The senior living labor crisis will only be solved if providers take steps to create the “health care worker of the future.”
That’s according to Jim Coughlin, Co-Founder and CEO of The Northbridge Companies.
“We thought we were self-aware of what was important, but Covid really exposed it all — we thought we were doing it well, but we can definitely do it better,” Coughlin said, speaking about senior living workforce practices during a recent SHN+ TALKS.
Creating the health care worker of the future demands that providers expand the labor pool, and that providers create better support systems and career paths to retain and upskill team members, Coughlin believes.
Across its 26-property Northeastern portfolio, Northbridge is pursuing workforce-related initiatives to accomplish those goals, as well as innovations in several other areas, including:
— Saving money and earning ESG cred by power communities via solar, thanks to an energy business started by Coughlin and Northbridge Co-Founder Wendy Nowokunski
— Pushing forward with new middle-market senior living models through HallBridge, a partnership with real estate firm HallKeen
Meanwhile, Northbridge has achieved impressive census gains, with occupancy expected to reach an average of 90% within about three months.
Burlington, Massachusetts based Northbridge provides a wide scope of development, operational management, sales management, fund management, and advisory services for its own portfolio of communities, as well as third party clients.
Read on to learn more about these topics and others, as we are pleased to share this transcript of the SHN+ TALKS conversation with SHN+ members.
The following has been edited for clarity.
[00:00:07] Tim Mullaney: Good morning, everyone. Welcome to SHM plus talks. I’m Tim Mullaney, the Managing Editor of Senior Housing News, and I’m really excited to be chatting with Jim Coughlin today. All right. Before we get started, I just want to take a minute to explain the format of today’s talks for anyone who’s joining us for the first time. These are really meant to be honest, free-flowing conversations with some interesting leaders in the industry and a chance for everyone to ask questions. So, please, do submit any questions you have for Jim, or any comments that you have as we go along.
You don’t have to wait for a dedicated audience Q&A portion. I’ll keep an eye on the questions as they come in and I’ll try to work those in as we go along. You can submit questions just through the Q&A function, which you should see on your Zoom screen. All right, by way of a quick introduction, Jim is co-founder and CEO of Northbridge Companies. Today, the portfolio includes 26 communities across Maine, New Hampshire, Massachusetts, Connecticut, Vermont, and soon to be in Washington, D.C. All right. Jim, welcome. Thanks so much for taking the time this morning.
[00:01:29] Jim Coughlin: Oh, thanks for having a me, Tim.
[00:01:31] Tim: Could you start by describing Northbridge? What would you say some of your competitive differentiators, or things that Northbridge does best?
[00:01:47] Jim: Sure, Tim. Northbridge was founded in 2004. My partner, Wendy Nowokunski and I have been in the senior space for the better part of 35 years. We started Northbridge after being part of multiple platforms in the Boston-based area — Benchmark with Wendy, I was part of Newton Senior Living, one of the principals there. That, of course, was sold to Atria. Wendy and I had the opportunity to start Northbridge with the support of a local family in 2004, after exiting Newton Senior living.
The concept was to really understand where the market was going and what it was going to take to be successful. We were very focused on aligning ourselves with supportive capital that really understood what it took to be successful in this business. What I mean by that is really balancing all stakeholders. The financial interests, the residents, the families that we serve, the communities that we’re developing in, and the like.
We’ve successfully done that. We’ve grown the portfolio from a single asset to 26 properties with over 2,000 associates; 175 different families have supported us along that journey, and it’s been a remarkable growth story, and very exciting for a very engaged team.
[00:03:25] Tim: I want to check in on how the year has gone so far, given that it was an unusual start to the year with everyone dealing with omicron. How did that affect Northbridge, particularly in terms of staffing and sales activity? And how much has the situation improved as of today?
[00:03:46] Jim: You have to look backwards in order to address going forward.
When COVID reared its ugliness in Seattle, we sat down with our investor base and said, “Listen, it’s not if it comes to New England, it’s when.” We were very fortunate in the sense that they provided us with the resources to acquire PPE early, made some difficult decisions. We shut down to new admissions very early. We made some changes to our protocols relative to visitation, relative to outside caregivers.
It was difficult. It created some real challenges in isolation for our residents — and families, for that matter — and created some real financial burden on the portfolio because we weren’t moving people in, then there was the natural attrition that we needed to navigate through.
