifically, Kutscher points out that A Place for Mom’s advisors sometimes will talk to the same family over the course of years.
“So, if we’re working with them and helping them, I think that’s a fair way to work,” he said of the clause.
Another complaint is that A Place for Mom advisors send leads to too many senior living communities, in a non-targeted way. This overwhelms families, who get swamped with calls, and it leaves senior living sales and marketing professionals putting in work on referrals that are not promising prospects from a financial or clinical standpoint.
Kutscher points to internal data from the last 90 days, showing that APFM referred to an average of 4.3 communities, which he thinks is a reasonable number.
“Where I think there’s a lot of valid feedback is that the process feels too chaotic to the family,” Kutscher said.
For instance, A Place for Mom advisors may begin with several phone calls to families, and then the family members also begin to receive calls from four or five communities that have received the APFM referral, and all the contact becomes overwhelming.
To start alleviating this issue, Kutscher wants A Place for Mom to prioritize referrals. For instance, A Place for Mom might send a batch of referrals to a community and break them down by how likely they are to move within 30 days, 90 days, or if they are on a time horizon of six months or longer.
“We shouldn’t have a one size fits all approach to our families,” he said. “To this date, we’ve more or less had a one size fits all [approach], meaning we treated every family in the order they came in, not necessarily based on their immediate needs, the level of urgency.”
He also wants to place a greater emphasis on scheduling tours for families. This eliminates the need for the community to call a family for this purpose, and Kutscher thinks it results in a better experience for both families and senior living communities.
Financially qualifying leads is a trickier proposition, he said. Families don’t always have a solid grasp on their own financials, know all the options available for paying for senior housing, and sometimes change their minds about their target price point. But Kutscher does want to work on this issue as well, and he emphasized that improving relationships between A Place for Mom advisors and senior living communities should be achievable, because interests are aligned.
“Something that does frustrate me a little bit is that we have no incentive on our side to waste anybody’s time or effort,” he said. “I don’t want to hurt the family, if they’re not ready to get referrals. And, quite frankly, I don’t want to waste the community’s time or our own company’s time, because we only generate revenue if somebody moves in.”
The path forward
In addition to “actively working” on ways to better prioritize leads, and shifting toward more respectful and customer service-focused relationships with providers, Kutscher explained a few other initiatives and investments in the works.
“You’re going to see us building our team, hiring many more people in all functions, and investing significant money in our technology and into our business,” he said. “We’ve already just started that.”
A major undertaking is on the technology front. A Place for Mom has been piloting a new platform for communities, which will soon be released. Kutscher wants communities to be able to share richer content via APFM, including more photos, videos and information, and to help them keep this content updated.
“We’re rebuilding our technology platforms from the bottom up,” he said.
A Place for Mom also has started to hire more people at the local level to work more closely with senior living communities. And there are some pilots underway to address pain points.
For instance, disputes over leads can create significant friction, if a referral comes through A Place for Mom but a senior living community also has already made contact and counts that person as an organic lead.
“Why should I pay you for somebody already in my database … I totally get that,” Kutscher said. “What we are seeing is, we spend too much time in friction with some of the communities, that are worrying whether they’re paying us correctly or not.”
Meanwhile, A Place for Mom advisors also spend time and energy worrying over whether they will receive credit for a disputed lead.
With some communities, A Place for Mom has started to pilot “zero-rejection” programs. In these pilots, APFM gets paid for any lead it sends, regardless of whether it was already in the senior living community’s system. This results in a “halo effect,” as communities see how few disputed leads actually turn into move-ins, and the easier relationship with A Place for Mom pays dividends in the form of increased overall move-ins.
Among the facilities that piloted the program, the year-over-year increase in move-in rates ranged from 25% to 113%, according to data provided to SHN by A Place for Mom.
Kutscher acknowledges that this might sound “counterintuitive” and that not every community will embrace this option, which he says is understandable.
The overall point is that A Place for Mom is experimenting with new ways of doing business to make it easier to work with the company, he added.
As the zero-rejection pilot might indicate, Kutscher is determined to keep A Place for Mom’s revenue coming in, even as he is focused on improving relations with senior living providers. A Place for Mom is owned by two private equity firms — General Atlantic and Silver Lake — and Kutscher knows that he has a mandate to increase value. In fact, this is the third private-equity owned company that he has led, and he finds that he enjoys the particular challenges involved in running these types of organizations.
“I like to reinvent things and build things,” he said. “I’m the type of person who says, why do we do that, or why don’t we do that … I’m not the person who is there to make little optimizations or just drive efficiency.”
Prior to A Place for Mom, he spent over a decade at TravelClick, building value in that company that resulted in a $1.5 billion sale in 2018. He says TravelClick was in a “very, very similar” situation as A Place for Mom, when he first took the helm there.
“Companies reach a stage in life where what you’ve done to become successful no longer works, if you want to keep growing and get to that next phase,” he said. “TravelClick was exactly in that same place, where the strategy wasn’t clear anymore, customers weren’t as sure what we were doing anymore, some of the technology wasn’t where it needed to be to deliver on the future.”
To those who worry that he might be too focused on the bottom line to be a trusted player in a mission-driven industry like senior housing, Kutscher explained his approach, summing up the message that he has been delivering to senior living executives since taking the CEO position at A Place for Mom in April:
“The way you build company value so that someone is willing to ultimately pay a lot of money for that company is if you do things the right way, and you do them well, and you create value for your customers, and you create a great team,” he said.
It’s all about creating repeatable processes that result in customers lining up to pay money for what they see as something valuable, he elaborated.
While A Place for Mom comes in for a lot of vocal criticism from senior living providers, he also believes that many providers already value what the company brings to the table, and he wants others to keep an open mind to the changes underway rather than defining the company by past actions.
“I say this all the time to customers, but I want you to pay me more money because I’m giving you value and helping you do so well, you want more of what I have to provide,” he said. “It’s very simple, but that’s what I’m all about.”