With 11 development projects in the pipeline and more to be announced soon, MorningStar Senior Living is in growth mode. Its new president, Mark Andrzejewski, is helping the Denver-based provider scale up while bringing a fresh perspective to the industry.
In particular, he sees the potential to use real-time data more effectively, and he is drawing on his health care and finance background to enhance efficiency while supporting MorningStar’s culture, he said last week during an hour-long SHN+ TALKS appearance.
We are pleased to share the recording and this transcript of the conversation with SHN+ members. Read on to learn about:
— New initiatives such as MorningStar University and the Whole Health Standard
— Projects in the works with groups such as Hines Interests and Artemis Real Estate Partners
— How new technology is driving cost savings and efficiency
— The opportunity to harness more real-time data
— Steps to overcome “shocking” worker fear of Covid-19 vaccination
MorningStar operates a portfolio of 27 communities across Arizona, California, Colorado, Idaho, Iowa, Montana, Nevada, New Mexico, Oregon, Texas and Washington.
The following has been edited for clarity.
You joined MorningStar in June 2020. This is a big time to make a move in any industry, let alone senior housing. Can you share a bit about your decision and what appealed to you about the opportunity?
Mark Andrzejewski: The greatest appeal was MorningStar’s culture. I had the chance to meet the owners and management, and found that we share a consistent set of values. But more importantly, it was very cool to see that they took that value set and put it into action throughout their communities.
Covid-19 didn’t really factor into the decision making, because we were very much done with the recruiting process before all the shutdowns began. However, seeing Covid-19 hit and understanding the effects it had on our communities and on our residents, it gave me a sense of urgency to get there and see if I could help in any way.
The company is filled with this great purpose, and taking care of the residents and keeping our team safe was paramount. I just felt an urgency to get there. And maybe some of the skills that I had learned in other industries, throughout a large private equity-type career, I could put to use and maybe be of help.
Can you describe your first month on the job: What are some of the things you’ve accomplished, you’re proud of, or that are still top of your to do list?
[I received] this incredibly warm welcome from the MorningStar team. But unlike previous places I’ve been, I met them all via Zoom. [There] was a sense [that] this was going to be longer than we thought at that point in time.
What clearly came through in those early meetings with all these community leaders is that those values that attracted me during the recruitment process were real, and you can see them in place. That was very reassuring to see it just wasn’t a part of the recruiting. These actions and values are actually in motion in action throughout all of our communities.
I have a strong background in finance. I’ve had a number of private equity experiences. So I quickly dug into things like operations and finance to help me understand the company, the culture, [and] the processes a little bit better. But [from] day one, [I] was dealing with the numerous challenges that Covid-19 presented to MorningStar, and probably to everybody in the senior living community and industry — things like occupancy losses, clinical needs, reviewing processes on wellness or clinical teams.
Now, this team had formulated a great Covid-19 response before I got here. But there was constant communication coming out from the states and from the CDC that caused [us] to constantly be flexible, amend what [we] thought was a good plan and react to many of the new regulations or twists and turns along that journey. It required us to reevaluate how we talked with our residents and with our potential residents.
We quickly adopted video tours. We quickly adopted technology to help us to have licensing and resident agreements delivered via email instead of via paper. We have frequent communications with our residents and our families, updating them on the situation in their specific communities, [as well as] frequent communications with investors, giving them status updates on what we’re learning.
Finally, we created strategies that helped keep our communities both safe and vibrant, to the extent that we were allowed to, to ensure that those residents not only stayed healthy, but also had a good quality of life. Our mission statement is to honor God, to value our seniors and to invest in our teams. We found ourselves doing that on every level throughout the organization [and] throughout our communities. We reviewed our internal processes and programs to make sure they functioned to give us the data we needed to confront this challenge, to help us build residence safety, and to take care of our teams.
Can you tell us more about the recruitment process: Were you looking for a job in senior living, and what were you thinking about the industry?
I was looking for a cultural fit. My background started in public accounting, and [moved through] a number of different industries — from telecom, to manufacturing, to health care. I was not trying to get into the senior living arena. But meeting Matt [Turner, managing partner] and Ken [Jaeger, founder and CEO] convinced me that this was a company where my skill and value sets matched.
