LCS President Chris Bird first joined the senior living industry in 1996 as it was still taking shape and as many operators were waking up to the prospect of the incoming baby boomer demand wave.
Fast-forward to the cusp of 2023, and he thinks the industry is actually in a better position now than it was then. Driving his optimism is the simple fact that the senior living industry is standing on the precipice of a massive demand surge; not to mention the low rate of new construction at the tail end of 2022.
As he looks to the new year, Bird and LCS are focused on four main areas: people, the customer experience, community performance and growth. And although he sees the potential for a widespread economic slowdown to derail some of that focus, he is still optimistic about the year ahead.
“To me, we have more tailwinds and more opportunities to serve residents,” Bird said on a recent appearance on SHN+ TALKS. “We know investors are calling and often looking into getting in senior housing, because they see that same tailwind.”
We are pleased to share the recording and this transcript of the SHN+ TALKS conversation with SHN+ members. Read on to learn about:
- Bird’s take on where opportunities and challenges lie in the coming year
- Why staffing is still the industry’s biggest headache
- How LCS budgets and plans for new technology
[00:00:04] Tim: Good afternoon everyone. I’m Tim Regan with Senior Housing News. Welcome to SHN+ Talks. All right, Chris, let’s jump into it. Thanks for coming on today.
[00:01:35] Chris: I appreciate the opportunity, Tim.
[00:01:37] Tim: I wanted to start with a state of play at Life Care Services. How have things been in terms of operations, tell me more about how margins, occupancy, and how that has been over the last year or so.
[00:02:04] Chris: Life Care Service is one of the five companies of LCS. We’ve had a great year. Team LCS has come through. We’re going to beat our plan for ’22, which is awesome. It’s really driven by a couple of things. One, strong resident engagement. In 2022, the feedback we got from our residents and our employee engagement scores through Gallup — we were near the top, which we were super excited about. It was the first time we’d been there.
Our most important asset is our teams, our people. As we’ve been strongly focused for our 51-plus years in this organization about succession planning, it’s really paid off for us this year as we’ve been growing. We added our first-ever role of chief marketing officer. We were able to fill that internally with Rick Westermann’s hire. Then just recently, in the last two months, we launched a search for an executive vice president of operations over our senior living management, which is basically the day-to-day operating models that we work through.
Again, we were able to hire that internally with GeLynna Shaw. With some retirements that were happening this year, we happened to have two senior vice president of operation openings occur within the organization. Again, we had internal talent that was growing with us, and we’re able to assume those roles, so really good stuff there. Locally, I’ll just take the opportunity to highlight that Monica Friedman, our chief HR officer, was awarded the best CHRO in the City of Des Moines for 2022.
We have great lead flow and visit volume that’s been setting record-high closings for us within the organization, which has been awesome. LCS Development, another one of the LCS family of companies, has had a tremendous year kicking off new developments. Now I’m hopeful that it doesn’t all stall out in 2023, because we know we have some headwinds, but all in all, it’s been great.
Now, I will share that we have the same headwinds as many of you listening, and it’s really around the workforce, the wage pressures, contract labor that continues to creep in, and the rising costs that have compressed margins.
We do see long-term value in what we’ve created in ’22, and are pretty excited about how this sets us up for the next year in 2023.
[00:04:14] Tim: Great. Well, thanks for the good start here, and I’m glad you mentioned Rick Westermann. He was at our sales summit here a few weeks ago in Arlington, Virginia. I think during that panel he mentioned somewhere around 17 communities in the Life Care Services portfolio were totally 100% occupied as of September, which is impressive.
That was September. Has that trend kept up now that we’re in December? Secondly, tell us more about how you were able to achieve that and some of the things that you did operationally to keep those communities totally occupied.
[00:05:10] Chris: Yes, we have been able to keep those and added a few more, plus get a few others above that 90% level.
As we’ve highlighted before, as our growth has been through our rental company and adding Clarendale to our portfolio. We’ve been really excited in 2022 to see a few more of those hit stabilization over the 90% level. That has been the opportunity for us. I’ll flip this a little bit and come back to the root of your question.
In the month of July, LCS finally achieved its March of 2020 occupancy. We all started measuring the drop that everybody sawed throughout the industry. Ours was about a 500 basis point drop. We were able to clip that off back in July. We’re now about 60 basis points above our March 2020 numbers. There’s only one segment within our business that has yet to get back to March of 2020, and that’s been our skilled nursing, which we call our healthcare centers. It’s not far off, but it’s still a bit of a laggard.
