Senior living is an arguably more challenging industry in 2022 than in any year before the pandemic — but even so, the industry is moving in the right direction, according to Silverado CEO Loren Shook.
While the general cost of doing business has risen steadily in the past year and labor remains a sore spot for the industry, Shook sees plenty of reasons to be optimistic about the road ahead.
The Irvine, California-based memory care operator manages 28 communities.
As he looks to the future, he sees new and promising memory care treatments, diagnostic tools and technology. But more importantly, he sees an industry willing to work together to solve common problems.
“Most industries in the U.S. do not share like the senior housing industry does, and we all gain from it,” Shook said during his recent appearance on SHN+ TALKS. “I think our industry is in a good place, so I’m quite optimistic about the future.”
Also underscoring his optimism is the fact that Silverado has made steady progress regaining occupancy lost during the pandemic. In August, the Irvine, California-based memory care operator saw one of its highest move-in months since the start of the pandemic.
“Moving that census forward is a significant goal for us for the next 12 months, and I think a 7% to 10% census occupancy increase across the company for the next 12 months is a pretty realistic target,” Shook said.
But as optimistic as he is, Shook is still leading the senior living operator through some challenges — chief among, the cost of doing business, which has risen in areas from labor and food to gas and medical supplies.
While some operators — Silverado included — have coped by raising rates for residents, sometimes by historic amounts. But Shook does not believe that will be a good long-term plan, and that there will need to be other solutions to cost increases in the years to come.
“I do think we’re going to be done with these double-digit rate increases, but I don’t think we’re done with inflation,” he said.
We are pleased to share the recording and this transcript of the SHN+ TALKS conversation with SHN+ members. Read on to learn about:
– What Shook thinks is most promising in the world of memory care diagnostic and treatment tools
– Why Shook does not see an end to cost inflation in the near future
– How Silverado gives memory care residents engagement and purpose
[00:00:06] Tim Regan: Good morning, everyone. I’m Tim Regan with Senior Housing News. Welcome back to SHN+ Talks.
I am excited to be joined by Loren Shook. Loren is CEO of memory care operator Silverado. Silverado is based in Irvine, California. Silverado manages 28 communities. It also has a hospice and palliative care service. Silverado is at the forefront of caring for residents, living with different cognitive abilities.
All right, Loren, let’s just jump right into it. How has demand been for your services at Silverado, and how are things like occupancy and move-ins trending? How have they been trending in the last month or so?
[00:01:42] Loren Shook: Great to be here, Tim. Thanks for having me.
Our demand and occupancy are trending up nicely. We’ve seen a significant increase this year especially when you hit March going forward after the initial challenges we had with Covid in January and February, but we’ve seen an 8% to 10% increase. Last month, we saw, for us, one of our highest move-in months we’ve had since Covid, very strong. That’s on top of a rate increase that we made prior to that. A significant rate increase did not dissuade people from moving in, which is always something we have to think about.
[00:02:33] Tim: Absolutely. For the next 12 months, what will your strategic goals be for the next 12 months, and why are you undertaking those?
[00:02:59] Loren: I think we’re focused on continuing to grow the census. We have a number of communities, thankfully, that are running 95% to 100% occupancy, and we’re grateful for those, but we have others that are in the filling process, refilling process from Covid.
Moving that census forward is a significant goal for us for the next 12 months, and I think a 7% to 10% census occupancy increase across the company for the next 12 months is a pretty realistic target.
We want to bring down our overtime, and our contract labor. We’ve got some communities that have no problems at all. Then, we have other communities that have a problem. We have invested in our recruitment department in our company and focused on the variety of measures to improve retention, and also have an immediate speed to attend to a new person coming in for interviews and really treat them as the most valuable person in the company. We’ve got a lot of strategies going there.
We’re focusing a lot and investing a lot, Tim, on training and training our frontline team. We’ve got a whole group of people who have been with us for many years, 5, 10, 15, some, 20, even some, 25 as we celebrate our 25th year in business here at Silverado, but we have others that have turned over and those turn over again and again. Those are the ones that are trusted and experienced team members are training. We have to be mindful and careful where we’ve got a high amount of turnover to not burn out our long-time, very skilled, talented caregivers and others.
Now, another source of training for us would be our first-line supervisors. We put together what we call a leadership development program probably 15 years ago.
I’ve been in healthcare all of my life running a behavioral hospital company before. I made the mistake running that company as I did in the early days of Silverado and not training my first-line supervisors for supervisory experience.
