Last year, Oakmont Management Group teamed up with real estate investment trust Welltower (NYSE: WELL) and launched a new brand called Ivy Living.
At just seven communities today, the Ivy Living brand makes up a portion of the senior living operator’s 51-community portfolio. But by the end of 2022, the company aims to add 13 more Ivy Living communities, making it a growing focus for the Irvine, California-based company.
The company’s leaders decided to launch the Ivy Living brand in late 2020, amid a belief that the industry would undergo a consolidation period that would see large portfolios trading hands.
Gallaher Companies developed all of the communities in Oakmont’s core portfolio, giving them a distinct and similar physical plant and footprint. But the company’s leaders wanted more flexibility to manage communities that weren’t developed with Oakmont’s specific brand identity in mind, according to Matt Stevenson, who is COO of Oakmont Management Group, the parent company that oversees Oakmont Senior Living and Ivy Living.
“It’s a brand that compliments Oakmont,” Stevenson said during a recent appearance on SHN+ TALKS. “It gives us a platform to pursue any opportunity that we think we can bring value to in any physical plant, in any market, without confusing the consumer or degrading or eroding the brand equity in Oakmont.”
Looking ahead, Oakmont plans to grow the Ivy Living brand primarily through operator transitions, with a handful of strategic acquisitions with some of its equity partners.
All the while, Oakmont has achieved an occupancy rate of 95% for its 35 stabilized communities.
Growing the Ivy Living brand is not the company’s only top initiative in 2022. The company is also focused on improving its recruitment methods by building out a more robust corporate infrastructure for training and onboarding.
“Like occupancy, we’re doing it in new ways: through digital campaigns, through networking, through grassroots marketing of sorts,” Stevenson said. “We’re bullish on the labor outlook.”
He added: “We are very much in the business of recruiting. It will never be easy, and … we will always be aggressive and innovative and progressive where we can be.”
We are pleased to share the recording and this transcript of the SHN+ TALKS conversation with SHN+ members. Read on to learn about:
— Oakmont’s plans for scaling up the Ivy Living brand
— How the operator achieved 95% occupancy in its stabilized portfolio
— Why Oakmont focuses mostly on the state of California, and which states it could expand to
— How Oakmont is confronting staffing challenges in 2022
The following has been edited for clarity.
[00:00:06] Tim Regan: Good morning, everyone. I’m Tim Regan with Senior Housing News. Welcome to SHN + Talks. These are live interactive and honest discussions with the people that are shaping the senior living industry today. I am so proud to be joined by Matt Stevenson. Matt is the Chief Operating Officer (COO) of Oakmont Management Group, which is the parent company that oversees Oakmont Senior Living and Ivy Living, which I’m excited to talk about today.
A little bit more about the company: The Irvine, California-based company has 51 communities spread across mostly California with two in Nevada. The company has been able to maintain a relatively high occupancy during the pandemic, which we’ll talk about today. We will talk a little bit more about how you did all of that soon.
I thought it would be useful to start by getting a state of play. Obviously, it’s been a tough two years for the senior living industry. Where’s Oakmont right now with regard to its operations and its occupancy recovery efforts in 2022? I remember, we talked a while ago, and this, of course, was before the Omicron variant but I remember you guys were getting closer, I think, or at pre-pandemic average occupancy. Is that the case now?
[00:01:53] Matt Stevenson: Well, first of all, Tim, thanks for having me. Really excited to be on this morning. Looking forward to having some fun. We’re going right into it.
It’s been a great quarter for us. We’re incredibly excited about how we’ve kicked off 2022. Today, at Oakmont, it’s the same story of stabilized occupancy. It’s back to 2019 pre-pandemic levels. Our stabilized portfolio today is pushing close to 95%, a target that we’ve had now on the docket for some time, and one that we’re really excited that we’ve achieved.
Our stabilized portfolio represents about 35 of our 51 communities. The remaining 16 communities are considered to still be in lease-up. Those are communities that we have either opened in the last 12 months or transitioned into the portfolio in the last 12 months. That lease-up portfolio today sits in the mid-80s. We’ve had some really sizable growth in that portfolio as well the last 12 months, picking up about 600 basis points. Great momentum all around.
I really want to touch on something you asked here in the opening. You talked about operating recovery, and that’s an important question. All too often the recovery narrative is solely focused on occupancy. When we think about recovery fundamentals, it’s so much more than occupancy because rate integrity is such an important piece of that recovery.
For us, we look at occupancy, yes, certainly, but we also look at rate. I think we’re equally as excited that we’ve been able to grow (that) rate pretty aggressively year-over-year and continue to maintain a rate integrity position that’s allowed us to grow other key metrics that are so important in the recovery story.
Whether it’s RevPAR or NOI or general margin, we’ve got recovery on all fronts, not just on the occupancy front. We feel really good about our position today and our outlook for 2022.
[00:04:01] Tim: That’s great. You might be one of the first operators I’ve talked to that has above 90% occupancy for its stabilized portfolio. Maybe there are other operators I’ve talked to recently that have hit that mark, but that is impressive and also the mid-80s for your lease-up portfolio. I wanted to ask, what are you doing right now that’s really working to make that happen?
I’ve talked with other operators who are still struggling with the recovery, still trying to get back to where they want to be. What are you doing right now that you feel like is really working to affect occupancy, and then maybe some of the other things that you talked about with some of the other operational fundamentals?