What it did do, though, is it really enabled us to manage COVID in our community. So, we didn’t have any significant outbreaks. We did not have any headline news risks that were — because we were a hotspot, and we were able to navigate it through very well. In turn, when we reopened our doors, we were rewarded for that. We were recognized for it.
Consumers came back very quickly, especially in memory care … we have memory care in each of our buildings, and we also operate seven dedicated memory care communities as Northbridge. Northbridge, when I talk about metrics, we’re 99% occupied in our memory care component, which is a real feat because that’s always been a challenging sector of the market for financial institutions to understand.
That has bounced back very quickly. Assisted living is trending in the right direction. In the aggregate, we’re over 86% occupancy, trending to 90% probably within the next 60 days. We’ve been successful in addressing the census issue.
Staffing is something that we have attacked very aggressively. I will say that we had a very dedicated team prior to COVID, that stayed with us during COVID. We had a fair amount of people that COVID took a toll on relative distress and the like. They exited the health care space. We’re not any different than a lot of our peers.
We lost a lot of very, very seasoned talent. Not big numbers, but critical mentors and leaders and folks that were very compassionate caregivers. We’re really showing the next generation of caregivers how you can be successful in this business. We’re rebuilding that. We’ve seen some young leaders that navigated through COVID with us rise to the occasion and fill those voids. We’ve also been successful in evangelizing who Northbridge is to folks that are at other operators that said, “I didn’t have the same experience that you did during COVID. I’d love to join the team.” It’s a work in progress, and it’s a major focus of ours.
[00:07:38] Tim: Let’s talk about HallBridge, because I think this is really interesting. Can you describe the origins of HallBridge and the vision that you’re pursuing there?
[00:07:54] Jim: There is a company in Boston by the name of HallKeen. HallKeen is a very, very successful tax credit investor and manager of properties that are family and senior-oriented, all over the East Coast. They have a very large footprint.
They explored getting into the senior housing business, the assisted living business, I should say, using subsidy layering with the acquisition of four distressed assets. That was a challenging turnaround for them. They tapped us because we had known the management team there for many, many years. They tapped our advisory business, we stepped in and partnered with them on turning around those four assets, and successfully did that.
In the course of doing that, that was probably 18 years ago, we really had a meeting of the minds of, how do we attack the affordability issue within the senior space? We are not financial engineers, but you have to be in that niche with tax credits and multiple sources of capital and unique operating models, more universal workers. It’s a different product. What we are good at is sales and marketing and financial engineering and development. We came together, we’ve successfully acquired multiple buildings together now under the brand HallBridge, where they’re the property manager, we’re the asset manager, and we’re 50/50 partners in that venture.
It’s enabled us to really explore what’s necessary to be successful in that middle market and affordable product, and it afforded us the opportunity to partner with a local developer down in Washington, D.C., that is very aggressively building large-scale subsidy land projects.
The Kenilworth is a 150-unit, brand new development with, I think, seven sources of capital, that we’ll be opening in the next nine months. The vision is to have two or three more projects done in D.C., in partnership with that developer.
[00:10:28] Tim: When you talk about having that tax-subsidy financial model, would you describe this as a middle-market price point for the consumer, or is it more on the affordable side? How do you classify that? I think there’s a lot of conversation about middle-market.
[00:10:47] Jim: I think it’s not lost on us, being in the traditional independent, assisted and memory care, that the vast majority of us are targeting middle to upper middle-income clientele, just given the price point and the cost structure.
We’ve seen, as the market matures and evolves, that there’s a lost generation that will never be able to move into traditional assisted living unless it’s at the tail end [of their journey], and there’s a high acuity, and it’s a short length of stay.
What we’ve seen, and it’s not unique to Northbridge and HallBridge, I think when Lynne Katzmann is doing a wonderful job exploring alternative models, and Wendy’s been collaborating with her. I think Merrill Gardens has their model, and they’re being creative. Some of the more forward-thinking operators are really trying to solve this, because that’s the masses. That is the consumer of the future. If we can work with our state governments and work with senior advocacy groups and figure this out, I think we’re solving two things.
We’re solving for the people that may have some means, they could go into traditional assisted living and memory care, and spend down their assets and have that safety net. Where, right now, the only alternative is to push them into a skilled setting, which we know that industry is changing materially … We can also create new product and new models for that middle-market that I think are creative and address their needs.