Because you’re a great nurse, it doesn’t mean you’re a great supervisor and nursing schools do nothing in the way of training for that. We’re re-engaging that. Melissa Solomon, our Chief People Officer is. We’ve ran the first program again. The staff attending were licensed nurses, caregiver mentors, culinary directors, and you name it. They just came out of there as raving fans. This is the best thing they’ve had, some of them said, in their careers.
There’s a real hunger for people to know that. Then, we’re going to the high-level leaders of training, administrators, we call them. Others in this industry call them executive directors, but we’ve engaged outside professional coaching for more than 25 of our leaders today. That’s the administrator, the director of health services, which is typically an RN in our company, head of the clinical services, and in the hospice, the director of patient care services as well. It’s really a heavy focus on investment in training.
[00:06:57] Tim: Great. I think we’ve heard this a lot since the beginning of the Covid-19 pandemic about how the industry must work to educate consumers, prospective residents and their families about what all this is, why they need it, when they need it.
How do you think the senior living industry and memory care operators should be working to educate consumers about what all this is right now? Tell me a little bit how you’re doing that at Silverado during your sales process.
[00:07:38] Loren: I think that a constant need for us as people in this industry-leading community is to continue to educate our consumers to discern quality services and myth from reality, and also to educate them with regard to the progression of this disease. Sometimes, it’s difficult to let a family know where their loved one is today because they don’t want to hear it.
That is an important conversation to have, but it’s one that takes ability and skill, and a whole lot of listening on the part of our team’s part because you got to meet them where they’re at initially.
Then, you have to realize where they really are in the case of it being different, and then lead them with compassion and empathy along that path. We want to make sure that we’re not sending someone with memory impairment at the end of life to an emergency room.
We need to have a plan. We need to have them willing to sign on with hospice when that day comes and avoid someone from being sent to the emergency room for procedures that aren’t going to help them, are just going to hurt them, so bringing them along in that path, letting them know what a good quality memory care community can do, and the advantages and disadvantages.
We’re fairly large communities. We don’t serve everybody. We don’t meet everyone’s needs. What are the advantages for smaller communities in some cases? What are the advantages of larger communities in memory care-only communities? Really, letting them know the value of strong programming, what a safe environment is today with vaccinations. A lot of people still fear moving into a setting like in senior housing because of Covid. In fact, they’re moving into a very, very safe environment with everyone vaccinated. We were the first to mandate vaccines back on March 1st, 2021 as you recall, Tim. All of our staff are vaccinated. Generally, all of the residents are too.
We’re living with Covid. We have to educate them what living with Covid means, and that we won’t be doing any draconian measures in terms of isolating people to their room, or segmenting the population, or that sort of thing because there’s a lot of damage to be done to people with memory impairing diseases to isolate them.
You’re not gaining anything. People in our company aren’t going to the hospital. They’re not having severe reactions when they do get Covid. Treating them as though they’ve got the flu or as though they’ve got a cold is the right track to go on, but also recognizing that sometimes, our staff will get Covid. We’ll have some staff out.
It’s not a cause for lockdown. It’s not a cause for, like I said, the draconian measures that we had to take in 2020 when we knew nothing about what was going on. We are going to be masking up, and we’re going to be using protocols that are reasonable, but we want families to have good, positive interactions. We’re going to meet the public health departments’ requirements. We’re bringing along, as I think the industry is, public health departments to be more moderate in their reactions. That does vary from one market to the next.
[00:11:47] Tim: You were at our BRAIN Conference here in Chicago not long ago, it feels like yesterday. We had a lot of interesting technology vendors come out and demonstrate what it is they are working on. I saw a lot of cool technology. Something, though, that I’m always wondering about technology is what is in the cool-to-have bucket versus what is in the must-have bucket?
Are you seeing anything out there on the technology front that has really caught your attention?
[00:12:32] Loren: Well, it’s not brand new, but Eversound is a great technology. We embraced that from the beginning. When you can facilitate people’s ability to hear and understand and enjoy conversations, that’s just golden. We’re certainly solidly engaged there with them. Music is so important. Whenever there’s a technology that can help an operator effectively deploy music to the resident population that they relate to, then that’s very cool and very useful.
We actually have music therapy interns, and we do connect with colleges to provide that educational source. We’ve got a pretty rich engagement team in each community, and every operator is a little different in terms of their staffing and their model. There are some technologies that will enhance the ability to engage in music for, quite frankly, lower-staffed budgets. When that happens, that’s terrific.