[00:04:39] Matt: We’re doing a lot. To best answer the question, we should take a step back and look at a few things that happened the last couple of years through the pandemic. First, inquiry traffic fell off to all-time lows. Consumers weren’t leaving their homes. Visitation tours were limited, if not completely restricted. There was a string of some damaging press. There was a quick realization for many that the pre-pandemic value proposition was no longer resonating with our consumer.
What did this do? It forced us to pivot and be more dynamic and more strategic in our sales efforts.
We had to reach a consumer and engage in more digital ways and creative ways. We had to adjust our value proposition to focus on access to health care over highly amenitized buildings. We had to meet the consumer where they were comfortable whether that was home or Zoom or FaceTime or virtual 3D tours.
We had to add layers of self-sophistication to our tour tool belt. Today, what’s materialized from what we’ve had to do the last two years, we’re better at selling than we ever have been. We see that with increased conversions. I know at Oakmont and in conversations with other operating partners, they’re seeing the same. Conversions are up.
We’re converting more inquiries to tours, more tours to deposits, more deposits to move-ins than we ever have. Now that we’re seeing inquiries recover, and continue to normalize, those inquiry conversions are really yielding great net absorption and net occupancy growth.
What are we doing? We’re just doing what we’ve always done but better because we’ve layered in many tools that we were really forced to introduce and refine the last two years.
I would imagine that many other operators are experiencing some of the same, or at least, I hope they are, but every month we’re seeing inquiries grow, and with the added conversions it’s really yielding great occupancy success.
[00:06:52] Tim: Great. I remember, Matt, you and I talked for a story that I wrote, I think it was in 2020, about how Oakmont had pivoted to marketing health care to prospective residents, whereas before, maybe it was a little bit more on the hospitality side. Obviously, now it’s been a couple years since you started doing that.
I wanted to check in since we’re on the topic of sales, is that shift still in effect? Are you still marketing to residents that way? Tell us more about how you’re marketing your communities to prospective residents these days.
[00:07:27] Matt: Yes, pre-pandemic our value proposition was one that was largely around a social environment that was incredibly engaging and focused on the great physical plan in the highly amenitized communities that we had. We had to pivot during the last few years of the pandemic because that just didn’t speak to the consumer the same way.
We focused on access to health care, a continuum of care and limited supply chain disruption as part of that access. That allowed us to reach more of an age-driven customer and continue to penetrate in different ways. Today, we no longer focus just on the value proposition of access to health care, but now we use that front and center more and more comfortably than we had in the past right.
Now, we’re back to a pre-pandemic value proposition again. We’re leading with highly amenitized buildings; we’re leading with a culinary program; we’re leading with a robust programmatic offering; but we’re also still layering in access to health care when it makes sense.
That speaks to my earlier point, that we just have more layers of tools today that we utilize, and that just allows us to better penetrate and better convert.
00:08:47] Tim: Reading between the lines there, it also sounds like residents are maybe ready to get back to some of the things that they were interested in before the pandemic, which is encouraging for operators.
We’ve talked a little bit about this Ivy Living brand, and I know that I have talked with you about this in the past. Tell us about what the Ivy Living brand is, and how it fits into the Oakmont Management Group umbrella. What is that brand, and also, why–and how–did you launch it?
[00:09:22] Matt: I’m happy to. We’re really excited about the Ivy Living brand and the platform.
About 18 months ago, this was late 2020, we were road-mapping 2021. We anticipated a lot of transactional activity in the space in 2021. We felt like there was a high possibility that we’d see a consolidation of operators, and that we’d see increased M&A and trade volume. At that time, we were managing approximately 30 Oakmont communities.
All of the Oakmont communities that we manage, even today, were built by the same development partner of ours in Northern California. Each of those communities has a real distinct physical plant and footprint. Given that they were all developed by the same partner, there’s a ton of consistency in the physical plant, the look, and the feel. That has really led to great brand equity across that Oakmont portfolio.
That brand equity carries a lot of weight and certainly a lot of value. When we decided, as we were road-mapping ’21, we wanted to expand the enterprise and be prepared to capitalize on opportunity and trade activity and operator consolidation, we needed a new vehicle to do that.
A vehicle that would allow us to leverage local skill, leverage the current infrastructure we had on the West Coast, but bring the same performance intensity, the same operating excellence to any physical plant without confusing the consumer or eroding the brand equity that we had developed in Oakmont. We wanted optionality, so we decided to create Ivy Living as that growth vehicle.
It’s a brand that compliments Oakmont, but it gives us a platform to pursue any opportunity that we think we can bring value to in any physical plant, in any market, without confusing the consumer or degrading or eroding the brand equity in Oakmont. We fully intend to grow our enterprise through that Ivy Living brand.
We have great plans to self-develop under the Ivy Living platform. It’s a platform we’re excited about. Today, we have seven communities in the Ivy Living portfolio, all in California. We’re excited about continued growth this year.
[00:11:49] Tim: When you took on those communities in California, did you have to do any changes to bring it up to Oakmont standards?
Tell us more about how Ivy Living will exist in this umbrella. It sounds like it’s going to stand apart from the Oakmont brand.
[00:12:13] Matt: We start with the Oakmont standard, as you said it. The Oakmont standard is as simple as thinking operational excellence. We lead with that. We performance-orient with that every day.