[00:12:52] Tim: Great. You mentioned that greater use of universal workers is one strategy. Anything else you can share in terms of how to operate at that price point?
[00:13:02] Jim: Well, I think you’ve seen what COVID did provide is, some financial institutions with older assets stepped away from them, and let a new buyer come in at a lower basis. We were very aggressive in that, we bought a number of buildings from publicly-traded REITs; the assets had not been invested in, and they were challenged out from an occupancy standpoint, and we were able to buy them at a very appealing basis.
I think it all comes down to cost structure. If you can acquire them correctly, if you can operate them correctly and be at a slightly different price point than traditional assisted living, people will come in droves to your front door.
[00:13:54] Tim: You talked about it being a big focus of yours to address staffing and recruitment and retention. Can you describe some of the new initiatives that Northbridge has put into place or where you’re feeling particular pressures or finding particular solutions?
[00:14:28] Jim: I think the buildings that we’re probably not feeling the same pressure are the ones that have a very strong culture. I think we’re spending a fair amount of time rebuilding that culture post-COVID. People are having some stress, post-traumatic stress syndrome that they’re trying to manage. That’s been something, and there’s been a fair amount of turnover that we’ve had to manage through as well. In 2021, we hired 854 new people. That’s people that we need to train, that’s people that we need to make sure that they’re appropriate and understand the Northbridge way. That’s a huge financial commitment.
I think where Wendy and I have been is evangelizing that to our investors, because in many instances, the structure between capital and operator, there’s friction there. It’s like, “That’s an operator problem. That’s why you’re getting paid a management fee.” I think the smarter capital is now recognizing that it ultimately becomes their cost and their performance.
Being able to manage and track the cost of turnover, whether it’s training, or downtime, or agency, or the like, and having those metrics readily available so that you’re not trying to convince your capital partner to invest in training and invest in culture.
I’m pleased to say, we’re very blessed with a lot of our families but also some of our institutional partners have really gotten smart around this, recognized that to be successful together, that is a must-have, as opposed to, it’s a feel-good program.
What are we doing? You can compete with a limited pool of talent that’s readily available. We do that. We try to out-hustle our direct competitors. Tim, you know in New England, we compete hard against each other, but we are a little bit of a family in the sense that we’ve all worked together and partnered together.
That has limited success, stealing from your competitor to get the right people on the right seats. We’re really spending a fair amount of time with training programs. We’ve created a 54-hour CNA training program that we successfully have, and it’s relatively new. We’ve trained 28 associates, 26 have stayed with us, which is a great success rate. The two that didn’t stay with us was a mutual decision that they may not be a fit for us. That’s what we need to do, is find the people. Each one of those folks had a story about how they wanted to do something with purpose, how they were desperately trying to move into this space, but didn’t know what the path was.
This is something that we talk about at ASHA and Argentum and the like. We have to start creating the health care worker of the future.
On the flip side, we have to be more efficient. This is hard work. What Wendy and I spend a fair amount of time on is, we do what’s known as a “listen and learn.” We sit with our frontline staff at least once a year, and we solicit their input. What we’ve heard on a consistent basis is, “Listen, we’d rather work short than work with that individual that is really working at cross purposes.” They’re not a team member.
Understanding group dynamics, training up, holding people accountable. If you don’t show up for a shift, that may work once or twice, but we’re not that desperate. That actually has an effect on your co-workers. It’s all those components that we need to recognize, that we have to execute upon each and every day to ensure long-term success. The answers are, in many instances, coming from our frontline associates.
From a recruitment standpoint, paying a CNA a $500 to $1,000 bonus to refer one of their friends that they’ve already pre-qualified and they have a vested interest in bringing them into the Northbridge family is money well spent. It’s benefiting them and it’s also benefiting us. We’re building their teams internally.
[00:19:56] Tim: I really like the phrase, “create the health care worker of the future.” I’m wondering if we can zero in on that a little bit. It sounds like part of that is definitely creating these training programs and also being able to attract workers who in the past might not have entered health care, so that you’re not just competing for the same pool of talent. Am I hearing you correctly?
[00:20:19] Jim: That’s correct.
I’ll give you two examples of that. One thing that I think I’ve talked to other operators about — and I’m thankful that we do share best practices and thoughts and collaborate quite a bit — [is] career ladders.
