Last week’s National Investment Center for Seniors Housing & Care meeting in Chicago exceeded expectations.
More than 3,000 people attended — a record crowd. And you can bet that we’ll soon be hearing about some of the mega-deals that were cut there behind closed doors.
While I have been attending NIC conferences for more than two decades, I marvel at how relevant and informative they continue to be. The 2017 event was no exception. Here are but four takeaways from last week’s event.
1: Size may matter, but it should not be your top priority
Attendees heard conflicting views on the merits of growth. Rick Matros, chairman and CEO of Sabra Health Care REIT, said he sees no real benefits to being a huge operator. His remarks contrasted with those of other speakers, who insisted that the economies of scale and additional service benefits can pay huge dividends.
So what is the optimal size? Some say that two to five is ideal; others hold that you need at least 20 communities to start seeing the benefits of leverage.
But those are less important than this: regardless of how much you grow, you need to keep getting better. Operators who lose their edge in the name of growth are asking for trouble. Which brings us to…
2. Solid operators never go out of style
This may be an oldie, but it’s a goodie. Those who have money to lend want to make sure they are dealing with operators who know what they are doing. Such judgment is in part a reflection of the numbers.
You need heads in beds, fully staffed communities and to be consistently hitting the financial numbers. But you need also show that you can run a successful business in both good times and bad. Do good, and chances are you’ll do well. And even if you are doing a great job right now…
3. There may be trouble on the horizon
Yes, there is a bit of a building boom right now, especially when it comes to assisted living construction. But some clear warning signs are also emerging.
For starters, demand is having a hard time keeping up with all this new supply. Yes, the absolute numbers are up, but occupancy is generally trending down. Some operators soon may find themselves facing an existential crisis, if they haven’t already.
As if that is not bad enough, wage pressures are on the rise. An improving economy may be good for the nation overall, but it’s not going to help you make payroll. And if you think your elected officials in Washington are about to help, think again. Because…
4. Our leaders are smart, but divided
Yes, it may seem that the current Congress can’t agree on what day it is. But despite the gridlock, disharmony and competing agendas now on display, our top officials are not idiots. Far from it.
As a debate of sorts pitting former House Speaker Newt Gingrich and former Treasury Secretary Lawrence Summers showed, there is no lack of eloquence in Washington.
Each man did something that seems to be outdated these days: speak coherently about his side’s perspective and solutions to some of the major challenges facing our nation.
It’s encouraging to see two intelligent men with differing opinions have a rational and civilized conversation. But the chasm that separates them is hardly narrowing.
It has been said that compromise is the art of politics. If that’s the case, then perhaps what we really need are fewer ideologues and more artists.
John O’Connor is editorial director of McKnight’s Senior Living. Email him at [email protected].