The Springs Living experienced about a 10% occupancy and 12% net operating income decline during Covid-19, but has recovered about a third of that lost census, with inquiries up 70% and move-ins up 20%.
With this as the backdrop, the McMinville, Oregon-based provider is reentering growth mode. The Springs recently broke ground on a 210-unit community near Portland, Oregon, and is planning a 12-story tower near Vancouver, Washington. The company also introduced a concierge health care offering, is mulling a restart of its in-home care company, and considering ways to get involved in Medicare Advantage.
These new communities will incorporate innovations in design and operations, applying lessons learned during the pandemic, The Springs Living Founder and CEO Fee Stubblefield said during a recent appearance on SHN+ TALKS.
We are pleased to share the recording and this transcript of the SHN+ TALKS conversation with SHN+ members. Read on to learn about:
— The concept of a “quality growth curve” to guide operators and capital providers toward smarter expansion
— The innovations needed in a post-pandemic world, for a new generation of consumers
— Stubblefield’s outlook on the timeline for occupancy to rebound
— How more predictable real estate returns will support more sustainable operations
The Springs Living opened its first community in 1998, and today owns and operates 18 senior communities in Oregon and Montana, offering independent living, assisted living, and memory care services.
The following has been edited for clarity.
[00:01:42] Tim: When do you think that senior housing occupancy will return to pre-pandemic levels?
[00:01:59] Fee: Wow. Okay … The trends are really good, Tim. I guess as a general concept, the way that we look at it is, it seems to take about as long to get out of trouble as it does to get into it. If I were just using a broad kind of 30,000 foot [view], I’d say this started March of 2020, it’s likely it could take the industry or profession until March, the end of first quarter of 2022, to get out of this. I think a year of the pandemic, and then a year of potential recovery.
We had all of our residents vaccinated in March. It was one year from when we shut things down to when we got everybody vaccinated, and our vaccination rates, it’s really changing the game. Right now we’re at 94% of all of our residents are vaccinated, and we’re right at 70% of our employees, and we’ve seen that creep up. We’re working to get to 85%. That’s a game-changer. We’ve seen, since our vaccine clinics, we’ve really seen our inquiries are up by 70%. Our deposits are up by 50%. Our move-ins are up by 20%.
[00:03:27] Tim: Wow. Great.
[00:03:32] Fee: To answer your question specifically, I think we saw our occupancy decline roughly 10%, I’d say in stabilized communities.
This is really interesting. We saw our occupancy decline by 10%. So far, through today, we’ve managed to get back about a third of that. We’ve got active deposits for scheduled move-in days for about another third. That’s pretty encouraging. If I just look at a normal absorption rate, your net absorption rate, it could take us, on the optimistic side, we could be there in five to six months. While a year from now is probably an outside number, within six months we could see our existing communities stabilize.
We had three new communities open and were just starting lease up when COVID hit. What’s really fascinating is those communities, if you take them as an aggregate, saw increase in occupancy of 30%. We saw a definite increase in customer preference for our brand new communities. I think the staff probably were new, were fresh, were ready to go. I think there’s a lot of factors, but that’s very, very encouraging to see that trend. In combination, our existing staff and our new staff, we’re seeing some real positive trends.
[00:05:03] Tim: Yes, those numbers are really encouraging, I think, and that’s interesting about the new communities. Are you seeing any patterns in terms of more needs-based levels of care coming back faster, or are the more lifestyle-driven ones coming back faster?
[00:05:19] Fee: Well, we’re a majority independent living, and then we have assisted living and memory care. There is support for our independent living residents. The independent has been a lot slower to come back.
For us, the needs-based aome up really quickly, except in some of our newer communities, for example, The Springs at Lake Oswego … All of our independent living apartments are full, and we’re still gaining occupancy in our assisted living, our memory care is full. Assisted living is gaining occupancy, but mainly it is just the struggle to find [workers] and staff from the care side of things. We don’t want to move people in, unless we can care for them … We’re going to be extremely disciplined, make sure that we get the qualified staff, trained staff in place.
[00:06:33] Tim: I just got a press release that hit my inbox maybe two weeks ago about a new project at The Springs at Happy Valley, which I think is near Portland. The press release teased that it is going to be an innovative community, and it’s a big one. It’s 210 units, I think. I’m wondering if you can just talk a little bit about that project, maybe what makes it innovative, and what’s it been like to move toward getting ground broken over the last year?