When we step into a new asset, and we might fly the Ivy Living flag, it’s the same operating approach. It’s the same performance intensity. It’s the same expectation around execution and excellence. What do we do? We start by performance-orienting the entire on-site team.
What does success look like, and how do we collectively achieve it? Do we have the tools, the resources, the infrastructure to be operationally excellent? We don’t think about it in the way that we have to go in and have a certain food program or a certain programmatic experience or a certain floor plan.
We think about stepping into an asset, and the value add is really enhancing the operations and being excellent on all fronts. If you can bring that excellence mindset to the community, you can immediately impact performance. Performance on the financial side, performance on the occupancy side, but performance also, holistically thinking, opportunities for our residents and team members.
We think about it in a really simple way. We step in, and we orient the team around being the best, being excellent, and proving every day when and where we can.
Then we make sure that once we feel like they’re comfortably oriented, then it’s a matter of accountability to make sure that we’re maintaining a new expected standard. It’s a recipe that seems to work really well for us.
[00:13:51] Tim: What is your plan for growth in the Ivy Living brand? Also, you mentioned development. When you come into an opportunity like that, how do you figure out if it’s going to be an Ivy Living or an Oakmont Senior Living community?
[00:14:12] Matt: We’re just getting out the starting gate here. We launched Ivy Living about a year ago. Still a really new brand for us, but we’re getting a lot of market traction and interest. As I said earlier, Ivy is our growth vehicle.
I would imagine that we’d be somewhere around 20 communities strong in the Ivy portfolio by year-end, primarily through operator transitions but also a handful of strategic acquisitions with some of our equity partners.
Beyond ’22, we fully intend to have communities coming out of the ground that we self-develop through our new development platform and the development partnership that we have with Welltower. That’s how we’re thinking about growth in general under Ivy.
When we’re thinking about Oakmont and Ivy, Ivy again gives us a ton of optionality here. If we go into a market, and we think of the Oakmont product, whether it’s because of the orientation of the land or the product that might compliment something else we have in the market, we have optionality.
It could be an Oakmont product, it could be an Ivy product, and I think that the market and the condition of the market will really tell us which direction we think will be most promising. Again, the optionality is the most important thing here, and we have a lot of that with Ivy and Oakmont today.
[00:15:44] Tim: Absolutely. I know, Matt, we’ve talked about this in the past, but I wanted to check in with your current thoughts on this. I don’t think that this was your plan before, but what are your thoughts on creating different sub-brands within your portfolio, another brand similar to Ivy Living or Oakmont?
I ask this because we are seeing this happening still across the industry. This is a trend going into the pandemic. We are still seeing operators differentiating their portfolios from one brand to another. Do you think that we could see more brands in Oakmont’s future? Tell us more about how you think about this multi-brand strategy.
00:16:20] Matt: Let me start by just making the point that Ivy is certainly not a sub-brand to Oakmont. I made that point here.
It’s a brand that’s certainly complementary and coexists as an equal but just gives us optionality on the physical plant in pursuit of all opportunities. We’re not interested in developing a sub-brand. Developing a sub-brand’s not an easy endeavor. I would certainly caution against it.
It requires, in my opinion, incredibly strategic planning, especially if there’s various brand levels and varying levels of value proposition in a similar market.
How do you performance orient a market leadership team, whether it’s a regional team or a home office team around a performance standard in a value proposition when there’s multiple standards in multiple propositions and multiple brands that are trying to serve different levels of consumer with different product types?
When you think about alignment and focus and discipline in performance, it’s really difficult when you have varying brands and different value propositions. Unless you’re going to build infrastructure that supports each brand individually in a market, then it’s very difficult to do, and therefore, we don’t have interest in it.
I think that our approach today, philosophically speaking, and being operationally excellent in both brands, Ivy and Oakmont, keep us really clearly engaged and focused and allows us to push and cascade clear standards down throughout the organization, and then accountability is easy.
At Oakmont, we’re not interested in a sub-brand at all. It is a tough endeavor and one that we have no interest in pursuing.
[00:18:20] Tim: Great. Thank you for setting the record straight, that Ivy Living is not a sub-brand. I’m glad that we talked about this. Matt, actually, I want to switch gears here and ask you about your relationship with Welltower.
I know that you have a relationship with Welltower. We talked a little bit before this call about how you also have a relationship with Harrison Street. I’ve heard from a lot of, especially on public earnings calls lately with REITs, executives saying how much they look for strong regional operators.
I’m assuming that, given some of the fundamentals you’ve shared today, ownership groups, or REITs are probably looking at Oakmont as one of those operators.
The first question is: Have you had a lot of interest from other ownership groups looking to work with you, has your phone been ringing off the hook, and when you see an opportunity, how do you start that discussion? What kinds of opportunities might you say yes to?
[00:20:03] Matt: There’s quite a lot to unpack there, Tim. Let’s start with the question about just operator opportunity. It’s a good question. It’s an important one.
We’ve been fortunate to have built a great team within Oakmont and continue to reinforce infrastructure. It has allowed us to perform really well for our partners.
That, in turn, has helped us develop some really strong reputation equity. That reputation equity has invited many opportunities for us with various ownership groups and opportunities that we entertain.
For us, though, when we’re entertaining a new relationship, it starts with vision. It starts with alignment around vision and passion and mutual trust and respect. We’re really fortunate to have that with Welltower and with Harrison Street.