Part of that has been the way that the troops have rallied up amongst our vice presidents of sales and marketing working together to think through what pockets of business need the assistance, how are we leveraging our advertising partners to get more leads and pulling the right levers. Our lead flow, as I highlighted in the previous question, has been documented across the industry. It’s been well ahead of 2019 and still going strong. Even as we’re seeing a seasonality slowdown, it’s still outpacing what we saw in 2019.
Being able to get leads in the door really articulating the value of what we provide for the customer has been filling those occupancies to get more at the 100% level.
[00:06:44] Tim: To your point about skilled nursing, some operators have told me they have seen the demand shift and are starting to replace skilled nursing with other high acuity services like AL or memory care. Is that something that you’re doing?
[00:07:04] Chris: Yes, I would say that we had a couple campuses that maybe were over-bedded, a term we like to use to mean maybe too many beds. We had a campus in Florida that had well over 200 units and that was too many for the time. When it was built 30-plus years ago, it probably met the need. Today as it went forward, we’ve been working with that partner on how we adjust one of the areas for some different opportunities to serve customers in another way.
I’m still a firm believer that the healthcare centers are needed and will be a part of many of our CCRCs even though others have a different view. I do believe there’s going to be a change and evolution to the model, but there’s still a need for the healthcare services we provide within our communities.
[00:07:46] Tim: Chris, you ascended to the president role in October. I’m curious, when that happened, what new responsibilities did you add? As we look ahead to 2023, what do you think your priorities will be?
[00:08:12] Chris: Joel wasn’t willing to give me a title without some additional resources — and that’s Joel Nelson, our CEO of the company. We did some shifting of some of the responsibilities I had, and I’ll come back to sharing a name: Rick Exline. Rick has been with the company for over 44 years. He’s retiring in a couple weeks, and when Rick’s role and my role were in the organization, we decided to combine those two and create this executive vice president of operations of senior living management role that GyLenna Shaw was elevated to in November. I was able to remove some of the day-to-day operating pieces.
I’ll still take on the strategy aspects of everything we’re doing day-to-day through operations, but specifically, with Rick retiring, I’ll be taking on one of his direct reports and Joe Weisenberger, who’s our vice president of business development, which is a key aspect for our growth. We want to grow the right way, just not take every contract or opportunity that’s out there. Joel and Zane Bennett have been doing a great job since joining the team over the last year getting new opportunities to the table.
On top of that, Blake Gillman, who led our clinical services is shifting roles and he’ll be our vice president of strategic programs. We think about strategic programs with some of the different things that we provide.
He’ll work on what we’re very focused on regarding growing our health and wellness within our communities. We know the coming customer, that baby boomer — all the research tells us that health and wellness is going to be a driving factor in their decision. What are the opportunities, and are we providing those in an LCS- owned or managed communities? As we talk about our priorities for 2023, it really rolls into four buckets: our people, how we’re serving the customer, the performance that we have within those communities, and then growth; both organically within our communities and exterior.
[00:10:27] Tim: I often tell people that I’m lucky that I only have to cover the industry, I don’t have to work in it. When I talk with operators, it feels like the industry is an interesting operational inflection point with regard to demand, at least. We have the baby boomers coming in, some of them are already starting to move into things like active adult communities. Some of them, the older baby boomers, are starting to think, “What am I going to do in a few years?”
Do you feel like the industry is at a crossroads or an inflection point?
[00:11:25] Chris: You joked around, you just have to report on the industry while we get to operate it; the harder job. I was with one of our partners last week, and he’s the owner that we work with. He said, “Chris, I own it, I have the easy job. You have the hard job. You get to fix all my problems.” I had to laugh at that comment.
There is a bit of a crosswind. We already know the tailwinds, it’s really the workforce. We thought we achieved some of those targets in ’22 and they just continue to creep up as more and more of an issue and we believe that we’ve hit the targets of what we think are the right wage rates and what our merit increases are going to be in 2023.
Have we built out the models to hit all the expense inflations that we’re expecting? We’re doing the best we can with the information we have to know how we build up for 2023.
I think we have even greater tailwinds that should help us, barring whatever recession and housing impact it may have in 2023 that we don’t know about. But the tailwinds are great. I got into this industry 26 years ago. My mentor showed me a spreadsheet showing all the seniors that will be growing over the next 30 years reaching the age of 80.
I wasn’t the smartest kid back then, but I saw this big growth chart of the customer. I said, “Well, this makes a whole lot of sense. This could be a great business.” I jumped in. Today, we’re in an even better spot than we were back in 1996 when I first started. I think in the year of 2022, there’ll be over 350,000 seniors in America turning the age of 80, which is great. More people are coming into our front door. In just over four years in 2027, that number flips into a million.
