The SHB Interview: Kim Lody, CEO, Capital Senior Living

by Jeff Shaw

Newly appointed executive says stabilizing portfolio’s occupancy is her No. 1 goal.

By Matt Valley

In January, Kimberly Lody succeeded Larry Cohen as CEO of Dallas-based Capital Senior Living Corp. (NYSE: CSU), one of the nation’s largest operators of seniors housing communities. Cohen retired at the end of 2018 after a 19-year run as chief executive and 21 years with the company.

Lody is no stranger to the inner workings of Capital Senior Living. For the past five years, she has served on Capital Senior Living’s board of directors. Most recently, Lody was president of GN Hearing North America, part of the medical device division of the GN Group, which specializes in intelligent audio solutions for medical, professional and consumer markets.

At GN Hearing, she led seven consecutive years of above-market growth and expansion across multiple channels and brands. Lody’s expertise includes mergers and acquisitions, as well as investor relations.

CSU’s portfolio includes a mix of assisted living (60 percent) and independent living (40 percent). The company operates 129 communities and 16,523 units. It is listed as the 14th-largest owner and ninth-largest operator in the 2018 ASHA 50.

The company is facing headwinds partly due to disequilibrium between supply and demand across the industry. That in turn led to a softening in occupancy rates and net operating income, and even forced short-term pricing concessions in challenging markets. The difficulties are reflected in the company’s stock price, which closed on Friday, Feb. 15 at $6.56 per share, down from $10.92 per share a year earlier.

Seniors Housing Business sat down with Lody in late January in California during the winter meeting of the American Seniors Housing Association (ASHA). What follows is an edited version of that interview.

SHB: Your background includes more than 25 years of expertise in multi-site healthcare marketing, sales and operational management. How did those experiences prepare you for your current role as CEO of Capital Senior Living?

Kim Lody: I began my career as a financial planner in a health plan, and that was the best place to learn the fundamentals of the healthcare system. So, from regulatory to funding to actuarial science, you name it. That was the foundation for my entire career.

From there I focused my career in what I would call ancillary healthcare delivery in sales, marketing and operations. I held a number of executive-level positions in those companies, from VP of managed care programs to chief marketing officer to chief strategy officer to chief operating officer. Then, most recently, I was president for two global medical device companies.

All of that experience culminated together in a solid skill set to bring to Capital Senior Living. I feel like I’ve held all the different operating roles in a company, which really positions me well for a CEO role.

I’ve been in so many different segments of healthcare, where there are a lot of parallels and similarities to seniors housing, it enables me to understand the segment really well, while bringing a fresh perspective to it.

SHB: Is it more important to have inside knowledge of the seniors housing industry, or the ability to provide an outside perspective?

Lody: It’s a balance between the two. You always want to keep institutional knowledge. The history is important because, without it, you don’t have that understanding on which to build. At the same time, outside perspectives are really important, especially with some of the challenges in the industry.

New ideas and new ways of doing things should always be welcome. But you have to make sure you’re thoughtful about implementing those ideas and understand the fundamentals of the industry that you’re operating within.

SHB: You are following in the footsteps of Larry Cohen, who occupied the CEO position for 19 years — nearly a generation. What does it feel like to fill those shoes?

Lody: Larry is certainly a strong presence in the seniors housing industry, having been in it for quite some time. He was a strong presence at Capital Senior Living as well. I don’t think of myself as filling his shoes necessarily. It’s a different pair of shoes at this point.

Coming in from the outside, but yet having been part of the organization over the last five years, I’m able to bring a different perspective and also a different skill set to the CEO role — the same skill set that the board was interested in when I joined.

SHB: What skill sets are required in senior housing today that are different from five to 10 years ago?

Lody: One skill set centers around market research and analytics, really understanding the customer we’re serving and understanding how the customer today is different from the customer of tomorrow. How do we make that transformation as the resident profile might change? My background in marketing and market research will provide a lot of value there.

With the large amount of construction that has taken place in the industry in the past several years, we have this imbalance of supply and demand. Everyone knows that. What that translates into is a pretty competitive marketplace.

There’s an interesting portfolio of properties in the marketplace today, ranging from brand new properties to communities that are a little bit older and more established. One of the skill sets I have is ensuring our communities are highly visible, that their reputation is known, that they’re very active in those communities so that our value proposition is quite evident.

SHB: The press release announcing your appointment as CEO talks about the
importance of Capital Senior Living improving operational performance and delivering “profitable growth.” To achieve that goal, might the portfolio need to be rebalanced in some way?

Lody: We’re always looking at our portfolio in the normal course of business, making sure that we have assets in the portfolio that are performing. We’ll continue to do that.

SHB: We hear a lot today from seniors housing operators about the importance of company culture. Hasn’t the importance of having the right people in place always existed?

Lody: It has. Like others in the industry we’re very focused on recruiting, hiring, training and retaining the best people in the industry. That will continue to be a major focus.

The labor market has become extremely competitive in recent years. Unemployment is so low that there’s a requirement to compete for talent in new and unique ways, including differentiating employee engagement and experiences with our company.

Culture to me is driven from the top, and that means the Capital Senior Living culture starts with me. At the community level, the culture that lives every day in that community starts with the executive director. It’s very important to make sure that our executive directors have what they need to foster and cultivate the caring, professional culture that we want.