They’re great relationships and great partners for us. We’re really looking to align in the long-term with like-minded ownership groups that want to have a collaborative relationship where we can share synergies.
With Welltower, for example, look, they’re a great partner. They own 15 communities today. Eight of them are Oakmont, seven of them are Ivy.
Oakmont has fully embraced, from day one, the Ivy Living vision. Today, all seven of our Ivy Living communities are owned by Welltower. With Welltower, we both share a clear appetite for growth through development.
With Welltower, last year, we structured a development framework agreement between our groups that excites and further aligns us in our organizations around development. Stay tuned on that front. I’m going to have some exciting development news here to share in the near term.
Welltower’s been a great partner. We have, with Welltower, alignment from the top down. It’s a relationship that’s built on collaboration.
For example, at Oakmont we recognize the value of data. We’re large consumers of data. As you probably know, Welltower’s built and invested in an impressive and robust data analytics platform that they make available to us. It’s a platform that we leverage regularly to help gain insights and make decisions.
That’s one example of the collaborative relationship we have with Welltower and in a partner that really helps keep us aligned long-term. That’s what we look for in partners. We have the same in Harrison Street. That’s a new partner for us, but it’s been a great partner.
We’re about a year into that relationship. They own 20 communities that we manage today. They, too, are all about collaboration and synergy. It’s easy to pick up a phone and say, “Hey, let’s talk through this issue together. This is how we’re thinking about strategy. This is how we’re thinking about capital. This is how we’re thinking about ROI.”
They’re engaged in such a positive manner, too, from the top down.
Those type of relationships are what we thrive on and work so well in. Those are the type of the relationships that we’re looking to continue to expand with new partners.
Those are some of the first questions we ask. How do you think about the business? Talk to us about strategy. When things are good, it’s easy to have a collaborative, positive, engaged in energetic relationship with your ownership group. When things are challenging, what’s that relationship going to look like?
Those are the questions we ask on the front end to get comfortable before we pursue a long-term relationship.
There’s a number of great partners in this space that we would love to have relationships with. There are conversations that we’re progressing today and continue to explore.
00:23:50] Tim: I want to put a pin in this, Matt. Please, share that development news with us when you have it. Hopefully, we’ll cover that on Senior Housing News.
[00:23:58] Matt: We’re getting really close, Tim. I was hoping to be able to share it today, but we need a couple more signatures.
[00:24:03] Tim: I want to ask you a follow-up question. I don’t know to the extent that you can talk about this. As you were talking about Welltower and some of the capabilities that they lend through their data and analytics platform, I’ve heard about that on Welltower earnings calls and what it brings to operators.
I have been curious, as an operator, how do you wheel that in your markets? What are some ways that you can use that to get a competitive advantage?
[00:24:34] Matt: Thinking about Welltower, they are the largest senior housing REIT in the nation. They have a data sample set that I don’t think anybody else can replicate. They can bring data and insights beyond just a major market.
They could really dive into the details of micro-market specifics. We’ll work with Welltower, and we’ll look at specific ZIP codes or neighborhoods within a ZIP code that we might be pursuing a land opportunity on. They’ll be able to give us real-time insights and to demographic specifics and to market specifics and demand.
They help grade markets and performance expectations for us long before we do any significant work or diligence on a landslide, for example, or a potential acquisition. There’s so much that they have available within their platform that we can consume and digest to make decisions, either on the front-end through acquisition development, or on the operating side when we’re trying to look at something like wage in a market or turnover in a market.
They have data that helps baseline and benchmark against that helps us make quicker and better decisions.
[00:26:04] Tim: Great. Well, thank you for answering that. I’ve been curious about that. That is good to know.
I will ask you this. Again, to the extent that you can talk about this, the question from the audience member is: Welltower has been talking about RIDEA 3.0, which has ended up in our stories as well, and the evolving relationship with operators. Could you elaborate how the contract has been different from prior RIDEA structures that you have undertaken?
[00:26:52] Matt: Without getting into too many of the economic specifics here, RIDEA 3.0 is a structure that really aligns capital and operators in ways that are mutually beneficial. If we’re performing really well in an out asset, there should be an upside in some incentive with that performance. If we are facing some economic struggles in an asset, then we, too, should carry some of that weight and burden.
It aligns us to be excellent beyond top-level occupancy, like I was saying earlier, to be excellent on all lines, on the RevPAR lines, the expo lines, NOI per unit, EBITDA, however, you want to look at it.
The RIDEA 3.0 structure’s a structure that really aligns us and sends us, as an operator, to continue to be better.
[00:27:45] Tim: Matt, we have seen some operators, I’ll pick on agents on the West Coast, they’ve launched an in-house staffing. They piloted an in-house staffing agency. I think they’re still figuring that out.
We’ve also seen other operators in the industry talk about things like home health or other services that they can start offering in-house and maybe not go with a third-party company.
Does Oakmont have any plans to do that? Does Oakmont currently do anything like that? Just tell us more about services that you can see bringing in-house.
[00:28:28] Matt: Today, we don’t. However, Tim, we do monitor closely what others are doing. It gives us an opportunity to pilot without piling. We watch closely, and we try to measure or gauge success of some of these endeavors or ventures that some others are pursuing.
