Fee Stubblefield is the Founder and CEO of The Springs Living. In his capacity as CEO, Stubblefield has been a catalyst for change by building new innovations into the company’s designs and operations while applying lessons learned during the pandemic.
Through the Changemakers series, Stubblefield discusses the steps he has taken to lead The Springs Living through a period of change as Covid-19 acts as an accelerant for trends that were already underway before the pandemic. He also explains why he believes taking a trial-and-error approach to innovation is critical for innovation at The Springs Living, and how leading change is like whittling, with many small changes leading to a more honed organization.
Describe one or two of the changes that you’re most proud to have led at The Springs Living or in the senior living industry?
Fee Stubblefield: Many of the changes we’ve initiated often originate out of listening to our customers, our residents and their families, our employees, and our investors.
The greatest change we’ve embraced at The Springs Living is an even greater focus on staff. We are focusing on the attraction and engagement of our employees, who lead the way every day. It’s a 24/7, 365 effort here, and without those people in the communities, we would have nothing. That’s where quality is made, and we have changed everything we do to support that interaction.
Do you agree that change-makers are risk-takers, and secondly, how do you describe your own personal tolerance for risk?
I would say that we’re probably categorized as both innovators and risk-takers, but I don’t see it that way. I don’t see it as risky. This is what we’ve learned. This is what we believe the market wants and we have hedged it in ways that we think makes sense — that eliminates risk. It’s been really fascinating to see how different people look at the mountain from a different side. When you go on a hike, you look up the hill and you think, okay, I’ll remember that spot when I get there, and then when you get up there, it looks completely different. Our view of the mountain is that we are mitigating risk every step of the way. Do we invest in R&D and experimentation based on what the market wants? Yes. Could some people call that risky? Sure. We don’t. Every day we hire a new employee — the kid that’s getting their first job. Every day we bring in a new resident that is going through this phase of life. That’s a different generation and we have to evolve.
It’s riskier to avoid change. I’ve seen too many instances where people drive right through the curve. You have to keep your eyes on the road, or your customer and your employees. No road is straight forever.
How does technology fit into your efforts as a change maker?
We’ve always invested in technology and tried new things. We want a percentage of our budget to go into new ideas and concepts that can help. I remember when we opened The Springs at Missoula, Montana in 2004, because it was a very innovative memory care environment. They had a great indoor open space to work with, so we invested in the physical space.
One of our early innovations was programmable lighting that can mimic the circadian rhythms of natural light outside.
We wanted to do it because, conceptually, the idea works. Our innovations are data-driven so we can prove the ROI in an attempt to evolve the environments that help people live better.
That being said, we’ve learned new things every time and we don’t regret any of the innovations that didn’t pan out. We look at it like spending R&D money. In fact, if you’re not making mistakes in your operational platform innovations and in your physical environment platforms, I don’t think that you will keep up with what the customer wants.
Technology is here to stay. We need it to help us keep costs down and deliver higher quality care with measurable results. I think the investments we’ve made in different environmental controls and the time we’ve put into working with groups like FitWel enabled us to come up with the right standards for a healthy building.
We’re helping produce protocols and working with groups like Winterlight, who has created predictive analytics that will allow somebody’s brief interaction with an iPad to indicate stages of and progression of Alzheimer’s disease. If we didn’t continue to do things like that, I fear that we wouldn’t attract the right leadership.
We want people who want to innovate, change things, and come up with new ideas. Technology is part of that, especially with the younger generation coming into the workforce.
As you look across the rest of the senior living industry, do you think that it’s changing fast enough to keep up with the times?
While we might not see some things, or we might look at environments that have been here for 20 or 30 years.
The Springs Living is part of a great group of peers across the country who are doing some incredible things. They care very much about what they’re doing, but they also are investing into the qualitative and the quantitatives, the A&R, and the effect and the resolve that take place. While it might appear to some folks that we’re not changing fast enough, we’re still changing.
In what ways do you think the industry needs to change to prepare for the future?
Covid has accelerated the understanding that healthcare and housing will continue to merge.
The supportive services will happen in the environments that we create. To do that, capital providers need to continue making proper considerations and allocations for operational systems and platforms while investing in the workforce..
We know that’s the key, not building buildings. We all know this, but I think we’re addicted to the capital markets and the real estate base that has driven financing in senior housing. What have you actually done to look at your underwriting differently or to invest in those operational platforms? I think that’s the number one change.