The circadian rhythm balancing lighting technology, I like that a lot. We’ve been exploring that over the years. In the past, it’s been very expensive and difficult to employ, but there’s a new technology there that we’re sourcing out to see if we can retrofit and use some of our communities. I think lighting is so important. We did a high-intensity light study with Dr. Sonia Ancoli-Israel at UCSD probably 15 years ago. It was published in the professional journals and is being referenced today by architects and others around the country in teaching.
High-intensity light outdoors, which is outdoor light, particularly in the morning, statistically reduces sundowning behavior in the afternoon. It takes about two hours of that exposure, at least in her study, it was two hours.
You can also use it in the afternoon, late afternoon to help people balance their circadian rhythms and stay up later instead of falling asleep, avoiding the use of medications for sleep in some cases, for a lot of people. That’s very important. We did a study with USC Davis School of Gerontology and the Architecture School. It was actually funded in part by NIC, where I’m at that conference this week. I think you are too.
That was showing the value of indoor light to our communities, to the residents’ memory care and residents. The community and my background as our St. Charles, Illinois community, we designed that community to bring in outdoor light, and it’s remarkably different. Now, that’s something in design, which is challenging to do if you’ve already got a community up and running, but you can move people outside and take advantage of that.
I always look at technology in terms of how easy it is to use and is it practical because there’s a lot of great ideas out there that take a lot of work with regard to the team to implement them. If your team’s focused on doing that, then two thumbs up, but also the resident has to be willing to participate, so I look for ease of use.
[00:16:06] Tim: Great. I’m glad that you mentioned a couple of those things. That’s very interesting.
You had mentioned some very promising diagnostic tools that you see on the horizon. I think that the idea there was that you could detect Alzheimer’s or other forms of dementia a little earlier, and maybe even in some cases delay the onset of it a little bit or delay the severity of it. That sounds very, very useful in senior living. Can you talk about some of these different diagnostic tools that you see on the horizon, and what they are, and why you’re excited about them?
[00:16:51] Loren: There are some new diagnostic tools coming. Some are here. There’s a blood test out now that can give information about dementia in place of the lumbar puncture that was there before. It’s less invasive.
There’s one that’s particularly exciting to me. It’s a new clock drawing. Clock drawing has been around forever, but this is a new look at it. It has been shown that it would allow a prediction of memory impairment ahead of symptoms being shown.
Anytime one can see that someone’s headed to memory impairment before the decline has gotten to the point that symptoms are appearing, that’s fantastic. That’s where, of course, most of the drug research is geared today is preclinical matters relative to dementia. There is a way we can interrupt the progression of the disease. We know that. Meaning, we can slow it down. If you can slow it down before someone has the symptoms, wouldn’t that be cool if we could get on to that early enough and let natural aging occur where the person passes away from natural causes as opposed to passing away with dementia?
I do think that’s a possibility. That’s what’s particularly exciting to me. This particular clock drawing’s been FDA approved and has been compared to the PET scan studies that look at tau and beta-amyloid in the brain and lined up to show some significance of early diagnostic value. We’re still relatively early on with all this.
There’s other tools that are out there that have a lot of merit. Looking at eye movement, looking at speech and gait, looking at eye-hand coordination, those are predictive measures in terms of how dementia progresses. Individually, they don’t show enough. Collectively, maybe they do.
Today, we don’t have it out there, but when you put AI technology together with collecting data on these different things coming together at the same time, I think we’re going to get some pretty exciting stuff. Like I said, it’s in the future. I don’t think it’s very far in the future. We’re not talking 10 years or something. I think it’s got a lot of opportunities. There’s certainly preventative treatment stuff like oral health, gum disease. People do not relate that to dementia, but it is there. Looking at treating people for depression is very important. It’s something anybody can do today.
All of our communities, we’re looking at depression because depression can be treated and its exacerbating situation relative to dementia, especially early-stage people in IL and Al that are moving into dementia, they know it. You don’t necessarily know it because they’re covering it up, but I guarantee you, it’s affecting their mood, and how would it not? There are some problems there that can be dealt with by treating it. It’s treatable. There’s certain things that the PET scans have been out there now for many years measuring the tau and beta-amyloid black. They’re more expensive to do but very useful for sure.
[00:20:55] Tim: This is a very good segue into something else I was curious about. What do you think that other senior living operators who might not specialize in memory care should know about this? Along the lines of maybe treating depression, is there anything similar that you think they should be looking at in their communities?
[00:21:34] Loren: I think that’s a great question. Those of us in the industry know that there’s quite a number of people in assisted living today that have early-stage cognitive impairment. I would hazard a guess if there’s probably people in independent living in the same situation. They’ll have all kinds of ways that they can cover that up, but that’s weighing on them. That’s not helping, obviously. It is not helping the progression of that disease to be unrecognized and dealt with. One of the things that we put into our Nexus program, which is an early-stage program, and it is a support group for people with early-stage dementia.