Today, though, we try to be really disciplined in our focus. Going back to the earlier point that I made around just keeping it simple, thinking operational excellence and performance orientation, we want to clearly stay focused in a performance lane that can speak to the entire organization.
To do that, we can’t afford to be distracted. While there might be some value add, whether it’s incremental add or significant add, we’ll see as other operators test some of these ventures and these different platforms. For us, we think, today, it would probably be too distracting, especially at a time where we’re still really trying to fully recover our business.
We’re staying focused on the task at hand. That task at hand is to fully recover margin and to fully recover the business in ways that even outpace pre-pandemic performance.
Now, once we fully do that, which we’re right there, if we see that another operator has successfully modeled out a venture, whether it’s a staffing agency, at-home health, a hospice platform, then it’s something we might be open to, but today, we continue to be focused on operating our communities really well.
[00:30:17] Tim: Great. Let’s talk about a topic that I think is on every single senior living operator’s mind these days, and that’s staffing. Everyone’s favorite topic to talk about right now. Obviously a huge, huge challenge. It was a huge challenge last year.
I wanted to ask you, to start with, what pressures are you still seeing on the staffing side? Has anything gotten easier? How much longer do you see all this lasting?
[00:30:44] Matt: You’re right. It is the topic, isn’t it? Every conference, every article, staffing’s layered throughout and for good reason. It is a challenge. It’s always been a challenge, but the headwinds have certainly been stronger the last 12 months as we’ve navigated new and multiple variants. We’re competing today with a booming gig economy, which really challenges the historical labor fundamentals.
It’s been a crisis of sorts, but I think that the crisis is stabilizing, that everybody, for the last 12 months– I’m not talking about everybody in our industry.
Really, it’s a macroeconomic issue that covers all industries. I think that everybody was really in crisis mode. With that, there was a lot of reactionary response, and that response was largely economic, wage, bonus, sign-on bonus, retention bonus.
What we’ve tried to do from day one here is not think about solving the staffing crisis by thinking about how to hire more frontline people. That’s not where you start. We took the position that to really tackle the crisis, we need to actually start at the top level.
Do we have the right infrastructure, the right leading minds in place to cascade the right vision down to make sure that we have the right training, the right program, the right resource? Then we could roll that down and expect that we’re actually going to be materially better at the job of recruiting frontline people.
I think that it’s stabilizing now and in a way that is real.
We’re seeing more operators in our industry are really focused on real strategy and pulling out of crisis mode and thinking about how to build out infrastructure and internal teams and focus on culture and retention and new and strategic ways so that we’re not cannibalizing each other here.
The answer to staffing isn’t to go try to recruit from the operator across the street by offering a bigger sign-on bonus and a higher wage, which a lot of that was happening.
Now, as an industry collectively, we’ve all been more strategic, and we’re sharing ideas. There’s been a really unique collaboration on this front. It’s allowing us to really stop the cannibalization and to think about better penetrating the market like we do when we think about occupancy growth.
How can we reach more potential candidates? How can we reach a workforce that we haven’t reached in the past?
Like occupancy, we’re doing it in new ways, through digital campaigns, through networking, through grassroots marketing of sorts, but I think that we’re bullish on the labor outlook for a lot of these reasons that I just articulated.
One more point that I really want to make here is when we think about staffing and frontline staffing, we have to be thinking as an industry collectively about growth pathways and culture within our industry.
We have a great industry with so many great opportunities, and we just don’t penetrate enough by talking about the incredible growth pathways and industry opportunities that our workers have.
We’re doing that more, and that’s helping that penetration story. As we continue to collectively do that and go to market with it and lead with it, we’re going to continue to make more headway. Again, we’re really bullish here, and we’ve seen some stabilization.
That can be quantified, Tim, with a real reduction in vacant positions, real reduction in agency labor, and just better trends on the time to hire and candidate flow. We’re seeing all that here, especially the last couple of months.
[00:35:02] Tim: This is a follow-up question…If you’re looking to do some of the things that you’d mentioned, I could see working with schools as an avenue to do that. There are some good colleges on the West Coast. Has that been a focus of Oakmont? If so, tell us more about how you do that.
[00:35:21] Matt: Yes, I think that’s one of the many things. We have an internal recruiting team at our home office and I think that recruiting team is really tasked with being creative in penetrating and better penetrating the market.
With that, they’re engaging with schools, they’re building these relationships, whether it’s with local CNA programs or local nursing schools, local trade schools. We’re going and we’re speaking at those trade schools early on, trying to capture some of that share. We’re talking about growth pathways for a CNA coming out of a CNA trade school.
We’re on the front end saying, “Come in as a CNA today. Let me tell you what this is going to potentially look like for you over the course of the next 36 months.”
Then we tell real life stories. We show examples of a caregiver that started with us two years ago and is now in the executive director and training program, or an LVN that came with us and now is a regional health service director. When you tell those stories, they become more real and tangible. I think it better resonates with our incoming frontline workers.
It helps with retention, it helps with recruitment. Those are some of the basic fundamentals, I think, in recruiting. That’s certainly helped, but that’s just a small piece of the bigger picture when it comes to the efforts that we’re making on the recruitment front.
[00:36:47] Tim: How do you feel like the senior industry can better support frontline workers? I guess, again, career paths might be one of those, but what are some other ways?
[00:37:13] Matt: I think trying to make sure that our frontline worker feels engaged beyond being a task-driven, task-oriented employee. How can we connect them to the community and the culture of a community so that it’s a bigger purpose?
