Today we sit down with Jill J. Johnson, MBA. She is President and Founder of Johnson Consulting Services, a management consulting firm specializing in strategy development for senior living providers.
This two-time Business Hall of Fame inductee has influenced more than 4 billion worth of business decisions for clients located across the United States, as well as in Europe and Asia. Jill's consulting work has encompassed the entire continuum of senior living services. She's been a consultant for numerous Senior Living clients, including two of the nation's top 10 largest not-for-profit, multi-site, senior living organizations, and Mayo Clinic. Her articles on business strategy have appeared in over 150 publications. She's been quoted in the Wall Street Journal, The New York Times, Money Magazine, Inc, Forbes, and Success. Jill's a frequent speaker for Leading Age state chapters and other healthcare associations. She's also the author of the award-winning book, Market Forces, Strategic Trends Impacting Senior Living Providers. https://www.jcs-usa.com/books/strategic-planning-senior-living-providers/
Today we sit down with Jill J. Johnson, MBA. She is President and Founder of Johnson Consulting Services, a management consulting firm specializing in strategy development for senior living providers.
This two-time Business Hall of Fame inductee has influenced more than 4 billion worth of business decisions for clients located across the United States, as well as in Europe and Asia. Jill's consulting work has encompassed the entire continuum of senior living services. She's been a consultant for numerous Senior Living clients, including two of the nation's top 10 largest not-for-profit, multi-site, senior living organizations, and Mayo Clinic. Her articles on business strategy have appeared in over 150 publications. She's been quoted in the Wall Street Journal, The New York Times, Money Magazine, Inc, Forbes, and Success. Jill's a frequent speaker for Leading Age state chapters and other healthcare associations. She's also the author of the award-winning book, Market Forces, Strategic Trends Impacting Senior Living Providers. https://www.jcs-usa.com/books/strategic-planning-senior-living-providers/
Welcome to the senior housing investors podcast. If you are an investor or want to be an investor in senior housing, then you're in the right place. Hi, I'm John Hauber of Haven Senior Investments. We are pleased to present our newest episode where we bring you the innovators and leaders across the full spectrum of assisted living and senior housing, all of whom provide for the betterment of our senior population. The host of our show, Pamela Pyms has background in the industry. And she will be interviewing our honored guests. Hi, Pam.
Pam Pyms:Hi, John. Thanks very much. It's great to be here. Our podcast topic today is strategic trends impacting Senior Living providers. Despite the anticipated senior tsunami in population emerging across the nation, success in the senior living industry is not guaranteed. Today, I'll be talking with management consultant Jill Johnson, who will discuss the critical market forces that will influence ongoing success in an industry oversaturated with competition and complexity. She'll offer insight on how these key trends influenced the industry and the implications they may have on investors, occupancy, operations, programming and site desirability. Jill Johnson is President and Founder of Johnson Consulting Services, a management consulting firm specializing in strategy development for senior living providers based in Minneapolis, Minnesota. This two time business Hall of Fame inductee has influenced more than 4 billion worth of business decisions for clients located across the United States, as well as in Europe and Asia. Jill's consulting work has encompassed the entire continuum of senior living services. She's been a consultant for numerous Senior Living clients, including two of the nation's top 10 largest not for profit, multi site, Senior Living organizations, and Mayo Clinic. Her articles on business strategy have appeared in over 150 publications. She's been quoted in the Wall Street Journal, The New York Times, Money Magazine, Inc, Forbes and Success. Jill's a frequent speaker for Leading Age state chapters and other healthcare associations. She's also the author of the award winning book, Market Forces, Strategic Trends Impacting Senior Living Providers. Gosh, Jill, I'm really honored to have you on today. How are you?
Jill Johnson:I'm good. I'm so excited to be here. This is a topic I love having a conversation about so I'm looking forward to it.
Pam Pyms:Yeah, well, you certainly have an impressive bio and, and before I really get to the meat of what we're going to talk about this strategic trends. I'd love to hear a little bit about you your background, how you got started. And you know, what led you to the senior living industry?