When I say early stage, I mean 20 to 30 on a mini-mental state exam. That’s a 0 to 30 score as everybody probably knows. Twenty to 30 is very high functioning. Thirty is perfect. We’re actually taking people into Silverado that will score 20, 25, 28, 29 on the MMSE. They’re choosing to live with us because they know that the program is shown with evidence-based data to slow up the progression of the disease. I’m talking about a UCSD study of 730 cases that showed a 60% improvement in cognition for those entering the Silverado Nexus program over a 20 MMSE.
That’s been duplicated by the leader in dementia care in Denmark, Dr. Mette Andresen, and presented on the international stage most recently at the Nordic Neurology Conference. It’s an engagement-based program that works with regard to physical exercise. It works with regard to establishing a purpose for the person, some cognitive exercises thrown in, support group, and also stress reduction. It’s just five pillars of 20 hours a week of pretty intensive programming. Those kinds of things can be incorporated within independent living and assisted living as well. We could certainly talk to people and help them with that.
We have a master’s level social worker in each of our communities who runs the support group. We’ve got results that we presented at the International Alzheimer’s Conference showing the improvement in socialization and reduction in depression for the people just having a support group. In my days of running behavioral health hospitals, we would call that group therapy, Tim. That’s exactly what it is. It’s very important, it doesn’t cost much to do, and makes a world of difference for people. People tend to isolate themselves when they are having this sense of disease.
What operators of assisted living and independent living can watch for, is when somebody used to go and sit in a dining room with a group of people, and now they’re not sitting with the same people. When somebody used to be more engaged, now they’re spending a lot of time in their room.
As one of my investors early on in the company, Pat Haden, said to me about his mom that she likes being in her room, and that’s why she’s there. Well, she didn’t really like being in her room. When it became apparent that she needed to be in a memory care setting, she moved into Silverado. I said, “Pat, she’s not going to be spending much time in her room.” She didn’t. She was a social gadfly for the community.
Isolation is one of the worst things that can happen in terms of exacerbating the progression of the disease.
Moving people into the right setting, whether it’s a memory care unit in the setting, or to a memory care community if one doesn’t have one, is doing a favor to the person who has it and it’s doing a favor to the others. We certainly see Margaret Wylde doing a number of studies where people with memory impairment are interacting with others and others don’t want to be in assisted living or independent living because of that. It would, I think, help the business grow in addition.
[00:26:58] Tim: We had a question as you were talking, Loren, about the support groups.
The question from our audience member is the support groups that you mentioned, are these for family members? It seems to me as though there’s an acute vacuum of this in society that the early indicators can be shielded only for so long until they suddenly snowball upon the spouse or adult children. I guess the question is, are family members included in these support groups? If so, tell us more about that.
[00:27:33] Loren: It’s a great question. There are separate support groups. We do support groups for families. You’re absolutely right. Families need that support group but not with the resident in them, or the person suffering from dementia. We have a separate support group so they can talk openly and honestly about their frustrations. Then, they realize that they’re not alone. We’ve had some residents set up specialized programs for men in support groups. We’ve been able to focus on specific interests and needs for men. Women have the same interests in these. There’s just typically more support groups for women, so it’s more unique to have a separate one for men.
What I’m talking about before it was a support group for the residents. The residents need to have this conversation. They need to understand that others are suffering these losses too because they’re coming in losing a whole lot of who they were. It helps them reconnect, and re-engage, and understand that they’re not alone because so many people think that these problems that they’re having are unique to them. They can learn that they’re really others are experiencing them too. They’re not crazy. They’re not losing their mind in a way that is only happening to them and no one can understand. It’s very important for both.
[00:29:19] Tim: Great. I want to talk with you a little bit about the future. There are a lot of other memory care trends that I’ve seen on the horizon. Is there anything else that excites you that you’ve seen coming down the pike for memory care, or just generally in senior living that you’d mention?
[00:29:45] Loren: I think there’s some new treatments that are being studied that are interesting. Sound and light therapy is actively being studied. The 40Hz sound sorts of therapies, a lot of work is going into those.
Gamma light therapy, a lot is happening there. There’s some positive actions that human-engineered mice to get dementia or Alzheimer’s disease are experiencing. For the mice, it’s good. A lot of times, it’s difficult to translate that to people. We’ll see how that progresses, but it’s shown to attenuate the amyloid load and modify the microglia impacts in animal studies.
