Incoming Merrill Gardens President: Middle-Market Success Depends on Adjusting Expectations

Tana Gall will become president of Merrill Gardens — again — next month, and she is excited by the opportunity to experiment and create new ways of doing business.

“We haven’t figured it out completely,” she told Senior Housing News, speaking of plans to combine Merrill Gardens with Blue Harbor Senior Living and offer a middle-market product. “That’s going to be the fun part of the next year here at Merrill Gardens — testing some of those theories that we’ve got, to see what works.”

After getting into senior living “by accident.” Gall rose through the ranks during nearly two decades at Seattle-based provider Leisure Care. She went on to serve as president of Seattle-based Merrill Gardens from 2013-2015, after which she founded a consultancy and then became CEO of Portland, Oregon-based Blue Harbor in 2016.

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Now she is returning to Merrill Gardens, replacing outgoing president David Eskenazy. And, Merrill Gardens has acquired Blue Harbor from private equity firm Fortress, with plans to create a new middle-market brand for the portfolio. The legacy Merrill Gardens brand will continue to deliver higher-end communities, including some high-profile developments underway. Currently, Merrill Gardens operates a portfolio of 33 communities in eight U.S. states, while Blue Harbor’s portfolio consists of 21 communities in 13 states.

Data released earlier this year quantified the massive demand for middle-market senior living that is set to hit as the baby boom generation ages, but creating a profitable and scalable middle-market operating model has been an enduring challenge for the industry. While she does not pretend to have a “secret sauce” for middle-market senior living, a crucial element will be in setting realistic expectations for residents, operators and owners, Gall told SHN.

She also shared some of the key accomplishments achieved during her tenure as Blue Harbor’s CEO, her take on meeting intense workforce challenges, and the potential for industry disruption from the likes of Amazon or Apple.

The following has been edited for length and clarity.

SHN: To serve the middle market, you’ve spoken about the need to be extremely efficient in all areas of senior living operations. But many providers already feel like they’re running a very tight ship.

Agreed. I think a lot of us do feel like, well, I’ve tightened up everywhere I possibly can. So, what more is there?

No. 1, I think it’s an expectation. And I’m as guilty as anyone of operating a community that’s been in the market for 25 years, and I have continued to try to compete with a new person coming into town. They’re coming in, and the amenity space looks different than it did 25 years ago, but I’m trying to compete with that.

I think as we shift to the middle market, the easiest way I get my head around it is, when I travel for work, I choose a Hampton Inn at maybe $100 a night versus a JW Marriott at $500 a night. I know what to expect and where my value is, in that I want to go somewhere that’s clean and it’s comfortable. I know I’m not going to get the fine breakfast … So, I think it’s setting that expectation correctly for people who are moving into this moderately priced product, and then it’s delivering on that.

Maybe breakfast won’t be cooked to order. Maybe it’s continental. Maybe we don’t offer breakfast. Maybe we have delivery services for people, maybe for breakfast, so you’re not bringing your labor in that early. Or, you’ve got labor that’s already there doing some of that [breakfast prep]. I think the universal worker is something that is going to be key in the moderately priced product. Somebody who maybe is running an activity is also potentially driving the bus, and on weekends, they are doing dinner waitstaff. I think that’s appealing to some people, to be able to do something a little different to get your 40 hours in.

I think it’s a great opportunity for us to cross-train, so that when somebody does call off, you’re not left in the lurch. You can look at your whole employee base and say, okay, their home base is dining, but they’re a trained caregiver, so let’s pull them into assisted living.

Part of keeping things moderately priced is controlling your labor cost. That’s our biggest expense. So, how do we be creative with that? Again, expectations. Do you need weekly housekeeping? If you want it, maybe that’s a la carte. I think a la carte will be key for this.

The part I will continue to work on and think on every single day is providing the care component. That will be, I think, the most challenging. It’s not something we’re ever going to skimp on. So, it’s finding ways to be efficient with our staffing. Maybe that even goes down to the layout of the building. How can I ensure that my caregivers are not going from floor one to floor three to provide a shower upstairs and a shower downstairs? How do I keep them so that there’s an efficient use of time? Because, it’s going to be watching every minute.

Do expectations also need to shift in terms of what a profit margin or investor returns look like for a middle-market product?