Jill Johnson:Well, you know, I was a really young, very unusual child. I'm a fourth generation entrepreneur. So I grew up in a family business where service was everything. And while I was in high school, getting ready for the Junior Achievement national competition, I met a management consultant from Chicago who talked about what he did. And I'm like, that's what I want to be, I want to be a management consultant. And after I completed my master's degree in business administration, I had the opportunity to work with an international consulting firm. And from there that led to being hired in the consulting division of one of the largest public accounting firms. And back in that era, we had many accounting firms. They were the that was where the the consulting, arena game was played. And I came in as an industry generalist with a specialty in marketing and strategy. And I wanted to work on anything and everything that they would let me do so I did high stakes Indian bingo, casino feasibility, and restaurant studies, I did the business plan for the first freestanding hospice that was ever built in Minnesota. And I was the only one who would work in the senior living space in our office. So I'm like, Sure I'll I'll learn senior housing. And at the time, the firm that I worked for was the national accounting firm working in that sector. They did all the national industry trends studies. And so I ended up getting involved in that and the last year I was with them, I needed to really politically I needed to find a home. So I landed in the National Healthcare practice group. And but I had been doing Senior Living studies at that point for a while. And it and at some point during that last year, they invited me to join one of the analytical teams that was developing the feasibility approaches and the methodology for looking at how to how to assess this new concept called assisted living. And so I was in on the ground floor working on evaluating the market potential for some of the first assisted living developments that were ever developed. And when I left the firm and went out on my own, I had some clients that followed me, and the rest was history. But for me, it was I fell into it. But what I realized is the complexity of this industry was, was so challenging, and I loved it. And I have some really amazing clients that I've worked with some I've worked with for decades, and have really enjoyed the experience and the learning and making a difference for them.
Pam Pyms:Oh, that's wonderful, that really explains how you got involved in doing management consulting work for the senior living industry. And I'm assuming it must have propelled you to write this recent book, Market Forces, Strategic Trends Impacting Senior Living Providers. What was the reason you wrote that book?
Jill Johnson:You know, I had been in the industry over 20 years, and I was growing more and more frustrated with the lack of critical thinking that I was often seeing, particularly, the boards didn't know how to really look at or understand the complexities because, you know, most boards are comprised of people who are either, you know, community leaders, or their investors, let's say in multifamily housing, and they don't understand the nuances of what draw what are the revenue drivers and the profitability drivers for senior living. So that started the gem of the idea. But then finally, I had a client that I got called in on an emergency basis, they were dealing with a potentially Extinction Level Event, it was a skilled nursing community that had been the profitability driver for an entire multi system organization. So that meant the other sites could be a little less profitable. And they could kind of do whatever they wanted to do. Because they didn't have to be responsible, because they knew this other profit center would carry everybody. And when that profit center collapsed, and it collapse really quickly, it threatened the entire enterprise. And as I got further and further into the analytics and understanding what was driving the situation, I realized that the mid level people who were customer facing and referral source facing, were not understanding the cues and the insight that they were being given. And so they came up with some very simplistic explanations for why occupancy was dropping, and why they weren't quite getting the number of referrals they thought they should get. And, of course, that went up the corporate food chain. And that's not the first time that I've seen that happen, where lower level staff people or mid level staff, people who just didn't have the insight, the strategic insight, or driving strategic decision making through their lack of information and their lack of understanding. So I decided that I needed to do something that would help leaders and emerging leaders in the industry better understand the complexities of what's going on behind the scenes, as well as the board members. And so basically, with the book, I pull the curtain back I, today, I work primarily with growth oriented enterprises, I work with distressed businesses. And I work with enterprises that are operating in very complex markets where the world around them has changed so much. And they don't realize exactly what's been driving the change, they just see it as their profitability is off their occupancies are declining, prospects are coming through and just not quite getting to a yes. And it's usually because the world outside has changed so much. What I find in the industry is that providers are usually phenomenal at the day to day living, and caring for the residents that have been entrusted to their care who have chosen to live with them. But where they lack is often understanding those other complex external drivers that really influence and determine ultimately how successful they're going to be. So I wrote the book as a way to pull the curtain back, and to help people understand better so that ultimately they can make better decisions, which in turn will create a better living experience for those who choose Senior Living wherever they are on the spectrum as their home.