Can it move forward and really help people? We all know about Aduhelm, the IV therapy. It had some controversy with it when it was approved. It’s got more controversy with it that’s come out recently as well. It’s not for everybody. It’s at least positive in that there’s some movement forward with regard to the drug scene. Aricept has been around forever. It helps people at a certain point, and then it doesn’t.
Some of the things that are a little more offline that are helpful and we’re seeing results for is cannabis therapy for behaviors. Because cannabis was persona non grata for so many years and research stopped, science doesn’t know much about it that they would otherwise know. Now, it’s back in vogue. I learned from our medical director at a conference where we brought in experts on cannabis a number of years ago that there’s a cannabinoid system in all of us in our health system. It used to be taught in medicine. Nowadays, the current medical interns and so on are learning about it.
We are actually doing work at Silverado with our physicians of course and the families, and we can see positive results from behavior management with some cannabis use. I said tongue in cheek a little bit at the conference that it’s amazing what a gummy bear will do with the behavior of a big burly guy in the afternoon that otherwise nothing else is touching. It is true. When that thing can make a difference, wow. Let’s use it. We know it’s a value for modulating pain and that thing in hospice care. Let’s use that, too.
There’s certainly vascular risks that are involved and dietary implications that can help people in treatment but just reducing hypertension to the best you can, looking out for metabolic syndromes, reducing weight, the kinds of things that are good for your heart are good for your brain, exercise, that’s very true.
In treatment, one of the things we founded Silverado on 25 years ago with my co-founder Stephen Winner was purpose, giving people a purpose in life. That is impactful for people with memory impairment all the way through their process. In late-stage people, they get value out of having a purpose even though you think, “Well, what’s the point? They’re further along.”
The point is that it makes a difference to them. Laughter is also another pretty cool tool to use. Laughter generates all kinds of great processes in the brain. It’s just good for people, so getting people laughing, getting people moving, getting people with a purpose bigger than they are, engaging them in purposeful, meaningful kinds of things.
In Alexandria, Virginia, our residents make lunch for the kids at high school. They know that the kids in high school have lunch at school. The reason they’re doing that is so they have dinner at home. They know that’s exactly what they’re doing.
We have over 10,000 hours of volunteer work our memory impaired people are doing across the country. Actually, it’s more than 20,000 hours when you look at it over a year. Those are inexpensive things to do. You don’t have to have a big staff. It’s not difficult to do. Getting people outdoors, or experiencing the light, and just to keep moving. Like the Blue Zone studies, having connectivity to people who love you and you love them, it doesn’t have to be family, but it has to be people who care and love you.
In our communities across this industry, what a caring group of people we all have is, our caregivers love our residents, and families come when they can, and that’s great. Having pets is incredibly valuable. We have intergenerational programming, where we invite our staff to bring their children to work, and that got interrupted with Covid, but now it’s back.
It’s also solving a problem with regard to after-school daycare and that thing, but it’s giving residents a connectivity to people. I’ll stop there, but those are really valuable kinds of things, and most of them don’t cost much money.
[00:36:03] Tim: We have a question from the audience, which I’m assuming is a question about the sales process.The question is, what does Loren recommend in a scenario where one parent is fully adamant against moving into a community, and the other is embracing it, actually looking forward to it? Is there dialogue support that exists for adult children who are thrust directly in the middle of a struggle between their parents? Does Silverado consult directly with adult children in this instance? We don’t have a guidebook on how to navigate this at all.
Do you have any thoughts about that? That seems like something that might happen commonly in memory care.
[00:36:54] Loren: Of course, it is a common problem, and our teams deal with that routinely. Here’s the tool that we use that works quite well, and that is, we have family champions, who have had this same conversation with their family, they’ve gotten over it, moved in, and then family has been reconnected with, “Oh, I guess you were right,” a sister or brother, or mom or dad, whoever it was, that was on the other side of the fence.
Having a person who doesn’t have an ax to grind here, has nothing to gain by the person moving in has trust. Then, they can go down the path of, “Yes, we had that same conversation,” and they can talk from the perspective of a peer. That’s one tool. Another tool is, just to start listening and to understand where this person is coming from that doesn’t want mom or dad to move in.
Usually, they’re coming from fear. Usually, they’re coming from denial that mom can’t have this degree of problem you think mom has. Now, there’s another reason they can be coming from it, that’s the money, they don’t want to spend the money, or they don’t trust the organization, or any organization for that matter, or they feel like there’s an obligation they have to take care of mom, and maybe they think that this sister, this is the brother in another state, has the obligation to take care of mom, like we’ve all seen that, too.
