No talking about deals, values, stock prices and cap rates, not even Brookdale Senior Living. It’s time to talk labor.
I know you usually hear me talking about deals, values, stock prices and cap rates, and let’s not forget Brookdale Senior Living. But I am going to digress a bit from the usual. The entire seniors housing and care business seems to be avoiding what I really believe is going to be a labor meltdown. Cost is one thing, and it is already impacting the bottom line of many providers. But the quality, the training, or lack of, is just something that I think is still missing, and it will begin to poke holes into the marketing pitch for seniors housing and care. For all of these new communities opening up, where is the staff coming from? We hear from the competition. But then where are they getting the replacements from? Hotels, restaurants, 30 hours of training, if that? How are companies going to pay for the training that really should occur? Everyone is now talking about it. But what are they doing about it? What are you doing about it? This problem needs to be solved before there is a real meltdown, and before regulations overwhelm the sector. It’s time to get our collective heads out of the sand.
I couldn’t agree more, Steve. All the growth, marketing, nice physical assets, and studies in the world won’t fill the daunting and critical gap we already have in labor…. let alone good labor. I look forward to having this conversation with those that want to devise solutions at the Argentum conference. Although a multi-faceted topic, in my opinion, it’s starts from the beginning- using a strategy and tools to find the best people (and weed out the rest) using tools vs. gut-check interviewing, then keeping the good labor you have. I just ran a detailed analysis on a mid-size Operator and they are doing it right- they use our tool to find the best and keep them. 75%+ of the candidates the tool predicted (with science) to be aligned with the best in the business– regardless of where they came from– were indeed the best-of-the-best 2.5 years later based on the Operators performance rating system. Better yet, their retention of the best is remarkable and their turnover is under 38%. Without the people closest to our residents, we have no business at all.
Sounds like you have the right system. Can’t wait to hear more about it.
Steve: Couldn’t agree more. Labor, qualified staff, this is the heart of the service provision, the strategic differentiator and the biggest part of the P&L. The issue is going to get worse for two reasons: 1. inflation will drive up costs, so we’re goign to need greater efficiency, and; 2. after the current market contraction runs its course in ~7 -8 years, the steep demand increase will be overwhelming. So we have a real opportunity to do something. But what? My opinion is that immigration solves a whole bunch of these challenges. If only we could get our politicians to stop with the faux issues and address a real issue in a real way. Is this Pollyanna?
I hear you on immigration, but my concern is that the industry just wants low-cost or minimum wage employees from out of the country, and I am just not sure that is the way to go. Unfortunately, wages have to go up if you want to provide the appropriate care.
Precisely. These are in many cases jobs that, with the right training, get filled by immigrants. Yet the new regime in Washington is blind to that reality.
But Michael, why can’t we train the low-skilled people who are already in this country to fill those jobs? And I always wonder, exactly what is “the right training?” There seem to be a lot of underemployed people, with the jobs going unfilled being those jobs that require certain skill sets that too many people do not have. Do you have any idea what the pay scale is for immigrants in seniors housing? Are they paid less, the same, more? Are they better employees, more adaptable to caring for the elderly? I don’t have answers to these questions but I am always curious.