Somebody that is coming in and being hired as a dishwasher, if you in the interview process add to the interview, “do you have aspirations of growing with this organization?” it suddenly changes the dynamic of people coming in and negotiating for a better wage, as opposed to, “hey, there’s hope here that I could actually grow within this organization.”
It gets those individuals engaged to a point where they’re advocating for themselves, but on the flip side, we’re showing them that there is opportunity, and that dishwasher may become part of our housekeeping team. We’ve had a number of housekeepers that we’ve provided money for books and training so that they become CNAs, med techs, and the likes.
The greatest story I can tell you that kind of comes home to roost is, my father, who was 84, had a major health issue. He was in the hospital. I went in to visit him at South Shore Hospital, and as I was standing there a nurse came in to check on him, a very engaged nurse, and she was really excited, and she turned around and she goes, “Jim?” I said, “Yes?”
… She said, “You gave me my first job in health care and you helped me go to nursing school.” I had been struck by that because here she was, taking care of my dad in a hospital setting, but Northbridge, over a 10 year period, had been supportive. She turned to my dad and she said, “Best job I’ve ever had in my life, working for your son.”
It was that personal relationship. She knew me, I knew her. We had supported her. She left the organization, but that being said, she had given us 10 great years of service before she moved on to another direction.
[00:22:46] Tim: I love that story. When you had mentioned earlier that investors are starting to recognize the importance of investing in the workforce, is this what you were talking about, in terms of paying for that educational component and understanding the payoff in terms of retention, et cetera, that’s accruing to them eventually?
[00:23:06] Jim: Yes, I think that was something that was a real learning exercise for us.
We thought we were self-aware of what was important, but COVID really exposed it all. We thought we were doing it well, but we can definitely do it better. I’ll give you an example.
We had one community, a very dedicated team … we had acquired [the community] from a hospital and the team was relatively new to us. They were really in crisis, in the middle of COVID, on the personal front. Husbands had lost jobs, there was no daycare available for kids, they were at risk because they had lost income.
The culinary director said, “Hey, listen, we got some people that are really in trouble here.” He created a grocery store in the community and ordered through our vendor relationships all the groceries for the associates and we gave it to them at cost. Now, it was an administrative burden on our part, and I will say that there were some instances where people couldn’t pay for it because they were in so much dire need, so that Wendy and I and Northbridge stepped up to do that. The commitment that we made to them in their time of need paid off tenfold for us.
We were fortunate enough that when I shared about COVID-related expenses, I shared this, “What are COVID-related expenses? It’s PPE, but it’s also this grocery program that we’re doing for associates. We created a whole meal program because in many instances the best meal that our associates are getting is at our communities.” Our investors recognized that, and our turnover in comparison to our peers is lower, and our length of service is longer, so we are collecting that data. You have to collect the data and provide the metrics in order to evangelize this.
I can’t stress that enough, because I think that’s where we as operators have failed in the past. We’re compassionate caregivers and we’re always trying to evangelize this, everybody is a fiduciary. As long as we can collect the data and provide that to people, back to stakeholders, then they understand it.
[00:25:38] Tim: Let’s turn to occupancy a little bit. You already mentioned memory care is very strong, but across your different states or markets, are you seeing variation in occupancy recovery? Are there things you’re doing related to sales and marketing, for instance, that are helping to drive the census recovery?
[00:26:19] Jim: One of the things that we invested very heavily in pre-COVID, and as a company, was creating our own internal referral sources through social media and the Internet.
The paid referral sources do it very well. With the right resources and team managing that, we’ve been able to successfully delist a lot of our properties from the paid referral sources, because we found that the referrals that we were getting, it was a numbers game.
As an example, last year, in January, we got 240 leads from our own website, and had multiple move-ins from paid referral sources. We got 73. Generating our own lead base and nurturing that lead base is critically important.
I think with our partnership with HubSpot, we have a lead nurturing platform now; the team may inform me that our leads are touched 12 times before they’re actually presented to our sales directors, so they’re coming in much more prequalified, much better educated, and so the conversion rate is higher than the industry average because we’re providing qualified leads that have already engaged with Northbridge and we’ve already engaged with them. I think that’s the secret sauce. Managing leads. They’re so precious.
We’re taking a similar approach to the staffing crisis, where we’ve adopted this whole strategy and nurturing staffing leads the same way. That’s where I think the world is going.