That’s an excellent point. That’s been something we’ve been managing, actually, over the years. As labor costs have gotten higher and our ability to drive rate has not, we have had to shift our expectations on return. And I do think that that is something that we will need to adjust. I think that the partners we’re getting into this with are open to that.

At some point, it becomes a little bit more about how many of these can we do, not how much do we make on one. But managing that will be certainly part of my job, finding out where that sweet spot is and what works, and I’ve got good partners that will be on my side working on that as well, so I think we’ll solve that issue together.

You must feel confident that the Blue Harbor portfolio is a strong foundation for a middle-market product. What are you most proud to have accomplished there?

The team we created. I was able to walk into a great team that was there, but we just built on that. I don’t just mean the home office, but the teams that we’ve created in the communities.

We really worked hard at the beginning. The first thing we really dove into was, we knew what Blue Harbor was — it was a management company — but who was Blue Harbor? Who were we? Why were we doing what we were doing? We spent a lot of time in the discovery of who were the people that worked with us, who were the people that were living with us? And, more importantly, who did we want to work and live with us? That was a lot of meetings, a lot of focus groups.

That’s where we came up with 100% True Blue. That meant to us, the physical plant is important — to be clean and nice and organized — but, it’s not about the physical plant. Because if you’ve seen one Blue Harbor building, you’ve seen one Blue Harbor building. There was no consistency among the communities. So, it was really about what was inside. So, I’m proud of what we created with that culture, and it caught on. I think people really did understand what it meant to go one step beyond what people would expect, and that 100% True Blue loyalty to each other as employees and the families and residents we serve, and the community as a whole.

We also brought some consistency to the operating platform. There was some technology we implemented that just wasn’t there [before], as a young company. We rolled out a good care platform, a purchasing platform to give more visibility to our expenditures — we tried to find as many things that we could do that would give us visibility into the business but also make a day at work more pleasant.

What electronic health record did you implement at Blue Harbor?

We went with Eldermark.

What does Merrill Gardens use?

Merrill Gardens is on the new Yardi care platform.

Do you want all the buildings on the same platform?

Ultimately, it would be great to have everybody on the same care platform. But of all the priorities we’ve got, that one’s pretty low, because it’s working well for both organizations right now. That’s something we’ll think long and hard about when the time comes.

Did retention improve as you implemented the True Blue culture at Blue Harbor? Thoughts on how to meet some of the workforce challenges facing the industry?

We did study the turnover when we first got there, and it was higher than the average in the industry. So, we laser-focused on one position first, and that was the executive director … I’ll say it all day long, it’s the key [position] to our operation.

When there’s turnover at that executive director position, you tend to see turnover in department heads and that trickles down to your line staff. We saw that drop dramatically. I think in the last year, we were down to 20% turnover in executive directors, and some of that was good — people who got promoted or moved into a different position.

How did you improve retention?

It was being creative. Trying everything we could to be the employer of choice in a market. On the retention side, it’s easy for us to get caught up in, we’re short a caregiver or the dishwasher is not there, and so you bring somebody in and throw them right into that work. What we’ve been trying to do recently is focus on the experience of the new employee. Sometimes, that means you’re going to get agency help while you’re getting your employees trained. But we found our turnover is mostly happening in the first 90 days of employment. So, we really took a ton of time to think about, what do your first 90 days look like? It started with the day they accepted the job. Once somebody accepted a job, they got a handwritten note from their supervisor sometime between the day they accepted and the day they started, with a packet that said, on your first day in the community, here are some of the things we’re going to go through. It has a “getting to know you” form in it, where we find out their favorite color and a favorite restaurant and their favorite music. So, we have an idea of who this person is, and so when they come in, it’s not that scary first-day-of-school [feeling].

We put together a form that a new employee got to use to go around and meet all the different departments. So, go into dining and find out how you get your employee meal, meet the team back in the kitchen, and you get a little prize everywhere you went.

Then, once they were able to start their actual job, we tried to check in more regularly. Everybody has a mentor. Everybody knows who they can go to for the questions they don’t want to go to their supervisor with. We actually pay mentors a little bonus for the longevity of the employee. We’re able to recognize a great [mentor] and give them something in appreciation, which also creates longevity in them, as well.

At day 30, we make sure the supervisor sits down with [the employee] for a stay interview. It’s kind of a report card on us. We said 30 days ago that this is what your job is going to be like, have we lived up to that? I’ve had experiences in my 25-plus years where somebody comes in to be a caregiver, and it’s not what they expected. It’s a demanding job, but they’re still good with our population. The end goal is, if you’re not caregiving, maybe [you’re] being a server … so, seeing if you can save people along the way, so that they don’t walk away completely.