[00:07:22] Fee: Thanks for the questions. We were really excited to break ground on The Springs at Happy Valley. It was slightly delayed due to COVID, as we paused a year ago. We just put everything on hold to see what was happening.
That was a community that we were so far down the road on that we were ready to go, we were just waiting for financing. We were very fortunate to be able to get the support of the lenders, and closed our construction loan earlier this year and [just broke] ground.
I think we try to do everything innovative. I think we hope to have that place in the market where we’re full of leaders in this company [with] their goal to evolve and to make life better every single day. You make that better every day with little decisions and choices and increases in systems and in quality and training and leadership and all that stuff, but we really get a chance to impact it when we open a new community because we take all those ideas that we’ve had, ideas from families, from residents, from staff. It seems like no matter [what], we’ve been doing this for 25 years, and it seems no matter how innovative we think something is, once we get it done, we go, “Darn, why didn’t we do this differently?”
Therefore, we have to keep going. We’re very excited about The Springs at Happy Valley, and holy cow, how could you get a better name than The Springs at Happy Valley?
Innovation really comes in, and there are some physical improvements, some slight adjustments to our formula that we like to do.
Our design, it’s a combination of physical design for us, and it’s also a combination of operational architecture and system development and changes to create energy, and create places where people want to be. We basically want to cause people to want to not be in their homes, in their apartments, but we want them to come into the common areas and meeting places where people will be … There are areas in technology that I think behind the scenes will make things just a little bit better, and just create a better living environment for residents.
[00:10:33] Tim: You mentioned that you closed the construction loan, which is great. We heard that construction lending was really constrained. Can share anything about what it took to get that financing, and then we’re also hearing that lumber prices, obviously, are through the roof, other material prices are really high. As you’re going through the building process, are you concerned about that? What is it like to be actually in the ground with a project at this moment in time?
[00:11:05] Fee: We’re pretty fortunate because we had been working on this pre-pandemic; we had most of our contracts bought out.
We are seeing some increases, certainly in lumber and with line items that weren’t quite bought out yet, and we’re going to have to absorb those. We accounted for that, we anticipated, I think in February … We saw this lumber thing coming, and so we did our best to get things set.
Costs are definitely going up, Tim, but the other side of it is, look what people are getting for their homes, look what residents are getting from home [sales]. I think what’s going to happen is, you’re going to have to see increases, it’s going to lead to increases in rent. It’s just going to have to happen, but certainly in the Portland metropolitan area, and in other markets in Montana, in single-family homes, the residents are selling to make a change in their life, they’re getting significant increases in that. We think that while costs will be more, we think that the market will be there and ready to go.
[00:12:13] Tim: I’m curious about growth plans generally. I think in the past, you’ve grown both through acquisition and development. It’s a tough time with so much uncertainty in the market, but also, we’re hearing that maybe there are acquisition opportunities in some markets, if there’s distress, things like that.
How are you thinking about growth? Do you have a philosophical preference at this point, in the company, to do acquisition versus development?
[00:13:07] Fee: Yes, great question. I think growth happens. Growth … obviously is a matrix influenced by many things. It’s influenced by the environment, and just all those factors. Right now, a matter of fact, Tim, today, we’re getting ready to set up a press release this week, but we’ll just go ahead and do it right now. We’re going to be announcing our latest innovative project community. It’s going to be on the Vancouver waterfront, in Vancouver, Washington. It will be a 12-story tower of about 250 units.
What we understand is, while we’ve had COVID, while we had a lot of headwinds to what we’re doing, we also see the demographics, and there’s more folks getting older … As health care and housing continue to merge together, and health care becomes hidden behind the background, we created environments where people can live their lives, and they don’t want to be in their single-family home. They’re not in that stage of life.
We created environments where people want to be. They’re active, and they’re exciting, and are a great next chapter. We see that development [pays off], and we see no reason to slow down on that. On the other side of it, half of our growth, over the years, has been through acquisitions. We’re working on some of those right now, and we expect there to be more of those. We think that there are organizations out there that maybe have been around longer than us. We have a young team of professionals that are very dedicated and excited about the future.
If I was another 20 years older, we might be looking a little bit differently here, but I think there are going to be groups that want to see their employees and their residents merge with other organizations that have a history of putting everything into creating the quality outcomes for these residents, and these families, and these staff. That’s our goal. That’s the company that we want to be.