Why were they looking to fill the president’s role? Was it related to the company’s growth?
My career has spanned a number of growing national, national scalable industries. I think those are some of the skill sets [Jaeger] was looking for, in addition to some of those leadership skills I learned years ago — everything from being an Eagle Scout, to playing for Coach [Lou] Holtz at Notre Dame.
MorningStar forged some interesting partnerships recently with high-caliber partners such as Hines Interests, the global real estate firm. Can you give us a status update on the development pipeline, as well as the partnership with Hines?
I’m very excited about the future with a firm as reputable as Hines. This is a partner who strives for success with a goal of serving our residents with the same quality and focus on excellence that we have. It’s a great match working with their team.
The lead project is River Oaks in Houston. It’s going to be 112 units with assisted living and memory care, high-end features [and] amenities. You can really tell from the Hines team describing the amenities we’re going to put in exactly how excited they are about the project, as well. Sales are ongoing and starting to fill up. It is slated to open [in] late summer, early fall of 2021. We do have a number of other projects that are in the pipeline. They’re not ready to be announced yet, but there is additional activity that we’re looking forward to in the future.
There was also the acquisition of two independent living projects with American Capital Group and Artemis real estate partners. These communities are located adjacent to multifamily apartments, is that right?
Yes. These are exciting projects. Artemis is another team [that is] so exciting to work with. You can already tell they’re focused on quality and how they’re a service-focused group. We’re enjoying working with them to get these started.
One [community] is in Hillsborough, Oregon; the other is in Kirkland, Washington. They’re strategically placed near high-end medical facilities — some of the best hospitals in Oregon, for example. They’re within reach of really nice commercial retail spaces. What I’m sort of jealous about in the Pacific Northwest, they’re by some parks and walking trails that will really benefit our residents.
These developments are designed to [promote] a vibrant, active and healthy lifestyle. Some of the amenities put into these [buildings] really reflect what they were trying to accomplish there: first-class dining services; upscale fitness centers; amphitheaters; and art classes.
It’s interesting that you’re positioning these maybe more as full-service independent living. Do you see independent living changing to more of like an active adult model?
In this instance, that’s exactly what we’re going for. These communities are well-positioned within commercial districts so that you can easily get to some amenities that you want. They are encouraging the residents to view this as their home, to make sure that they understand that they’re still part of the community, [and] that they’re also situated so that they’re not on the outskirts. It is intended to be where they can hit the sidewalk and maybe go hit a walking trail, for example, if that’s where their day takes them.
Is the idea that you want to bring in a younger, more active adult, but have a more comprehensive set of services and maybe a little bit higher price point than an “active adult” rental community?
I won’t know the comparison to the active adult industry, per se, especially in those areas. We are looking at this as being promoted as more active. We’re making sure that we can build outreach to several community amenities, to make sure [residents] can access those. The intent is that they are more vibrant. As far as the age level, MorningStar is committed to that 55-plus range. We want to make sure that we don’t change that philosophy, in these buildings.
Has there been any discussion with Artemis or Hines about the possibility of creating a full continuum, building out assisted living and memory care close to these properties?
There are plans in place. So as you can tell, Hines is already there; [the Houston project is] assisted living and memory care. These two projects with Artemis are independent living only, but there are future plans in the pipeline that probably will reflect more of that full continuum of care. I’m not sure if some of those are already on the website, or if they’re further down.
Do you see synergies between your capital partners’ expertise in multifamily real estate, building with amenities and creating mixed-use developments, cross-pollinating ideas and coming up with new models?
I do see those opportunities. The MorningStar brand built a reputation for caring for its residents and for quality. We are seeing a very good synergy of the expertise we bring from senior living with their expertise in [other] commercial real estate arenas.
Can you give us an overview of other projects that might be in the works? What does the pipeline look like?
This is a tremendous time for MorningStar. It’s one of the reasons I wanted to join. I’ve been part of national growing companies for the majority of my career. Right now, our pipeline has multiple high quality projects.
