Many older adults and their families don’t think about senior living until they have to. Typically, that is when a prospective resident is in their late 70s or early 80s, and often when they can no longer live at home.
But HumanGood CEO John Cochrane thinks there is a real opportunity to reach those older adults and their families far earlier in their journey — 10 to 15 years earlier, to be exact.
Of course, that doesn’t mean he believes people in their 60s should move into a community and simply live there for longer. Instead, he envisions a world where senior living operators play a larger, more visible role in their surrounding communities by interacting with older adults or their families long before they even consider making a move.
“You may be accessing services, programs, you may be teaching in a community long before you would ever make a move — and maybe you never will,” Cochrane said during a recent appearance on SHN+ TALKS. “That’s where I think the real opportunity is, what I think of as aspirational well-living.”
Like other leaders in the industry, Cochrane also believes many senior living operators are still too reactive in the way they care for residents. And he sees a real danger in focusing too much on needs-based move-ins, as what works to grow occupancy today may not in five years.
“We want people looking at this at 60 and 65 saying, ‘Hey, I can’t wait to live there, and at some point, that’s going to be my best option,’” he said. “And they do it on their terms, on their time at the right time, not when you’re up against the wall.”
We are pleased to share the recording and this transcript of the SHN+ TALKS conversation with SHN+ members. Read on to learn about:
– What Cochrane thinks operators must do to “self-disrupt” for the future
– Why HumanGood moved its headquarters to Duarte, California, next to one of its communities
– How the organization is growing and evolving in 2022
[00:01:30] Tim: We have a lot of ground to cover today, John, so let’s just jump right into it. What’s the state of HumanGood right now? And what are you as a leader focused on?
[00:01:41] John Cochrane: What a fascinating time to be in our field. And what a great time to be in our field, honestly.
It’s interesting, having come through the last two and a half years of crisis land for all of us, I’ve never been more enthused, more excited, more optimistic about what’s in front of us as an industry, as a field, as individuals, as organizations. But I say that with full recognition that the last two and a half years have been challenging, to say the least, for all of us.
It’s easy to get mired in the challenge and what went wrong and all of the stresses of the last two and a half years, but as I look at where we are as HumanGood and where we are as a field, I believe in many respects we are stronger today. We’re stronger as HumanGood and I think there are a lot of organizations out there that are stronger than they were two and a half years ago. And if you had asked any of us, myself included, to predict two and a half years ago here’s what’s going to happen — that we’re going to have a global pandemic and a shutdown and labor disruption and political disruption and racial unrest — how do you think you’ll fair in that? I’m not sure I would’ve said we would come out stronger. But we have. I think that really is why I’m so excited about where we are today and what the future holds.
Having said that, as I look at where we are and how we’re positioning ourselves, I’m right in the middle of trying to rebalance our initiatives in our organization from short-term to a balance between short-term and long-term. As we often talk about as HumanGood, as leaders, we need to have one foot in today and one foot in five years from now. For the last two and a half years, we have had both feet, all of our arms, legs, and digits, in the very immediate. A long-term plan was looking out 24 hours and that was necessary to get us through the crisis. It was necessary as we recalibrated to something of a new norm, but it’s not enough to get us where we need to go.
We, as an organization, are trying to pivot back to taking care of the immediate as we have done very successfully for the last two and a half years, but make sure we’re keeping one eye out on the long-term plan of where we are going. And where is our industry going? Where are our customers calling us to be? I use that phrase customers deliberately and it’s a broad view.
It starts with our team members, where are they calling us to be as an organization, as a field? What’s changing in that marketplace that’s going to impact how we do our business? What do our residential customers have to say to us? What are they looking for? What are we doing well today? What are we doing not so well today? Where are the gaps, where are the opportunities? Listening to those folks, tuning in a much more nuanced, sensitive way to our families, how we engage with them, how we partner with them, how they see our business, and then how do we reach the 90% of the people who don’t have and don’t want anything to do with us because they don’t understand what it is we do in the first place?
I think for the organizations who are agile, who are nimble, who are strategic thinking, who are willing to try something and have it not be successful and try again and try again and keep trying, it truly is just an exciting time to be doing what we’re doing. You look at technology, attitudes towards aging demographics, advances in healthcare understanding, there are so many dynamics that are shaping our field and potentially shaping it in profound and really positive ways that I just could not be more excited to be where we are today, as a company and as a field.
[00:06:13] Tim: What has demand been like in the past few weeks, months, and what are you seeing on the ground right now in terms of leads and move-ins, things like that?
[00:07:12] John: Obviously, we took a significant downturn in the early days of Covid because everything was shut down, you can’t tour, you can’t bring people to any of our care environments. Sso occupancy took, as it did for everyone, a pretty steep decline.