[00:15:46] Tim: On the acquisition front, I’m hearing mixed things because on the one hand, there does seem to be stories of, especially mom-and-pop operators, smaller companies that maybe they were going to retire already, or maybe not, but COVID is compelling them to look for an exit and sell, maybe at a good price. On the other hand, there’s a lot of money chasing deals, and that’s keeping prices pretty high.
There hasn’t been a ton of price deterioration, especially for quality product. Can you give us any sense [of what you’re seeing]?
[00:16:48] Fee: Our opinion and point of view is that we’re in a little bit of an adjustment period, as we recover from the impacts of COVID. We’ve got to balance the economics of the individual transaction with the reality going in the market. We’re not there yet. We’re not recovered on occupancy. We certainly don’t have a trailing 12- or 36-month NOI that is going to support probably the values that sellers are going to want to see and have. I think our point of view, and why we’re excited is, we’re willing to look past those last 12 months’ impacts and look at, on a more stabilized basis, on where it should be.
We’re in it for that long run. We can get there, we think, on valuations; we think that’s happening. I personally know of a couple of people that are thinking about making some changes, but they’re concerned about the operating results of the last 12 months, which — we’ve all seen a decline in our operating results over the last 12 months. I do think it’s just a matter for capital to really look at that long-term. You’re going to have to take a little bit of risk here, to see into the future.
Again, if you look at it very objectively, and you look at five years down the road, acquisitions today, even if they seem like they’re at a fairly low cap rate, are going to probably turn out to be pretty fortuitous.
[00:18:26] Tim: We talked to you earlier in the pandemic, and you were penciling out a worst-case scenario of NOI declines of $3,000 to $4,000 per unit in some communities. I don’t know if you have these numbers at your fingertips, but I’m curious, on the financial side, what those impacts have been, and if the financial recovery is going to keep pace with the occupancy recovery, or if it’s going to be lagging because of higher expenses, or if it’s going to come back faster, because you can drive rates. How are you thinking about the dollars and cents in terms of recovery?
[00:19:13] Fee: I think we are at the lower end of that range. We had an NOI decline of 12%, while occupancy declined by about 10%, and so our NOI declined about 12% in existing stabilized communities.
There’s two elements to that. One is the occupancy loss, but there’s then the COVID-related expenses. For COVID-related expenses, I’m trying to think, I think a year ago we talked about estimating that it’s going to cost about $500 a unit to fight COVID.
That’s when we thought it was going to be one outbreak, and we had no idea. Well, in the end, it’s cost us so far, in the last year, about $1500 a unit in COVID direct related expenses. Now, we’ve seen some reimbursement, specifically through some worker comp, reimbursements for PPE, and things like that. We’ve seen some CARES Act money. The net impact right now for us is about $500 a unit, is what our COVID expenses cost. That doesn’t even count the massive amount of income loss that we’ve experienced. That’s the key. I think that’s what our legislators need to know, is that we need help here. We need help getting to the next level.
Particularly, the key is, we need the resources to invest in our staff. There’s going to be no recovery if we don’t have staff. Everybody’s challenged by the staff right now. The staff that we have, they’re tired, Tim. They’re exhausted. The vaccine was like a breath of fresh air, and it was like finishing a race, the last little bit before you run through the finish line, but then there’s that adrenaline, you’re tired, you feel a sense of relief that you’re done. Then after that, there’s recovery time, and we’re going through that right now.
There are people that are leaving our profession. These people are heroes. These people have PTSD, and we need their support because most of us don’t qualify for the PPP [Paycheck Protection Program]. If we do qualify, or if we are able to check all the boxes on the applications, there’s nobody out there that doesn’t have some sense of, “I hope this works out. I hope this doesn’t come back to bite me.” There are people out there that we know that are getting PPP. They have to have it, and they’re stretching on that, but what we need is an explicit [relief allocation] for seniors housing care. We’re the frontline.
COVID primarily affected older adults. Independent living, assisted living, and memory care are the frontline to that. We protect those skilled nursing beds, and we protect those ICU beds. We’ve got nothing specific other than a token amount in the CARES Act. We’re going to need to see some support here. There’s trillions of dollars that are going out there in aid, but none of it is going specifically to the people that were on the front line, or little of it is going to us on the front line.