There’s all those different things, and listening and uncovering that, and then having those conversations can help intercede with that. The other thing that is helpful is to engage an outside expert, a geriatric care manager who really knows what they’re doing, and has the skill set to walk through the psychodynamics that are going on in that family. Again, that’s a separate outside party that is engaging in that conversation.
Every market’s got these terrific champions and professionals that can do this thing. Those are a few ideas of what we do. I could probably go on. Certainly, if you had our sales people here, they could do a much better job of answering that.
[00:39:42] Tim: I want to talk with you a little bit more just about general operations here. Obviously, I think it’s no surprise to anyone tuning in that, cost inflation and labor and some goods and services are currently eating into senior living margins.
Where are you still seeing the most cost pressure? I’m assuming, labor is still probably an area where costs are elevated, but where are costs elevated, and where are you still seeing the pressure on your bottom line?
[00:40:21] Loren: You nailed it, Tim. Costs in labor are continuing to be a challenge. One of the solutions to our contract labor is raising our wages and bringing in people, but exacerbating that is the public policy we have in the nation today to go away from an energy-independent nation, to one that’s reliant on energy from places we don’t want to take it from.
As a result of that, our cost of fuel has just gone through the roof. That has the compounding problem with regard to the gas price for our caregivers, driving a distance to get to us, can’t afford to get to us. They have needs that are going through the roof, with regard to those costs of fuel, but then their rental rates for their apartments have gone through the roof as well.
Now, they can’t live as close, because the rent in Austin, Texas, or you name it across America, has gone up, and now they have to move further away. The inflation that’s impacting our country and all of us as well, is impacting our operations. It goes directly to the lowest hourly rate of our staff members, impacting them on a compounded basis. You and I can go to the gas pump and pay more, and we don’t like it, but we can pay the bill.
They get to the point where they can’t pay the bill, and we have to raise our wages. We think that they’re helping them to have a better quality of life, while we’re just keeping them even. That’s disappointing because we want them to do better, but then all the other costs are going up, too. Our food costs. I think the gas costs, we’ve seen that gone down a little bit, but I think that’s temporary.
There’s petroleum reserves being released and some nonsense going on that’s temporary, and that will go away after the elections. Then, it’s going to go up again, so we just saw the cost of living increases today come out, and they came out above projections. Of course, the stock market didn’t like that and took a hit, but that’s boding negatively for us in our buying of food, and buying of energy, and medical supplies, and all the things that we have to buy, our mass prices.
Guess what? We get to pay for masks now forever, it feels like. I don’t know when we’re going to get rid of that, so inflation’s real, it’s here. I don’t think it’s going away. I lived through the ’70s of stagflation. That’s when I first got into the business world, running hospitals. I don’t want to see that again, but there’s a risk that we might. We certainly will see inflation continue. I’m afraid it’s not going to go away for next year.
[00:44:04] Tim: We had a question a lot earlier in the conversation that I want to loop in now. They get a little bit of context here that I think I can just summarize. They mentioned Brookdale and their occupancy gains, and how, essentially, they’ve laid out to get back to certain NOI, and certain margins, they’ll have to get to this occupancy by X number of years.
I think the general point is that they are noticing how, despite the fact that a lot of companies like Silverado have added occupancy at a steady clip, that hasn’t necessarily translated into their margins returning to pre-pandemic levels, even when their occupancy in some cases is. I think it has to do with the expenses that we just talked about.
Looking ahead there is this question about whether or not pre-pandemic margins, especially in something like memory care, are feasible; or whether or not there’s going to be a correction, and margins are at a new normal after the pandemic.
What is your thinking on that?
[00:45:19] Loren: Well, the answer is, yes. I think the margins can get back, Tim, to realistic margins that reward financial investments that aren’t over the top or egregious or greedy. In any event, I think, we see margins in our higher occupancy communities that are at pre-pandemic margins, and I’m sure others do too.
Occupancy is essential, and we’ve got to be able to build it back up. We’ve had to make rate increases, which we didn’t want to make. In 2020, we’ve got Covid, so in 2020, we did a double-digit rate increase across the country.
Then, in 2021, things didn’t get particularly better, and we did another double-digit rate increase. I don’t like doing that. It’s not what we normally do, it’d be a 5% to 6% rate increase, but we had to do it then. In 2022, here we are doing it again because of inflation. We, again, have done double-digit rate increases this year. Now, how did the market respond? Because a lot of our competitors are having rate reductions or rate freezes, and we’re not.
