Sometimes driving change is about doing the thing that no one else is doing — yet. Such has been the case for Michael Schonbrun, founder and CEO of Balfour Senior Living, based in Louisville, Colorado. The company operates nine senior housing locations, with three more in active construction and development, spanning all care types across the continuum. Schonbrun has set a vision for Balfour to be the “most admired senior living company in America.”
From the colors of the walls to the company’s early approach to the COVID-19 pandemic, Schonbrun has led Balfour through changing times by sometimes taking the unpopular path. Yet it has served the communities’ residents and staff well by providing an lifestyle that is enjoyable, safe and growing — all in light of challenging operating times.
You once said that you use bold colors in your buildings, at the risk of some people not liking them. Do you think it’s a problem that too many communities try to be all things to all people?
I think there’s a widespread belief in the industry that you can’t go wrong relying on monochrome tones, everything beige. Nobody’s offended, but nobody really loves it. We’re prepared that some people will say, “I don’t like a red couch when you first walk into the building or that chartreuse one up against a leopard-skin carpet.” Those are folks that we’re probably not going to get, just like there are people that say, “I don’t want to spend a Balfour price when I can get something like it for less.”
When a lot of the Japanese carmakers were making cars that looked a lot like BMWs and Audis, people said, “Why spend another $20,000 for that more expensive model when it looks the same, and whether the performance is the same, nobody knows or I don’t care?”
We’re not going to get the bargain shoppers or the people who don’t like that kind of design, but we’re finding more and more people who do.
We’ve had people, especially in our Denver community, who have moved from the East Coast and have brought their interior decorators from Connecticut and New York, to decorate their apartments. When they bring their designers to look at the building in total before they focus on their client’s individual apartment, the question has come up more than once of, “You should just ask whoever did the common rooms here to design your apartment because it’s better than anything I’ve done.” We politely thank them for the compliment, but say, “No, we’re not in the business of designing individual units.” Although we sometimes do furnish model units, sell it complete, as furnished, and then we just replicate it in another unit elsewhere in the building. Obviously, that’s when the building is getting leased up, where we have that ability.
We think the boomers are going to want a more vibrant community to be in, that they feel there’s new life, new adventures, new friendships, new things to learn.
The baby boomers are very close to being our primary client group. Even if they’re only in the 74, 75 age group [and] maybe a couple of years shy of the typical entry age, we wanted to be more like the boomers, following the tastes of their younger siblings, and not like their older siblings who had gone through the Depression and World War II and don’t want to spend money on themselves. We think this shift in taste has already occurred, and it’s going to be even more the case in the future.
We think the boomers are going to want a more vibrant community to be in, that they feel there’s new life, new adventures, new friendships, new things to learn. They don’t just want to be in a tranquil, boring, beige environment. That’s our bet and it’s been paying off, and I think it’s only going to be increasingly a winning strategy going forward.
How has COVID-19 impacted Balfour and influenced your thinking — and the industry’s? Do you think people are going to see more value in having on-site health care?
The answer to that last question is yes. My first 10 years after getting out of law school I spent in the public health and health care regulatory environment. I think one of the benefits of COVID-19 — if you want to call it that — is that there’s going to be a willingness to invest in public health and to appreciate that, as much as an individualistic society America is, that there are things that the government alone can do.
That means there will be more investment in that work and sector, whether it’s totally a governmental one or through public-private partnerships. I think that’s going to come. I think the COVID experience is going to mark permanent change in American life and investments.
One of the interesting questions right now as we speak, and this may be dated by the time this is published, is whether folks are going to feel more safe in their own homes or more safe in a community that has care partners and that is taking the kinds of precautions we are with cleaning and isolation and preventing visitors from coming in or tracking in the virus.
In terms of the specific question, we were very early implementing a series of steps ahead, frankly, of what the CDC was recommending. We did not allow visitors in. We made out employees and also third-party visiting nurses, home health aides and hospice workers limit their visits to just one community. In some cases, we had family members coming from out of state flying in to see their parents and unfortunately we were not able to reach out to them quickly enough to prevent them from making that trip. We had to turn them away at the door. [Early on, we had] our vendors leaving packages outside the building [and started] taking temperatures of the residents twice a day.
At the moment, knock on wood, we have no cases in any of the Balfour communities, and none among our care staff. We’ve made arrangements, I should say, for daycare for our care staff if they have young children at home, which of course many do, at our expense. Our new employees now immediately are getting health insurance coverage on day one rather than the beginning of the next month after they join us.
We’ve actually been reaching out to local restaurants and hotels saying, “If you’re losing hours or, in fact, have lost your job or been put on a cutback, consider coming to work for us.” Because labor has been such a shortage in the industry, we’re believing that we may be able to pick up some talent going forward, who would find that our work is more satisfying than where they were, and that our pay rates are comparable. We’re making those steps.
We’re obviously still in the early stages of this. Who knows how it’s all going to play out. I’m hopeful we can keep COVID-19 away from any of our residents, but one has to be realistic. If every prediction is half the population in the country is going to come down with this, then it’s hard to see how we’re going to totally dodge the bullet. We’re going to do our damn best to do that.
Do you think senior living is changing fast enough these days?
COVID changes everything when you say “these days.” I do think, as an industry, we have to recognize that the boomers are going to be a much more discerning group than the World War II Greatest Generation. Some things can be changed more quickly. Dining and transportation. People who have a 20-year-old building are going to be hard-pressed to change the bones of the building. It could be a challenge.