This isn’t all fluff. This is, how do you really make this materialize in a real way and it’s tangible for our employees? I think you leverage tech. I think there’s a lot of great tech on the employee side that helps with engagement.
There’s a number of new platforms either embedded in HRIS systems today, or standalone systems, that really invite a social engagement amongst peers, a social engagement amongst family members and residents. I think I can really speak to our frontline workers and tie them to culture beyond being the employee that comes in and does the task.
They’re part of a bigger ecosystem. I think the community organism of sorts, where they have real meaning and impact and get value beyond a paycheck.
That’s part of the bigger culture story and position that we’re focused on. To do that and to really do it well, again, you have to have infrastructure within the management company that can drive those initiatives and see them through.
I think sometimes, Tim, there’s a misalignment. I’ll be careful with my words here. There’s a misalignment of capital and operator here. Is the operator really incentivized to invest in culture, infrastructure, at the operator’s expense?
Is there really upside and benefit in the long-term for that operator, or is that something that the operator wants to push down to the community and say, “Well, it’s a community expense, a community burden, and therefore, an ownership burden?” I think that can prove to be problematic.
If everything’s being pushed down to the community and saying, “Figure it out. We don’t have the capital, or capital light, at the ManCo level to invest in recruitment and culture infrastructure, we’re going to push everything down to the community.”
We’re going to continue to have a disconnect and challenge because the community aren’t experts here.
They don’t have the recruiting expertise and experience to really be culture leaders and excellent recruiters. Until you engage, and this is what I was saying earlier, at the top level here, on the employee recruitment and culture front, and really develop ManCo infrastructure.
Know that that investment will be long-term fruitful for all parties, it’s going to be hard to get it right. We’ve tried to do that at Oakmont. We’ve built out a really impressive recruitment and culture team at the top level. Then to drive down some of this resource and infrastructure in ways that are packaged and clear to the community.
So, they truly have the tools to be culture drivers, to be excellent recruiters, to be industry-leading retention specialists. That’s just how I think we need to think about it as an industry a little bit more.
Otherwise we’re going to continue to solve their problem…I want to make one more point to this. We recently asked our recruitment team what candidate flow and conversion rates looked like across our organization. We found that over the course of 12 months, we had thousands of applicants that have come through our applicant tracking system.
We dug a little bit deeper and said, “Let’s dissent this and look at conversion rates similar to how we look at conversion rates on the occupancy front.”
It was shocking to see how low, sub-5%, some of these conversion rates, from candidate to worker or team member were, and we realized that that’s not even a metric that we regularly look at.
How disconnected is even that, right? Thinking about it, on the surface, we’re managing occupancy conversion ratios hour-by-hour, but it took us a couple weeks just to dig in to get the data we needed enough to look at candidate conversion ratios. That speaks to the disconnect and priority here.
We’ve now prioritized recruitment similar to how we have with occupancy.
Now we’re managing and monitoring conversion rates on the candidate side similar to how we do on the occupancy side. It’s really materializing in ways that we’re more sophisticated now, and we’re recruiting in better ways than we ever have. I think that as an industry, we could all benefit from just a change in mindset there.
[00:42:09] Tim: Absolutely. You mentioned technology and some of the ways technology can help with that. I want to preface this by saying, I don’t think anyone in the industry sees robotics as a solution to the staffing challenges right now, but I have seen some operators experiment with robots or pilot robots, especially in culinary programs, to try to drive some better outcomes and help keep staffers in closer contact with residents.
Is Oakmont exploring anything like that, or I guess more generally, can you expand on how you can see technology helping with some of this stuff?
[00:42:54] Matt: Yes. No, happy to talk a little bit more about that, too. I think that, again, going back to the focus conversation and eliminating distractions, we want to be progressive where it makes sense. We want to be progressive where we think there’s real value to our residents and our team members.
Whether it values efficiency or values culture. More than anything, we want to make sure that the tech that we would be considering looking at can survive and thrive in our current ecosystem because the second it can’t, and you’re talking about an integration list and it’s really taxing multiple team members, then that ultimately leads to distraction.
We’re really cautious about what we look at on the tech front. We are mindful of the various offerings, and there’s new offerings weekly, so we’re mindful and we track it and we have teams that look at it and explore it.
We’re really disciplined and exercise a ton of discipline and diligence on the tech front before we really aggressively pursue anything beyond maybe reading a summary of what the new tech is. I think selfishly and unapologetically, we like to let other operators sample tech and then share their feedback.
When we think that there’s a real opportunity to explore a tech platform or offering, whether it’s robotics or otherwise, that we think is going to bring value to our business, our team members, our residents, then we’ll certainly consider it.
I don’t think about Oakmont as an organization that’s trying to be tech-forward and progressive, at least early on. That’s just how we think about it. Philosophically, I think we’re patient on the tech front.
[00:44:53] Tim: That makes a lot of sense. I guess I can totally see the utility of letting other people pilot these stuff and seeing what works because you’re right. There is no shortage of things to try right now, it seems. I want to talk with you a little bit about the future, before the end of our discussion today.
This is a topic, obviously, I think that has been on the minds of everyone. How do you think that the senior housing recovery from the pandemic is going to play out over the next 12 months? Maybe another way to ask that question is, what are you, at Oakmont, preparing for?