We’ve seen a very strong comeback. Last month was a record-setting entrance fee month for us, the best month we’ve ever had in the history of the company. We’re seeing tremendous pressure coming through to the pipeline, tremendous interest driven by a lot of different factors, I think.
It’s obviously very encouraging. It tells us that we’re doing something right. We’ve got the bones of something here. I think long-term that won’t necessarily be enough to sustain us. It’s positive, but I think the cautionary note that you’re probably hearing and that I would offer to people is we can’t get lulled into a complacency of, “Oh, the old order has returned, and what worked five years ago is going to get us through today.” I think there’s pent-up pressure from people who put off decisions too long, and recognize they’re missing something being in their homes versus being in a community with people.
I think we’re benefiting from the fact that people know that while there were adverse impacts from Covid in our communities for sure, there were adverse impacts in the world, and people living with us fared better than people isolated and restricted to their homes. Again, I think there’s a good story coming out of that, about the power of community, about the power of healthcare, about the power of simply living with other people and having access to resources that we don’t have in our homes and we’re seeing that benefit, and so that’s all great. I think now we need to use that momentum to help shape the new future.
It’s very encouraging and it’s part of why I’ll go back to my first comment of why I feel so optimistic about our field. I would just caution all of us, and I caution HumanGood regularly on this, let’s not get lulled into thinking, “Oh, we can let down our guard. Oh, we can slow down our focus. Oh, we don’t have to look at innovation anymore.” Now’s the chance to double down on all of that while we’ve got momentum.
[00:10:40] Tim: Self-disruption: You’ve said that the industry needs to look inward, change what it’s doing, not be so complacent, get away from the old order. Can you tell me though, what self-disruption means and why you feel that way?
[00:11:10] John: It’s such a great question. I don’t know that I have any brilliant answer to that, but I’ll add my thoughts to that. This is where I think the audience will have things to add in their own perspectives. I think what I’m talking about when I talk about self-disruption is that what got us here is not going to get us there. What got us to this point in time in terms of program and offerings and pricing and product, will not meet the demands of a coming generation. The disruption comes into how do you pivot from a business that’s working today and working in many cases, more or less successfully?
Happily, now we’re all seeing more success every month. But how do you pivot from what’s working today that you know will not work in the same way five years from now to an uncertain future, and an uncertain new model? That’s the danger. That’s why so few organizations and companies pivot in environments that are being disrupted. We know that we’ve got great demographics coming, that’s wonderful. We know there are strong economic foundations for the coming generations of seniors that we serve. There are a lot of pieces in places that say there’s a big and growing and stable market. How we reach that market is going to be very different than it was five years ago.
Our world is changing at a faster clip than it ever has. We’re seeing new models, new technologies, new pressures, new approaches to aging, new approaches to healthcare. Again, all of which I think is potentially positive, but all of which will require us to take a different approach to all these aspects of our business. I say that with a real sense of humility that, look, I don’t think we’re brilliant at self-destructing at HumanGood, we’re trying it and it’s hard. That’s another reason people fail at it because it’s hard to let go of something that’s certain today, and hold on to a new future that’s going to be different.
I often use the Walt Disney Company as an example of a successful pivot in disruption. It’s easy to look at the results of something like the Walt Disney Company and say, “Oh, well, they just went from here to here, and they just turned this corner, it was flawless.” A, it wasn’t flawless. It was a big pivot and it was a risky pivot. One small example is their pivot away from carriage fees, working with the cable providers, to direct-to-consumer provision.
That looks obvious five years after the fact, and we have success to look at. It was a whole lot less obvious when Disney was letting go of billions of dollars in carriage fees while they built out an uncertain model to reach their consumers through a new channel. That’s the kind of thinking and risk-taking, and experimentation that we need as a field if we’re going to be relevant today and remain relevant for the next five years. That’s the big challenge but it’s also the enormous, enormous opportunity.
The cautionary note I would sound on that, and I think many people in our field are aware of this, is that we’re not the only people looking to disrupt our field. We’re not the only people who see the demographics and the growth, and the attention being paid to this field, it’s coming from other providers. That’s fine, but even more interesting, it’s coming from outsiders in many cases who we don’t even view as competitors today. If we don’t disrupt ourselves and get in front of those people, they are going to leap in front of us, and we will never see them coming. That, I think, is a big danger.
The reason this gets me so fired up is these are outsiders who in many cases, see the demographics, they see all the compelling data. They don’t know this market like we do. We’ve got expertise, we’ve got access, we’ve got reputational advantages today but we have a fairly short window to take advantage of those and make sure that we keep moving ourselves in front and don’t get lapped by somebody else.