For many years, operators have been willing to go out there and collect a small management fee for a whole lot of work. We’ve tied what those resources are — 4%, 5%, 6%, to, in some cases, 7% — to a model of multifamily real estate underwriting. The reality is that as an operating business, we’re closer in class to a hotel, if not beyond a hotel, where branding and management fees run 12-13% or higher.
That’s the number one area where we can reallocate some things, and I know that’s a really hard question. On a real estate balance sheet, that’s moving some dollars around, but I think you can get both, and I think you can avoid eroding values while funding operations correctly. I know the market will pay for better operations.
There’s a way to do this where the real estate owners don’t erode their value by seeing the management fees go from 5% to 13%, because they are able to garner a higher dollar from the customer to make up that difference. I think there’s a way to blend it in and to make it work, and we’re going to have more focus on risk adjusted capital. It’s not just about spending your money, it’s about effectively using your dollar.
If you use your dollar better, you’re going to get better results, you’re going to get more consistent results and you’re going to get more stable occupancy. You will lease-up quicker, and operators who do that should be paid on a risk-adjusted basis for the quality of the returns. That will mimic the quality of the operations, whether it’s a high-end product, a middle market or an affordable product — it doesn’t matter. Quality still exists in every one of those tranches of brand experience and affordability for the customer.
Covid-19 is just an accelerant to what we knew was coming, and that’s the silver lining in this whole deal. It’s been a tough year, but it brought things front and center, and it’s going to result in some very good quality enhancements for our industry.
Can you talk about a time you tried to make a change, and it didn’t go well, and also, what did you learn from that?
A good percentage of the changes we try to make are a struggle, and we never quite end up with what we initially planned. That’s probably most evident in the first community we built and developed in 1996, which opened in 1998. We were trying to build a community for my grandmother, who I knew would not do well in a big institutional building or nursing home.
We wanted to create an environment that was very homelike, but that could also deliver the quality of services we expected. She and both of my grandmothers actually did the groundbreaking when we broke ground, and they both were there at the ribbon-cutting as well. I remember walking them into one of the communities we called a “neighborhood,” with 12 unit buildings that look like very large homes. There are current concepts out there right now called greenhouses. There’s some real benefit to having these small environments.
We did that concept in the mid-’90s, and my grandmother, she walked in to cut the ribbon and saw it was a nice, big home. At the time, she was 90, and she walked in and said, “Wow, this feels just like home, won’t this be nice for all those old people?” That statement right there taught me a lot.
The mistake we made is that we completely forgot about our staff. We built so many inefficiencies into the community because we just didn’t do it right. We still own that community and it’s a wonderful place, but it takes a lot more resources to keep that operating. We originally saw it as a very affordable way to deliver care and, in fact, it’s been exactly the opposite because of the intense staffing requirements logistics.
As an innovator and leader, how do you think about timing, so that you innovate without getting so far ahead of the market that a new idea doesn’t work?
I go back to the small-house example: I met a guy who suggested that I lease my rental home to an adult foster care provider. I rented this house out to a provider and I thought, “I don’t want to operate it, I don’t want to do this.” While it was a great idea and she was a very lovely lady, she also had a teenager that caused problems in this home. Then I started getting calls from the county with complaint letters. I realized, holy cow, this is a lot of work. There are a lot of great adult foster care homes out there with families that do a phenomenal job. I’m not saying everybody, but it didn’t work for what I thought could be repeatable with consistent quality. It was going to be the exception and not the rule to get high quality.
We innovated by taking that concept of a home-like environment, but putting it into a larger operation. The first community we opened was in Salem, Oregon, which was made up of five of those homes. Instead of having all five rooms in a single-family house, they were divided into 12-unit, single-story apartment buildings that looked like houses.
We thought that was the greatest innovation ever. We also created a common building where we could hire a great chef and eliminate the need for kitchens. Then, we figured out the logistics of delivering, hot-carting out to the houses as well. We thought it was brilliant, but when we finished, we realized we forgot about the staff. Innovating doesn’t have to apply to physical environments, it can apply to planning communities in general. This process of trial-and-error has enabled us to grow.
We’re going through that right now in the new community we just announced in Vancouver, Washington, which is a 12-story tower right on the Columbia River. It is going to be a world-class community. One of the reasons we’re doing it is because this is an opportunity to build on what we learned from our highly successful community in Lake Oswego, Oregon. It is an ongoing process refined with each community we add.
We try to be forward-thinking and take calculated risks, and every time we do it, it’s an imperfect vision. It is a process of whittling.