[00:28:28] Tim: Great. Yes. Data, data, data, right? That 73 number, can you just repeat what that represented?
[00:28:36] Jim: That was third-party paid referrals. If they were to move in, we would owe a third-party, whether it’s– A Place for Mom is, of course, the biggest, but there’s a myriad of other paid referrals services that we still actively engage with.
[00:28:53] Tim: That was the number of referrals that you got, or the number of move-ins from those referrals?
[00:28:57] Jim: That was just referrals that we received.
[00:28:58] Tim: Just referrals. Wow. Compared to the 200 some from your own website.
[00:29:01] Jim: Yes.
[00:29:02] Tim: Okay. I guess going back to the investor question and those relationships, you mentioned HubSpot. I know that is not, I don’t think, a cheap investment. Do you think that that’s a thing that investors are are more willing to support? The technology needs on the backend to support more sophisticated operations? Is that something that the management company needs to be responsible for?
[00:29:35] Jim: I think it’s part and parcel of — it’s a shared expense, but the payoff is that we’re not paying as much on paid referrals, so we can, again, track the metrics and rationalize the investment.
I think what that says, and I think this is where our industry is going, we’ve seen the aggregation and the bigger platforms get so big, and now we’re moving back to those super regionals that have the focus and understand the nuances. I think the same is going to hold true for operators that can represent to institutional investors, “Here’s the infrastructure that you must have in order to be successful in this business.” We’re moving from the mom and pop or the large, large, institutional operators to the super regionals that have the acumen to do something like this.
[00:30:48] Tim: Let’s talk about margin a little bit. How quickly is margin returning, and will it ever get back to pre-pandemic levels given that I think certain expenses, like labor, wage rates might be permanently higher? What are you seeing on margin and what are your expectations for the future on where it’ll land?
[00:31:33] Jim: Margin is a work in progress. I think we’ve successfully navigated and in the next quarter or two will be back to stabilize the occupancy. I think that’s a little bit ahead of some of our peers, but it is coming back, and the demand is absolutely there. In talking to my local competitors, they’re seeing the same thing. We may be a few 100 basis points better at this point in time, but that’s all trending in the right direction.
I think that the cost of the agency and COVID-related expenses are trending in a positive direction which, of course, has an effect on margin in a positive way.
I think the long-term prospects of getting back to 35%, 40% operating margins, that’s going to be a heavy lift in the traditional independent and assisted and memory care model. I think that’s why a lot of private equity money has targeted the active adult and independent [living] … but I also think that what we’re seeing is the consumer will pay for quality services.
Quality services mean fully staffed buildings, a team that has a continuity, that works collaboratively at a platform that not only takes care of the resident, but it’s taking care of the family itself. This is a journey, and some of our best referrals come from former family members that we did well by. We’ve bumped rates pretty aggressively and the consumer has been willing to do that.
What we’ve also done though is, during the pandemic, we spent a fair amount of time trying to address staffing patterns and collecting for the services that we do provide to our residents. Understanding who’s getting the most services, making sure that they’re on the right care plans, and we’ve seen ancillary income significantly go up because of that initiative.
Also, we are getting back to that nickels and dimes part of health care. I have a lot of friends in the skilled space, and they said we’ve always been in the nickels and dimes business, that’s what it takes, and making sure that we are getting paid for what we’re doing. That’s something that we’re spending a fair amount of time on. I think margins are trending in the right direction. It’ll be interesting with the labor pressures to be able to get back to the stabilized levels that we have previously.
[00:34:59] Tim: You brought up the move these days to a super-regional model that is happening on a large scale across the industry. I think Northbridge is a very well-established and reputable regional operator, so I’m wondering, from your position of having built this company, what does it take to be successful as a regional? I know it’s a huge question. Obviously, getting the right size is important, but it has to go beyond that, right?
[00:35:39] Jim: I think lessons learned from our advisory business, when we step into situations, we’re typically called by one of the many stakeholders. It’s either the private equity firm that invested in it, the lender that’s concerned about it, or the operator that is just not getting where they need to get to, and there’s friction there.
In some instances, we see that it’s a lack of presence, that the sites have been left to their own devices. They’re doing the best that they can. They have minimal support from their regional teams, so having a high touch, driving success daily, as opposed to doing the touch base every 90 to 120 days, because a regional is overseeing 25 properties, that’s just not physically — it’s not a model that works. This is a high-touch business, and a crisis or something that needs to be addressed has to be done that day. It can’t wait for two or three weeks.