Obviously, the amount of new construction that’s come on has raised the question of, what does that do to the more obsolete buildings? They’re maybe going to have to cut pricing and yet still have to pay more and more for their staff. They’re in a hard place.
We have some buildings that are 20 years old, we have some that are 10, and then there are ones that are just the last couple of years. So, we’re going to be facing those challenges as well. We’ve been refurbishing and trying to improve the dining experience, the transportation — those kinds of things that can be done even if the physical plant is a bit dated. I guess the question is, are people making those investments or not?
Describe a time when you were trying to make a change, and it didn’t go well.
The best example I can conjure up is somewhere around year 16 or 17 in our company’s experience. We began to grow somewhat more rapidly. We just opened up the Denver, Riverfront Park, an urban project, and began to attract more capital for our future expansion. We found ourselves with a core staff who had been with us almost from day one. They had, call it 12 to 15 years of experience with the company. A number of them had come from other senior housing companies, and it became increasingly clear that either they were burned out, or they liked working in a company that had three or four communities, not nine going to twelve. Even at that larger number of communities, we’re hardly big by any measure.
These folks were more comfortable with the smaller setting. They missed seeing me every day in the communities, because I was spending more time on development opportunities and capital formation and those things. In some cases, their skills just didn’t come up to the level that we needed as we started to go from a small mom-and-pop to a more medium-size, growing, ambitious company.
We had some painful personnel issues. In some cases people deselected themselves, moved on to other opportunities. In other cases, we had to give them a nudge out the door and then reassure the people who stayed behind that the fundamentals of the culture were going to stay in place, but we needed to be a bit more efficient and streamlined, use technology more and accounting systems … it all couldn’t be done with the old fashioned pen and paper.
That was taxing because these were staff members who had been involved in building the company and were loyal. They all had been capable, but were not really suited for the new demands. We think we’re through that process, but there’s ongoing challenges. At the end of the day, our buildings may be beautiful and well situated, but the most important element is always having the right folks who have a mix of dedication to the residents, love of the work that they do and are ambitious and professionally and technologically competent.
Is it fair to say that Balfour is helping elevate the industry in the eyes of consumers?
We hope so. If the question is, “Do we have definite proof of that?” I think I have to say, not yet.
Maybe of greatest interest is that we’re now seeing people looking for themselves — couples or individuals in their mid-to-late 70s, who 20 years ago were placing their parents in the first Balfour communities. They’ve already gotten acclimated and become somewhat knowledgeable, and they saw their parents enjoy the last years of their life in an energizing, captivating environment, and now they’re now looking for themselves.
Part of the fun in getting up every day is how to push the envelope.
They’ve gotten over this sense, which of course has plagued the industry from the beginning, that it’s a nursing home with Nurse Ratched waking you up at four in the morning, forcing you to take your pills and living in a setting that antiseptic environment, full of fluorescent lights, linoleum floor and green tiles on the wall.
Disabusing people of that image has been a very long marathon crusade. I think we’ve begun to turn the corner on that, but I think we still have got a way to go. Hopefully, people coming in and seeing what we’ve done in Riverfront Park and some of our other communities are now beginning to change their attitudes, but attitudes take a while to change.
Changemakers are risk-takers. Do you agree with that?
Yes. Whenever I find myself in either Las Vegas or the new hotel/casino that the Wynn company has [in Boston], I’m very comfortable walking through the casino without spending time at the blackjack table, because I’ve got enough of my net worth in making bets and assumptions of how to proceed with new senior developments. But I think people want to be safe. [If] the smallest little tweak is all that senior developers can tolerate, (they) are not going to be the ones who break through.
I think of the comment attributed to Steve Jobs about why he doesn’t use focus groups to decide what the next product is from Apple. He said, “How can people anticipate what they need when they’ve never seen it? I know what I can produce, and I’m convinced in my gut that that instinct is right.”
My partner Susan Juroe and I both share that feeling, which is, “Let’s give them what we like, or what we think they’ll enjoy.” We trust our intuition. You can’t test those things out until you actually do it, and then you tweak later.
There’s one example I could think of that happened probably maybe 15 years ago. We put a very bold wallpaper pattern in the skilled nursing component of our first project. It was green and white. Everybody hated it. There were no supporters at all, and we just said, “Well, we still like it.” We saw it in a swatch, and then we put it up on the wall and liked it, but with everybody being opposed to it, we said, “We’re not going to fight it.” We changed it out.
You can do that to a wallpaper in an area, but obviously, if you’ve got some architectural feature, then you can’t move columns and posts later, if some space doesn’t work. At this point, 20 some years into the business, we think we understand what some of those tolerances are.
Anything else to share about where the company’s going next or changes you still have on your to-do list to accomplish?
At this point, we’re far from satisfied with where we are now. Part of the fun in getting up every day is how to push the envelope, how to improve design and improve service levels. How to find the best vendors for communication or programs so that when the resident wakes up in the morning and turns on their TV, they see what’s happening at the community, or what field trips or outside trips are being held. We think there’s a lot more improvement there. We think what we’ve done in the markets we’re in should be applicable to 20, 30 of the major metropolitan areas in the country.
[Now], are we going to do 20 or 30? Probably not. We’ve grown pretty slowly, organically. You hinted at this earlier: If you’re afraid to fail even in small ways, then you’re never going to really see what works and what’s exciting. We’re prepared to take some, I guess, calculated risks. The risk can’t be that it’s a wrong location. The risk is more: “Is the dining room big enough?”; “Where is the bar?”; “Do we have now, in the world of Amazon, special locations for the packages to come?”
One of the company mantras is, “Let’s make only new mistakes. Let’s not repeat old ones.”