[00:15:42] Tim: I really loved the Disney example. Do you have any senior living specific examples of either a pivot underway that you see in the industry or something that you have done at HumanGood or are doing right now that exemplifies some of the things you just said?
[00:15:58] John: I think there are a couple of things. I think you can look at the Enso Village community in Healdsburg, California. It launched just before the pandemic I believe, before the fires in Healdsburg, a runaway success. They sold out in a record time as a Zen-inspired community, working in partnership with the Kendal organization and the Zen community of San Francisco.
It’s interesting because I think if you had talked to a lot of people 10 years ago and said, “Hey, what do you think about the idea of a Zen-inspired community?” A lot of the traditional thinking pushback would have been, “Hey, it’s a really narrow market and it’s way too narrow and it’s too focused, and you’re leaving too many people potentially out.” I think what that experience shows us is when you do a targeted, well-thought-out, well-positioned project, yes, it may be narrower in scope, but it’s much deeper in terms of market responsiveness.
There’s nothing out there to compete with that product. I think it shows that that kind of strong affinity group, that kind of focused community is increasingly what people are going to look for. What I would tell people is Zen community is one example of what could be dozens, if not hundreds, of focused communities around affinity groups that I think will be much more appealing to people than the generic one-size-fits-all, we’re appealing to everybody community, which increasingly we’re seeing does not appeal to anybody.
[00:17:38] Tim: It’s very interesting. You mentioned that community and those questions. I remember when I saw the first press release for this community a few years ago,I thought, gee, this is very different. Who is this for? Now, of course, it makes more sense, many years later.
[00:17:55] John: Well, it’s interesting because I’ve gotten to know the Zen Center of San Francisco folks a little bit and Sean Kelly is a good friend from Kendal, so he and I talk about this project from time to time. It’s really fascinating because I think what makes this community work is the programmatic elements that accompany this. This really is a programmatic shift in how we approach aging.
It’s participatory, not passive. That’s really significant. It’s partnered, not parochial, so this isn’t, “Hey, I’m going to sit here and you’re going to entertain me, I’m going to sit here, you’re going to take care of me, I’m going to sit you’re going to serve me,” it’s “How can you partner with me to help me live my best life as I define it?” And how I define it is going to be different than how you define it, than how our audience defines it, than how someone else defines it, and that I think, is the real beauty of this.
I think that speaks to people to say, that’s what I’m looking for in this next phase of my life. I’m not looking to be taken care of and talked down to, I’m looking to live my best life understanding that that may come with different goals, different limitations, just like every stage of life comes with different goals and different limitations. Again, I think that that’s an interesting example of one model that works, and it should ignite our thinking about other models that also might speak to aspects of aging.
[00:19:27] Tim: Along those same lines, let’s use another specific example. I’ve talked with some operators who are, I don’t think they’re using the phrase self-disrupt, but essentially, they are self-disrupting by getting into things like home care. Doing things that they traditionally had not done in an effort to try to reach people sooner or make connections, a lot of the things that you just mentioned.
You have actually said that you have seen opportunities to reach older adults even earlier in the care continuum. That piqued my interest. What is that opportunity as you see it, and in your view, as these operators self-disrupt, how can they take advantage of that?
[00:20:01] John: This is where home care is interesting because people are trying to push back into two things. One is getting people at home before they make a move to a community. Two, they’re trying to get to the people who will never go into a community in the first place. They’re just not going to go unless they have to. That’s a real market, but I think what’s missing with that is that’s still what I would call in many respects a reactive market.
I’m not taking away from the business plan, that’s fine. There’s a business there, but I think the greater opportunity is to reach back 10, 15 years earlier and start building that database for people of what your best life is going to look like at 70, 80, or 90. How do we help you define that sense of purpose? How do we help you understand where you are today physically and maintain your optimal physical health without spending six hours a day in the gym and eating only broccoli three meals a day?
I think we’ve got an opportunity, and we see this with our families who come in and say, “Hey, we love the community aspect of what you’re doing for mom and dad, they’re thriving. This is great, we see that. Obviously, we’re not ready to live this lifestyle yet, but what can we start doing now to ensure when we get to 70, 80, or 90, we are as best positioned as we can to live that best life?”
This is partly a result of the fact that these years are, in many cases, newly discovered years. You go back 500 years, 1,000 years, 2,000 years, nobody lived to be 95. It was a fluke. Today the expectation is not only to live to 95, it’s to live to a healthy 95 in many cases. I think we’re starting to see this mindset shift if you will to say, hey, I don’t want these to be accidental years. I want them to be intentional years. I want to move from aspiration to actual achievement of my dreams and my goals in these years.