I know there’s some things in the works. I hope our Congresspeople and Senators and leadership will continue to recognize that. [AHCA CEO] Mark Parkinson has done a great job of, and other organizations, [ASHA President] David Schless, has done a great job of advocating for us. We’ve got to get some support here. That’s the key. It’s about our staff, our employees, and that’s the key to the recovery here, is our employees and making sure we have the support to take care of them correctly.
[00:22:57] Tim: I’ve asked a couple of other people on TALKS this question. I always preface it by saying, I’ve heard uniformly across the industry that everyone’s really grateful to David and James, and all of the associations for all the work they’ve done. I know there have been efforts in the past to merge or consolidate on the advocacy side. Coming out of this, do you have any sense that it would be beneficial to the industry to have fewer industry associations, maybe have a more singular voice in Washington?
[00:23:33] Fee: You’re trying to get me in trouble, aren’t you, Tim?
[00:23:35] Tim: That’s why I’m a reporter. That’s my job. [laughs]
[00:23:39] Fee: I don’t know the answer to that. I don’t know whether the answer is fewer. I certainly know that the answer is not duplicating resources. We have a finite amount of resources in our profession. Figuring out how to coordinate those voices strategically together and aligned is absolutely critical. I don’t know if that means that there’s one PAC or there’s more PACs. I don’t know that. I’m not the smartest person in the room on that. I do know that we must coordinate and use our resources well.
It doesn’t make any sense for us to not be coordinated with one voice. We’re after the same thing.
The facts are clear that we’ve been impacted. That our market, in our communities, that COVID hit the frailest of the frail the worst, right? Primarily memory care residents and frail assisted living residents. It’s been huge, it’s been traumatic, and our workers, our frontline workers in particular, need that support to go to them.
[00:24:45] Tim: I want to talk to you about something that I think you’ve been working on with NIC, on quality growth standards. Can you just explain what that means, and what you’ve been working on?
[00:24:58] Fee: This is a pre-COVID flashback. Ken’s done a great job to lead in the NIC operator board.
We took on a project centered around a concept called the quality growth curve. It was really, we were getting ready to start digging into that, and what that means. It was really around helping operators and capital have a common focus on what’s going to drive stability, and predictability, and risk-adjusted returns for seniors housing and care.
Partly, a little bit of my fascination is why is it that in general, a senior housing company — in general, not all, but in general — it’s a common conception that as a company gets bigger, their quality gets worse? Shouldn’t as we grow, we have more resources?
The concept of a quality growth curve basically says this: “To the extent that you’re not outgrowing your quality, the size of your organization really doesn’t matter.” It doesn’t matter if you have 100 buildings, 10 buildings, 1,000 buildings, to the extent that you don’t outgrow your quality.
If you look at the graph, and you see the growth curve, number of buildings, number of communities, number of residents, beds, and then you see a quality growth curve, to the extent that that growth curve doesn’t exceed your quality curve [you’re doing well]. Once you exceed your quality, then gravity is going to take over and you’re going to start seeing everything decline because you start to get yourself in a challenging situation real quick.
We want to put some definition around what [quality] means, because it means different things to different people. For me and for The Springs, quality is what happens every day, every minute in our communities. That direct interaction between our direct care staff and our residents and our families. How you measure that experience — ultimately, how every organization that measures that — is going to make a difference.
That was the concept behind the quality growth curve. We hope to get back to it soon. Hopefully, it’s something that simplifies this big question and this mystery around, how many communities is the right size?
I was with a capital provider that popped in the other day. They’ve got their formula, they say between X and Y is the right size. I guess my question is, is yes, probably the data shows that those are where you get your best risk-adjusted returns. However, why should that matter? If we have more resources, why does that really matter? That’s the concept, Tim, that we’re working on.
[00:28:23] Tim: There have been so many questions about, how big is too big? We’ve seen the public operators trimming their portfolios way back, which I think reopens that debate, to some extent. I’m curious about defining quality. You mentioned each operator is going to have their own ideas about what defines quality, but are there metrics that you think, on an industry-wide basis, should be adopted, or just at The Springs? Can you share an example of how you track quality? Would that be in resident surveys, or would that be in hospitalization rates? How do you quantify that?
[00:28:58] Fee: Well, ultimately, you can make it real simple. You can look at your occupancy levels, and you can look at your NOI growth. I think that’s what the NIC operator board wants to set out to do, is that this shouldn’t be about one organization’s definition of it.
