Accomplished developer, investor, operator and speaker helps change the way we view aging
By Jeff Shaw
You’d be hard-pressed to find someone in the seniors housing industry who doesn’t know Lynne Katzmann. She is a regular speaker at industry events, a relentless advocate for seniors housing and a veteran whose career spans more than 30 years.
After a brief stint running a public seniors housing company, Katzmann formed Juniper Communities in 1988 in New York with plans to be a seniors housing investor. But it soon became apparent that buying and selling was not enough for Katzmann.
Realizing that there weren’t enough operators aligned with Juniper’s mission of advancing the seniors housing industry through technology and good deeds, the company soon shifted to development and operations. The company now operates its entire portfolio of 18 communities, and owns most of them, totaling 1,428 beds in Colorado, New Jersey, Florida and Pennsylvania. The portfolio spans the continuum of care.
Katzmann is fixated on the future. Her mission to innovate within the industry and increase the role of technology has made her well known, despite heading a mid-sized company.
Seniors Housing Business sat down with Katzmann to discuss the history and continuing evolution of the seniors housing industry.
Seniors Housing Business: You’re the founder of Juniper Communities. Why and how did you create this company?
Lynne Katzmann: I come from a very long line of entrepreneurs. Starting a company was not something strange or out of the question. My grandmother had her own company, my father had his own. What type of company and what it would look like was my question.
I’m a big believer in the “double bottom line,” which is doing well by doing good. When I went to graduate school at the London School of Economics and Political Science, we looked at a discipline from many different perspectives. So while my degree was in economics, healthcare became my chosen field.
I really wanted to create something that would have a positive impact on the people I love. Getting into senior living made sense to me. Being a boomer, I knew my generation would be a large generation. We will need seniors housing, and perhaps in a different way than what was being offered at the time in the 1980s.
Seniors housing is a huge growth industry, which makes it ripe for innovation. All of that’s really exciting to me — a good business opportunity where you can innovate and do something good for people.
Mission changed as industry changed
SHB: Juniper started as an investor, and then morphed into a developer and operator. What precipitated that shift?
Katzmann: Our thought was we would go out and buy what we called “undermanaged properties,” then turn those properties over to operators in that region with a proven track record of strong operations and financial returns.
The idea was if the operator could turn around a property we bought for a low price, it could pay a lease fee and keep any further profits to eventually purchase the property from us. It would leave the community in the hands of a local provider and leave the citizens with a better product and someone that would meet their needs.
We went into development because the industry started changing. Assisted Living Concepts went public in 1994, one of the first seniors housing companies to do so.
We saw that as good evolution. We bought some facilities that we converted to assisted living and realized we had some different ideas of how assisted living should look. At the same time, we realized the number of operators who shared our values and mission were fewer than we hoped for.
SHB: How did you approach this shift in plans?
Katzmann: We began to look at both triple-net leases and management agreements. So if our managers did well, we got the upside. That helped us generate more capital to buy and develop more properties.
At the same time we were developing, we realized we wanted to control operations. We had some ideas how to innovate in our industry to provide a better service to the new, emerging market.
We took over all our existing properties, and anything new we brought on we managed. By 2000, we were an owner-operator of all our communities. There was an emerging product and we believed we had something to add to the industry’s evolution.
We built a 28,000-square-foot memory care model. It was one of the original small-house models. We built these buildings in 1998 and 1999 — long before people were talking about greenhouses and small-house models. We were an innovator.
Each building had four small houses connected to the town center. We were able to include internal walking paths with destinations and a large external space. We could do all the things in a small house model, but we also had economies of scale because it’s all in one building.
We also incorporated some of our values into our assisted living buildings. Our windows are 18 inches from the floor. When people sit, they want to look out. So we bring the outside in. There’s a lot of natural light. There’s a lot of merging of the outdoor and indoor spaces that make it easy for people to be part of the greater community.
SHB: Juniper’s communities are located in a variety of states without much pattern — Colorado, New Jersey, Florida and Pennsylvania. How do you manage such geographic diversity?
Katzmann: Yes, our geography is funny. That stems from our early history of buying and not operating directly. We had opportunities in different states, and that’s how we got to those states.
We believe in being present. All our company’s leadership team — there are seven of us — visit each building every year. There’s a lot of presence from the home office. We do that because it says we’re one family, one company.
Continuing professional training is critical
SHB: Every leader goes to every property every year?
Katzmann: Yes, and we don’t just walk around and say hi. We teach. Each leader has his or her own area of expertise, and we teach that community’s team based on that expertise.We do it because we are one family. It makes a big difference in our culture and in the way our associates feel about the company.
SHB: What do you teach?
Katzmann: Last year I talked about our program of coordinated care. This year my topic is communication. There are lots of different kinds of communication. What we’ve learned is if you really want to do well with your customers, you have to make a connection with them. Communicating how we’re different and how we innovate is also important.
We do something called a “friends and family call.” We ask our community’s leaders every month to reach out to each resident’s family. You don’t just call when there’s a problem. You want to keep people up to date.
SHB: Since Juniper was founded in 1988, you were at the front end of the changing seniors housing model. How have you seen this industry change over the years?
Katzmann: When Medicare was set up, nursing homes were thought to be short-term recovery units. You’d get out of the hospital but you weren’t ready to go home, so you’d go to a skilled nursing facility and convalesce there until you could go home. They were built with two beds in a room. They weren’t meant to be a long-term home.
Because society had no place for people without resources or family, people with chronic illnesses would end up in long-term care. People were living in these places but they said, “I don’t want to live here. I need a locked door. I need a kitchen. I need my own bathroom.” That gave rise to the assisted living industry.