Currently, we have 11 different projects currently in development in five states. We have others that are moving through the pipeline that will soon be able to be announced and placed on the website. This pipeline is robust, and it’s such high quality that it is truly exciting.
You mentioned earlier that maybe one of your skill sets that was attractive to MorningStar was helping scale. Can you talk a little bit about what you’re working on as these projects come on to take the company to that next level of size?
Over the last 20 years I’ve spent in private equity-owned companies, that had the goal of building a national platform that was scalable moving forward. A number of the skill sets that I’ve learned dealt with systems and process improvement: making sure that you have real time data; making sure that you can monitor the success of your communities or facilities.
Those skill sets are vitally important for any company, but certainly a company that is undergoing growth. When you’re growing, you want to make sure that you can keep the temperature of all of your different initiatives and understand what’s going on from a metric level as well as well as a human level.
That said, nothing replaces the human factor, especially as I’m learning especially in senior living when you have residents that count on you every day for both their love and their safety. When I was at Alliance [Physical Therapy Partners], we used a program that measured our net promoter score on every single clinical interaction with our physical therapy patients. MorningStar has a customer service program called Radiance, which takes it to the next level. I’ve been super impressed with the program. And we have a [vice president] dedicated to it that helps drive that throughout our communities. That program seeks to empower our teams. They treat our residents with kindness. They treat them with goodness. They treat them with love. Those are all characteristics that residents and their families really appreciate, and it makes them feel comfortable.
For example, to leave a loved one in a community and feel comfortable with the care and the attention that they’re going to get, it’s my job to make sure that, outside of systems, we make sure that foundation for MorningStar can also scale in each one of these new projects. Essentially, I’d say the goal is to make sure that when you walk into a MorningStar community, you can feel that warmth, you can feel that radiance without looking at the sign on the door. If I can get to that point where we can replicate that in all our communities, I’ll view that as a success.
Is Radiance a data system where you’re gathering information?
It’s a customer service program that Ken has developed over many years. Every day at 9 a.m., you will say the same Radiance value that every single one of our teammates will say. Those values and those concepts tie us all together and ensure that every day we refocus to concentrate on those residents and on those customer service levels.
It’s really made a huge impact on me. And I love going into communities and interacting with our teams.
And there is a leader dedicated to the program?
Yes. That’s one of the things that really impresses me about MorningStar. They don’t just talk the talk. They make sure that we walk the walk and have dedicated resources that other companies would not, to make sure that this is important and replicable.
How is the Radiance program consistently strengthened or renewed?
We are looking at ways to expand this program. Right now, it exists in the form of a training program. What we’re looking at is using technology and different learning resources to make sure that we expand that offering, so that our teammates touch it earlier and earlier.
I’m [also] encouraging a refocus on some of the mission, vision and values.
For example, we say our top mission is to honor God in our business practices and relationships. What does that mean? How does that relate to a customer service program and having those discussions amongst teammates to make sure that they understand the intent and they carry it out, to give success to each one of our residents? Extending that program to make sure that it’s not only a rote answer that you say every day, but [staff] actually understand the concepts, allows them to implement it in their daily actions. I get a chance to see that constantly.
When I tour a community, I’m so impressed when I see. These leaders actually have personal interactions with each one of these residents. They actually know them by name, they know their families by name. It’s community in every sense, and not a “business.”
As MorningStar is scaling up and working with different capital and development partners, you’re answering to a lot of different parties, and they’re having a lot of data related questions that you need to produce quickly. Can you describe systems you have in place today, and if you have a vision for what needs to be in place in the future?
We’re using systems that are pretty common throughout the senior living industry. I don’t think there’s any special sauce.
Part of my background is to make sure that they interact and share information seamlessly, that we look at the process flow and remove bottlenecks. We look at the inputs and make sure that there’s no wasted motion.
For example, we’re just putting in a paperless employee file retention system. Why? Because I was sold on the concept that we have 2,000 employees [and] every time there’s a piece of paperwork, it takes [a set] amount of time to process. It goes into a file cabinet, and we estimated by using the software we could save our business office managers two hours per input per employee. Over 28 communities [throughout] the course of the year, that’s well in the six figures of savings. We love that those ideas are being brought to the table.