I think the message is, the market is wise, and they’re increasingly intelligent, looking at the results that can be delivered. They realize that, it isn’t something that the– Silverado is not raising the rates, so we make more money, we’re raising the rates, so we can pay our bills and stay in business, and serve their loved ones. What is the choice for them? That we go out of business or that we stay in business? It’s a difficult choice.
Of course, as an industry, we’re facing how much can people afford to pay for already expensive services. When I look forward to 2023, 2024, I do not see those kinds of rate increases happening, or continuing to happen. I think we’ve got to bring those under control, but we are seeing a significant occupancy increase across the company. I think that’s what’s causing us to be able to not have to have those kinds of rate increases going forward.
I do think we’re going to be done with these double-digit rate increases, but I don’t think we’re done with inflation, so we’re going to have to deal with that. I do think we’re slowing up on wage increases. I think the economy slowing down, oddly enough, is going to be actually a benefit to our being able to hire. It’d be nice if it wasn’t that way, but I think the economy is slowing down, and that will also help with the energy cost.
[00:48:48] Tim: Something that you had mentioned a little bit ago was how people that work in memory care often do it because they have a passion for it. It’s a rewarding business, they help people, their value is clear to them. It seems to me like, as you’re recruiting folks, it can be hard to find those people, especially, because sometimes they will say, “I didn’t know this about myself until I started working there.” As you’re recruiting people, how do you find those folks with passion? Do you select for that at all in your hiring process?
[00:49:23] Loren: We absolutely select for it. Our teams, that’s the first thing they select for is, does the person have a heart, have a passion for improving people’s lives? Our vision is, give a quality of life to our residents, our families and each other that we haven’t seen for residents and families, that they probably believe will never happen, never come back.
Actually, we want people who are going to work with their colleagues to help improve their lives too. That’s the first thing we select for, we see it as a foundational, cultural piece of our company, coming from love greater than fear is, are they there? The teams are interviewing for that first, and skill second, training and knowledge. We can train people. We’re realizing that we have to do a lot of training of people that we weren’t doing before.
That is something that we are investing in more training because of that, and then looking to different sources of bringing in people, younger, maybe high schools and other sources as well. It is critical that we get people who care about being in this business, and that’s an advantage of being a freestanding memory care, as opposed to a unit that we have, and not saying anything negative about the others.
If you run an operation that is all memory care, then we get the benefit as an easier path for us to say, “You’re not passionate about this disease.” If you’re running a place with independent living, assisted living and the other functions, you’ve got people who really don’t want to be in memory care, but they’re in the other place. Then, when you get a vacancy, and you slide somebody from the other area over to memory care that doesn’t like memory care, now you have a problem.
My path is easier. I don’t have to deal with that, running all memory care. We will put people on the floor, and see how they interact. We’ll hire them, we’ll start the training, and we’ll give them a mentor to work alongside them, and we’ll see how they interact with people. You said it, Tim, very accurately, that some people didn’t know that about themselves, and from love greater than fear, we say, “That’s fine. There’s no harm, no foul, let us know this is not the place for you, that you didn’t realize this is what you were getting into. That’s okay. We wish you the best. You’ve got a lot of training for free here– — for you, for free — and go use it somewhere else. Adios.” The better for them, the better for us. That’s what that process is about.
[00:52:35] Tim: I want to drill down on something that you mentioned in there, the need to bring in workers from outside of the memory care sector, outside of the senior living industry. Obviously, that’s something that I’ve heard many, many operators talk about the need to do, but it seems hard. How do you think operators can work to bring more people into this industry from outside of it?
[00:52:56] Loren: I think a lot of workforce development’s been happening here with our [team] working on it as well, but connecting those high school programs, so people can come through, and kids can come through and see what it’s like. We’ve got leadership development programs at the higher levels that are becoming more developed, USC Davis School of Gerontology, working with Cornell, for example, and Vision 2025 with Doug Olson, and that whole movement going forward.
A lot of us have been doing a lot of work over the years to bring in leaders, where you can see that you can really benefit society from a service that’s much, much needed, and you can also benefit economically yourself. It’s a win-win, and there aren’t a lot of businesses where you really get a triple win. You get one for a society, you get one for yourself, you get one for the people you’re serving.
This whole industry of senior housing is just golden in that respect. It’s unknown to a lot of people, and that’s what we got to continue to push that knowledge forward. We bring in students, nursing students, social work students, music therapy students, you name it, every kind of student known that walks around, we like to bring them in, because what they then learn is, “Wow, memory care is pretty cool. It’s a lot of fun, and I didn’t know I liked this. I didn’t think I would. I thought this would be the worst place for me to be, but I actually love it.”
