The SHB Interview: Cindy Baier CEO, Brookdale

New head honcho at the country’s largest owner-operator New head honcho at the country’s largest owner-operator is determined to right the ship. 

 

By Jeff Shaw

It’s no secret that Brookdale Senior Living (NYSE: BKD), the largest owner and operator of seniors housing in the United States with an operational portfolio of 1,023 communities in 46 states as of Dec. 31, 2017, has suffered through a few tumultuous years.
Problems surfaced after the Brentwood, Tennessee-based company purchased fellow seniors housing giant Emeritus in 2014 for $2.8 billion. Brookdale struggled to digest the massive acquisition. After initially experiencing a lift in the months following the merger, Brookdale’s stock price fell from $38.72 per share on April 10, 2015, to $11.80 on Feb. 8, 2016. BKD stock opened at $6.89 per share on Monday, March 26.
The company has been in talks to sell at least twice. In 2017, Chinese investor Zhonghong Zhuoye offered $3 billion for the company — $20 per share, according to reports by Reuters and Bloomberg. The transaction fell through last November when Chinese regulators deemed the deal to be “high risk” and the bank financing the deal pulled out, according to The Financial Times.
This February, Brookdale rejected another suitor after determining that the $9 per share offered by the undisclosed buyer was too low. At the same time the company announced the rejection of the offer, it also announced a major change in its C-Suite.
T. Andrew Smith, the CEO since 2013, resigned at the end of February. Lucinda “Cindy” Baier, the company’s CFO, was promoted to replace Smith.
Baier assumed the CFO position in 2015. Her previous experience includes serving on the board of directors for several other distressed companies, such as Sears and The Bon-Ton.
Seniors Housing Business asked Baier what her plans are to right the ship at Brookdale. Her responses were sent via email.

Seniors Housing Business: You’re obviously taking over during a turbulent time for Brookdale. What do you see as the way forward now?
Cindy Baier: Our top priority is to turn around the business. We plan to return to our strong foundation where we will differentiate ourselves based on caring associates who create passionate advocates and generate referrals.
It is about winning locally while leveraging industry-leading scale and experience. We will make decisions closer to our customers by empowering our executive directors with more local decision rights.
We are also changing how we allocate our resources. This is about improving our ability to operate by narrowing our focus. So, we will stop trying to do so much and will eliminate things that distract us from our mission. We will make sure our associates are able to focus only on what matters most — our residents.
SHB: I understand you’ve been going to Brookdale communities and speaking directly with associates and residents since your promotion was announced. What’s your reason for doing that and how has it gone so far?
Baier: To understand what is best for our associates, residents and patients, it is essential to spend time with them and to listen to their ideas and observations. That’s why I am planning to visit communities on a regular basis.
I am first connecting with our associates in the corporate support offices with town hall meetings in Nashville and Milwaukee where we can reach a large number of associates very quickly. Next up will be travel to communities in a number of locations to share information about our path forward and learn about how we can help streamline processes to provide our community associates with more time with their residents and patients.
SHB: Although there have already been a lot of changes at the corporate level, what changes can we expect to see at the actual communities themselves?
Baier: We are expanding our program to invest deeper in the organization. We made good progress with our efforts to improve the retention of our executive directors and health and wellness directors last year and are pleased to build on that success.
We’re improving how we recruit and onboard our new associates into their roles. We will ensure that our associates’ interests are closely aligned with the work they do, that they know the work they do is meaningful, and that they receive proper rewards for their efforts.
At the same time, we will invest in technology to remove routine tasks so the associates can center their attention on the work they enjoy most: taking care of our residents.
Our strategy also improves the focus on our residents and patients. We will continue our work on enhancing our customer value proposition: differentiating based on quality, choice, personalized services and associates who care.
At the same time, we are discontinuing well-meaning, corporate department-driven initiatives that distract from the things that matter most.
SHB: On a recent earnings call you noted that there had been an “indication of interest” in buying the company, but Brookdale rejected it. What made you decide not to take the offer?
Baier: The board believes Brookdale can create more value for our shareholders by driving better performance as a public company under new leadership. We believe the rejected indication of interest and our current share price are significantly below the company’s intrinsic value and below our net asset value.
SHB: Is a sale still on the table for the right price?
Baier: Although the formal process has concluded, as always, our board is committed to evaluating opportunities to enhance shareholder value and will continue to do so.
SHB: How do you think your finance background could help to lead Brookdale to greener pastures?
Baier: While Brookdale has underperformed, we have a strong foundation and are committed to our mission and to the residents we serve. What has changed is that over the past few months, I’ve helped formulate a turnaround strategy.
I’m working directly with our operational, sales and marketing leadership teams to plan and begin implementing tactics to improve our results. We analyzed our operations to determine what’s working and what’s not. We developed a concrete plan to focus on the key value drivers of our business model.
We are shifting our focus to win locally while leveraging our
industry-leading scale, and I’m confident we’ll get to where we want to be.
SHB: This isn’t the first troubled company where you’ve held a leadership position, including Sears and The Bon-Ton. How do you hope to use that experience to help right the ship at Brookdale?
Baier: Leadership skills are transferrable. What matters is focusing in on a particular situation, understanding the particulars, and determining where the opportunities and obstacles are.
At Brookdale, the first step is all about the mission and it’s all about the people. This is a local business. And what really makes a difference in this business is the dedicated and caring associates that we have who are delivering quality service to our residents.
And our plan is about differentiating at that local level. We’ll have choice. We’ll have quality. We’ll have caring associates. And our experience will be personalized. That will make the difference for the residents that we serve and for their families.
SHB: Even with significant reductions in both your ownership and operational portfolio, Brookdale is still the largest seniors housing owner-operator in the U.S. by far. The company has over 1,000 communities capable of serving more than 100,000 residents. What are the advantages and disadvantages of that size?
Baier: In organizations as large as ours, there are going to be things that are not discretionary. We don’t compromise around regulation. We will make sure that we’re compliant with all government regulations and license requirements. But when it comes to delivering the local resident experience, these are very local decisions and executive directors have choices on many things.
SHB: You’ve been pruning your portfolio recently. Do you plan to continue reducing your size in this way?
Baier: We will continue to look for opportunities to create value from our real estate, like the approximately 30 asset sales we announced in our earnings call, while we pursue our turnaround plan to improve our operating performance and financial results.
SHB: What’s something our readers might be surprised to learn about you?
Baier: I learned about being a caregiver when I was young, growing up on a farm in central Illinois. One of my responsibilities was providing care for my blind grandfather.
I am a genuine believer in Brookdale’s mission of enriching lives, and I personally experienced the importance of it last year when my mom went into a decline and passed away.
As we approach an increase in the population growth of people over age 75, this heartbreaking personal experience of my own is one that many people all over the country will continue to endure, and it’s something that further connects me to this inspiring, mission-driven organization.

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