Then, at 90 days, we do that again. It’s a little more back and forth. How are we doing, and we want to share with you how you’re doing. Constant feedback I have found to be really important to today’s employee.

It’s working. We still have turnover, but that turnover in the first 90 days has decreased.

Any ideas for how to recruit more top talent?

As an industry, we’re working really hard on that … I’m a big advocate to have non-traditional ways of recruiting. I think there’s this whole untapped market of people who stayed home to raise their children, and now their children are off to college. Maybe this is because I relate to it — I’m an empty nester this year. But, I have a lot of friends who stepped off the ladder to raise their children, and they almost don’t believe that they have this worth, to come back into the workforce. That employee, I think, would be amazing. They can relate to what our family members are going through. And they’ve worked before — I’m sorry, you’re raising your family, that’s work, too. I think that’s an untapped market we should look into, and continue to go to those folks.

We also have some really great folks that work for us that quote-unquote retired. Maybe they ran a business, and now they still want to get out. Now, they’re our bus driver, or concierge … and they’re fabulous workers. Another, I think, untapped market.

You mentioned you’re an empty nester now. I believe you’ve been commuting between Blue Harbor’s home base in Portland and Seattle, where you live with your family, is that right?

Yup. My life’s in an airport most of the time. I stayed living in Seattle, and my corporate office was in Portland. For the most part, I would go to Portland on Sunday nights and stay there a week. The great thing about Portland to Seattle is I had many options — sometimes I flew, sometimes I drove, sometimes I took the train. On average, I would spend one week in Portland and one week in a building. I don’t see that changing much here. Our home office is in Seattle, so that is more convenient from where I personally live, but I’m on the road most of the time. For me, probably one of my biggest challenges in the next year, year-and-a-half is going to be time management on where I spend my time and how to make the most of it.

Your home base is in the Pacific Northwest, where Amazon and Apple are based. Do you think one of these big tech companies could disrupt senior living?

I think that’s a great question. I think we’d be foolish to think they aren’t working on plans to disrupt the industry in some form. Our industry is too big, and what’s coming down the pike is too big, for smart people not to be thinking about that.

Amazon is already dipping their foot in the water with Alexa starting to show up in resident apartments in communities. I’ve been really impressed with watching them. I believe they hired a chief medical officer, and I know they’re going hard on pharmacy. You can see how this is all working together. If you own a pharmacy company that’s doing prepackaged meds, and you’re delivering it to somebody’s home where Alexa tells them, “Don’t forget to take your medicine.” Our No. 1 competitor is people’s home. So, I think Amazon and Apple — with the smart home — things are certainly going to play a part in disrupting our industry. 

Being an industry loyalist who’s been doing this for so long, I look at it and say, they can try to do everything they can in technology, but you can never replicate or replace human interaction, that feeling of belonging and community, and the purpose that we give in our communities.

What are your top priorities as you take the helm at Merrill Gardens next year?

My top priority is smooth transitions. For the sake of the employees feeling confident that they’ve got great jobs and our rersidents feeling like they’re only going to have their lives enhanced with this new merger between the two organizations. That’s probably the No. 1, 2, 3, 4 and 5 priority, ensuring that, because it’s going to take a while.

I know people do it all the time and in much larger numbers than this, but my style, the Merrill Gardens style, is very hands-on. I don’t want to do 50 buildings in a day. Our goal is to do a few a month, to have smoother transitions in the communities and not burn people out. Because in addition to transitioning to the Merrill Gardens umbrella, we are opening six new communities in 2020. So, another priority is making sure that we continue to focus on those new communities. Recruiting a great team and filling those up.

If you could sit down with a few other senior living CEOs who you respect, what would you want to talk about?

I would probably ask the question about moderately priced senior living. [I would ask them to] give me advice on what you think this could be like, moving forward. I’ve had the fortunate time to spend with great CEOs on workforce development. Even if we really are out to a dinner party, we end up talking about labor and workforce. And I would probably ask them, those that have done this before, how do you deal with an empty nest? My kids are gone out of the house. What do I do?

I really do respect the people that are in this industry. After 25-plus years, they’re more than industry people, they’re my friends.

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