Tom Grape has a sobering message for a senior living industry facing a growing number of disruptive forces, including rapid technological change and shifting consumer preferences that pose a threat to the long-term health of the sector.
“If we continue to think of ourselves as senior living operators in the way that we have, I personally think we’re vulnerable. If we think of ourselves in ways that will allow us to compete for this new era, we’ll be positioning ourselves successfully.”
Grape is chairman and CEO of Waltham, Mass.-based Benchmark Senior Living, which operates 58 communities offering independent living, assisted living, memory care and continuing care across eight states in the Northeast.
His concerns about disruption aren’t centered on overly aggressive capital providers or new entrants to the business. Instead, the veteran executive, who has been in this niche sector for 32 years, believes that there is “a whole host of people from a whole variety of different angles that are trying to put the senior living business out of business. I think that has huge implications.”
The comments from Grape came Tuesday morning during a keynote address titled “Prospering in the Era of Disruption” at InterFace Seniors Housing Northeast, which took place at the Sonesta Philadelphia Rittenhouse Square. The one-day conference attracted over 250 industry professionals including owners and operators, developers, lenders, brokers, architects and more.
Impact of shared economy
The conventional wisdom in recent years has been that the prospects for the seniors housing industry are bright due to highly favorable demographics that will lead to boom times in the long term, and that the opportunities are boundless. Not so fast, Grape cautions.
There are a number of technological advancements in health monitoring that will allow seniors to stay in their homes longer, which in turn will impact the seniors housing business. Grape recounted a recent conversation he had with Joe Coughlin, founder and director of the AgeLab at the Massachusetts Institute of Technology.
Coughlin pointed out that with the advent of the Internet of Things, seniors will be able to stay in their homes for a longer period of time than they might have otherwise because of virtual care. (The Internet of Things is defined by Wikipedia as the network of physical devices, vehicles, home appliances, and other items embedded with electronics, software, sensors, actuators, and connectivity which enables these things to connect, collect and exchange data.)
“With the shared economy where we can get nutrition at home, where we can get everything delivered that we want, he estimates that will allow people to stay at home six months longer than they currently do, which he believes will reduce assisted living revenues by $22 billion. Who knows if he’s right,” said Grape, referring to Coughlin’s weighty opinion.
Boomers as change agents
Changing consumer preferences may prove to be the most significant disruptor of all in the coming years, according to Grape. “We know that the baby boomers have turned everything on their heads that they've touched. And for all the 32 years that I've been in the senior living business, we've been saying the baby boomers are coming, the baby boomers are coming.”
Now the oldest baby boomers are 72 years old. Their entrance into senior housing may be a decade or more away in most cases, but many of the younger boomers already have an aging parent residing in seniors housing, so they are familiar with the space. The baby boomer generation tends to be vocal about its wants and needs, and Grape doubts that the senior living product that’s being delivered today will satisfy this demographic group.
“The baby boomers aren’t going to want anything that says ‘senior’ on it. In my view, they are going to want all the same choices in their senior years that they had throughout their lives,” emphasizes Grape.
“They’re going to want urban, rural, high-rise, mid-rise, low-rise and multi-generational. They're going to want to pay for it how they want to pay for it. They're going to want to be able to finance it. They’re going to want to be able to buy it, not just rent it. They're going to want to be able to have any service they want 24/7. They're going to want to be able to do a timeshare. Every choice they've had throughout their lives they're going to want to have in their senior years.”
Memorable mission statement
An avid reader of business books (his favorite author is Jim Collins), Grape said one hallmark of great organizations is that their mission statements are short, pithy and memorable. For example, The Walt Disney Co.’s mission is “to make people happy.” “Who can’t remember that? Every employee at Disney can remember that one,” said Grape.
The second characteristic of a great mission statement is that it’s about a bigger cause, a transcendent idea.
“It’s not about what you do today. It’s a calling. It’s something that is motivating people beyond just what they do today,” Grape pointed out. “Again, to use Disney as an example, had the company said back in the 1950s we want to be the best animated cartoon company, think of what Disney would be today. Instead, ‘make people happy’ is a really big calling. It gives Disney all kinds of possibilities, and obviously it has taken advantage of many possibilities.”
Benchmark has come up with its own pithy mission statement that stemmed from letters Grape has received over the years from happy customers.
“Nobody has ever written me a letter thanking me for the great food, or the great activities or the beautiful building, or the great financing, or the fact that we got the bills right. That’s what they pay for, that’s what they expect.
“The delighted customers have always written me about one thing, and that’s about the great connections they had with our staff — how we made them feel loved, how we did something that was perhaps above and beyond what even their family could have done for their loved one. It was the fact that they wanted to stay in touch with our senior living community, even though mom or dad passed away or moved on.”
Fittingly, Benchmark’s new mission statement is “elevating human connection,” which goes well beyond being the best senior living operator. Grape’s job title inside the company also has changed. He’s now the connector in chief. The new mission statement is a hit with the staff, explained Grape. “Starting at the core of who we are has really made a difference for a whole host of people in a whole host of ways.”
In short, the company no longer views itself as a senior living operating company.
Not all gloom and doom
The distinct advantage that the seniors housing industry has with regard to this new competitive landscape in the digital age is that it has a head start, according to Grape. “We know our customers, we’re in the market. But there are a lot of people out there chipping away in each of these different ways at our customers and our length of stay and the like.”
One great opportunity for the seniors housing industry going forward will be the ability to partner with local health systems to drive down the cost of healthcare, according to Grape. For example, seniors housing communities are a low-cost alternative to skilled nursing facilities for rehab stays.
Those relationships take time to develop, however. Right now those conversations are not on the radar screen of the health systems that Benchmark has encountered in the Northeast, said Grape.
“I think this is more prevalent on the West Coast than it is on the East Coast. Maybe some of you are having more luck than we are with those conversations, but that’s going to be coming.”
— Matt Valley