That’s where I think we have an opportunity to develop much deeper, longer ties to our market before they come in with an identified need. I think that won’t be a magic bullet because I don’t think there’s one solution that works, but I think that’s going to be part of brand leadership will be the people who establish those relationships early on to when it’s time to move into a community or think about it, Tim’s not going to think twice because he’s been tied into HumanGood or this Enso Village or someone else for 20 or 30 years before there’s ever a physical move.
You may be accessing services, programs. You may be teaching in a community long before you would ever make a move and maybe you never will. That’s where I think the real opportunity is focused on, what I think of as aspirational well-living.
[00:23:12] Tim: Yes. You actually answered a question I was about to ask you, which is, well, how in the world do you get people thinking about moving into senior living 30 years beforehand, but the examples that you shared, I mean, all that makes a lot of sense to me.
[00:23:24] John: If you just wait until there’s a need, we’ve waited too long, because at that point it’s coming out of a place of it’s more of a push than a pull. I think what we want to do is shift it to a pull.
We want people looking at this at 60 and 65 saying, “Hey, I can’t wait to live there, and at some point, that’s going to be my best option,” and they do it on their terms on their time at the right time, not when you’re up against the wall, the family’s telling you, you can’t stay in the house. The car’s been taken away and your life is shut down. You’re going to move from an expansive viewpoint, not a scarcity viewpoint.
[00:24:04] Tim: It seems like 2022 is a big year for you guys. I know you just moved your headquarters to Duarte, California. Before we talk a little bit about that and what that’s all about, I know that HumanGood has three strategic priorities in 2022, so can you tell me what those are and why you’re pursuing those as priorities?
[00:24:42] John: Sure. We’ve had the same three strategic priorities for the past five years, and they’re simple priorities. When we talk about strategy and choice, it’s one of those topics that is so often misunderstood by people. It’s overcomplicated, it’s over nuanced, it’s over-thought, and I think it’s really much simpler in many cases than what we make it out to be.
We’ve been focusing on three areas at HumanGood. One is creating experiences that matter for our customers. We’re moving into an experiential economy, we know that. That’s increasingly what people are looking for from us, and when I say customers, I use that, again, in the broadest term. That starts with our team members. What is the experience that we’re providing to our team members from before they ever sign on to the company? What are they seeing about us? How do they access us? What does that feel like to them? What emotional buckets does it fill for them? What career opportunities can we create for them?
How do we create a relationship and an experience for our team members that says “This is where I want to do my work. This is where I can make the most impact. This is where I can have the most satisfying career. This is a place I can devote my time and energy and talent.” The experiential focus starts with our team members, continues obviously, most obviously, to our residents.
What are the experiences they’re looking for? What are the experiences we’re not providing them today? Where are we falling short? Where are we meeting their expectations? Where are we not? Just as importantly as we look at where our current residents are experiencing life, what are the people coming in 5 and 10 years looking for? How do we create experiences that matter to those folks? How to, back to the last question, how do we start connecting with those people before they ever become residents? How do we create experiences that start to create a sticky brand relationship with those people early on?
We’re highly focused on that. We’re also focused on creating experiences that matter to our families. I think — and this is true for HumanGood, I can’t speak for other providers – that’s one of the big gaps for us. We just have not spent any time or meaningful attention designing experiences that matter to our families. That’s where I think we have some significant opportunities to differentiate ourselves and add real value to people so they look at our communities in a positive light and a light of I want to be here and participate with my mom or dad or my grandparents, and be part of their lives and be part of that community. I think that’s significant.
Then the last piece is our broader communities. Again, that’s where I think as a company and as a field, we’ve often operated somewhat in isolation. We build a community, we put a moat around it, and we control access. How do we connect our small communities with the broader community at large in a better way that we’re seen as an essential, integral part of a broader community? We think the experiential part of what we provide is going to be an important part of who we are and what the HumanGood brand is going forward.
The second strategic initiative is to improve our deployment of technology. We think there are just any number of exciting changes going on in the world of technology that can improve every aspect of our business, every aspect of the experience that I just described to you. I think it’s an area where we are way behind as a business and as a field and we need to take a much stronger position adopting and deploying and trying technologies that can improve our business practices, improve the team member experience, improve the resident experience, connect family members, and ultimately help us reach people who we would otherwise never reach, either by reasons of geography or by reasons of choice.
Then finally, and we’ve seen the significant advantages of this through the years of HumanGood, our third strategic priority is to continue on growth. We’ve seen significant advantages to growing our portfolio through affiliation and through new development. We’ll continue to do that and the affordable housing side. We know there’s just a critical unmet need for affordable senior housing and services. We’re looking for every opportunity we can find to grow that side of our business.