To me, we have more tailwinds and more opportunities to serve residents. We have the lowest delivery of new supply that we’ve seen in quite some time, so we should be able to catch up a little bit. We know investors are calling and often looking into getting in senior housing, because they see that same tailwind that I was highlighting.
We’ll get through this workforce dynamic but the exciting part is about how, after the gray cloud that the media projected over senior housing during the pandemic, the customer came back. I’ve been pretty excited about that result.
[00:13:46] Tim: Almost every operator I talked with this year would say that staffing has been their biggest challenge, either the availability of it or the cost of it. What do you think is the biggest challenge for both LCS and as an industry? Is it staffing, or is something else going to dethrone that as the big headwind to watch out for?
[00:14:23] Chris: I don’t want to be redundant, but it is still staffing, and here is why: If we can’t continue to solve the staffing issue, the customer is not going to have the same engagement they expect in our community or our competitor’s community that they signed up for. They expect a full dining program with different options. They fully expect all the life enrichment activities.
I talked with a handful of operators as well. One of the things about the pandemic that I’ve shared is that it brought the industry a bit closer. We were all willing to share what we were doing to overcome this major challenge, and still today we’re sharing details on how you are handling your staffing crisis — “What are you doing in this market?” For us, we really have been focused even going back to retention. Recruiting is key, don’t get me wrong, but let’s retain and love those that we have under our roof right now.. Don’t give them a reason to leave.
Let’s make sure we’re really nimble with our wage adjustments and doing it appropriately so we can keep the right staff in place and just not totally crush our margins. At the same time, we also decided that at bigger campuses we have, we can embed just one recruiter managing all the recruiting needs for that community. Then in markets where we have scale, we’ve been putting in regional recruiters across the country which has been paying off in great returns. In the month of November, we had our lowest contract labor utilization since November of last year.
I’m really pleased that we’ve been moving in the right direction. Are we out of the woods yet? No. We believe we have the right tools and programs in place and hopefully, we’ll continue to keep working the magic and get to the right position so we deliver all the services that our residents are desiring.
[00:16:18] Tim: As the boomers come into the industry, as you mentioned, they want something a little different. And I hear a wide range of opinions on how to meet those preferences. I had an interesting conversation with a guest who said essentially 80% to 90% of seniors are “never-movers,” meaning nothing about today’s senior housing communities appeals to them.
So, it seems like there are a lot of people out there that the industry can reach. What do you think that the industry will need to do to attract more folks from that generation, the baby boomers? What do you think their biggest needs and preferences are, and how do you think that the industry can meet that?
[00:17:09] Chris: I think we’re just making sure they know what’s out there.
My mom, she’s had some back issues and knee issues and when we were together over the summer, I just approached the discussion: “Mom, we should start thinking about one of these ideas of you moving into one of our communities.” It didn’t go well.
My mom didn’t like the conversation, I fumbled it being the son versus being somebody in senior housing but she responded, “I’m not going to one of your nursing homes.” I’m like, “Mom, I’ve been in this business 26 years. How do you not know how good our communities are?”
As we spend more time telling the great stories of what we do and how happy our residents are — and let them tell their stories — that will reach more people than we can do with just our advertising.
To go back to your other question, what’s going to attract them more? It’s to me really about all the research on the baby boomers and the health and wellness aspect of what we deliver. What is new and unique in this community that separates you from the competitor down the road? We’re spending a lot of time on that. We had our successful recapitalization of the company last year. We started this year thinking through what the next five to 10 years of LCS is going to look like.
Joel challenged us to envision what our high-level imperatives should be to continue to evolve our business. We’ve done great for 51 years but we can’t just keep doing it the same way. One of the pieces that came out of it is a big focus for health and wellness. What are we going to do to make sure that we’re creating a different environment where the customer feels very engaged in all the different aspects of life that they want.
My dad is 77, in great health, and he goes to the gym three or four times a week. Once or twice a month, he meets with a fitness trainer, not about how he gets stronger or bigger or more bulky, but he just wants to get feedback. What else should he be doing at his age to stay as healthy as possible? That’s what that customer is going to want.
As we think about how our community started 26 years ago, we had a fitness room, a treadmill, and maybe a bicycle with a fan wheel in the middle of it. We have to take these to a whole other level and make sure that we have trainers and programs within those fitness spaces; along with group exercises and access to other fitness environments that we could provide even outside our doors.
[00:19:37] Tim: As you look to the year ahead, is active adult on your radar? Maybe it’s something that you might think more of in the future?