Pam Pyms:Oh, thank you so much. Let me just say that before I got involved as much as I have in podcasting, I was a broker in the senior living industry for about 10 years. And how I wish I had had your book that I could have given every one of those owners or especially, you know, developers looking to build and I know you're going to touch on that but right there you're right you start to look at the industry from all the different facets and you realize people don't take everything into consideration. So for example, what are some of the different types of market forces that impact the senior living industry?
Jill Johnson:Well, everybody knows the demographics. You know, and that's why a lot of investors are looking at getting into senior living, oh, the senior tsunami, there's so many the population bubble, Oh, my gosh, we can make so much money off of it. And so that has driven a lot of the growth and development we've seen, especially over the last five years. Okay, the COVID year's five. But what we had seen happening is that developers who really didn't have a full understanding of the complexities of senior housing, were jumping on the bandwagon very quickly. And the reality is, is the demographics, you have to look at them in subsections. And, and sub nuance cohorts. And what we find, you know, after the recession, in the late 2000s 2009 10 11, that really shifted for a lot of providers that offer some level of support, whether it's one meal a day, so it's independent living with one meal a day, they've got activities, they've got transportation, they may have a great fitness program, but the residents who move in are still independent, live their life and do what they want. But what we saw is that a lot of developers jumped in and thought, Oh, well, we'll just do assisted living, cuz, you know, there's great demographics, we can make a lot of money because we can charge a higher fee for that assisted living level of care. And all we can just go hire somebody to run it, we don't need to know anything about it. And what we've seen in market after market is kind of that collapsing of the ideas, because the truth is, for anything that offers any level of service, the average agent move in is often closer to 85 86 years old, even independent living with just one meal a day, depending on the market that you're in. And so what happened is, there's a demographic dip, we call it the birth dearth. And it's basically that group of people who were born between 1929-30 to 1936. And for your listeners, if you think back to what was happening in that era, that was during the Great Depression. And a lot of women either stopped having children, the babies that they had had died, or they just simply couldn't feed the children that they had. And as those children grew to adulthood, they weren't healthy. And so they they died sooner. So there's actually a demographic dip for those people who are in that 85 to 92 year age window, where it's actually smaller or shrinking. And we've been talking about that with our clients for at least a decade prior to to the to the last few years. To help them understand that you can't over build, you can't overprice you have to find that proper market equilibrium. And so the demographics is really critical. Now, yes, there is a senior tsunami, but that age cohort is younger. And they tend to be better suited if they're going to move into any kind of multifamily type or congregate type of housing. Active adult housing is actually a better fit for them without services. And so for a developer that's looking at getting into this for the first time, or an investor that's looking for an opportunity, that often can be an easier first step to understanding. But even that's no guarantee. I just finished up a project that was an emergency project for a developer who had built a property, their staff are blaming that COVID was the reason that they weren't full. But when we got in into the external market assessment, which is what we always do, there were two other competitors and competitors as another market Force had moved into the peripheral of their market areas that were just outside those market area boundaries. But they were savvy, sophisticated developers, and that other those other two developers were least up to 80% occupancy in each building. One was 240 units and other was 100 unit. My client only had 65 units to fill. And they were stuck at 35% leased. And the reality was is their team didn't understand how to sell and build the case for that target audience because they they were showing the building just like multifamily housing, oh, this is a two bedroom. Here's your washer, here's your dryer. Here's the common area, where do you want to sign on the lease, and they didn't understand that with the market that they were selling to, they actually had to help them make that first major decision, which was I want to move out of the house that I've lived in for 40 years that I raised my family in and because they didn't understand that but they're competitors did and their competitors were beautiful properties, lots of amenities, frankly, more amenities than my client had. And they were able to jump on the bandwagon and seize up the market. Even during COVID. They found ways of connecting with prospects. And so competition is a is another major section, or major element of the market forces. And the third one I'll throw out there and there are nine altogether, I'll just throw this third one out is technology. Senior Living providers often are a little slow to leverage technology, it's expensive often. And some of the benefits and the return on investment are often a little unclear. But yeah, during COVID, the clients that I've worked with that had invested in Resident communications technologies, all of a sudden, they had an amazing resource that they were able to use to stay in contact with their residents, they were able to residents were able to submit their orders for dinner so that the client could then deliver the requested meal to their door at night as as basically people were, were in, you know, stay in place in their units. Some have invested in really interesting dynamics in looking at technologies, let's say in their fitness center, and how they're tracking residents progress and strength building. All of those are things that help to keep residents independent, which keeps them keeps them in your building longer. And we see other tools, looking at increased productivity for staffing. And I think that's an area that's going to explode in the next decade. Because we can't find enough people to work in the industry. In many markets, you see provider after provider struggling to get enough staffing. And that is another reason for a developer and an investor to be very mindful of the type of property that you're looking at investing in, the higher the degree of service required, the higher degree of care that's required, the more challenging it will be for the site, to be able to find enough people to staff it, and to staff it well, and to create all the kinds of cultures that everybody talks about wanting to create. Even clients like Mayo Clinic that we still have trouble sometimes filling certain positions, because they're not always the most glamorous position. It's the dining service waitress, it's the care attendant. Those are entry level positions are often not glamorized positions. And so I think the industry is going to be leveraging technology in a much more complex and sophisticated manner, as we continue to progress. So those are just a couple of the ones. You have to read the book to find out.