These are the kinds of things that we want to make sure we use technology properly for, so that even though the systems might be consistent, it’s focused on continuous improvement.
Is it fair to say that culture is a competitive differentiator, even in conversations with some of these businesses that we don’t necessarily think of as being mission-driven?
You’re right. I wasn’t part of the conversations that built those relationships. But I can comment on MorningStar absolutely views that as a differentiator. MorningStar is for profit, [but] we do not bias or filter any of our team members or any of our residents through, based on religion. That’s not the point. [Our] values are all things that every human wants. Those are all concepts that every resident would want, and every family would want. They all want to be treated with respect. They all want to be treated with integrity. They all want goodness, kindness, fairness. And most of all, they all want love.
If I can have our teams display these attributes in all their interactions, I believe it helps our length of stay. That helps our retention. It helps our marketing efforts. When you walk into a community, I want you to feel it, so that you say, “I would love to live here.” I do think that helps. That’s hard to quantify onto a P&L [ledger]. I can’t trend that, graph it and do some of my statistical analysis that I’d love to do. But you can definitely see that through the occupancy and see that through the move-in metrics.
Where do you see the future of health care in senior living? Do you see opportunities for MorningStar to increase its clinical capabilities in-house and partnerships with other health-care systems or payers.
I’ve always viewed the health care industry as a hospitality industry. That is not always apparent, though, when you go to your doctor’s office. When you go there you think, “This doctor is competent and can get me well. Unfortunately, in many situations, you also go there expecting some poor customer service. We’ve all had long waits over our appointment times. We’ve all had surly or grouchy people behind one of those little glass windows that they slide back and forth. I’ve never accepted that.
When I was meeting leaders for some of those organizations, we always made sure that we had a patient-first mentality. At Laser Spine, we had several of the protocols from the [Planetree International] program that we put in place throughout our waiting rooms to make sure that we tracked metrics like waiting times. We actually worked to actively decrease that. Those are hospitality-type concepts being applied in a medical setting.
When I came to MorningStar, I actually viewed it as a hospitality company that also has a strong clinical component to it. Those two always blended seamlessly for me. I always view those through the same lens. Doctors can be great customer service advocates, as can each one of the executive directors at our communities. Now, Covid-19 certainly elevated that. MorningStar has its own wellness team populated with nurses that serves regionally. But this took it to a different level.
For the past year, we’ve been talking about things like infection control protocols, things that I learned in ambulatory surgical centers walking the sterile corridors. We’ve talked about safety protocols, disinfecting protocols, sheltering protocols. How do you implement a quarantine and make sure you take care of not just the physical, clinical needs, but also applying Radiance to make sure that you also took care of their wellness needs from a mental or spiritual state. You don’t want them to fall into depression, as well.
MorningStar responded expertly, they had already built algorithms and protocols that protected our patients, but also focused on some creative out of the box ideas to extend the activity levels. When someone is quarantined to their room, for example, it was not easy. We fought the good fight, just like everybody else that’s in this industry.
There are many stories of heroism. I’ve heard of many executive directors who packed a bag, brought their teams to that community for weeks, forgetting about their private life, to show passion and this sense of caring and living our values in service to these residents. They stayed there for the entire quarantine [period]. These are stories that everyone in senior living can relate to. But it really blows me away to think how committed these EDs and their teams are that they’re able to do that.
Covid-19 also taught us vigilance. We are now better prepared than we ever were before. We have developed algorithms and protocols, through the fire of experience. And we are much better prepared for any future event that would happen. I just pray we don’t ever have to use it. It’s also important to understand that there is no going back for senior living. You’ve developed these [procedures] and you worked through Covid-19, which I’m hoping is nearing its end. But you can’t suddenly turn this off, we need to make sure that we continue with this vigilance and this expertise, mostly so that future residents feel that sense of calm and confidence that not only they’re going to get a vigorous, active lifestyle where they’re loved. They’re also safe.