[00:20:01] Chris: It’s on our radar. We’ve studied it. We have not gone all in on active adult. We still believe there’s so much more for us to carve out in the core of senior housing. I’m not saying active adult is not a competitor or something we shouldn’t be thinking about. For us to do it really well, we’d have to set up a whole team. We’re just really happy with the direction we’re going right now with senior housing as our core. We’ll continue to monitor it, study it — and you never know. There may be a partnership out there for us someday to get involved with another active adult provider.
What I like to do is to build one of our communities next to an active adult community that has been open for 10 plus years.
[00:20:44] Tim: [laughs] Because they can do the hard work to get residents in, right?
One of the things that I have noticed in the senior living fitness world is just how much more technology there is in the way people manage their fitness. More generally, I wanted to ask you about technology. First, as you look ahead, what are you budgeting for technology? What’s interesting to you?
Also, can you highlight any unique projects or tech pilots that you have either underway or that you’ve done during the pandemic that you find just really cool and interesting?
[00:21:28] Chris: Yes. Frank Vedder, our director of IT, he leads our innovation council. We also have an operations council and those two partners together share what they need and want. Frank and the team that have other operators on that council, the innovation side is delivering different opportunities. Mike Andreasen, our senior vice president of asset performance management, also has other tools that he brings to the table for us.
A couple that I’ll talk about is that we’ve already got deployed in 30 to 50 communities on technology such as the Whiz and the Whiz and Servi. The Whiz first was the robotic vacuum. It’s not just your Roomba, it’s a much bigger vacuum. When we were first bringing that to the table in 2019, before the pandemic, my expectation was, all right, great. If we’re going to put a Whiz or two or three in a community, how many FTEs will we end up saving on that? That was my operator’s mindset.
Coming through the pandemic, as we hit this workforce headwind, we couldn’t get enough Whizes in communities, because we couldn’t hire enough housekeeping staff. It was able to supplant the lack of staffing that we may have. Now, what we’ve also found though, with the Whiz, we are able to cover more carpet and flooring and cleaning than we ever could with most of our housekeeping staff. As a little side benefit, the residents think it’s their little fun robot, and they’ve been named in all the different communities.
We thought we’d run the Whiz in the middle of the night. The residents enjoy seeing it going around during the day as a little entertainment.
We also have been using Servi within our dining rooms. Servi is a machine that expedites food out so you can bus tables. It allows our staff to stay on the floor more versus going back in. Frank and some others are working with a whole host of other technologies.
To further answer your question, how we budget is typically like this: When we’ve had some pilots that have made sense, we work with our partners and owners and recommend what we’re going to do, and here is what the savings could be.
[00:23:57] Tim: How do you separate something that might be a cool thing from something that you really need to implement in your community?
[00:24:20] Chris: What I often always come back and share is we got to remember just the cost of providing our services today is not inexpensive.
When we start adding technology, we’re going to look at the return on the investments so we can balance it out, because we don’t have an unlimited ceiling on how much we can be charging residents before they just think we’ve out-priced ourselves in the market.
We balance on what the need is, the feedback we’re getting from our residents and our operators, and then Frank and those teams are ringing back different options that we could be rolling out that can make the right return and the best outcome for the residents. Sometimes I would offer a lot of the technologies behind the scenes that you don’t ever see that really make a bigger impact.
[00:25:16] Tim: It’s always the not-so-sexy stuff that seems to save the most dollars.
[00:25:21] Chris: We’re spending a lot of money on a staffing efficiency and communication solution for next year, but nobody’s going to see it in the front. It’s still a cost, but it’s going to help us with our workforce.
[00:25:31] Tim: We have one question here from the audience, so I’ll key this up for you. Can you name a strategic partner that you work with today and how they demonstrate partnership or why they came to mind?
[00:26:17] Chris: One quick partnership that came to my mind is Harrison Street.
Harrison Street has been a great partner for us as we’ve launched a line of what we call our Clarendale communities with Ryan Companies. Harrison Street and Ryan Companies have been great for us from the partnership as we were going through the pandemic, we decided to pull back in our buildings and say what else should we be doing?
If we want touchless faucets or everything that we’re reading about again, how should we be designing these buildings? They’ve been a great partner from that perspective. As we’ve introduced the ideas around technology, it’s never been, “No we’re not going to do that.”
Every time we open up one of our Clarendales — we now have 10 open and a few others under development — what can we learn from each one that we can improve on the next one? That’s how I think about the partnership. We have partnerships in different areas, not just about real estate. But that was the first one that came to mind.
[00:27:19] Tim: Where are you still seeing the most cost pressures in your budget?
[00:27:55] Chris: We haven’t seen it yet, but I know that the cost of gas has gone down for the last two or three weeks. I think that ought to start flowing through our P&L hopefully in the next month or two. It’s too soon to comment if we have a full reset back to what prices were before the inflationary factor hit us in 2022.
