In the industry’s infancy, senior living providers catered to residents by offering them entertainment, and then later on, engagement. But Watermark Retirement Communities President David Barnes believes it will take more than that to reach the baby boomers.
“What we’re working on right now is one step beyond engagement,” Barnes said during a recent appearance on the Senior Housing News podcast Transform. “It is really about having flexibility in being able to craft your own day.”
To that end, Tucson, Arizona-based Watermark is catering to the next generation of older adults with its Elan and Elite collections of luxury-focused senior living communities, which give residents monthly flex-spend accounts of between $550 and $650. Residents can use that money on any service they want to, from dining to massages.
“That’s really what Elan and Elite stands for: less about being dictated and more about saying the world is your oyster,” Barnes said.
Watermark is also focused on being an “associate-centered” company to attract and retain workers during the ongoing labor crunch. And Barnes is optimistic that, as long as the company can hit its mark on these and other initiatives, the future will be bright.
Highlights of Barnes’ podcast interview are below, edited for length and clarity. Subscribe to Transform via Apple Podcasts and SoundCloud. The interview took place in mid-June.
On what Watermark is seeing in terms of recovery in its markets:
It’s been an extremely difficult 14 months-plus.
I’m really proud of the Watermark team and task force for what we accomplished during the pandemic, and we’re very excited as the rest of the United States and parts of the world start coming out of this pandemic and getting back to life and business as usual. So, it’s been a long year, but we’re very optimistic about the future.
This is our third consecutive month of increased census in all product lines — we have independent living, assisted living, memory care and skilled nursing combinations. We’re not setting the world on fire, but people are ready to start looking at options.
If you look at what’s going on in senior housing, we’re actually the safest place to be right now. We have highly vaccinated resident rates. My mother lives in one of our communities, and I can’t imagine what it would have been like had she not, even during the pandemic with all the negative press and stories out there. [It would have been hard] to coordinate all the services that would have been required in her home and not have any support and help.
So, we’re starting to see people come out and start looking again, and our traffic is picking up. We still think it’s probably a year-and-a-half recovery to get back, but all the signs are very positive.
I get a lot of feedback from our family members and our residents of how appreciative they were for the steps we went through to keep them safe and thriving. The other thing about it is, being at home by yourself and dealing with a pandemic is extraordinarily difficult. I think people are understanding just how important senior housing is to us as human beings.
On the hard lessons learned coming out of the pandemic:
We spent close to $3 million in PPE, and frustratingly had to import it, often from China. So, it was very challenging just to get through it. The positive side of this is that we are better equipped as a company and probably as a country to not be in the position that we were in on the ground. Hopefully, leadership in the United States won’t allow us to get into a position like that where you can’t get basic PPE in place when you need it. I think we were caught unprepared as a country.
We have a lot of robust systems that we put to the test for being able to put out a new policy … for 6,000-plus associates across the country. We made sure they had the right information and tested that they had read it so they could do their job as safely as possible. That was really a big thing for us, and a lot of our systems were tested beyond anything we thought about when we designed them.
And [we learned] a lot of really good best practices. So I’m very bullish on the future of our company because of the severe test that our leadership went through: the culture of our company, our systems, our training, all that.
On how Watermark has used technology during the pandemic:
We developed [our systems] in-house 20-plus years ago, and keep expanding that every year.
One thing that we are able to do is, we can push training out and know whether you took it and that you have some level of knowledge about the subject. That was really, really important, especially with our task force, [which] was taking information coming out of CDC and putting it into a policy or a procedure.
Masking was a perfect example. In the beginning, there were not enough masks to fully mask all of our associates, and we worked really hard and quickly to get that accomplished. But in the beginning, we had to do a whole policy and procedure around what we call conservation masking. You have to let the associates know, ‘Here’s what you do, here’s how you get your mask, here’s how you protect it, here’s how you get a new one when you need it, here’s how you try to make it last more than a day,’ all those kinds of things.