Being present, having resources that can be supportive in clinical, in sales and marketing, in operations, we refer to it as a three-legged stool, and what we do is every 30 days, the executive director meets with their leadership team and has to report out to our three-legged stool; the operations, the clinical, and the executive director. It’s just fascinating to me about how we can see trends, address concerns, adjust to the market.
We had one situation where we stepped into a building, and they said, “We’re spending all this money on advertising and we’re just not filling our units.” I said, “Okay, well, let’s look into that.”
Well, sure enough, you looked at every ad and it was a husband and wife couple, and the only thing they had left was studios. We tweaked the advertising campaign to target men and the VA benefit and the likes. We addressed that occupancy issue. That’s something that you’ve got to take a step back, you’ve got to analyze the situation, you’ve got to fix it.
I think that’s very difficult to do on a national basis when you’re more dashboard-oriented. It’s really going in and rolling up your sleeves. I think that’s what the regionals have the capacity to do and they also understand the nuances. We can look at buildings and we can say, “How are we going to staff this building? What high schools do we have to partner with to get kids in here to do the weekend shifts,” and it’s really getting in there and getting it done.
[00:38:59] Tim: Let’s turn to growth plans a little bit. I know that you mentioned you’ve grown recently, even during the pandemic, so we can just start there. Can you walk us through your recent growth?
[00:39:13] Jim: During COVID, thankfully we were aggressive buyers. Our investor base recognized that COVID was a risk factor, but they were supportive and had the conviction to support us in buying some appealing opportunities. We actually bought 11 communities in the middle of the pandemic, and that was not for the faint of heart, but it worked out well.
Each of the communities we knew well, we knew the management teams, and they’re all works in progress relative to the turnarounds of each of those, six of which were in the HallBridge model. That worked out well.
We’ve always been opportunistic. In the 2008 crisis, we were aggressive land acquirers in markets that we never could have touched in a good market.
Construction prices, it’s very, very difficult right now to make construction deals work, but we are in the process of building two buildings. It’s slow and prudent growth relative to that. The acquisition market is thin because New England’s a very competitive market, and there’s a lot of folks who would like to be in here and have a presence, so we will continue to grow, and we are very focused on the affordable model.
We’re going to continue to support the local developer in DC. They have three other projects that they’re winding their way through the permitting process, and I think that would continue to be a successful venture for us there.
[00:41:08] Tim: Terrific. We talked about you being a regional, is there a golden number that you don’t want to expand beyond, or do you see the HallBridge ventures as an ability to grow that faster and larger than the traditional Northbridge portfolio? How are you thinking about that?
[00:41:29] Jim: Yes, we’ve never subscribed to using size as our metric of success. It’s always been, “Do each of the deals work on an individual or portfolio basis?” I think that will dictate where we see the opportunities. I think we are definitely in a position now because we are vertically integrated, so we have the development company, we then operate what we develop. We have the fund management business, so that we’re actually raising capital directly from institutions and individual investors. Then we have the advisory business.
One of our more exciting ventures is, we realized, from an inflation standpoint and a risk point, energy pricing in New England is something that was really concerning. We actually started a solar company and we’ve been building solar fields with the goal that we will be carbon-neutral within 72 months, and we’re having great success with that venture; creating the power and then selling it back to our portfolios at a discount. That’s been very, very successful.
[00:42:48] Tim: That’s really interesting. I have not heard of any other companies doing that.
[00:42:52] Jim: Yes.
[00:42:54] Tim: I guess I’m thinking two things, one is we hear a lot of chatter about ESG initiatives being more important, and investors really looking for that angle on where they’re putting their money, and then also it’s increasingly important for consumers, that they feel that they’re giving their business to environmentally friendly companies. Were those things informing your decision to do that solar venture along with the utility price?
[00:43:28] Jim: Yes, that’s part of our ESG. One of our institutional partners in one of our funds is Blackstone and Maine Public Employees. What Blackstone is doing in the ESG space is remarkable, because they see pension plans and others in Europe are probably 10 years ahead of us relative to their focus on ES&G, and recognizing the performance sometimes is better in ESG investments than not, so the Blackstone folks have been very, very supportive in educating us and using us as a beta site relative to the senior space, and [we’re] excited about just learning from them because they have such a wide breadth of experience and perspective. They’ve been very supportive.