Again, we’re just trying to plan with what we know today. We have our budget set, we know we’ve got the right tools and people in the right places and if we just work the system that we know that we got in place, we should be able to get the right outcomes and maybe we’ll catch some decent tailwinds with cost starting to decline.
[00:28:30] Tim: We’ve got a flurry of questions here, so I want to try to get to a couple before we move on. This is a comment and a question. It’s about staffing and I think it’s unpacking something that you had said earlier. The person says, “As a fellow operator, I can pick up the phone and get a staff person, i.e. through agency. Is there really a shortage?”
[00:29:02] Chris: I don’t disagree. We could do the same thing. We could argue, is there a shortage or not? What I would offer from my viewpoint is that in the pandemic late 2020 and early 2021, the staffing groups were actually coming out to employees and saying, “Hey, come work for us, we can get you more dollars.” We were losing so much of our staff and I’m just speaking about a few of our communities that flushed over to the agencies because they were going to get paid twice as much, or whatever the number was.
What we’ve been seeing since then — eight, 10, 12 months later — is a boomerang effect, often in many of our markets where they enjoyed that 10 to 12 month run of maybe getting more dollars. But they would rather enjoy the culture of the LCS community they worked for. We’ve seen that. I’ve talked to other operators that have seen that.
Where we see more success, and I’m just speaking for LCS, is when that executive director has made it their commitment to work with the teams to stay focused on retention and recruiting. We used to always say that ED had to be the sales lead at the community. Now, they have to be the recruiting lead and retention lead within the community. When the campuses are run that way with our executive directors owning it, typically, we find great outcomes
I was just at Timber Ridge in East Quad Washington, outside of Seattle a week ago, and Heather Turner, one of our great EDs with over 20 years with LCS; was telling me all the different things she was doing. She’s got a fully staffed dining room. The residents are happy and they’re coming back in droves down into the main space, but she drove it. When our executive directors drive it, we know that in this industry they can help us win a lot.
[00:30:50] Tim: I’m going to actually combine two questions here. They’re both about dining. I’m just going to read them back to back. The first one was, “How are evolving resident demographics impacting the nutrition that your residents want and the clinical needs they may have?” The other question, “What’s the vision at LCS for dining? How are you planning for changing demands from the incoming boomers while keeping in mind things like labor shortages?”
[00:31:19] Chris: Yes. I’ll take it in reverse order.
We’ve added three different leaders to our dining programs to help us take that to the next level. That’s just happened over the last three years. Before that, we had community resource teams that helped our communities, but now, we have three dedicated groups of three dedicated leaders who helped support our communities to give them direction on dining, menu management, and the different opportunities that we could create. We’ve got a great chef of the year program that instills competitiveness with all of our different chefs.
I come back to where I was 26 years ago. You had one or two dining options. We had one dining room. Everybody came down for the meal that was served between six and eight. If you weren’t there between six and eight, you didn’t get a chance to enjoy dinner. That just isn’t going to cut it in 2023.
Today, depending on the size of your community, we have multiple dining venues that have different options, a very healthy balance of what the residents want. Then you also have takeout through some of our bistros.
When we think about the nutrition and clinical needs, I want to start tracking more of our data about our residents and how many times they’re eating in the dining room. Also, are we getting better outcomes? Or do we see less people using the dietary services we provide?
Are we having more healthcare outcomes on the negative side? We’re trying to produce better menu opportunities, again, driven by what the residents want. What they always remind me too, when I’m in some of these different communities meeting with the residents is, “Don’t forget, I also like french fries from time to time.”
[00:33:41] Tim: [laughs] As do I.
I want to ask you about something that I’ve written about for a few years now. Life Care Services has, I believe, come out on top of the J.D. Power senior living rankings for I think four years in a row now. That process is behind a closed door to me. I don’t know what happens to make these scores.
Can you talk about what it’s like to actually go through this process? Then also can you point to something that you feel, specific in your operations, that sets Life Care Services apart that might lead to that high ranking on that list every year?
[00:34:19] Chris: It’s been an honor for our residents to respond to the surveys with high marks and get the outcomes that we’ve aspired to accomplish. Just yesterday, we spent time with the group from J.D. Powers. They came to our office to walk us through the process, the outcomes this year. It was awesome again to win for four years in a row on the independent living side. We’re hopeful that we’ll have enough beds to be able to compete in the assisted living memory care realm next year, which we’re right on the cusp on.
They send it out in a blind survey to residents I think it was — don’t quote me — almost 30,000 surveys that went out to those different providers and those residents. We’re filling it out to the six different categories and all the questions. I don’t get a chance to see the questions, but that’s how it goes.