Pam Pyms:Yes, it was very good. So I'm thinking based on what you just said, that these market forces impacting communities, Senior Living providers, or investors, you know, how much can they really control?
Jill Johnson:Unfortunately, with the market forces, primarily, they're external to the site. You know, it's it's it's government intervention, you know, we saw a lot of that during COVID. Certain states, the states were very involved in prescribing who could or couldn't move into a building, what math requirement, pp requirements, things like that, that that weren't part of the budgeting process, if you will. And so all of those factors are completely outside the control of the provider, the investor, the developer. So what you have to look at is how do you understand enough about what those factors are, and it's very site specific, what's happening to a site, let's say, in a suburb of Fort Lauderdale, will be very different than what's happening in a suburb of Seattle, or in San Diego, or in a small community in rural Iowa. Each is uniquely matched to their local market. And so bringing in just main assumptions, that things are great well and good, really isn't going to give you a chance to succeed financially in this, the developers who do well and the investors who do well are those that understand those unique market nuances relative to the market forces, and then understand what they can harness and what they can can address. So if you've got, for example, a lot of emerging competition coming into your market, the more you know about them, what resources they offer, how their pricing is structured, what what they're including in their pricing package, what kind of amenities do they offer in their community? Then you can look at are, are there things that we need to do to upgrade our site? I've had a variety of clients that we've worked with over the years, where the provider was the only game in town for 20 or 30 years, and we got when that there were new developments coming in, we started looking at the competitive market area and discovered that their 30 year old physical plant simply wasn't going to cut it anymore. And they really needed to make investments in renovating the common areas, renovating the fitness and wellness areas, and revamping programming and dining. What often has happened is older providers really were serving that GI generation, if you will. So he's tying back to demographics now. And you know, the GI generation was great. They used to, you know, they had their house paid off, they had a modest savings, they had some pension they could rely on and, they were pretty fiscally conservative and very risk averse. And, and so those folks came in, they often didn't complain, they were grateful for the things that they received in the sites that they ran. But as we shifted to the silent generation, and they're the parents of the baby boomers, the silence had different expectations, there was that different shift. And so what we started to see happening is they had different expectations about fitness and wellness, because they've, we've learned more from our medical studies that if you're physically active, and cognitively and socially engaged, you have a greater likelihood that your cognitive health will be better over the long term. If you focus on eating nutritious foods that helps your body age well, also. And so what was happening is those generations were starting to collide, and providers that that really stepped up and understood the nuances and took the time, we used to do focus groups, for our clients to help them better understand what was driving this new audience that was coming in and saying, Oh, you know, I know you have a good reputation but you're not for me, we were able to help clients revamp their sites, so that they would better match the local market and the emerging trends. And I'm so grateful that I have have a lot of clients who who understand the depth of the research that we do, and listened and made those multimillion dollar investments. And now you know, are coming out of COVID with, you know, occupancies well into the 90s. That is not the norm in this industry right now. But because they had already made some of those critical shifts, they were in a much better position to be able to handle the storm that came, we call it a black swan. And they had, you know, they had their financial reserves, they had their financial house in order. And all of those are things that providers can do to respond to the emerging and changing trends. And when a competitor comes in, they have a tendency to redefine you in the marketplace if you're not careful. And so we work very hard with our clients to help them understand. Because it's easy to dismiss an old competitor who may be renovating, or somebody new coming in all they're not like us, they won't have an impact. And then all of a sudden, a year or two later, they've had a huge impact. And often, then it's pretty late in the game. And then you're really having to make major investments in scrambling. So it's really good. I have a lot of clients that actually bring