That’s bringing in clinical leaders and a lot of others that would never dream of this. That’s been very effective for us. Looking at people in other lines of business, and other industries that don’t find value or meaning in what they’re doing, that’s pretty important. Older people, people getting to the direction of retiring, wanting to do something meaningful in their life, that’s another resource for us in this industry, and they can’t do the heavy lifting because of their age probably, but they can do a lot of things.
There are a lot of opportunities for people to volunteer. In our locations, we have a major volunteer program with our hospice palliative care, and in our communities. That’s not paid, but it’s a very useful and effective resource, because it’s not paid, then it’s free. Nothing’s free, of course, we have to manage it. Putting forth the effort to manage is useful.
[00:55:50] Tim: We have about five minutes left, so I want to use the last little bit of our conversation to talk about the future, because we were talking about staffing. In the next 6 to 12 months, do you foresee any of these challenges getting easier, or perhaps anything getting harder, as you look ahead in staffing?
[00:56:10] Loren: Well, I think staffing is getting easier for us. We’re getting better at it. We were always pretty good at staffing, but it’s a new world. We’re getting better at recruiting people that are difficult to recruit. I’m hoping from a public policy point of view, our leaders across the country in different states stop paying people to not work. They did that before, people got payment of close to $75,000 a year to not work.
That sounds like it’s good for the person. It’s actually probably not, but it really impacted our ability to employ people, and hopefully, that goes away and stays gone. I think there’s a risk that comes back, and that’ll make it difficult for us to hire. Now, I’m very grateful for all the people who could have stopped working, and got that paycheck, but didn’t. That is a wonderful thing to see across the country.
Our getting better and more rapid responses to interviewing people, screening people, getting people into our communities, and improved training programs — I have to say, we weren’t at our best coming out of Covid. We were strained in lots of ways, hiring people and then not training them as well as we used to, and putting them on the floor, and then they quit. Why’d they quit? Well, I have to look inside. I have to look at myself in our company, what have we done?
Well, we’re not preparing them. Why? Because we’re overwhelmed coming out of that, and it’s not because we didn’t want to, but then we have to recognize we’re overwhelmed, and we have to bite the bullet and just move forward, and put out that energy to do that basic training that we didn’t have to do before, but if we’re going to stop the churn, we’re going to have to change our behavior.
That’s what we’ve done and doing, and we’re getting better at it. I do think the employment situation will become better going forward. We have to maintain our culture. Our culture attracts people, retains people. I’m grateful we’re considered number six in the Fortune Best Workplaces in Aging Services program with 91% plus of our people saying, this is not just the job.
All of the challenges I mentioned, our team, I’m very proud of our teams, they’re doing an incredible job. It’s just I’m looking at myself, what can I do better as a leader, and engage in helping our teams with the resources? That’s what we’re focusing on. I think it will be better. I think we’re going to be in a better place.
[00:59:18] Tim: Looking ahead to next year, what is on your worry list, and what is on your opportunity, or excited-about list?
[00:59:34] Loren: I’m worried about the public policy decisions going forward next year, which I already mentioned. On the opportunity, and excited list, is I think the market has really done a better job differentiating quality operators. They will be rewarded, even though the pricing is higher, and we’re seeing that now. I think our census is going to continue going up. We’re opening new communities.
Frederick, Maryland opens in two weeks, and our other communities we’re seeing fill that that opened in the last year. I think there’s many more opportunities coming. The whole area of memory impairment, and taking care of people is an area with a lot of new things happening. Not just drug studies but other studies. The quality of life for people being served is being enhanced.
I think that’s across the industry, for sure. It’s not just Silverado. The exciting part is that it’s across the industry. I think we’re in a solid industry, Tim. We share amongst each other these programs like you’re doing here. Bob Kramer’s information he’s putting out, and so many others. Very, very valuable stuff. Most industries in the U.S. do not share like the senior housing industry does, and we all gain from it. I think our industry is in a good place, so I’m quite optimistic about the future.
[01:01:16] Tim: That’s great. I agree with you. One of the things I like about the senior living industry is the level of camaraderie and collaboration. All right. Well, Loren Shook, I know we can talk for a lot longer about Silverado, and about all the things that you think about the industry, but we’re out of time. I just want to thank you again, Loren, for coming on the program.
Thanks to Silverado for making this happen. Of course, thank you to our viewers for tuning in. Don’t forget to catch us next week. We’ll be back with another SHN+ Talk. Thanks again, Loren.
[01:01:56] Loren: Thanks. Tim. Everyone, have a great day. Thank you all.
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