It’s humbling to know that we’ve done through what we expect with our hospitality promises for our residents, that we’ve been achieving it at such a high level for them to respond how they have.
We work on our extraordinary impressions on a daily basis from all of our employees, from the executive director to the caregiver, to the housekeeper, to the maintenance techs. Those are the things that I believe help separate us from the rest of the pack.
[00:35:58] Tim: I want to ask you a little bit more about these kinds of programs in a moment, but first I just want to share a comment we’ve got from our audience. The comment is, as a baby boomer, “I want my health care to be portable.”
Here’s another quick question from the audience. What are the top three areas you’re investing the most in this year? I’m just going to add to that. That can be money, time, attention, anything.
[00:36:28] Chris: Our people have gotten the most investments. Right behind that has been our technical, our IT technology and our infrastructure which have been the two biggest focuses of ours. Coming back to that comment about how care is portable. I don’t disagree. We’ll always have home as our major competitor, but at home, sometimes you’re not going to get the same socialization that you can get within our communities.
As we started seeing our occupancies start going in the positive direction in the late spring and early summer of 2021, we started surveying our residents who were coming in over two months, just out of curiosity, because we were seeing a lift in our independent living occupancies grow. We always thought it was the pent-up demand of those for AL memory care. The overwhelming comment was, “I never wanted to be alone in my house and cut off from society. I wanted to be in a community with others of my same age, likes, and interests.” I think that will always help us to overcome the portable care aspect of what we can deliver to somebody’s home.
[00:37:40] Tim: Back to the accolade programs. We’ve seen a real proliferation in these programs over the past three or four years. Just off the top of my head, U.S. News, J.D. Power, Great Place to Work.
I see more operators these days touting these accolades. What do those mean to you as someone at an operator? Do you see those accolades as useful tools in marketing and recruiting or do you see them more as a plaque to put on the wall, a reward for a job well done? Or both?
[00:38:15] Chris: I see them as both.
They’re a great reward and recognition for a job well done. Ironically, our teams get really motivated about them, and having the trophies up, the residents in their communities are honored to have this. I was at a community out in San Diego, Casa de las Campanas, and I met with the resident marketing group. They wanted to share with me how they made sure all the residents called the local San Diego Tribune to make sure that they were able to put in the commentary how Casa was the best retirement community in the area. They’re really proud of their effort, so they get behind it and get pretty excited about it.
From a marketing perspective, it can help us both with marketing for new residents and our HR talent. Getting people in; Rick Westerman and his team from the marketing offices are creating multiple paths to leverage the awards for marketing. Monica with the HR team is doing the same thing with our recruiting.
[00:39:20] Tim: I saw one of your communities has a care navigator role. Tell me more about that role, and is that something you’re exploring or currently doing elsewhere in the company?
[00:40:02] Chris: Yes. You’re referencing Foulk Living in Delaware. That is a community that we onboarded last year.
We’ve been rolling out all of our programs and one of them is healthcare navigator.
The end outcome here with our healthcare navigator is we have a dedicated FTE in most of our communities. When they’re managing all the different needs of our residents, they know what is happening. The peace of mind that can happen for a resident who might be living in Tampa, Florida, and their loved one, a daughter or a son who may be up in Cleveland Ohio. When something happens to the resident, the healthcare navigator takes a lead, keeping the lines of communications open. Maybe it’s a hospital event. The healthcare navigator is working through making sure the resident is getting there, the right files are with those doctors.
We’re also connecting with the family member up in Cleveland so they don’t have to worry about getting on a plane to fly down with mom. If that resident needs time in the healthcare center for rehabilitation, how do we navigate that? Then when they’re done with whatever rehabilitation may be coming, how do we navigate to the next care plan? Companies all say we do this but we have a dedicated FTE that drives this. To me, that’s something that’s hopefully been a little bit of our different and better story.
That’s what we’ve been launching elsewhere. We wanted to have better outcomes with our residents and it’s one of the four different experiences we try to sell as our different and better story.
[00:42:01] Tim: Yes. I can’t tell you how many operators have told me that there is a real need to help people navigate what is often a confusing and frustrating process.
[00:42:15] Chris: You have that aspect, you also don’t even know what is really covered in your healthcare insurance. That’s what the navigator digs in. You shouldn’t be 82 years old and going through a crisis of some sort small or big and have to be thinking about that. That’s one of the benefits of our healthcare navigator.
[00:42:30] Tim: I want to answer another question from the audience here. We were talking earlier about portable care, I believe, and the question came in, “Do you have plans to do LCS to home to reach those who are aging at home or provide them services?”