We’ve not done a lot of Greenfield life plan community development for various reasons. That may change. I think we may start looking at some opportunities there, and we have grown very successfully with like-minded organizations through affiliation and those have just brought tremendous rewards to our organization. It’s enriched our culture, it’s strengthened our finances. It’s increased our geography and our brand presence and brought us a tremendous amount of talent, which as we all know, is one of the biggest concerns we have as a field is how do we attract people? How do we reward and retain people, and growth and scale have afforded real opportunities for us in that. Between experience and technology and growth, those are the strategic priorities for HumanGood.
[00:30:23] Tim: Moving your headquarters to Duarte, opening the innovation center, I know that this is all part of an effort to get everyone on the same page, align what everyone is doing and what they’re thinking about. Can you tell us how all these pieces fit together and then, what you are planning, what your grand vision is for all of this?
[00:31:16] John: Sure. I can try anyway. I say that somewhat jokingly but some of this is you got to make it up as you go along. Ambiguity is something we are not comfortable with as a field. I think it is important that we get a little more comfortable with the fact that we got to make some of this stuff up on the fly that we expect, we’re going in this direction, and we end up over here, and we got to be comfortable with that. Historically, we’ve just been too cautious as a company and as a field. This is where I’ll go back to the very first comments we talked about.
I think Covid has helped us because it’s forced us to become more agile, more open to experimentation, more accepting of a certain level of failure as we try things, they don’t work and we got to back up and go in a different direction. As we looked at how we embrace a culture of innovation at HumanGood, which is really what’s behind us, and a culture of understanding and being responsive to our customers. There were two things that I thought were important. One is for the home office, or as we call it, the community support center.
I think it’s so important for people who work in what for lack of a better word called a corporate environment, to be connected with a customer. It’s so easy to sit in an ivory tower somewhere behind a cubicle and not be aware of the impact our decisions have on the people who do the frontline work of our organization. We wanted people connected to frontline team members and understand what their lives are like because that’s where 80% of our business happens. Understanding their pressures and concerns and desires and aspirations is really important for people who work in the community support center.
Understanding our residents and their families is equally important. We need to be able to interact with people and it can’t all be formal. You pick up so much more if you’re having breakfast or lunch in a dining room and seated with a resident or a family member just having a conversation about what their life is like, what they want their life to be like, what’s missing? What’s an unexpected surprise that’s happy for them?
We need to hear that stuff and you only hear that through these casual interactions and those interactions, shape how people behave. It shapes the culture of an organization. We thought it was important that our community support folks on site. We’re also connected to three affordable housing projects within a several-block radius of that campus. That is equally important to us. That is a very important part of our mission and our business.
Having the ability to go over to events in those communities and understand those residents and hear about the lives they’ve lived and how living in senior-supported affordable housing is enhancing their ability to age successfully in ways they could never have imagined is not just heartwarming, it inspires us. When we’re asking people to put the effort in to bring something across the line now they get it. Now they understand why it’s so important.
The third piece that we thought was so important about the move to Duarte, where we have a community, is where we’re building our innovation center. As we look to establish a culture of innovation, and that is not easily done, we thought it was important to have community direct team members and community support team members from the home office able to interact and see these new technologies on an almost daily basis. Every day we’re seeing how that gets woven into everything we do and we think that that awareness by itself will be important for people.
We also think that, similar to having breakfast or lunch with a resident or a family member, having those casual interactions with our innovation team will also start to surface some of the challenges that otherwise nobody would ever think about. You and I are having a conversation and all of a sudden a light bulb goes off and I say, “That makes me think, Tim, the big challenge I’m having in my life is X, Y, or Z and now we’re off solving a problem using technology, using innovation.” That’s what we’re looking to establish. This is a big move for us, it’s an important move for us and it’s one I’m really, really looking forward to.
When I started my career I started working in a corporate office at the time with Erickson Communities that was located on the site of one of the Erickson campuses. Every breakfast, every lunch I was eating with residents, with team members in a community and it shaped my career in really profound ways. I’m optimistic that this will have the same impact not just on the folks in the CSC but on folks throughout the organization.
[00:36:51] Tim: I want to take a question from our audience here. The question is, “Do you see active adult communities cannibalizing independent living demand, the latter as freestanding or within a CCRC? If so, what does HumanGood have in mind to thrive in that new landscape?”
[00:37:22] John: It’s a great question. Active adult communities have existed for as long as our field has, or very close to it. You had the Del Webb and the Sun Cities and you’ve always had the active adult communities out there. I think they serve a very different market. The question is going to be what is the intersection of those markets going forward? Because it used to be the difference between leisure retirement and more of a healthcare-focused retirement.
We don’t like talking about that but that’s the reality, it’s more of a healthcare-focused retirement when you move to a life plan community. I think if we do our jobs right, we may be able to push that line back a little bit, but I think some of what we do in terms of healthcare management we could push into some of the leisure retirement communities as well.