It should be about best practices, and how we really take that into account, and how we work together as a profession and the industry, to come up with those. We have very specific ways that we do it, and we’re continuing to evolve our processes. I think the quality growth curve concept allows for individual companies to focus on those things that their customers need and that they’re looking for. It’s a concept that’s respectful of each organization’s culture and what they’re looking for.
Listen, we think that the road to recovery here starts with what’s going on right now in those communities, with those families, and those residents. The quicker we can get back the quality of those interactions, then you’re going to see, I mean, the inquires are already there. We’re up 70% in inquiries. That’s not the issue. We know the demographics are coming. That’s not the issue. The issue is, what is the customer experiencing in those buildings today, and is it meeting the needs of those families?
How you measure that, and the impact on growth on that, in my view, my personal view, is where it’s at. Then how do you make that something that is measurable, right? That’s what we hope to work on, because we think that innovation … We think that innovation comes from capital … We put a lot of money into our buildings, our development, and our acquisitions, and God knows our legal fees, to do all this. Capital that recognizes that investment into that staff, which then flows into the residents and those operating systems and platforms, that’s the capital that’s going to change, that’s going to give that next generation which is coming [a better product]. As we ease into the baby boomers, they’re going to be very demanding, and we’ve got to innovate and improve, or they’re just not going to move in. They’re going to have the resources not to move in, for the most part.
Of course, then we have the middle market and we have all, we have the different segments that we got to figure out, different options and support for.
[00:31:46] Tim: Fee, I love what you said about innovation coming in large part from capital, which I think isn’t something we often hear, but I think what you said makes sense. I’m wondering, I guess, if you can elaborate on that a little bit. Do you think that operations are capital-starved to some extent today? That too much of the dollars are flowing to real estate returns? Can you maybe explain what the situation is today, and what needs to change a little bit more?
[00:32:25] Fee: We’re going to need another two hours, but I can tell you that I think what capital needs is predictability, and it needs a quality risk-adjusted return.
The less predictable the results in communities, the less predictable a portfolio is, means that that capital is going to demand a higher return. That higher return is then going to put strains on the resources that are available in the community because, listen — the capital, the operators, the lawyers, we all work for those residents. The minute that they decide that they don’t want to keep moving in and paying for what we create, we’re in trouble.
I’d say this, to keep it short and simple: I think that if we can come up with ways of making those returns consistent, predictable, stable, we’re going to be able to attract capital that has a lower cost, and continue to invest in [operatios], but it’s a little bit of a chicken and egg thing because, in my opinion, we have to invest into those things.
We have to take the money, the resources, now to invest in those systems, into that quality and to those operations, so that we can get those risk-adjusted returns. That’s where the innovation is going to have to — it’s going to have to be folks that have that vision that we need to get to the same level of quality and professionalism that we’ve seen in every other industry. Whether it’s hotels or medical or other things.
This is our time. COVID has highlighted the importance of what we do, and all of those of us that get up every day, and come to work to take care of people. It’s highlighted the value and the importance of that. I think that’s what we’re most excited about, is investing into — we’re going to continue to invest and innovate on the physical plant and buildings, but the key to that, and the results of those, is what we invest into our operating platforms, systems, employees, technology. We’re going to need technology because we don’t have enough employees.
[00:34:50] Tim: We’re getting some questions from the audience. As long as we’re talking about capital, here’s one that’s related, wondering if you can comment on what you’re seeing in the capital stack. Are you seeing owners needing capital where they didn’t need it before?
[00:35:13] Fee: I’m hearing lots of things. There’s a lot of things out there. I think there’s a lot of pain out there right now, and it’s mixed. I think, for our organization, we’ve put everything we’ve got into fighting this, creating stability, working with our partners and our lenders. It’s been a great team effort, and we’re on the road to recovery.
I think that to the extent that capital can look around the corner and invest now into those operating platforms and systems, we’ll see a quicker return to stabilization. I think we’ll see the returns come back.
My guess is there is every kind of situation going on with buildings and markets and challenges out there. It’s just going to take us a year or so to work through this, and to get it back on track, but we can’t lose sight of what’s going to get us there. That’s quality. Quality in the operations. I know that there’s a lot of capital at the table, people who want to get engaged. I think that that capital, from what I’m hearing, is in a flight to quality. To groups that they have confidence are going to be able to operate, that have a track record, that are committed to that continual merging of housing and health care.