We have 65-plus communities in 20 states, so it’s difficult from a central location to be able to do that. But our platform and our systems give us that kind of visibility where we can actually do either a skill gap or a policy gap analysis. I can see [when someone] has not attested that policy, [meaning] there’s a really good chance he doesn’t know the procedure for conservation masking, or once we had enough PPE, that you no longer have to do conservation masking and that you’ll be issued a fresh mask every shift, and more if you need it. When that changed, all we did was update the procedure, we pushed it back out, we said it requires re-attestation.
That’s really important, because otherwise we would have to work through 65 leaders and hope that that message gets communicated and that they don’t interpret it one way or the other
We designed the system with this in mind, but we certainly didn’t design it with a pandemic in mind and how absolutely critical this kind of communication is. So we also invested in new technology.
We invested in a company called GoHealthID, and we have real-time data on vaccinations. We can log into this app and see exactly how it communicates with the labs — it’s pretty seamless. We’re really a data company that relies on strong data.
On getting capital partners and investors on board with technology spending:
We’ve always viewed ourselves in many ways as an investment platform, not a management company. So, when we partner up with an investor, we really are partners, and we have some great partners. We’re having these discussions right now. It is challenging that we had a large hit in occupancy. We’re starting to recover, and it’s going to take time to recover. But they’re very smart folks.
The demographics of this population hasn’t changed because of the pandemic. The baby boomers are here and are heading our direction. So they see the long-term of all this, and they understand the need to stay competitive and the need to have options and programming and services that differentiates you from other offerings. We were fortunate to have great partners, and those conversations are going well.
How Watermark is catering to the baby boomers:
We’ve been around for 30-plus years, and we’ve actually commissioned studies on this to look at what the drivers are for the different generations.
If you kind of look about when we got started 30-plus years ago, it was really about entertaining. You’d hear the expression that it’s like a cruise ship on land, and we would build these beautiful dining rooms where you could have three meals. You could come out and we’d [play] “Tie a Yellow Ribbon ‘Round the Old Oak Tree” and all that. It was really about entertaining and taking care of people.
Then, 10 or 12 years later, we realized it really should be about engagement. So, we started really focusing on that as a driver. How do you get people to engage? So maybe it would be less about watching a singer sing “Tie a Yellow Ribbon ‘Round the Old Oak Tree” and instead, you want to learn how to play guitar. So, we started Watermark University with this in mind. How do you share whatever skills and talents you have with others, and how do you learn new things?
What we’re working on right now is one step beyond engagement. It is really about having flexibility in being able to craft your own day.
So, if you look at the Elan and Elite collections, they’re, in most cases, purpose-built communities where we have three or four dining venues, and you’ll be given a flex spending account. So let’s say you get $600 to spend per month, the country club model. You get to choose how you want to spend your $600. So, if I want to go have a really nice meal and invite some friends, or I want to go get a massage, or I want to grab a bottle of wine, take that back and have some wine and cheese with some friends, you get to craft your own day and have that flexibility. That’s really what Elan and Elite stands for: less about being dictated and more about saying the world is your oyster, how do you want to craft your day and how would you like to spend your money? And let’s create the physical space that embraces that.
We have Elan and Elite, and we have what we call our classic brand. And to me there are some differences where we may not be able to have four dining venues. But even in our classic brand, we try to figure it out. We have, in some cases, taken a dining room and we carved it up into multiple dining venues, or we created an outdoor dining venue.
It doesn’t matter what price point you’re on, human beings are all the same, they all want choice, they all want flexibility. So we’re working hard, throughout all of our communities, to provide this feeling of flexibility and choice.
On staffing and hiring in 2021:
I was once told by a CEO, ‘We are a resident-centered company, how about you?’ David [Freshwater] and I were in his office talking to this gentleman. I said, ‘Well, if I guess if we had to pick … it’s going to be associate-centered.’