I think as we navigate through this, ES&G has got a little bit of a black eye in the sense that a lot of people just put words on a piece of paper and say, “This is my ES&G.” It goes back to what I alluded to earlier about our focus on tracking the metrics, making sure that we’re actually performing on that. I mean, 87% of our workforce is female and 86% of our senior leadership is female. That’s very appealing for some investors that want to support women-led businesses.
We’ve had a number of family offices come to us and say, “We really want to be supportive of that because that’s something that we believe in.” Again, it’s a self-fulfilling prophecy if you can build it, and it feeds Wendy’s and my kind of entrepreneurial zeal for, “Okay, what’s next in the senior space?” I never thought I’d be building solar fields, I’ll tell you that much.
[00:45:48] Tim: We do have one question from the audience. This is about HubSpot. How long have you been using HubSpot, and anything you can say about the choice of HubSpot over other options for those types of platforms?
[00:46:17] Jim: HubSpot has been a great partner. We’ve been working with them, I think, for almost eight years now. It’s been a mutually beneficial relationship because I think we were one of their first forays into senior housing using their platform. It was definitely a learning exercise on both of our sides. Their technology, I think, is amazing. Their willingness to collaborate and be open about their learnings has been a real positive. If your listener would like further detail, I’d be happy to have them have a direct conversation with Jen Hastings, who is my senior vice president of marketing, that manages that relationship. She could be very insightful on that.
j[00:47:13] Tim: Terrific. You mentioned Lynne Katzmann. I know Lynne is very active on the Medicare Advantage front. Is that anything that you are thinking about integrating in some way, whether it’s joining a consortium like Lynne’s or starting your own plan, or partnering with MA payers in certain ways?
[00:47:41] Jim: I think we’re very early in the process. I think Lynne and Wendy have become fast friends because they’re on many panels together, very accomplished leaders. I’ve always been impressed with Lynne’s platform and what they’ve accomplished. It’s still very early for us. Our first foray is using MaineCare up in Maine for dedicated memory care. That was something that, as they continue to address the needs of the Maine constituents, they’ve been aggressively [limiting] their skilled exposure.
When I first started doing business up there, I think they had 14,000 beds, I think they just tipped below 5,600. They’ve been supportive of prudent development, you have to be good partners with DPH up there in order to get the support, but we’ve used MaineCare and that’s been our first direct government pay. It creates a safety net. Typically, a resident that has some cognitive impairment will come into one of our memory care communities, spend down their personal assets for two and a half, three years, but have the hope that there’s a MaineCare bed available when their time of need comes in place.
As we expand the footprint, we’ve been able to accommodate folks from one community to another. Sometimes it hasn’t been optimal because there’s a limited number of beds, but it worked out well from an outcome standpoint.
[00:49:39] Tim: That’s really interesting. I feel like skilled nursing has come up more frequently than it often does in these conversations. You seem pretty tied into what’s happening in that space. Do you have any thoughts in terms of the challenges and trends and changes in skilled nursing, how that’s affecting the senior living business? Are you seeing higher acuity residents coming in? Are you partnering with SNFs at all in a different way than in the past or working with hospital systems in a different way with their post-acute patients?
[00:50:13] Jim: I sit on the board of Beth Israel Needham, and that’s been a real eye-opener for me on the hospital side.
During COVID, the discharge process was incredibly challenging. I think we all as local providers had to get smarter. Which building was closed because of COVID protocols, what building didn’t have staff? I think the positive that came out of that is that there was a lot more collaboration in addressing the needs of the seniors in that given submarket, where we were comparing notes and working collaboratively and solving the crisis jointly, which fostered a lot of good conversation.
In many instances, because of COVID protocols, they would do an interim step with a skilled facility and then move into one of our communities in 21 days. We have very close working relationships with a lot of SNF operators. Over my career, I’ve worked financing nursing homes and the like, so I just have exposure to that, and that business is changing materially. For better or for worse, we’re all trying to figure out what our niche is in the continuum. How do we make sure that we’re partnering with the right SNF operators so that we can advocate for our residents when they do have a need? That’s the touchpoints relative to that.
[00:51:59] Tim: I’ll wrap up here with some big-picture questions. Top business goals for 2022?