I think some of the innovations you asked about before is, work continuing in The Springs at Lake Oswego, which we opened last year, we partnered with a local concierge health care group called GreenField health. We have a clinic in that community. We’re going to add that clinic to our next communities.
Then the technology innovations, I think, are happening. I think one of the things that you’re going to see is those continued investments into technology. Having health care in our buildings during COVID was spectacular. It really helped.
We’ve been doing telehealth for a long time, but having the ability to have the staff in there, and to deal with residents’ needs, especially when people didn’t want to go out to hospitals, that was a game-changer for us.
[00:37:33] Tim: That’s really interesting, that you partnered with a concierge health care provider. I see that as a trend that more providers are going to be looking into. Is that group that you are working with, are their services reimbursed through Medicare Advantage, or is it private pay, that your residents just out-of-pocket for their services, or how does that work?
[00:37:56] Fee: Yes. There’s a lot going to happen, I think, in the next couple of years around that, around Part D plans, ISNPs, all of that, as we try to figure that out.
I think what we’re doing right now is we’re working inside the system that’s here. We’re really not involved into any of the reimbursement. That’s what they’re getting through Medicare and Medicaid, their reimbursement for their clinics. We’re providing them the space to do it, and the support, and the coordination with our staff and their staff is really important for the benefit of the residents. Not just the resident, but our employees too, inside the buildings, because a lot of our employees have two jobs. When are they going to go get time off to see health care [providers]? Having that ability to have more stable workforce is not just around the residents, but it’s about those employees, too. I think we’ve got to continue with the technology investment that’s going to help that. You know that we’re making investments.
COVID really saw us partner with other peers, operators, like-minded folks, and really make investments into things centered around communication, environment. Some of the things we did around testing, and surface testing, and now has morphed into really monitoring the environmental health of your community, the customers are looking to know that you’re doing things like that. Then that really leads also to really being able to collect data, and advancing our infrastructure so that we can measure what we’re doing.
Then we can do things like — one of the organizations that we were lucky to get to be a part of and invest in, is a group called Winter Lake, that has predictive analytics. They’re going to allow our staff to do assessments with residents on iPads for dementia-related issues.
I think we need those innovations, Tim, in the areas of communication, environment, data collection and analytics, and then really predictive analytics that helps us make good decisions and use our labor wisely.
[00:40:18] Tim: I just want to make sure I’m understanding, with this concierge health care at the Lake Oswego community, if I’m a resident, and I want to access the services of that on-site clinic — is there a clinic there?
[00:40:32] Fee: Yes.
[00:40:33] Tim: Can just make an appointment and go see them, and my Medicare Part A, or if I’m on a Medicare Advantage plan that they happen to accept, or some other reimbursement system, [payment for the service] just all flows through that? Then they’re talking to the staff, so the care is a little bit more coordinated. Am I understanding that correctly?
[00:40:56] Fee: Yes, exactly. Right now, it’s pretty simplistic. Our concierge and our staff help our resident, especially if they’re moving from out of the area. We’re seeing a significant portion of our occupancy come from out of the area, people moving closer to family. They don’t have a primary health provider. Or maybe some of our residents’ doctors, when they move in, are retiring. They’re not available anymore. So, they’re open to changing primary care providers. In this example, GreenField will take on that role. Our concierge and staff help schedule and coordinate and get all that there, which is a really big piece of it.
Now, they’re not getting there with their vehicle, or they’re not going and waiting and spending a whole day going to the doctor’s office. They’re getting a lot of those simple things done right there.
Now, we are not yet — and I say yet, because we’re looking at some options right now — ourselves part of a Med Advantage plan itself. We see that definitely coming. We think that our staff can impact those outcomes of the residents’ health — the independent resident, assisted living, and memory care residents’ health. Then we think that we should be and will be compensated for that. That’ll just drive an increase in professionalism and quality in our communities.
[00:42:22] Tim: Great. I don’t know if you have a chief technology officer or chief information officer, but this question is, “Since senior living has historically not focused on innovation, or had a C-suite technology expert, how are you choosing new technology solutions?”
[00:42:41] Fee: Great question.
I think that certainly is in our roadmap for our leadership development. We have an IT department, like many organizations, but a CTO is a completely different scenario. That is actually in our playbook right now, discussions around that. We think that that’s going to be absolutely critical. It’s not just getting your laptops to work. This is about, how do you get all those systems integrated, [to] give us information that we can make decisions on a daily basis. If we don’t know, we can’t make decisions. Then we’re basically back to dead reckoning of running our operations, which is important.