It’s an expertise they don’t have, they’re not going to have, they’re not equipped to have. It’s not what they do, but it is what we can do. We’re not doing it yet but I think it’s something consumers are looking for: “How do I get the tools and resources to understand where I’m at physically today? How do I find interventions that allow me to easily and meaningfully move the needle and how do I track my progress and track how I’m doing?”
I think that’s something that ultimately can help us push the line back and ultimately even potentially partner with some of the active adult communities. The long and short of it is I think those two business models serve very different– complementary but very different needs and so I don’t lose a lot of sleep worrying about the leisure retirement folks taking away our business. If we lose our business it will not be because of the leisure retirement people.
[00:39:25] Tim: I sometimes will see life plan communities or CCRC try to build out pocket neighborhood or cottage concepts to try to meet some of this demand. Do you do this on your campuses? How do you do some of the things that you’ve described?
[00:39:45] John: It’s an interesting question. I can’t say we’ve started looking into the idea of pocket neighborhoods within larger communities that are senior-oriented. I suspect, and I’m talking off the top of my head here, that’s going to be one of the models that we see emerge in the next decade, with some success as people look to what they call stay at home, stay in their communities. And that’s great. Many people aren’t equipped to do that in their current homes, they’re simply isolated, there’s a big difference between being independent and simply being alone. I think they’re pocket neighborhoods that may serve 6, 8, 10 people with whether it’s a common kitchen, a common living room, some shared outdoor space, but your own private living space.
I think that’s actually a concept that could be really intriguing. Again, it’s not going to displace the life plan community business at all, but I think it could actually, in a really positive way, help support it. I think that’s a model that we could see take off. Again, I think that one of the opportunities we may see is for those pocket neighborhoods, to connect into a life plan community for some of the services, whether it’s programs services, health care services, it’s something else.
[00:41:13] Tim: The middle market. Obviously, it is a big challenge and I’m sure you also agree, a huge opportunity for senior living operators. As big as the topic is, I just want to start with getting your philosophy on meeting the market and how you at HumanGood think about doing that today?
[00:41:39] John: Well, your observations are right. You go to NIC meetings, for example, and five years ago you didn’t hear anyone talking about the middle market. Today, you go to the seminar on the middle market, and it is quite literally a 400 seat auditorium. It’s interesting because we serve the top 10%, 15%, 20% of the market with life plan communities. We do a superb job serving the bottom 15% through government-subsidized affordable housing communities.
That leaves this 70% in the middle that can’t afford or don’t want an LPC, and are never going to qualify for an affordable community. What do they do? Well, they stay home. They stay home because they don’t have a choice, there’s nothing else for them. I think people are finally waking up to the fact that staying in the home may not be the best solution. Staying in the home without any supportive services is a terrible solution. We have a societal interest in doing better at serving that 70% of the population. Having said that, what you see today is mostly development, which I’ll call life plan community light.
We’ve taken the lifeline community, we turn stuff overboard that we think people can’t afford and we tried to skinny it down. I don’t mean to belittle that it’s an okay business model, but that’s most of what you see. Instead of the top 15%, we’re serving the top 25% of the population, that’s an improvement so that’s great, but there’s still a huge gap there. I think a challenge is how do we provide services and support to those people in the true middle middle of that? I think if you look at the bottom, say 15%, who are supported today through government subsidy, I think the next 15% to 20% will still require a subsidy of some kind for support.
To imagine that we’re going to do this purely based on private enterprise, I don’t think the economics work. At least I haven’t seen a model. I think the true middle middle, that middle 30 if you will, I think there probably is a model that works. I haven’t seen what it is yet, we’re looking at some stuff I know other people are I’m not trying to be coy, we literally haven’t seen the model that works. I think there are a lot of people looking at it, a lot of smart people working hard at it. I’m hopeful that we’ll find models, I think technology will absolutely be part of that model.
In our case, we look at the work we do so effectively with our service coordinators and affordable housing. Some of my favorite people in our company, some of the most passionate people you’ll ever meet are the service coordinators. What they do is just what it sounds like. They connect people like me to meals on wheels, if I need meals support, they connect me to VA services if I’m a veteran. They connect me to county mental health services, if I need mental health support. They connect me to channels that I might not otherwise get to myself.
I think service coordination and technology, some element of that will be part of what I call true middle middle response. Having said that, Tim, we have not figured out the model yet. We’re working on it. We are open to ideas. We’re open to partnerships which I also think by the way will be key. We can’t do one-size-fits-all, be all things to all people anymore. I think the best providers on many levels will work in partnership with other organizations. The good news is there’s a lot of attention being paid to the middle market and I think people are serious about trying to serve it. The challenge is we haven’t seen the model that works yet.