me back in every three to five years. And we do a whole new market feasibility, even though they're older, and they've been around forever, they're still wanting to have that new and emerging market insight, so that they can stay at the head of the game, that they can stay in the forefront in their market, because they're committed to being the premier player. And so, you know, they've they've been willing to make those investments. And the skills that I have, are not skills that clients need on a day to day basis. They need people to serve meals, they need people to run programs, they need people who can deliver care, somebody who can understand a market, they don't need me every day. So I can come in and you know, in probably two or three months, get a really great detailed update. And we can retweak and retool, the site, if needed. We can look at we use income and demographic data to see, you know, have your prices gone up too much. And sometimes we help them recalibrate their pricing. So they keep that in a in a range that allows them to have the largest market possible. That's something that you see a lot of developers come in, they want they have really high rates, they're looking at rent, annual rent increases of three to 5%. Investors pay attention when you're looking at those pro formas. And a three to 5% rent increase means that over a five to 10 year window, you're going to price yourself out of whatever market opportunity you've had. And we see that all the time. I had one client I worked with that was well known provider and everybody listening would would recognize the name and when we got in and really understood and looked at the market and looked at the market potential, they were only affordable to 9% of the local market. You can't fill a building, if you're only affordable to 9% of the people who live around you. And so we had to really work hard with them to retool to keep their pricing increases lower, because the reality is a senior annual income is probably only going to increase at about one and a half to 2% a year. So anything above that means that they're having to pull money out of their net worth, or they're having to find other other sources or worse. And we see this all the time, too, they'll be forced to move out of your site. And there's nothing worse than watching a family have to deal with the reality that this beautiful for profit development that mom lived in for three years, that she can now no longer afford. And she moves from that into basically, a very low income community. It's such a psychological trauma for for the resident, to have to make that shift. And so we try and work with our clients to help keep them to as affordable as they can. And we use that data and that insight, and that information about all those different market forces as a way to help them better harness what they can react to, and what they can control, which is their response to the shifts and changes around them.
Pam Pyms:I hope everybody who's thinking about getting into this business is listening today. I can't tell you how many developers used to call me or or just landowners and say, I've got a great piece of property, this will be great for senior. And I will say, did you have a feasibility study done? Did you have market analysis done? Did you call Jill Johnson or for other people, you know, other consultants in the industry that there are so many things they don't even realize they just think the tsunami is coming. And you know, which takes me to my next question. You know, you can't just say the senior tsunami is going to be enough to fill all providers, and maybe you can speak to that a little bit.
Jill Johnson:Well, and it kind of ties off of what you were saying is, yes, there's feasibility studies done. And I've been doing this long enough. When I worked for the big accounting firm, you know, our goal was to get to a yes. And so I learned very early in my career that if you gerrymander the market area, oh, a little bit further than is probably realistic. Or you look at the competitive supply, because the number of competitive units goes into the the math formula for determining feasibility. And you're like, well, this one's in, we're gonna, let's get this one out, or they're only 50% competitive have a really, I'm kind of an old school or, you know, you're either competitive or you're not you, it's hard to be like, Oh, 50% of your ability is less, there is a, you know, unless it's a, you know, some kind of a HUD financed property where there's, you know, a low to moderate income requirement, okay, then maybe I can give you the percentages, but, but a lot of let's let's just be realistic here, a lot of feasibility studies are done with a goal in mind, to be able to document a Yes, so that they they get the bank financing, or the investor financing that they need. And the truth is, is that we've also seen that are within the industry, a lot of push up to say, Well, you know, 30% of the market could have would live in here. So therefore, you're you're feasible. Again, I'm really old school, we take very tight evaluations of market