With information, we can deliver better quality product at a lower cost to our customers. That’s going to be a key to the future.
Definitely, I think any company that wants to basically not outgrow their quality in the future, is going to need significant investment into a CTO. I think some of the really great organizations out there — larger organizations, certainly, than us — have done that, and they’re way ahead of it. Someday we hope to follow in their footpaths. We’re working on things like that right now.
[00:44:01] Tim: You mentioned that you’re majority independent living. Are you seeing a trending need at all to move toward higher acuity populations as you’re penciling out future developments?
[00:44:13] Fee: No. We like our mix. We like our formula. We are creating environments where people come to live, and we want them to not just move in, but we want them to thrive and enjoy another chapter.
We think that there will be ancillary services that we’ll [utilize to] continue to deliver that support. Certainly, we have the moves to assisted living and memory care available for our residents, which is important to them because they want to know that they’re not just moving from one house to another house, that they’re moving to somewhere that has that infrastructure of support behind it.
Certainly, if it’s a couple, they’ve got resources there that can help them live well. It’s really simply, we do the chores for people, right, Tim? We want them to be able to focus their time on relationships and quality things in life. We see that we’re going to continue to follow that path.
[00:45:20] Tim: It’s in your plan maybe to hire a CTO or a C-suite tech executive, but you did bring on a CFO, I believe, last year during the pandemic. That seems like another marker of your growth, and I think I saw a comment from you that the CFO is focused on strategic infrastructure. I’m wondering if you can elaborate on what that “strategic infrastructure” means?
[00:45:59] Fee: Greg Smith, who is still with us on a part-time basis, was our CFO. Molly Vaughan coming in as our CFO was a planned transition that had nothing to do with COVID. Although it is interesting that Greg’s tenure at The Springs Living as CFO was spectacular, and we wouldn’t be here without him. In Molly, we brought in a CFO with a little different skill-set, and a different focus.
Greg really secured the blocking and tackling of the organization’s financial structure. Molly’s role as a CFO is to really be more of an FD&A, be out there driving the systems, and the data, and the information so that we can make good financial decisions. Very similar to what we’re doing in technology right now. We have a group that handles all of our IT needs, but that’s a backbone. We have to have that. We’ve got that, now our goal is to take that to the next level, and really evolve that, and now that we’ve got that backbone, how do we integrate those systems? Very much like we’ve done with our CFO.
[00:47:30] Tim: We have just a couple minutes left, so I want to ask some big picture questions. One is, imagine you have your peers, the 100 CEOs of the largest senior living companies, all in a room, and you can only ask everyone one question, what would that be?
[00:47:57] Fee: Besides the last four digits of their Social Security number? I think it would be, “What are the top couple of things you’re doing to drive quality in your communities? I want to know. I want to learn from you.” You’ve got some amazing, brilliant leaders out there, and please email me. They’re probably not watching this, they’re out doing great stuff, but I’d love to know what they’re doing to drive quality innovation. I think we need each other.
[00:48:31] Tim: If you could just tell them one thing, deliver a message to everyone, what would that be?
[00:48:36] Fee: I think it’s that we need each other. We need to stick together. We need to continue to work through our organizations like Argentum, NIC and AHCA, and our local state associations. They’re really, really important to be involved in.
I would say that we need each other, and that we need to have a united voice around regulation and legislation that is going to come after us. We need to be united around that, with a very well thought out strategic plan, and we also need each other in presenting that we need support too.
We’re getting impact from minimum wage increases, we’re getting impact from regulations, we’re getting impacts in regulations from maybe a few performers that caused some real deep concern, and maybe had some really tragic outcomes. We’re all going to pay for that, and so we need to be united together, and work together through our associations to tell our story, and to show that the vast, vast, vast majority of things that happen in all of our communities are great things.
We need to continue to have that understanding and support. I wouldn’t presume to want to tell anybody anything, certainly not that group, but that’s what I would say. We need to stick together.
[00:50:15] Tim: We have one more question from the audience, I’m seeing here. This is about innovation opportunities or social partnerships to meet the needs of the ageing or frail senior population, with the observation that the need of this population is exceeding the capacity to serve them, even with available occupancy in senior living communities, which not everyone can afford. We are seeing, I think, some interesting partnerships that senior living providers or forging. You mentioned the concierge health care, are there any other partnership opportunities you see out there that you can elaborate on?