Over the years I’ve created Kim’s Top 10 List of Leadership Principles. Because I tout these principles as being so core to my leadership philosophy, people started asking me for it on a regular basis. I really do live by them. In fact, if you held them up beside me, you would say “yep, that’s how she operates.” One of the things I look forward to implementing at Capital Senior Living are these 10 simple principles. It’s important for everyone in our company to know principles, and to implement them in the way we operate our communities.

SHB: Can you share a few of those top 10 principles with us?

Lody: Respect every individual all the time, no exceptions. Find out the truth for yourself. So, if there is a situation that is complex or that you may not completely understand, it’s your job to find out the truth for yourself because you own it. Another principle is hire slow, and let go fast. You want to cultivate your high performers, and you want to make sure that destructive producers are not pulling down the team.

SHB: How much of the drop in the stock price is the direct result of the performance of Capital Senior Living and how much is a result of volatility on Wall Street in general?

Lody: Certainly the industry element is there because many times all of the companies in this segment are painted with the same brush. Market volatility is also another element. But the company has underperformed. Investors don’t take that lightly and neither do I.

SHB: Underperformed how exactly?

Lody: As we’ve shared in our earnings releases we have not met our expectations in terms of occupancy growth or other key metrics. We’ve disappointed ourselves, and that leads to disappointment with our shareholders as well.

SHB: The occupancy rate across Capital Senior Living’s portfolio was 85.6 percent in the third quarter of 2018, according to the company. That’s down from 87.2 percent in the third quarter of 2017 and 89.2 percent in the third quarter of 2015. What’s driving that gradual drop in occupancy over time and what will it take to turn that situation around?

Lody: A lot of the industry dynamics are at play there, including the oversupply. One of the key things I want to make sure we’re focused on is ensuring that each one of our communities is very visible in the market and has the right value proposition. The markets have changed. The competitive dynamics in the markets have changed. We have to make sure that we’re positioned well to operate with those dynamics.

SHB: How would you describe your portfolio in terms of pricing?

Lody: I would say that we’re a value player, meaning that we provide a high-quality seniors housing experience at affordable prices.

SHB: Capital Senior Living is developing healthcare affiliations with hospitals in an attempt to increase the company’s participation in the post-acute care continuum. Do you see this initiative as a major growth vehicle?

Lody: It’s too early to tell. I do believe that there are opportunities for the healthcare continuum to include seniors housing. But like most things in healthcare, those initiatives take quite a bit of time to get structured and operational and to see what results they yield.

We’re interested in those kinds of affiliations, but it’s too early to tell or quantify what impact they might have.

SHB: Have you identified a goal for your first year and the helm of Capital Senior Living?

Lody: Stabilizing occupancy is No. 1. We are focused on operating our current portfolio really well. That’s my objective, that’s my priority, that’s where we’ll focus our time and energy. (Lody wouldn’t discuss any initiatives to address the occupancy issue in detail, but hinted that she would be more forthcoming during an upcoming conference call with senior management to discuss the company’s 2018 financial results. A date for that earnings call had not been announced as of mid-February. )

SHB: Given your intense focus on occupancy, does that mean you’re not looking to buy or develop seniors housing properties right now?

Lody: We’re always evaluating that possibility. I can’t say that we are or we’re not, but that’s a normal evaluation in the course of business.

SHB: Capital Senior Living is the ninth largest operator. How do you feel about size?

Lody: It’s too early for me to have a perspective on size and scale. I will say that geographic concentration is important. That provides you with scale in terms of management resources and being able to be hands-on with communities on a regular basis.

SHB: Is there anything about Capital Senior Living that you think our readers may not know or need to know that you’d like to emphasize?

Lody: We really like being an owner-operator. We like owning the real estate and being in control and responsible for what happens within those four walls of that real estate. When we look at that model and the future of the industry, I feel confident in our future prospects.

SHB: Do you see yourself as a role model for other women in this male-dominated field?

Lody: I’m delighted to be a role model for other women looking for that kind of leadership, but throughout my entire career I’ve never felt my success was based on gender. For me it’s been all about being the best person — the most qualified person — for the job regardless of any other factors. That’s how I approach this role. My intention is to be the best CEO possible regardless of any other factors.

At the same time, I feel it is important as a woman and in this role to mentor other people, be a role model, help other women who may not have had the same experiences I’ve had in my career, or who may not have been exposed to different parts of business and who could benefit from having that exposure.

SHB: What is something that our readers may be surprised to learn about you?

Lody: A couple years ago I received a royal medal of honor from the Danish Foreign Ministry. That was one of the proudest moments of my career.

(In June 2017, the Danish Minister of Defense Claus Hjort Frederiksen awarded Lody — who was then serving as GN Hearing’s U.S. president — the Diploma of the Danish Export Association and His Royal Highness Prince Henrik’s Medal of Honor. The award recognizes efforts to promote and market Danish products and services abroad. Danish technology pioneered by GN helped thousands of U.S. veterans returning from the battlegrounds with damaged hearing.)

I had the pleasure of attending a royal ball with the prince and princess of Denmark in Washington, D.C. That was a very special time, and I was honored to be part of it.

You may also like