How are vaccinations going at MorningStar communities, for residents and staff, and have you made or are thinking of making vaccination a requirement of employment?
The vaccination effort has been impressive. We do understand a couple different facts.
One, [vaccines were] issued under an emergency use authorization protocol. Second, our teammates and residents see a very short time frame in which they can evaluate the efficacy and the safety of the vaccine.
Therefore, MorningStar has not made it mandated, and will not make it mandated in our current stance. There may be future iterations where additional testing is done and that changes. But that’s where we are now.
What we did see is that we did an initial survey before the vaccines came out on the team’s response to a potential vaccine. We were shocked to see how much fear there was, it was an extremely low response to say, “I am going to take the vaccine” before the vaccines [were distributed]. So we initiated a campaign that involved residents and teams together. It was an educational program that attempted to give them medical information and dispel myths, which I think we’ve all seen some of these floating around on the internet. That program was a huge success. We saw the response rate on people taking the vaccine, far, far exceed the initial fear and trepidation. We were very proud of that campaign and the response.
Right now, we are slightly above some of our peers’ levels that they’ve communicated for their team response, and [we are] very consistent with their resident response rates. I think that campaign actually hit the right note with everyone to make sure that they got the information they needed to be able to make that decision.
We’ve been reporting around 50% vaccination rates for staff. Is that is that what you’re seeing?
We’re a little bit higher than than that … I can remove the word “slightly” from that, if you’re quoting 50% … What’s encouraging to me about that is, it was a low 30s number when we took that initial survey, and that was concerning. So this campaign achieved quite a great deal of success. Not quite double, but substantially higher than the initial feedback.
When do you think MorningStar and/or the industry is going to get back to kind of pre-pandemic occupancy levels?
This has been a very turbulent, unpredictable year. There have been numerous challenges. The vaccine has been a tremendous confidence booster, I believe, in the psyche of future residents.
We are starting to see signs of highly increased activity. For example, our number of new leads just in the last 45 days have gone back to pre-pandemic levels. Those need to be converted, of course, and there still is trepidation before you sign your name. But that is a healthy indicator that the interest is there, and that senior living will recover.
The consumer needs to understand that they can be safe and be able to see their loved ones. The states opening some of their restrictions, I think, will be one of the things that leads to that occupancy change. We’re in 11 different states right now. Each one has their own protocols. Each one has their own restrictions. We’ve become advocates on behalf of our residents and their families. We’ve had some families that were highly upset that they couldn’t visit their loved ones, based on state restrictions. Believe me, the minute they change those, we’re on board with opening up and doing the extra things like dining that sometimes you couldn’t do.
The timing is unknown, because it’s based on the states and their regulations, which we follow vigorously. We’re very excited about the future, but it is certainly fuzzy — the when is a little unknown. But whenever that is, I do think senior living has a fantastic future, and the future is bright.
Is the improvement in lead generation across the board, or is it relegated to more need-based care such as assisted living and memory care?
I’ve been looking at it at a community level, not at [an acuity level]. In areas where those restrictions are starting to lift, you’re getting increased lead levels. That makes sense to me. You have adult children who probably were working out of their homes and were able to help take care of a loved one. Now, maybe they are starting to approach the point where they’re going back to an office setting, or maybe at least partially to an office setting. Suddenly, they cannot provide that same level of care that they were when the pandemic was at its height.
I think those leads and the need for senior living is corresponding to what’s happening across the nation. We’re still in the thick of it, but I’m hopeful that we can see the light at the end of the tunnel.
How worried are you about staffing versus occupancy? How is MorningStar approaching recruitment and retention?
MorningStar believes the team is our most valuable asset. I’ve talked about systems and processes, but also about the heart and the people that are on the ground. That’s our team, and we really want to take care of them.
What we’ve done is we’ve constantly reviewed wage information, and we constantly seek to improve our benefit offerings to make sure that they are above any level so that we can compete. We can start building some programs that [provide] career paths for these individuals and give them hope of not just today’s paycheck, but the future paycheck.