We have this fundamental belief that if you treat people well, they’ll take care of your residents, they will fill your buildings, and that will make your investors happy. I’m probably the least important person in our company. It’s the servers and the housekeepers that are there doing the work.
But absolutely, staffing is a challenge, and we’ve been working on it. We really focus on trying to create an environment where we can engage our associates, not just have them clock in, do their work and clock out. How can they connect to the mission? How can they teach a Watermark University course by becoming a faculty member and sharing their hobby or passion with a resident on the clock, and be paid for it? So that’s going to be even critical: how do you engage people? How do you make sure that they don’t want to go down the street for 25 cents more or 50 cents more?
The flip side of that is that there are clearly wage pressures here, but I don’t think it’s any big change for us. We’re a very data-driven company, we’ve always kept a close feel on what wage demands are, we always dealt with the minimum wage increases that are happening in multiple states — we’ve always been ahead of those. So, we’ll have to keep a close eye on wages, and it just kind of is what it is, and we’ll deal with it and work with it.
We have recruiting in-house. We just added another recruiter in preparation for this challenge. We think things will free up a little bit in the fourth quarter once the stimulus money stops and we can get America back to work. But no matter what, we’ll listen to our associates and understand what the market is telling us, and we will react.
When you don’t have engaged staff, and you don’t have people who really believe in your mission … it shows up in all sorts of ways. It shows up in overtime, because people don’t come to work, and now you’ve got to fill shifts. Now you are paying one-and-a-half times wages. It shows up in agency staffing, which is two or three times your cost and not necessarily great care. There are some wonderful people who work for agencies, but they’re not invested long-term. When you have unengaged, uninspired associates who don’t feel appreciated, you’re more susceptible to lawsuits.
So there are all these intangible or somewhat tangible things out there you have to factor into this equation. We have to balance what we can pay versus what the market can pay. And our residents have struggled this last year-and-a-half, so the pressure is coming from both sides. But you’ve got to do the right thing. We’re in this role long-term. Our investors are in this for the long-term.
What Barnes wishes the world understood about senior living:
I really believe in the human spirit, from residents, from family members, and from associates. There are such incredible stories that came out of this pandemic where people were selfless, where people really put their heart and soul into it.
What I would hope is that people coming into the space, whether you’re a developer or investor, whatever it is, that you understand what we’re dealing with. It’s in the heart and soul of our residents, it’s in the heart and soul of our associates. We’ll figure out margins, we’ll figure out returns, we’ll figure out all those kinds of things. But if you don’t start there, I think you’re going to miss what this is really all about, especially with the baby baby boomers heading our direction.
There is a lot of interest in this space. Maybe it got a little bit sour the last 14 months, but we all have short memories. And as we recover… I just would hope that people get into it for the right reason: because they want to do the right thing by our residents and by our associates and by our family members, and the rest will take care of itself.
On the outlook for the next year:
I think I’ve never been asked to have a crystal ball any more than in the last year and a half. At one point, I actually said, ‘We’re sourcing a lot of PPE, but I haven’t ordered the crystal ball yet.’
We’re seeing a slow recovery starting, which is extremely encouraging. From a morale perspective, we’re starting to talk about fun things. I think what you’ll see is slow recovery for the next six months, like we’ve seen the last three months. We’ll pick up the pace, I think we’re looking at about 18 months of recovery.
We are really focused on recruiting and retaining and attracting talent, and really leveraging what we’ve been known for for the last 30 years to create environments where people feel appreciated and connected. So, that’s what we’re putting all our attention in, associate engagement. We’re actually developing some interesting platforms to focus on that, and on how to retain the associates that we have and attract new ones. When we have this conversation a year or 14 months from now, I think we’ll just see a continued trend of improvement.
Overall, I’m extremely bullish, I’m extremely excited, and I really do remain inspired by the really talented leaders we have in our organization and by all the beautiful stories that have come out of this pandemic.
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