feasibility, and we look at it very carefully, when we're looking at an independent living community. And again, that's like with one meal a day, services and things like that, you know, we're trying to see if everybody else is full, to whatever degree of occupancy we agree on and, and the degree of occupancy for our client. Ideally, we'd like to only be no more than five to 6% of that market of the remaining market for us to fill. And that's very, very conservative. I have seen market studies where they were using penetration rates of 10% 12%. And they were pushing it up. And what that does, is it It tells the investor and the developer, oh, there's a lot more market here than there actually is. And here's the problem. If it's any kind of housing with service, or assisted living, and they're using higher percentage numbers, you all of a sudden now have a recipe because they're all all those feasibility studies are using age 75 and above, for the for the study. Now, we still do that too. But we also will break out other cohorts. So we'll look at 75 to 79, 80 to 85, 85 plus as a way to see kind of like where is the risk level here because If the market average age at entry is really closer to 85 Plus, but your study says, oh, you're feasible on 75 plus that cohort of age 75, to 79, has the higher incomes, there is a bigger population pool in that age cohort. And often, that's what's making the project feasible. But those people won't be ready to be able to move into your site for five to 10 years. So you have to look at very, very carefully what those numbers are. We worked with a client years ago, where they had all this competitive influx into the market. And we went through and very carefully analyzed everybody and looked at it. There were enough housing options, market rate or upscale market rate housing options for every 85 year old in the market. It was a one to one it was I was flabbergasted. And there, there had been several new developments that had come in bigger properties, big numbers. And the other thing that we also often hear from the developer side is, well, we'll be better, we'll be prettier will be more competitive people are going to flock to us. And it's not always about the building, it's not always about how pretty you are. There are often very deep psychological ties within that senior living marketplace. So if it's an affiliated property, or an were, let's say it's affiliated with a Catholic Church, or with some other affinity group, like a college, that's a little bit of a different animal. But for most developers, they're not affiliated, and if you're from out of town, folks, in certain communities, is not a good thing. You know, you're my mom with a small town I grew up and my mom lived there for over 45 years. And she never felt accepted in her mind. Because it was a small community of people who had lived there their entire lives and generations. And, and so sometimes they're very wary of outsiders. I know, I was working on a project in Rhode Island. And that was the most suspicious skeptical market I have ever worked in. They were very skeptical, even of me as just an outsider coming in and wanting to do research, they didn't want to talk to me. And it took a lot of extra effort on my part to be able to break through those walls and, and be able to have the kind of conversations that I needed with key referral sources and key information, guides, if you will, we got what we needed. But it was it was a surprise to me. But I was an outsider. And and that really made a difference. So we in the written plan for the client made some very specific recommendations to him as a developer about how he needed to have a presence in the local community, before the development deal got fully underway. And and they were fully in pre lease, so that people could begin to get to know him that key opinion leaders in the local community could get comfortable with him. And that he could leverage what ties he did historically have to the community so that people would realize, Oh, he's not an outsider, outsider. You know, he's somebody who we can, he's a good guy, we can work with him. And but again, those are all nuances that most people forget that they have to take charge of. And and I think that the nonprofit's do that really well, the for profits come in, and they're really good on the marketing hustle. And they're, they're going to prospect those, you know, call those prospects, and they're going to groom those relationships and things like that. So it's kind of a combination of the two.
Pam Pyms:Hmm. Well, I know in your book, Market Forces, you know, you talk about research, and I think you've just highlighted, you know, why research is so essential for understanding the market forces. And unfortunately, we only have time, you know, for one more question, and I do want to ask you this one. You work in a lot of highly competitive markets with many distressed properties. So, you know, to wrap this up, what would you say would be the best advice you could give the leadership team, board of directors or investors in this type of situation?