[00:52:11] Jim: Occupancy stabilization in the next 90 to 180 days. We’ve pivoted our head of strategy to be solely focused on workforce development, so establishing some key partnerships in that avenue. We, in the middle of the crisis, created a nonprofit called Compassionate Caregiver Fund that we’re launching in the next six weeks. That will be there to support our caregivers and a scholarship program … there’s a separate advisory board that manages that, but we’ve had incredible excitement around that from our investors and stakeholders, saying, “This is a great way to be supportive.” Those are the top three goals. And getting more solar fields built.
[00:53:19] Tim: I’m curious about the solar fields, and it’s maybe a little bit to the side of our senior living conversation, but how many do you have? What’s the size of that venture?
[00:53:30] Jim: We currently have four projects in the works that will in one fell swoop provide enough electricity for 62% of our entire portfolio.
[00:53:44] Tim: Wow, and what’s the challenge there? Is that getting the land for that, or–
[00:53:50] Jim: It’s getting the interconnections with the utilities, it’s getting all the approvals from the local municipalities. It’s, candidly, materials. The supply chain is completely upside down like any other construction project, and the cost escalation has been amazing in the past even 180 days, so it’s very, very disruptive.
[00:54:18] Tim: Yes. How feasible do you think it is for another senior living company to do something similar? Is that something that you and Wendy as entrepreneurs just were excited to jump into that market?
[00:54:34] Jim: We didn’t just jump into it. We, over the years, had partnered with various carbon reduction initiatives at our buildings, and we developed a senior green program. It was Erin Gowdy, who runs our asset management business, who took the initiative to do the first project down at Dartmouth Mass, because we had adjacent land that was available.
We built 250 megawatt or kilowatt platforms there. That provides the vast majority of electricity for our Dartmouth community and 70% for our Cape Cod facility, because we sell it back to the grid and like. There are all sorts of nuances to it, but as we pushed further and further into acquisition and development, we did look for adjacent land that we could roll out this platform.
[00:55:43] Tim: Amazing. My last question is, again, broad. How do you think senior living needs to change in the years ahead?
[00:56:23] Jim: I think the way we present ourselves as an industry, quality is going to be king. I think our trade organizations are doing a good job of ensuring that we’re keeping quality at the forefront. That’s number one.
I think COVID did, when you look at provider relief funds and the like, I think we were all surprised as operators that people didn’t have more awareness of what assisted living was. Where a lot of money went into nursing homes and hospitals, but we got left [out] because of lack of awareness. I know [ASHA President David Schless] and [Argentum CEO James Balda] are all over that, and they’re doing a great job, creating the awareness of how we fit into the continuum.
Product is going to change. This is not a one-size-fits-all, both from a market standpoint and from a consumer standpoint. Actually, in preparation for this, I was querying some of my team, and they said, “Well, here’s an interesting stat for you. Of all the internet queries that we get, we’re now seeing more coming directly from the consumer or potential resident, more from the son, because we can track that, and less from the adult daughter.”
Now, that’s a game-changer, because it always has been, “How do we market to the adult daughter, because she’s the key decision-maker,” but the discussion that we had internally was, are more seniors feeling the effects of isolation during COVID, and advocating for themselves and saying, “Maybe senior living is a better choice for me than being locked up here in my apartment, alone and isolated”?
We have to be smart to learn our way through this, but the great thing is that having working relationships with your peers, nationally, and in sharing best practices, it’s still a great group of professionals that are dedicated to this space, and that’s what’s exciting. It’s not this combative, “Don’t come into my market.” It’s, “What can I learn from you? Here’s what’s working for me.” Those are the things that I enjoy.
[00:59:21] Tim: We have one last-minute question from the audience. Other than the CNA program, do you provide tuition reimbursement for employees?
[00:59:33] Jim: We do, and that’s really one of the things Compassionate Caregiver Fund is trying to put a shoulder behind, because we want to be in a position where we can be supportive, not just from an episodic basis, but to really support the best and the brightest, and have them continue to be with our team … Having tuition reimbursement where people are trying to build their careers, that’s what we really want to spend time and effort on.
[01:00:28] Tim: Thanks to everyone who tuned in, and thanks, everyone, who submitted questions, and Jim, a huge thank you.
[01:00:47] Jim: Great. Thanks, Tim. Really appreciate you having me.
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