We just launched, within the last month, MorningStar University. The goal is to make sure that starts to build those paths. One of the first programs we’re rolling out is an executive chef and training program; it actually begins April 6. We’re going to take a number of our people in culinary services that aspire to be executive chefs, and give them leadership training to someday achieve those goals. My hope is that as we learn from this lesson. We’ll roll out additional protocols that allow people to come to MorningStar to build a career, not just to get a paycheck. That is the goal.
I know when I went through these interviews with some of these candidates for this program, I was blown away. These are some very intelligent, very motivated people that also could cook. It’s very exciting to see that we might be a part of their future.
Hopefully, that will be not only an attractor for talent, but also help them stay with MorningStar and help them say, “Hey, I can grow in this way. How else can I grow here?” Those are some of the concepts that we’re starting to bring to the table and work with our teams on, so that they know that the third point of our mission statement is to invest generously in our team’s ability to serve well. For me, that doesn’t always mean money. That also means training.
Are these people, say, waiters in your dining rooms or line cooks, and they want to move up the career ladder?
The majority of the applicants were line cooks. But there are some people that were in some of the serving components or other components of the culinary system that applied and they got in. They had to interview, they had to get letters of recommendation, they had to do some work to get to this program. And we intend to make it special for them. At the end of the day, they’re investing in their futures, and we want to be right there with them to invest with them.
What happens when they’re accepted into the program?
We have several [vice presidents] that have volunteered their expertise. For example, our vice president of culinary is going to be teaching components that are directly related to a kitchen for what we call our memory care component, Reflections. How do you properly prepare food for Reflections’ residents, to make sure that they can access it easily.
We’re also bringing in HR, we’re bringing in finance, all these different components and skill sets to make sure that you are not just a good cook, you are a leader, and not just the leader in the kitchen, your leader in the community by getting these skill sets and interaction.
The VP of HR is going to teach some components on how to properly monitor resumes, screen applicants and interview to make sure you say the right things. We want to make sure that they get those skill sets. I’m pretty excited about it. I told them I want to be invited to every training session, because I’m going to lurk in the background and try not to talk. I really just enjoyed interviewing all these young people, they were fantastic.
And is this at no cost to the employee?
Is there anything involving technology that you’re especially excited about: the potential for new investments or initiatives, that MorningStar already has planned or are in the works for bringing in new products?
MorningStar has already invested in some of these programs before I got here. My focus now is on optimization, making sure that [platforms] communicate efficiently and removing waste from process flows. That doesn’t sound terribly exciting. But if I can take two hours off of a business office manager for every applicant, that’s a huge differentiator for not only the efficiency of the community, but also for that business office manager’s sanity.
Covid-19 did push us to adopt a few telecommunication tools quicker than we were anticipating. Obviously, I didn’t have Zoom this time last year. But it is a function of where we are. We’ve also made sure that our video tour capabilities are top notch. We’ve implemented programs to make sure that resident agreements are now paperless, so that a resident can easily get comfortable about joining a community without walking through it, because they’ve already seen it, they’ve already felt it and they can do all of their diligence and research from their home.
A lot of those front-facing programs were ones that were being debated, that quickly went from debate to implement. We are always on the eye for new technologies and see if they can fit into our suite and fit into our mission statement. But we also want to make sure that what we already have purchased is implemented to maximize its efficiency and its influence on our residents.
Are there any other operational initiatives in the works, such as sales and marketing, resident programming and infection control?
I’ll mention one that we’re rolling out we developed with one of our longtime partners, Confluent, with the announcement of our Observatory Park community that’s in the works. That’s our “Whole Health Standard.”
What we’re doing is, during the design phase, we are actually going through and looking at the highest quality holistic concepts that we can build into physical structures, and then our teams, using Radiance, can actually implement those to more effectiveness. We view wellness as a holistic strength. We want to make sure that that is a dynamic process of change where a resident can really take their health in their own hands, with guidance from some of our wellness directors and our life enrichment coordinators.