[00:45:45] Matt: I think it’s going to be a great year for our industry. I think many operators have, and/or are recovering pretty aggressively.
Some of this is anecdotal, but we’re hearing that there’s great momentum on the recovery effort. I think those who recover will fully recover this year and I think be better for it.
I think those who recover are probably those who performed pretty well considering the headwinds the last two years. I think those too, really had a performance fall off, a massive margin erosion.
They’ve got a bigger lift, and I think we’re going to see some continued operator consolidation because some, I just don’t think, are in a position to survive given the lift required.
I think generally speaking, our industry’s going to come out of this really well this year. Some of that operator consolidation I think will be really healthy. I think that there’s going to be operators that are going to be so much better for what we’ve learned the last two years and operationally more dynamic, more adaptable, to my earlier point, have more refined tools on all fronts because we’ve been forced to.
I really think that we’re thinking about COVID, at least, as something that’s normalized now. I think that we’ve positioned ourselves well, and we’ll continue to normalize COVID. Whether it’s preparation or response, there’s no longer a need to be reactive. Even if it’s a new variant.
This is now a steady state. There should be no reason, in my opinion, that we see another lowland performance right now. We should continue to see an upper trajectory and performance in recovery through 2022.
We fully expect that at Oakmont, and I would hope many of our operating partners are feeling the same positive momentum and position today, and are thinking about recovery the same.
[00:47:54] Tim: You had mentioned a variant. It seems like every time we read the news, there is a new development or something to pay attention to.Obviously, we just got through a very troubling variant, the omicron variant, which pushed hospitalizations and deaths, I think, in this country to all-time highs.
You had mentioned that you think the industry is pretty well-prepared to weather the storm going forward. We have another variant in the news I keep hearing about. Now there’s a stealth omicron variant.
I don’t know what to make of that one, but what gives you confidence that the industry can weather future variants similar to the ones that we’ve seen before? It sounds like there’s a lot that you’re doing much better than in early 2020, but tell us more about what tools you feel like you have at your disposal.
[00:48:48] Matt: First, I think let’s look at tools beyond what we have at our disposal with Oakmont.
We’ve got a ton more tools and just enhanced science offerings. There’s been, I think, some great progressive science that we’ve had, medical science that we’ve had, related to managing these variants with these vaccines and these boosters.
Fortunately, the majority of our residents today are boosted. A majority of our staff are vaccinated and boosted. I think that gives us a layer of protection that I think will see through another variant or variants that might come in the next couple of years.
I think that that helps us think about COVID and the pandemic as something that’s really normalized.
Where I think the biggest impact in 2022 on the COVID front is really going to be the regulatory environment. There’s going to be a regulatory response that’s going to change, requiring change. I think there’s still a lot to be determined on this front. I think, whether it’s new legislation, or more aggressive positions on the health care front, I think that the regulatory response that we can expect is going to challenge us.
When I think about the regulatory environment two years ago, really, it was largely, for us in California, the California Department of Social Services. They were the regulatory body. With this pandemic, we now have to speak and respond to a number of agencies.
Now we’re working with the Department of Social Service, we’re working with the CDC; we’re working with the California Department of Public Health; we’re working with the local healthcare authorities; we’re working with OSHA–who’s now in our buildings more than they ever have been.
Now, I think just managing what really is a fractured regulatory environment and landscape is going to prove to be challenging.
When I think about a lot of what Oakmont has done well with the density we have in California, we’ve been able to leverage local scale and density because we know the market we’re in and we know the health authorities really well. We can play in that arena, in that space, and leverage that economy as a scale that we have, but now that these healthcare and regulatory environments are further fractured, even that’s becoming difficult.
We don’t have the same economy as a scale because we’re now managing a really difficult regulatory environment. I think that’s going to be the challenge in 2022. More than managing a variant.
I think we’re completely prepared to do that. It’s just managing the healthcare authorities and lack of consistency and guidance that we get here makes it incredibly difficult to operate at times.
[00:51:49] Tim: Earlier, you said you were bullish on staffing. I wanted to see if you could try to give us a timetable now. Obviously, things are still very tough. Is there a time this year that you expect maybe we might see things start
[00:52:12] Matt: I don’t know that it will ever be easier. I think that we’re going to always have to be strategic and forward-thinking on the staffing side because we’re competing with so many industries and it really, again, is a macroeconomic issue.
I don’t think that’s going to get easier, I think we’re just going to get better at recruiting, and we’re going to continue to add more infrastructure and layers of support, which is going to help us better penetrate. I think the second we start thinking about it as an easy task, is when complacency sets in, and again, we’re going to start to have some of the challenges that we’ve had historically.
I think we always have to be on our toes here and never get complacent and start to think that it’s easing. I think we have to constantly be aggressive on the recruitment side.
Really, Tim, we’re a recruiting agency, right? Our business is providing people that can provide great service in care. When you think about Oakmont, we’ve got about 5,000 employees today in California. If you turnover, let’s just say 50% of those a year, that means we have to hire 2,500 people in California every year. Now, we want to bring that turnover down so it’s less, but regardless, we’re talking about hiring a few thousand people a year.
We are very much in the business of recruiting. It will never be easy, and we’ll never think about it as an easy task or responsibility, and we will always be aggressive and innovative and progressive where we can be.