[00:50:51] Fee: Yes. That’s a great question, and that really leads to the statement I just made, that we have to stick together.
This is about meeting a need. This is about a need. That need is families are going through challenges with aging of parents, of grandparents, of ourselves, that we need to provide support for. That doesn’t necessarily have to be in that bricks-and-mortar scenario. Bricks-and-mortar plays an innovative part, but also home care is a great asset for all.
Home health care must be integrated and will continue to help drive quality. Not just quality as people start off in their single-family home, which is the American dream, right, Tim? Just be in your single-family home until it becomes the American nightmare, and it overwhelms you when you can’t take care of it. In-home care provides people maybe a little bit more time in that single-family house, or it definitely helps them. The big thing that we see is that it’s really going to help transition, help people transition and find the support that you need.
Listen, I think to the extent that you can pay a really quality caregiver, somebody can hire in-home care, to the extent that you can afford $20,000, $30,000 a month. I think that’s a wonderful thing. I think that’s great, but I think the communities that we build, one, people want to be there because you can’t get the social interaction [at home]. There are partnerships that we can do, facilities that are already in place to help with that, too. I think there’s going to be a lot of innovation. I think that you can’t get stuck on just one way of doing things. We’re going to have to be open to how this is going to change.
One of the things that we’re waiting to see is how COVID really affected [the industry]. That’s why we think we need a year here to really see how things are going to settle in, and how the course of the river has changed a little bit.
Listen, we had a great big storm. It was a gully washer, with COVID. It’s changed the course of the river a little bit. Not completely. It’s not going now from north to south, it’s just changed a little bit. We just need to understand what that looks like, and what that is.
I think there’s a lot of opportunity and a lot of excitement and hope for the future, and a lot of great, smart, young people being drawn to our profession, that are really going to make the difference.
[00:53:25] Tim: Have you thought about starting a home care company at The Springs?
[00:53:29] Fee: We had one.
[00:53:30] Tim: You had one.
[00:53:31] Fee: We started it years ago. We put it on hold because we weren’t the best at it. We were in the middle of growth spurt, and we weren’t getting the quality outcomes. We actually have a licensed in-home care group. We will be either looking to merge with another in-home care group, or to restart that, because in-home care, especially [in] independent living, is becoming a bigger and bigger factor in both providers and our buildings.
Our residents in our buildings need and expect consistency in quality and professionalism throughout that, and so we will definitely be merging into, or reinvigorating our efforts and taking on our in-home care out there, and continue to look to work with other great providers out there. Listen, if we don’t need to do it, we don’t want to do it. As long as there’s a quality [provider and] people are being taken care of. We’re busy enough, but we anticipate, actually, starting that effort up again.
[00:54:39] Tim: Interesting. All right. I’m curious if there’s something keeping you up at night these days, from business perspective? If you’ve got to narrow it down, what would the biggest thing be?
[00:54:58] Fee: That’s a really great question.
Not to get philosophical necessarily, but maybe I will a little bit. We’ve just been through a tough year … I think one of the things that we’ve been trying to make an effort in is encouraging our staff. Actually, I try to encourage myself because I certainly need this. In the past generations that went through lots of challenges, World War I, World War II, the great influenza, all those challenges, we saw a real movement, and you saw a lot of literature, and things like that, around being positive, choosing to look on the glass as glass half full. I think there are so many things out there to keep us up at night right now, that we’re working on choosing every day to approach it with optimism, and excitement, and hope, and innovation, because it’s out there.
There are so many things that can depress you, drag you down, and just run screaming from a burning building. I think it’s a choice, and I think, in our profession, we need to make that choice to be positive, look at the future growth.
How about I answer it this way; the thing that’s helping me sleep at night is the absolute, stunning quality of people that are joining us, professionals, that I don’t know how long they’ll keep me here because there’s some really great talent coming into our profession. Not only are they intelligent, financially savvy, educated, but they’re compassionate. They’re the next generation that is going to make a difference. That’s what helps me sleep at night, Tim. How about that?
[00:57:14] Tim: Great. Thanks for turning that question around and bringing us back to a more positive place to end, so that’s great. That’s being glass half full. So, that’s great.