Jill Johnson:I think the best advice is you've got to go in and invest in doing the homework you whether you hire me or somebody else, you really need to go in and look for candid answers. Don't dismiss things out of hand. Because Well, it's always been like that. We're in a whole different world now, especially post COVID. And, you know, the, the dirty secret is that, you know, many of our residents were locked up for a year. It was like a minimum security prison, if you will. And, you know, actually prisoners probably had more opportunities to be outside than often more of our residents did. And so we have a lot of rebuilding to do in that trust with our community that trust with our residents. And it means that you go through each of these areas and and do the due diligence to see, what do we need? And what can we do differently? What can we do to set us up for success in the future? And how does that benefit the residents who live with us and the people that we care for. And I think providers that make that kind of investment in understanding how the world has now shifted off its axis now, I think will be much better suited to be able to understand how to go back in and leverage things to their advantage. I got a call from a guy in New Jersey, and he was the executive director for a full continuing care retirement community. And on the website, it looked, it was alright. It wasn't spectacular, but it was it was it was a nice enough place. But the reality was, is that they didn't have good insight about the local market, and their occupancy and their skilled nursing had dropped down to 50%. And that's a very expensive area to not have solid occupancy and, and they're independent and their assisted living was, you know, probably in the 70s. And the board wanted a quick answer that you know what, we just need to cut a couple costs, and we'll be fine. And I told him, I said, No, you're in a much more complex position right now, because of the way the world has changed around you. And you haven't made good infrastructure investments. And so you're going to have to rethink what it is you want this campus to be and what is it your community needs from you? And how is that shifting and changing and if there are other competitive alternatives, which include staying at home and make no mistake, folks, technology is going to create opportunities for those people that we thought would live with us to stay at home longer and be safe and secure, and have the resources they need. But in their own home. We have a whole industry that is ready for lots of shifts and upheaval. So I just encourage providers, boards, investors, take time to look at what's really happening going on, because there's so much more in the undercurrent, and you need to have more than just a quick and dirty feasibility to document you really need to have that deeper dive understanding so that you know exactly what you're getting into, and exactly how you're going to be able to ensure your long term future.
Pam Pyms:Well, thank you, I, you didn't say it, but I will, which one of the big questions to me was how so many investors are willing to spend millions and millions of dollars building a facility and yet they don't want to take, you know, the money for the prerequisite marketing research? I mean, yeah, I mean, it's not a cookie cutter business, you don't just cut expenses, you're talking about people's lives here.
Jill Johnson:Exactly. You know, I get these calls all the time, you know, at least once a week, I get a call from a what I call a novice developer, they might be an experienced developer and investor, but they really don't know this industry sector. And, you know, when I talked to them about what the fees are to actually do a proper level of research. They're like, Well, you know, we just need, we just need a little one, we just need something. Right? And I'm like, you're gonna spend millions of dollars.
Pam Pyms:They should take all that you provide, they should take every last sentence. Go ahead.
Jill Johnson:Yeah, no, it is like, are you kidding me. But I see it all the time. And and I think that, you know, my compadres in consulting, you know, often what I actually get, and I've had two in the last year that had this when they you know, the the one of the clients it was the market area was a rural provider. And they included a portion of an urban area, zip code in their market area. Well, of course, it was going to be feasible, because there was enough population in that little section of that urban area to make it work at but that's not how the reality of market dynamics go rural. People from urban centers don't move to rural unless they were from there, or their children are there, they're not going to come in the droves enough to justify and warrant including it in the market draw. And we had another one that was very similar. And the question that went back to the original consultant was, why did you how did you include that? I mean, this doesn't make any sense in retrospect. And in both cases, the consultants said, Well, this was just a limited market study. It wasn't a complete market study, and it should never have been used for getting an investment. And I'm like, Oh my God, my client just spent 10 or$20 million on a deal that should have never even been built. I had one that was two thirds higher level care and 1/3 independent and it's would have been flipped, they should have had just a small higher care area. And the majority is independent. They'd have been full in a New York minute, but because of how they constructed the building, you know, I don't think they'll ever fill and I always ask, is it market? Or is it marketing? I can fix marketing, but I can't fix market. And unless we adjust price and and that kind of thing. We see it all the time. We see it all the time.
Pam Pyms:Yeah, I'm, I'm so happy to have had this opportunity to let you talk about all the forces that do impact the market. And I hope everyone will remember to pick up your book Market Forces, among other books that I know you've written, so terrific chatting with you today. I want to thank you so much for your time.
Jill Johnson:It was my pleasure.
Pam Pyms:Oh, good. Well, we'll talk again soon, I hope. Thanks for joining us today. This podcast is brought to you by Haven Senior Investments. Haven Senior Investments is the leading faith based senior housing advisory firm focused on providing their clients with the knowledge and expertise necessary to support their goals of buying, selling, developing, investing, fiancing or operating in the senior housing market. They can be found at havenseniorinvestments.com