[00:45:35] Tim: What do you think the biggest hurdle to the model is? In my mind, it’s the care component. The higher acuity of a resident, the harder it is to bring those costs down to something that is middle market. But what are your thoughts? What is the big hurdle? Why is it hard to make this model work?
[00:46:01] John: Well, lots of reasons. Although your vantage point of studying this from your seat probably gives you unique insights into this market. I think you’ve just hit on one of them, which is that the care costs of care delivery to any market are just exorbitant. That gets to a broader challenge and opportunity we have, which is, we have today, what is a sick care system. You break it, we fix it. “Ah, your hip gives out, we’ll get you a new one Your knee gives out, we can get you one knee. You can get a deal on two, if you do them both. “
We wait until something’s wrong, and then we intervene. We have got to reverse that. That’s going to be part of the solution. When you look at how do we bring cost advantage, cost favorable services to people. The way you do that is to back up 10, 15, 20 years, and start understanding people today, giving them tools and resources to understand where they’re at, what trajectory they’re on if something doesn’t change.
Tools to change that trajectory and bend the trend. That’s how you’re going to ultimately deliver cost-effective services to people. That means, if you’re looking at, for example, falls risk. It’s our biggest source of insured loss as a company. It’s our number one source of insured loss as a field. Is seniors biggest fear as they age. I’m going to fall. Because we know you take a tumble at 85, nothing good happens from that.
What do we do? Well, we wait until people fall, and we send them out to the hospital. The worst thing we can do for people, what’s far better is we get people at 60 and say, “As part of your physical, we’re going to do a gait analysis.” We’re going to watch it and say, “Hey, John, you’re doing fine.” Until John’s not doing fine. Then we’re going to say, we need a customized intervention.
John needs to get into a weight class, a yoga class, a silver sneakers class, John needs to eat less milkshakes, whatever it is. What are the interventions to get me back on track for a positive gait and stability?
That’s where I think we have an opportunity as a field to add real value. We have expertise, we have access, we have knowledge of aging. We’ve got to bring it to bear, to reach people at 60 so that at age 80, they’re having the optimal aging experience. Having defaulted into what you described, which is you’ve aged unsuccessfully, now you’re scattered around in your home, and we have no cost-effective way of bringing in services to that many people.
[00:48:54] Tim: Staffing. Obviously, still a huge challenge. I know that we’re in the midst of yet another Covid surge, and I know that that does not do good things to someone’s workforce. John, as you see it, what are the big challenges left in staffing? Has anything gotten easier? Is it getting harder again? What do you see as you look at it?
[00:49:38] John: Well, again, I can only speak for myself on this front. I can’t say it’s gotten easier, and I don’t see it getting a lot easier. I think that’s the challenge. Everyone knows that the challenge we’ve had with labor, both access, cost of labor, retention, engagement, you name it. On every score, we’re all struggling in the labor markets. I don’t think there is a one size fits all solution for that. I think it’s going to be a multitude of solutions. It’s getting into schools which through vision 2025, which is an industry collaborative, we’re making an intensive effort to develop internships with colleges and universities to attract people into our field.
These, of course, have to be paid internships. We have to be competitive, and we need to really put out an industry-wide effort to do that, and Vision 2025 is doing that superbly. That’s one initiative to address one facet of the challenge. We’re looking at some innovative programs to get into the high schools and start working with high school kids for whom college may not be the best-desired option to say, “Look, we can start partnering with you early, give you training, get you a job when you’re coming out of high school. Even better than that, continue that training and give you a professional career pathway that will not only be financially sustainable, but emotionally rewarding.”
That also gets to one other aspect of this, which I think we all need as we look to address the labor challenge and that is we need to be better at telling our story. Most of the people I know who work in this field love the work they do. They understand it’s important. They understand the impact. Besides putting food on the table for their families, it feeds their souls, and I hear those stories all the time. It’s why I’m in this field. I am not unique in that respect. We do a terrible job of telling people outside why this work matters to us so much, why it resonates so strongly with most of us who do this work.
I think if we’re going to compete, we need to do a better job of explaining the emotional value of the work that we do and the satisfying career path you can have in this field. There are multiple career paths for people and we’ve all got great stories about team members who started here, and went here. It’s often a circuitous path as life often is, but it’s gratifying for people.
We just haven’t told those stories very successfully. I think it’s working with people earlier. It’s working on multiple fronts and it’s working as a unified field, which is why something like the Vision 2025 Initiative is so important because it’s not Life Care Services doing their own thing, HumanGood doing its own thing, Kendal doing its own thing. It’s all of the same, “Look, we benefit from working together. We all love this field. We see the possibility in this field, and we need to collectively pool resources and tell the story to attract people into this field.”