What that implies is exploring technologies such as UVC light fields that can destroy microbes. We already have implemented kiosk sign in systems that take your temperature and won’t allow you access if you don’t meet the protocols. We have needlepoint bipolar ionization machines. It actually goes right in the HVAC to help eliminate microbes in the air flow systems. We need to do that well, before construction begins. Sanitation stations positioned around the community that I’m used to, coming from a health care setting. Touchless faucets.
[With] touchless faucets, you have to upgrade some buildings that don’t have those components to make sure that those are implemented. There are anti-microbial surfaces for countertops, and anti-microbial paints. I know those were used in some of our operating rooms in some of my past lives. You evaluate if it fits into this setting.
Finally, one thing that we implemented earlier was an electrostatic sprayer. It disperses a fine mist of positively charged particles on 3D objects from every angle. It eliminates 99.9% of the bacteria. Not all may be implemented, but all are being explored to see if it fits into the continuum of what we’re offering, and to make sure that we make our residents as safe and comfortable in their communities as we can.
What about the Whole Health Standard as a marketing strategy? How is that being communicated clearly to prospective residents?
I’m not the right person to talk to about that. But basically, as we develop these and come to conclusions, that will be part of the marketing campaign. Showing that we have the right abilities, capabilities and thought processes in how we can address not just Covid-19, but anything else that arises in the future, will continue to give comfort to our residents and our future residents.
Is MorningStar thinking of working more closely with health systems as this Whole Health Standard concept evolves?
That may be possible and maybe it’s a strategy we’ll adopt. Currently, what we have are great partnerships with several physician groups in local areas, and also with our pharmacy providers.
What are you seeing for MorningStar for the year ahead, in terms of the financial outlook: Do you think NOI will rebound before occupancy? Do you see expenses and margins to be impacted for the foreseeable future?
Those are all very much tied together. [Regarding] occupancy, [it depends on] states opening. I do believe that it is going to come back. It’s the when that I am unsure about. But we are very bullish on the future.
There is nothing in our indicators to say that we did not weathered the storm without challenges, but we weathered the storm with some success. I think the future is extremely bright. Once occupancy continues to accelerate — and we’re seeing the initial signs of it that — this industry is going to be fantastic. But there are some challenges still.
We are anxious to see Covid-19 go away, not only for business reasons, but also personal. I miss going to live sporting events, for example. That is something we’re all hopeful for. And I think that will positively impact not only the MorningStar financials and that of our investors, but the entire industry.
How are MorningStar’s expenses, particularly staffing and PPE? What are you seeing in terms of trends? Are those expenses decreasing?
With PPE, there was a mad rush where nobody had the proper stores or inventory, and everybody went out at the same time that some of the industries that supplied those types of things were shutting down or quarantining. It created a tremendous non-recurring expense spike in the industry. Now, we have proper inventories of PPE. We have proper supply chains to get more as needed. It’s still an expense, but it went from this rush expense to a more normalized expense that we can include in the P&L and start to trend and manage correctly. This was before I started, but I believe it was March and April where that expense spike was significant, and it was needed. We’re hoping that’s a non-recurring event from a financial perspective.
We’re seeing a lot of potential disruption on the horizon from Amazon, Google and players that aren’t traditionally in senior living. Are there areas where, with fresh eyes, you see room for innovation, or new ways of doing things?
I’ve started to question some of the ways that we report data, and how we can use that data. I’m trying to get it to be more real-time. The reason is so that you can act on it. I love the concept of getting feedback from every resident at every meal: could I improve the service and the quality level and make sure that they get food that they like. If you do that once a year, you can do the same thing. But you’re going to be nine months late. And what if that costs you a move-out?
The goal is to make sure that you have that data so that your satisfaction scores are strong enough that you not only attract new residents, but you start to decrease move-outs, as well. Tracking those data points [is] the start of the discussion. That’s the start of a program or a process that other people haven’t thought about. The data may just lead you to a conclusion, or to a question. Maybe the question is answered with, “We’ve got that solved.”
The exploratory process is good for everybody in the room. I love when we get our team together: You’re all in a room sharing thoughts, and the CFO is adding to operational discussions, and it’s a vibrant discussion. You get better answers.