[00:42:46] Chris: We had a health and home business that started out years ago. We’ve partnered with another group and we actually are just at the tail end of selling out of that business. It doesn’t mean that we’re not going to do it but we do know that that’s going to be an opportunity down the road. How do we maybe break out the CCRC without walls that have long been discussed for the last decade plus? Maybe that could be the capitalization way of how we take our portable business to others within the markets.
[00:43:14] Tim: We have another question here. This is something I actually wanted to ask you a little bit later but since the audience is asking it, I’ll ask you now. They said, “It’s clear that you have a lot that you can be excited about at LCS, but what are the top issues that you and the board are focusing on? What keeps you up at night?”
[00:43:32] Chris: I don’t want to keep saying this over and over, but it’s really the workforce.
You asked that question, what keeps me up at night? One, is everybody going to be answering the bell and showing up for the third shift? Being a former executive director, somebody who was in the communities, I’ve covered many a third shift, and it’s never exciting. But you do it because that’s what we’re challenged to do. I’m always concerned: Are we following the care plans and the programming that we have to make sure we’re delivering our services with dignity for all of our residents?
Because while we take care of a vast majority of independent living residents, we still have those with assisted living and memory care needs and healthcare needs. Are we trusting that all of our training and supervision has helped drive those employees, do the things that we know will be the right outcomes for those residents?
Don’t get me wrong, we’ve got our challenges. Margin compression has been one of them and it’s largely been driven by the workforce issues that we’ve been talking about for the last 45 minutes.
[00:45:24] Tim: Since we’re talking about the future I’ll ask you a couple more questions about what you see ahead. As you look ahead to 2023, what are you preparing for in terms of the ongoing industry’s recovery? Do you feel like this will be another good year for the industry, or do you think there might be some pitfalls along the way.
[00:46:04] Chris: That’s the toughest question of the day thus far. I’m always the hopeful guy. There’s always light at the end of the tunnel. The cup’s half full. We can still get there.
There is the anxiety of what happens if we do have a bit of a housing crisis and/or recession. There’s nothing about the data out there that says it’s anything like 2008. We’ve seen the slowing, but we also saw an unbelievable rise in housing prices through 2020 and ’21. Maybe there’s a small correction there because that impacts LCS a little bit more than maybe other providers, because our customer typically needs to sell their home to move into one of our life plan communities.
We know what happened in 2008. While move-ins did slow down, we are a little bit recession-resilient within the industry that we are. We still have a customer that may have a need that has to be dealt with no matter what their ability is to sell a house or not, and/or a desire just to be getting out of the lonely situation they are in to come into our community.
We built our plans for ‘23 with what we know today. I’m hopeful that the markets and the capital markets keep moving in the right direction versus going the wrong direction that could crush our margins maybe a little bit more.
I often share with our executive directors, “Let’s focus on all the things that we can control. Don’t get anxious about the outside media because those are things that maybe might not even impact you. Let’s focus on the facts around your community and what we can control.”
[00:48:00] Tim:. This is a marketing question, although I think you’d go multiple ways with this. The audience question is, “What are the best-performing means to attract new residents?” In other words, what’s working to bring people through the door? What assets do you tout to get residents in?
[00:48:25] Chris: The biggest move for us has been how we’ve shifted a lot of our dollars into digital media.
Rick Westerman, when he came onto the team almost five years ago, helped us balance out our dollar spend throughout the rental business that he started with. He filtered it over to the life plan side of the business where we were heavy on direct mail and other sources. Almost 80% of our leads today come through digital media advertising channels. We always often tried to manage that correctly because we could spend more there and maybe not get the best leads. That’s how we’ve been able to reach more.
[00:49:29] Tim: I want to get to another audience question here with the 10 minutes or so we have left. This is a response to something that you just said. They write, “In line with your comments based on what you can control, where have you seen an opportunity to expand margin as a senior living operator?”
[00:49:47] Chris: That’s a good one. The biggest one we’ve done is obviously having record-setting rate increases. It’s been a challenging conversation but what we also did, in some of our portfolios, is we advanced those earlier than the calendar year date than we typically would run.
Residents got comfortable with taking to-go meals right to their apartments. Well, during Covid, we’ve never charged for those. But if you think about the packaging and the labor that goes behind it, we’ve now started sending out pricing on it. We say, “Great, if you want to do this and not be part of the socialization, let’s make sure that we’re charging you for the service that you want.” They’re small numbers, but those are numbers that make a difference in the bottom line long term.
[00:50:40] Tim: A quick follow-up to what you just mentioned about your digital strategy. They want to know more about, “what is in the LCS resident offer.” I’m assuming what they mean is what marketing is most attractive to potential residents? Is there something that really far and above is just the biggest driver of people coming in for tours?
