What make a successful senior living community?
I am attending the national American Seniors Housing Association and National Investment Center for Seniors Housing & Care conferences in Washington, DC. If you ask this question to the thousand of attendees, many would respond in financial terms such as EBITDA (earnings before interest, taxes, depreciation and amortization), NOI, (net operating income), occupancy trends or operating margins. Their focus would be cash flow and financial value creation.
The industry has consolidated over the past 25 years, so the real estate investment trusts are now a dominant owner with competitive cost of funds, and the largest owner/operator is a public company that operates more than 1,000 communities. The real question is, what is “success,” and how do you measure it?
One needs to visit a senior living community and observe the staff serving the residents to answer this question of success. The frontline staff, department heads and executive team are where success begins.
Staff salaries and benefits always have been the largest operating cost—25 years ago and still today. This is for good reason. On-site employees deliver the care—not financial ratios. The successful community recognizes this key and starts the process when interviewing employees.
I always have recognized in my communities, when starting Capital Senior Living in 1990 and still today at Stroud Companies, that we need to hire the right heart. This is an individual who has a passion to serve and care for others. He or she typically has experienced a loss in the family of a loved one or witnessed a family member or friend battle medical conditions while aging. This life experience creates a capacity to serve and a desire to care for others.
The question for us leaders is, what do we do with these individual capacities and desires? I have learned both the easy and the hard way that an effective leader recognizes these individual traits. I have cycled through the lengthy operating and personnel manuals, the training seminars, company universities and detailed company mission statements. My current journey is one in which I am deliberately creating a culture of passion.
My company structure is an inverted pyramid with residents first, then onsite staff and corporate goals last. The public relations corporate mission statement has been replaced with person-centered care. Each employee knows that he or she is valued, and our goal is to support each one of them every day so that the team provides the best care possible.
The employees are empowered and start each day with the attitude that they matter. They know that a resident’s needs come before corporate goals. When issues confront the staff, the direction is clear as decisions are made. The result is a passion to serve the residents as well as fellow employees. A culture is created that attracts like-minded employees and builds an environment that distinguishes your community from the competition.
Our business is an operating business since the beginning in the 1980s and still is today. The environment is more challenging, as our residents are older with greater acute medical conditions. We as an industry have had more communities under construction or opening in the past year than ever before. Despite these headwinds, the result of creating a culture of passion will distinguish your community and lay the foundation for “success”—including financial success.
James A. Stroud is founder and president of Stroud Companies, a privately held senior living and real estate company headquartered in Dallas, with related activities elsewhere in Texas and in the southwest. For additional biographical information, click on his name at the top of this article.