Major stakeholders in seniors housing must understand each otherâ€™s roles to succeed.
By Traci Bild, CEO, Bild & Co
Change is constant. While seniors housing is oftentimes slower to adapt â€” and I would even say somewhat resistant to change â€” much has transformed over the last five years. One of the most significant observations has been the operator-investor relationship.
I’ve spent close to two decades working closely with small to mid-sized operators, people who work incredibly hard to deliver stellar service to seniors and their families. Five years ago, things started to change. Gradually investors began to join operators on review calls to better understand what steps were being taken to improve earnings.
Today, a good portion of our business is working directly with investors â€” and this change was not easy. The most difficult part was navigating the relationship between the operator and the investor or asset management team. It was downright contentious and extremely awkward at first, and I didn’t understand why.
Investors wanted to understand how to improve financial outcomes and the tactics being used toÂ drive results. Meanwhile, operators wanted to help seniors, oftentimes pushing back on the investors.
Perplexed by the sense of complete distrust between the two parties, we started to really dig in. Doing more and more work for investors we were regularly going on-site to access communities, troubleshooting, conducting detailed competitive analysis, assessing operator capabilitiesâ€¦ and we finally understood the disconnect.
Breaking down the language barrier
Investors don’t understand the operating side of the business and operators donâ€™t understand the investor side of the business. It’s sort of like a marriage between people from two different parts of the world: while they may be in love, cultural differences are going to creep up. They literally speak a different language.
Operators are under tremendous pressure to get financial results. While the intentions are good, some asset managers can appear matter-of-fact and not so understanding when on-site, further agitating the situation. It’s not intentional, it’s business. Blame it on the language barrier.
Operators speak care, compassion, empathy at all costs, whereas investors speak earnings, returns and, well, Wall Street. They are in the business of making money while operators are in the business of providing care. Therein lies the bigger problem: these two different worlds don’t always go together. It’s an incredibly complex dynamic but, when done right, it’s magic.
We can diffuse the tension and align operators and investors. It’s best for everyone involved and makes incredibly good business sense. The better an operator performs, the more communitiesâ€™ investors will invest. It’s that simple.
Anxious to start improving that alignment? Here are four steps you can take whether you are an operator or an investor in seniors housing and care to begin the process:
- Be Transparent: Whether you’re an investor or operator, say what needs said. Be gentle but frank. Don’t beat around the bush or expect people to read between the lines. Admit what you’re struggling to understand or accomplish and unite on finding an answer or solution. Nothing unifies people more than an aligned cause.
- Get Aligned: Agree upon a written 90-day plan along with each group’s role. Rather than focus on what you don’t want, laser in on what you do want and come together to achieve that common objective. Brainstorm constraints and possible solutions you can implement together. At the end of the day, you both want the same thing: to fulfill both the operator mission and the investor margin expectations. Click herefor a sample 90-day plan.
- Speak a Common Language: Spend a day in one another’s shoes; meaning walk one another through a day in the life of an asset manager or executive director. There is nothing more powerful than experiencing what another’s daily life and, in this case, pressure is like. Literally shadow one another’s job for a day and watch what it does for the relationship.
- Create a Win-Win :Since I first began trying to understand the operator-investor relationship I’ve asked, “isn’t it a win-win to work together?” The better financial performance and operating partner, the more investments a company can make with that specific operator. While it seems like common sense, it’s not. You must work to find the win-win and keep it front and center even when things get tough.
Just like a family making a move to a senior living community there are lots of dynamics at play here. My motto in life is, “when you don’t know what to do, just take the first stepâ€¦and keep walking!” The same holds true here.
Traci Bild is founder and CEO of Bild & Co., a consulting firm serving the seniors housing industry. To submit questions, frustrations or scenarios for future columns, email Traci at firstname.lastname@example.org