The Executive Study series is a forum to connect with industry thought leadership on a range of thought-provoking topics. These are not interviews. They are conversations to stimulate the ideas and collaboration required to solve some of the industry’s biggest challenges.
We were fortunate enough to sit down with Andy Smith, President and CEO of Brookdale, for the second installment of the Executive Study series. Andy became Brookdale’s President in March 2016, and its Chief Executive Officer in February 2013. He currently serves on the boards of the American Seniors Housing Association (ASHA), Argentum, and the National Investment Center (NIC). Brookdale is the largest senior living provider in the US with more than 1,100 retirement communities that provide a wide range of innovative programs and services.
Andy was gracious enough to host Patrick Crotty, President of Beatha Group, in his Nashville office. Below is an excerpt from what was a very engaging and candid interview. Patrick and Andy discussed the current state of the industry, Brookdale’s operations, and what the future holds for Senior Housing.
Current State of Industry
Patrick: Beatha Group is a firm believer in collaboration, yet we don’t see, frankly, enough of it in the industry. What drivers do you think will encourage greater collaboration?
Andy: Collaboration between traditional healthcare providers and Senior Housing is not only important, but it is going to become required. There is an opportunity for Senior Housing to become an even more integral part of the evolving ecosystem of care. You are going to see healthcare public policy continue to drive less expensive, better quality, value-based outcomes. Senior living can be a part of the solution. For example, today we have assisted living communities that are serving as step-down communities for folks being discharged from the hospital. We are experimenting with a number of different health systems around this idea. Brookdale can offer this transitional environment when utilizing our assisted living communities along with our ancillary services platform.
Patrick: Some have suggested that the Senior Living industry has a branding problem? Is there any truth to this idea? If so, what must the industry do to help change the perception?
Andy: Yes, there are elements of our industry that have, at least to some extent, a stigma associated with them. For example, there are many folks who think assisted living is of the same as a nursing home. That stigma persists, and when you step back, you can understand why. We market a product that most people aren’t exactly excited about and don’t really understand. There is a lack of familiarity with what we do as an industry. In that sense, there is an opportunity for us to explain our value proposition better. What do we provide? Why is it valuable? Part of what’s behind the television advertisements we at Brookdale have done is to better explain what we do. Clearly, there is a lot more work to be done and a lot of opportunity.
Patrick: As we look at the industry, you see a lot of sales tactics related to move-in concessions, offering flat screen TVs, etc. All reinforce the idea of a commodity-driven industry. Is there an opportunity to disrupt this with a new approach?
Andy: Our pricing techniques need to mature, certainly in the case of Brookdale. Not only is there a need for folks to be more sophisticated in how they price their own products and services, but there is a lack of benchmark data. The industry is a long way from having mature industry data around pricing since products like assisted living are still relatively new. In today’s environment, there is also a lot of new competition. We are probably in a state of more discounting and incentives across the board. Over time, this will all sort itself out. We don't want to be commoditized. We have work to do there and it's a challenge at the moment.
Patrick: The industry is searching for new methods to attract and retain great talent. What must we do to create a stronger and more compelling story for those interested in serving?
Andy: There are not a lot of people who are going to college today thinking that they want to take care of seniors for a living. It is really important for people to understand the magic of what we do as an industry. A big part of that magic, is that we provide powerful benefits to the lives of our clients and their families. The Brookdale commercials are just one opportunity to tell our story. Our commercials look through the lens of real Brookdale associates. Most of the people who work in our industry have such a passion for what they are doing, it's not a job, it’s a calling. As an industry, we have an opportunity to spread the word to younger folks in college or who are just starting their careers and to show them how rewarding and fulfilling our industry can be. We need to introduce this to people, so it becomes a natural thought.
Patrick: You’ve recently filled a number of leadership roles. What is the so-called X factor that make a great leader at Brookdale?
Andy: It is critical for any company to hire based on their mission and values. This has to to be first and foremost in the minds of our leaders and, frankly, in the minds of the 80,000 people working for Brookdale. I am also a big believer in servant leadership. Do our folks lead with the heart of a servant? Do they have a passion for serving seniors? Yes, we need to drive the business, but we must keep in mind that our residents are most important.
Patrick: If we apply a warfare analogy, one could compare Brookdale to a cold war power fighting insurgent competition using guerrilla tactics. Is there any truth to that? How does Brookdale approach competition?
Andy: The key for Brookdale is to think big and act small. We are a national company, but we serve our customers at a local level. In other words, we need to consider where the company can help in terms of national strategies while serving the local interests. We also have to empower the people in our communities and provide them with the systems and tools that will help them compete against local competition.
What The Future Holds
Patrick: The baby boomer generation is vastly different than their predecessors. In fact, they have managed to influence our culture at virtually every stage of their life. We certainly don’t expect anything less as they age. What steps is Brookdale taking to prepare to serve the unique needs of this generation?
Andy: We are beginning to think about the difference between what the boomers want, what they are going to demand, and how that may be different from what we provide today. Today, we serve boomers in the way we support them as they take care of their parents. As the boomers begin to age, they are going to have a greater degree of familiarity with what we do. They are also going to be more demanding and we are going to have to continually improve. Also, as a generalized demographic, the members of the silent generation that we serve today, are a pretty wealthy economic cohort. The boomers, generally speaking, have saved a lot less and are likely to be less financially prepared to pay for retirement solutions. As an industry, we will need make sure that we can deal with the affordability question.
Patrick: Beatha Group believes there is tremendous opportunity in harnessing the power of cognitive computing within the senior living industry? What do you make of it?
Andy: I will say that the use of data is very important. We need to find ways to use all of our data. That is going to be a big deal for the industry and certainly for Brookdale. The trick for us is to figure out, of the 50 good ideas we have, what are the one or two we need to get right so we don’t diffuse our focus and so that we innovate to serve our customers better. As an example, we have spent a lot of time with predictive models trying to determine when our clients are going to need additional care and how we can provide that through our ancillary services platform.
Patrick: Every industry has a disruptor. Who or what has the potential to profoundly reshape the Senior Living industry?
Andy: The real disruptors are those that are not even identified. But the most obvious disruptor is the risk of a substitute, for example, private duty home care providers. Companies like these are applying technology to help people age in place in their existing homes. This is going to be, at the very least, disruptive on the margins. Is it possible to replicate what we provide? I don’t think so, but, this is fine, competition make us better assuming that we are clear eyed about it. This also could be disruptive in the way of attracting people in the workforce because we employ the same people. We at Brookdale need to figure out how to constantly provide more solutions, whether that is technology or making sure that people are better trained. Making sure we offer things that qualitatively make our company and our services different and better. Better quality and better outcomes. That's the way we avoid the concept of new disruption.