[00:51:01] Chris: One of the key things is making sure on your Google search, that you are on the first page.
For us, it’s really speed to lead when that happens, right? When somebody’s able to come in, and we’re able to track them, how is our team focused on getting involved with them? Mrs. Smith isn’t spending her time at nine o’clock at night searching because she has nothing else better to do. How are we quickly following up first thing in the morning, and making sure that we can introduce all the different benefits we bring from LCS, and just like any other retirement.
[00:52:10] Tim: Good points. It’s clear that your digital strategy was interesting to our audience because we have another question. They asked, “As your strategy shifts more to digital, or as you have done that, has your resident acquisition costs increased along with that?”
[00:52:27] Chris: I would offer that it’s actually decreased based on how we’re able to manage our spend on that front. It’s much more expensive to do our direct mail campaigns and other events. We’re also being able to move our digital spend to gain more customers.
[00:53:00] Tim: Environmental, social, and governance initiatives, otherwise known as ESG. I’ve read more about ESG in senior living this year than I think I have in any other year prior. What does LCS think about ESG? Can you highlight any projects or efforts that you’re doing where you’re prioritizing it one form or another?
[00:53:35] Chris: Yes, I’ll talk about it in a couple of ways.
One, we already had a public REIT that we already managed for have worked with for the last three years. We were involved with their ESG efforts. Some of our other partners are bringing and backing different programs, such as Harrison Street and their Fitwel certification. As we’ve been designing newer buildings and opening them, we’ve been creating parking stations for electric cars. We’ve got smart rain technology in many of our campuses to help manage the weather predictions and control irrigation systems.
Then as you think about the S and the social side, we set up a diversity council at the LCS, a little over three years ago. We’ve been going down some of those different roads and always continue to evolve with what’s happening in the market and the outside, the demographics around us.
[00:54:20] Tim: Another quick question, based on something that you had said, the question from the audience member is, “Will LCS ever consider outsourcing dining? What would you like to see in an excellent outsourced dining program if so?”
[00:54:53] Chris: We don’t. We do have a handful of campuses based on legacy and where they’ve come to do outsource dining, we get some great opportunities. We’re proud of the efforts that our three leads do on this and working with our dining directors and chefs at many of our communities today.
[00:55:13] Tim: How are you thinking about growth for LCS, Life Care Services, in 2023 and beyond? Has that changed at all with the high cost of development in some of these other headwinds?
[00:55:33] Chris: Yes. As you touch on development, we have pulled back on our five-year model with some of our development specifically for 2023. Chasing land has been hard.
The other organic growth that we have within the organization and continue to add communities to the pipeline, I think will still continue to fold that in. The capital markets will have a big impact on that. We were excited as ‘22 opened up because there was a lot of transactions that were occurring and we were at the pencil but, we know that has slowed a little bit.
We’re still fielding calls to be able to come in and be a third-party manager. We want to make sure that we’re partnering up with the right team versus just saying we want to provide our services for you if we don’t have the right alignment.
[00:56:41] Tim: Do you have any advice for other operators, or how as an industry we can rise the tide and lift all of the boats, so to speak?
[00:57:11] Chris: One, work through your resident leadership. My past group, I was working with a resident advisory council that led my portfolio of 19 life plan communities. Their feedback was instrumental in us making the right decisions, not just for that portfolio, but elsewhere. Over here at LCS, we have a very similar setup.
As we work through resident engagement and governance, we come up with better plans than us just sitting here in Des Moines in our regional offices, trying to make those decisions. The last piece is down the people side. You can never lose focus on hiring the best people you can, training them, giving them direction and then letting them do the job. Let them focus on what they can control and don’t get too hung up on the uncontrollable things.
[00:58:05] Tim: As a follow-up to that, what do you think’s the best way for the industry to educate consumers on what this all is?
[00:58:22] Chris: Joel Nelson, our CEO, was the one that coined it first as he was talking with all the different providers. He said we need, as an industry, a “Got Milk” campaign, because we all got to go in this together. LCS can’t go it alone. Brookdale can’t go it alone. Atria can’t.
How can we all come together and push the excitement of what senior housing is the opportunity we provide for residents? We may have preferred jobs for people that want to be in the culinary world. How do we get that message out there? That’s going to be the challenge for all of us to work as one to push that storyline.
[00:59:34] Tim: Well, all right. Chris, I wish we could continue the discussion, but unfortunately, we’re out of time today. I just want to thank you again, Chris Bird, and of course LCS, for a great discussion. Of course, thank you to our viewers today who asked a lot of really interesting questions and helped push the discussion along. Have a good one. Bye, everyone.
[01:00:13] Chris: Thank you.