[00:53:47] Tim: I also want to ask you about growth, which I think we’ve talked in piecemeal throughout our presentation today, especially on the Ivy living side, but what is Oakmont’s strategy for growth in 2022? I know we talked before this call started that you have two communities in Nevada, so might there be other markets outside of California that you have your eye on? Tell us more about your growth plans.
[00:54:13] Matt: We deliberately have a smaller geographic footprint and have largely stayed in the State of California for obvious reasons and for reasons we’ve discussed today, with economies of scale and local infrastructure and knowing California so well.
We still think there’s a lot of opportunity in the state. On the development front, and then we think there’s a lot of opportunity to potentially transition some communities into our operating portfolio. I think that said, we are definitely open to the West Coast expansion for the right opportunity with the right partner.
Going back to the alignment discussions we had earlier, that’s key and critical, first and foremost, but what we don’t want to do is start picking up these one or two communities in Colorado or in Utah.
We would really be interested in finding a portfolio that would give us that same cluster density that has served us so well so we can continue to be high touch. If that opportunity comes, we’ll definitely look at it. Full transparency, we’ve looked at a number of opportunities outside the state here in the last year, it just hasn’t been the right opportunity, but we certainly think we’ll find an opportunity to expand outside of California or further densify in Nevada here in the coming years.
We’d love the opportunity to do that. For us, it’s really about discipline and diligence, though in growth. That’s served us really well. We’re going to continue to philosophically think about growth in that manner. We’ll see. We don’t have a target really, on either time or size outside of the state. I think it’ll happen organically, and we’ll know when it’s the right opportunity and the right time.
[00:56:05] Tim: Great. I think we’ve answered the first part of this question, but I will ask this again. As you look ahead, what are you most worried about? Obviously, earlier, you said the regulatory environment, probably staffing is on that list, but also, what are you most excited about? Again, yes, looking ahead, what is on your worry list, what is on your excitement list?
[00:56:24] Matt: Excitement is easy. We’re excited about Ivy’s growth. Ivy has done well so quickly. I said earlier, we want to get to 20 communities by year-end, we want to have Ivy communities coming out of the ground through self-development here soon. We’re incredibly excited about Ivy in that platform and vehicle.
We’re equally as worried about Ivy scalability. I think that there are complexities of scale. Even in the state or in markets that we’re in. As we decide or desire to further densify, scale is becoming harder today, because of the reasons we talked about, which is the fractured landscape, especially in the health care and regulatory world.
I think Ivy is something we’re excited about, but we know there’s going to be some complexities to this growth and scale. That’s something that I don’t know that it worries us, but we’re just trying to be really strategic in how we think about it.
[00:57:21] Tim: Let’s pretend like you have a magic wand, you can change anything you want about the senior living industry. What would you change and why would you change it?
[00:57:30] Matt: Oh, boy. I think that one of the biggest challenges here, and this might not be a favorable response, but one of the biggest challenges I think we have as an industry is we have a real complacency conundrum.
Our industry, I think, largely speaking, is plagued with operator complacency. I think there’s an environment right now where good enough is good enough. If I could, I think I would change or endeavor to change the broader leadership mindset for our industry to really push for excellence on all fronts.
Can we be better operationally? Can the dining program be better or improved? How can we programmatically be progressive? How can we enhance the resident experience? How do we better prioritize first impression as a performance fundamental?
I think when we start to collectively as an industry avoid these deep complacency traps, I think we’ll together push each other to be more progressive, more innovative, more strategic. I really think we need to start to replace performance excuses with prideful execution. I’m passionate about it.
I think whether it’s walking into a neighboring operator or looking at performance across an operator and acquisition on the market, it’s shocking to me how widely accepted some complacency is here. It’s not everywhere, right? There’s some incredible operators in the space today, but I would love to see just a better push for performance and excellence across the industry.
[00:59:26] Tim: Great. In the time we have left, let’s try to improve some of those leadership standards. There’s clearly operators tuning in right now. What advice would you have for them watching to do that?
[00:59:45] Matt: Well, I just said it. I think just push to be better. I think we don’t leverage each other as operators enough. I think that when we think at Oakmont about growth in performance in even the markets in the clusters that we operate in, I don’t think about trying to go steal a resident or a staff member from one community to an Oakmont.
I think about, how do I better penetrate the market and pull somebody at a home that I know, I’m confident, is going to thrive in one of our communities?
I think when we start collectively working together and saying, “Hey, let’s focus on what we do so well, and talk about better ways to penetrate our market versus how are we going to really compete for the same customer through discounting and cost cuts and burn off concessions and waiving of community fees?”
We need to get back to selling from a position of strength. We do incredible work every day. We need to be unapologetic about it. We need to sell from a position of strength and pride, thinking of integrity for all the great work we do.
Let’s not create value by cost-cutting. Let’s create value by investing in our people and our programs and our assets, as an industry, holistically and together. I think when we do that, and we’re confident, from a position of strength, it’s going to resonate with, I think, the industry at large, our consumer at large, we’re going to better penetrate and together have better success.
[01:01:18] Tim: Great. Well, those are great words to end on. We’re just now here at the hour mark. I think that is all the time we have for this talk. I just want to, again, thank Oakmont Management Group and Matt Stevenson for a great discussion. Also, obviously, thank you to our audience for tuning in today. We will have more SHN+ Talks next month, so tune in then.
[01:01:46] Matt: Thanks, Tim. Thanks, everybody.
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