The U.S. Congress passed Medicare with good intentions, but it created an unmet need. That led to the rise of a new type of community to fill that unmet need. Assisted living was a logical evolution. From there, it became clear that dementia and Alzheimer’s disease were going to be an issue. We needed a different kind of community for that.
As the new millennium came in, people started to think about the Baby Boomers. We have talked about the silver tsunami for years and years. We’re not there, but some things started happening.
Technology will lead change in market
SHB: What sorts of things?
Katzmann: Our market shifted in the early 2000s. People started coming to us sicker, later and with higher acuity. That necessitates a different way of providing care and service. It also means people don’t always make their own decision to enter our community — their kids do. And who are their kids? The Boomers. Boomers are the buyers, and the Greatest Generation and Silent Generation are our users.
Jumping forward to the Affordable Care Act in 2010, it is one of the most exciting things that could happen in our field. It’s got many challenges and obstacles, but many more opportunities. It created a series of other changes. It continued to move people through the continuum. It created incentive for long-term care to provide a lot of care for chronic illness. It put a lot of emphasis on quality of life.
We need to evolve again. We need to provide a home-like environment, but also medical services. Enter technology.
Technology will radically change what we do. It will provide the opportunity for us to offer services in a variety of different environments. We will continue to see an evolution in our product. Not only will our buyers change, but so will our users, technology and regulatory incentives.
SHB: What kind of technology are you referring to exactly?
Katzmann: The first thing that has to happen is care must be coordinated. There has to be interoperability. With sharing of data, things will change at an even more rapid pace. Coordination among providers will become greater.
We need to start looking at system-wide quality measures. If you’re getting paid according to how a patient fares across the medical system, you start to look at things differently. That’s going to radically change how people move within that system. Since the incentive is to improve quality of life, we’ll see regulations change and we’ll see the way people work together change. Assisted living is part of this continuum, even though it’s not reimbursed by Medicare.
With new technology and the demographic shift, it’s an unprecedented time. It’s going to create great change. There’s no getting past it. You can’t hide your head in the sand and pretend it’s not coming.
SHB: How did you adjust to survive the various real estate cycles, most notably the overdevelopment in the 1990s and then the housing crash in the 2000s?
Katzmann: We didn’t have much of a problem, to be honest. When there’s a crash and people don’t have money, prices on property are lower. Because we had access to cash, we were able to grow during those periods.
SHB: Did you just go on a buying spree?
Katzmann: I wouldn’t say buying spree — we’re not that large and we’re not public.
We started via angel investors, and our investor base has been with us for 28 years. They’re very happy with us. We have different pressures than my colleagues might.
We haven’t done a traditional equity raise since 2002. So, we’ve been doing our acquisitions from operational income or refinancing. We grow more slowly. We’re not pressured for growth, and we have a financial model that lets us utilize our cash differently.
Engaging seniors pays off
SHB: Juniper recently took some seniors to Burning Man, the famous weeklong, communal arts retreat in the Nevada desert. What was the purpose of that trip and how did it go?
Katzmann: I gave a NIC talk last year on ageism. Essentially my thesis was if we stopped looking at people as old or young and just looked at them as people, we’d all be better off.
Burning Man is typically thought of as the Millennials’ Woodstock. Our notion was to take a group of seniors there and show they could not only exist, but thrive at Burning Man; that it didn’t matter how old you were, you could participate in life.
Our camp was named “Aging Insurrection.” We had people from ages 28 to 87. It was so cool. There were three generations of my family there — my nephew, myself and my mother.
Burning Man is a phenomenal experience. It’s a very interesting societal experiment. It’s held in the dessert in an old lakebed. The bed is covered in dust. When the wind picks up, even without gusts, the whole place is a whiteout. It’s a dustbowl. The environment, while beautiful, is harsh.
But the social environment is very rich. Over 74,000 people came together in this dustbowl for a week and created a community.
My mother is 84 and took care of my father for 15 years after he had a stroke. She was very isolated. While she’s an active 84 year old, you wouldn’t believe how she came alive as people engaged her.
That ability to engage, openness among people, is something from which I learned a lot. I’m still trying to process and put it into words. When you’re open to people as human beings, human beings thrive. Our goal is to create environments in seniors housing that allow people to engage. Burning Man was a very powerful part of that.
When we got home to New Jersey, I saw her a couple days later and asked what she thought about the Burning Man event. She said she missed it. She missed the engagement and the people.
This is an 84-year-old woman in a dustbowl with no showers for a week. It’s a camping experience. For someone of that age to come back and say the engagement was so rich is huge. I saw my mother blossom. I knew she would, but it really happened.
SHB: You have a book club with a few other seniors housing professionals. Tell me a bit about that.
Katzmann: Joel Mendes of JLL got the idea. He came to me and said, “Can we get together with people and do some reading?” There are between five and eight of us so far.
We tend to meet at large conferences, and different individuals host the discussion. We read “Being Mortal” by Atul Gawande this time. It’s a great way to talk about the seniors housing industry from a different perspective. It’s another way to join people from different segments of the industry, to find that commonality. We also have good food and good wine, which doesn’t hurt.
SHB: What’s something people in the industry would be surprised to find out about you?
Katzmann: I lived in Berlin before the wall came down. I did my graduate research in East Berlin. To do that work I had to go back and forth across Checkpoint Charlie each day to access the archives in East Berlin.
I was researching the German Sickness Insurance Programme, which was in effect from 1883 to 1911, and the impact of that act potentially on American health policy. Since that was an early form of public healthcare, and we’re currently working on implementing the Affordable Care Act here in the United States, it’s really cool and it’s totally relevant.