[00:53:04] Tim: I was at an industry conference recently where it was ASHA. There was a lot of discussion about, I think there was an example of a community that was located near a McDonald’s. I don’t remember the exact specifics of the story now, but essentially it was they were looking to compete with this one particular McDonald’s because this McDonald’s was very popular for people to go and apply to.
The frustration was, McDonald’s can pay good wages because of their scale and their application process is really robust and very easy. You can do it on your phone if you want. And they were describing how senior living needs to move closer to something like that, removing the barriers to applying. Do you see solutions like that as part of the answer? I know that you’re a big fan of technology, so maybe technology can play a role here too.
[00:53:55] John: Well, technology will play a role, and you’re right, part of the challenge we’re having is if you want to apply to McDonald’s, they’ll tell you within six hours, whether you’re hired or not. You apply to us and we’ll tell you in six weeks, well half these people have had three jobs in those six weeks. We’re way behind if that’s what it’s taking, but so it’s where technology can absolutely play a role in speeding through the process of connecting someone who wants to work with jobs we need filled.
Now the tricky part that we’ve got, and I think there’s still a technology solution to this is unlike McDonald’s, we have to do different levels of background checks for people and for very good reasons, but we need to find a way to do those much, much faster than the current process we’re using. I think there are solutions for that. I don’t think we’re there yet, but if we’re going to compete with the McDonalds and the Chick-fil-As, we absolutely need to be much more technologically adept, but also much speedier.
[00:55:00] Tim: As you look at the next six to 12 months, how do you see the ongoing recovery playing out? I mean, obviously, no one has a crystal ball. But we’ve had just four consecutive quarters of occupancy growth. Again, an interesting time for the industry. In your mind, what comes next?
[00:55:39] John: I hope what comes next is a real doubling down of what we’re doing today. Many of us, HumanGood included, we’ve learned to be more agile, we’ve learned to be faster, more responsive, better at risk-taking, we need to double down on that and not let our foot off the gas and I think that’s the big risk here. As we come through, as you say, four quarters of occupancy growth, continued occupancy, growth, knock on wood on the horizon, I think everyone’s feeling more optimistic about where we are. This is not the time to pull back, it’s the time to double down, and if we do that the future is truly just about limitless. It’s unbelievable.
If we back down and back off, we’re going to lose the ground we have gained and we just can’t do that and I will tell you from HumanGood, and this is something we talk about a lot internally as a company and that is, we know that we’ve done a lot of the work in the last two years because we were forced to do it. It was responding to external pressures and the external environment, and it just forced us into this new place. Sometimes uncomfortably, often uncomfortably, and we’re still not quite comfortable with that environment of constant change and shifting, we’ve got to get ourselves comfortable with that.
We’ve got to recognize that is the new norm and it needs to be the new norm and if we make it the new norm, that’s going to be where we realize our potential as an organization. It really is about encouraging people to keep doing what we’ve been doing for the past two years, so successfully, that we could never have predicted. Double down, push harder, go faster, take more risks, try more technologies. Be brutally honest about what works and doesn’t work, be willing to pivot, be agile, and that is going to create the future for us.
[00:57:43] Tim: As you look ahead, what’s on your worry list? What’s on your opportunity or excitement list?
[00:57:50] John: Boy, I think the opportunity excitement list is just huge. I think it’s looking at as you know, we’ve started a technology investment fund as part of our commitment to technology. I’m more excited than ever by both the deal flow of what I’m seeing, and the number of people who are looking at this space. These are smart, creative people who see the opportunity, see the need, understand technology, but don’t know our business, we do. You put those two things together, I am excited about what we can yet do in the field of technology and successful aging.
I’m excited about what we can do in the area of addressing the labor challenges we’ve just been talking about, as we help paint a picture of why this is such a great place to spend and develop a career. At the same time, I’m equally excited as we look at how we age successfully. There are many resources out there just floating around as we start to pull these together into offerings that matter to people. I’m more excited now about our future as a field than any time I’ve worked in this field, and if you’d asked me that two and a half years ago if I would feel this way after this experience, I don’t think I could have told you the answer would be yes, but the answer is I’m more excited now than ever before. I just can’t wait to see what the next decade brings.
[00:59:21] Tim: Yes. Lightning round. What is on your worry list?
[00:59:25] John: Worry list, I think complacency and I think the worry list is the disruption coming from outside at a speed that will eclipse anything we have imagined.
[00:59:38] Tim: All right. Well, John, I know that we could talk for another hour or more, but we’re out of time for this talk but again, I want to thank you, John Cochrane, for coming on. It’s always great to talk with you, and thank you again for HumanGood for making this happen. Of course, thank you to our viewers for tuning in. Without you, this wouldn’t be possible.
[01:00:07] John: Thank you, Tim.
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