I’ll never forget the 2008 recession. I was sitting in my home office in Clearwater Florida thinking to myself, “What am I going to do?” The industry had come to a standstill and we had Continuing Care Retirement Communities (CCRC) clients with $1M+ entry fees and no leads, zero; across the board, everything just stopped- everywhere.
I had a choice to make that day and I’ll never forget it. Sitting in my office chair, looking at the credenza filled with family pictures, I said to myself, “No way am I going backward, I refuse; I’ve worked too hard to get here.” That day, I made a conscious choice to grow revenue rather than see it decline and the result paid off big time. Bild & Co not only grew but doubled in size each year for three consecutive years, ultimately landing on Inc. Magazines Fastest Growing Companies List in 2013 (during the worse economic recession in my lifetime).
What I learned from that experience is that it’s not what happens but how you respond to what happens that matter. The same holds true for you. While the industry is wondering if it’s an occupancy bottom, I say “sure for those who are complacent- but not for those who are willing to fight back and do something about it.” You have more control than you realize over results and no it won’t come easy, but the fight will be well worth it in occupancy, revenue, NOI and the valuation of your community or portfolio. My ask is that you choose to fight!
Our industry has become incredibly complacent as it relates to occupancy. This reality hit me hard when on the phone with a COO I’ve admired and worked with for close to a decade who said, “Our space is now completely comfortable sitting at 90% occupancy, so I guess our 92% is not so bad!”
He’s right 92% isn’t so bad but even as he said it, I couldn’t help but think of the spread between 92% – 98% or even the fact that most of that increase goes direct to the bottom line! As a business owner, I don’t think I’ll ever be able to wrap my head around lost revenue and frankly there is just so much of it in seniors housing that is preventable it makes me crazy. While we blame it on market saturation and demand not yet meeting supply, I disagree. As it relates to processes and systems needed to drive leads and convert them to move in, we have yet to evolve from the mom and pop mindset; despite those small shops growing to 30+ locations in most cases. Prospective residents and families are interested; they are calling and emailing but we simply aren’t responding properly and, in many cases, not at all. We continually make it difficult, if not impossible to buy seniors housing and care.
All of the first quarter I listened to people talk about how occupancy was improving, yet deep in my gut asking, “how is that possible?” I look at portfolio numbers on a consistent basis, the numbers I see are not trending up; they are either flat or trending down. We now know that was wrong, trouble has been brewing all along and we are in for further decline.
Reap What You Sow
An investor I worked with recently told me that each move in had an internal rate of return of $50,000. Once again, with my jaw was on the floor- I could not help but wonder why executives are not willing to invest in the proper training infrastructure needed to capture and convert quality leads into future residents when there is so much at stake. Those individuals in sales, who are literally responsible for the revenue that drives earnings are not paid anywhere near what they should be, nor are they provided the education needed to compete in today’s complex environment. Every day they are battling competitors who are deeply discounting, navigating complex family dynamics, trying to understand the healthcare issues their residents are dealing with and more. Their job is tough and it’s your responsibility to educate them. I challenge you to look in the mirror and ask, “What have we done as a company to empower and facilitate sales success this year?”
If you want to be better and do better you must know better and that means hitting the books, getting mentors and pursuing conversations with people who are doing what you seek to do. It means going back to school with your entire organization, reinventing your culture with a growth mindset around learning, empowerment, and possibility! This is not the time to pull the purse strings tighter or to wait it out, it’s the time to go all in!
You Have to Want it and Be Willing to Work for It
So here is the reality, occupancy is continuing to decline, and new development projects are taking upwards of 24 months to fill. You can do better but you need a process and a plan, not hope and more time. If you are sitting at 85% or 87% occupancy within your portfolio, you can take control, get in the driver seat and do something about it. By the end of the year, you can be in an entirely different position with a highly trained sales force driving revenue and executive directors who are true sales leaders. These two must work together to balance the demands of sales and operations to achieve common objectives just as investors and operators must do the same.
Here at Bild & Co, we are knee-deep in turn arounds every single day, it’s our passion. It’s not rocket science but it is absolutely a science and there are no shortcuts or easy routes. The work must be done and a commitment made for the long haul.
Get back in the driver seat and create success for your organization now, before 2020 rolls in.