Torey Riso shares about the opportunity to evolve to better our industry, the importance of a strategy and how using data and analytics builds a solid foundation. Torey is the Managing Director and Leader of Healthcare Real Estate, Seniors Housing and Long-Term Care at Huron Consulting Group.
Lucas: Welcome to Bridge the Gap Podcast, the senior living podcast with Josh and Lucas. Exciting topic and guests on our show today. We want to welcome a good friend of ours, Torey Riso. He’s the managing director and the leader of the Healthcare Real Estate Seniors Housing and Long-Term Care at Huron Consulting, welcome to the show!
Torey: Thank you guys. Lucas, Josh, it’s good to meet up again.
Lucas: Absolutely. We really have enjoyed conversations with you, you know, as we haven’t been able to attend conferences and share a cocktail and just have a discussion, you know, we have had the opportunity to get on a couple of zoom calls and just talk about what’s going on. And it’s always fun to get updates from you because you’re constantly innovating and you’ve had some recent changes. You’ve had some big CEO roles that people in our industry know you very well from. And now you’re on this new venture with this consulting platform today, we’re going to be centering in on and around the topic of the opportunity to evolve to better. And we’re going to run through a couple of things where there’s going to be some key takeaways in this and some strategies around innovation, efficiency, effectiveness, collaboration, health systems that our listeners are going to want to probably relisten to this episode multiple times. Torey, before we jump into those bullet points, help us with the framework here. What do you mean by the opportunity to evolve to better?
Torey: Yeah. You know, Lucas, thank you. And I’ve been involved in the industry now since 2006. My first NIC event was in 2006 when I was at the CIT group platform as a lawyer. We were making loans to people in senior housing and skilled nursing. And I’ve seen the industry evolve and it became for the better. And frankly, I recognized early on that the folks that we were lending too, some of the folks really were focused on just the bottom line. They didn’t care if it was seniors or bubblegum or widgets, they were just out to make money. And there are other people, their heart was in this business and they serve residents and they serve staff and guess what? They were the people that we wanted to lend money to. And I wanted to ultimately make my partners in this space that had a heart for this business. And when you do that, guess what? Investors are satisfied and money is made and opportunities are given. So those are the folks that we wanted to focus on. Over time, we’ve all been kind of, as during that 15 year tenure, I seen that as recessions come and go and that kind of good stuff and everyone’s kind of heading down as if it were a highway everyone’s going really fast down the highway and you’re just focused on staying in your lane and not crashing and not having anything happen. The pandemic for me, kind of was like an ice storm. You don’t really see that it’s going to be really slick out there. And all of a sudden you’re in a tailspin and you’re hoping not to crash into the car in front of you actually, in this case, I think there were a lot of crashes and there were occupancy challenges with people, unfortunately that died in the pandemic, right in the early stage of the pandemic. We didn’t even know what was going on. So people, all of a sudden were trying to keep their residents and their staff alive and not really knowing how bad that was going to get. Now, as we start to see light at the end of that tunnel, I think that we have the opportunity to say, okay, we were traveling really fast on this highway and not aware of the slick conditions up ahead. And we’ve kind of made it. Maybe we got our card dinged up a little bit, but it can still drive, but we have the opportunity right now to go in and reevaluate where we were going, how we were going, where we were going. And I think that’s the real opportunity to evolve to better right now. And I think those are some of the topics that we should talk about; is what do we focus on and let’s use this opportunity. People say, this is not good, let’s not let a good crisis go to waste. And that’s really what we see here is that this is a unique opportunity that we were given to rethink and to set ourselves on a course for better as we go forward.
Lucas: You know, Josh, there is a huge topic and discussion around occupancy and Torey, this seems to be one of the focus areas that you’re you and your teams are looking at. You know, occupancy is a major challenge right now. It affects the economics and it has a big cause and effect. In your outline for discussion today, you’re talking about renewed focus on some old themes. You want to talk to us about that and specifically, maybe start around the strategy component.
Torey: For sure. You know, as we’ve thought about it in this new platform, as Lucas you had said, I was a lawyer in a lending platform. Then I was CEO of a small real estate investment trust. And we partnered with kind of the developing operators, helping them go from smaller to larger. And then I worked with Blueprint Healthcare Real Estate Advisors as their CEO, during 2018 and 20 19 and at the beginning part of 2020. So, you know, in this new platform where I am today, it’s kind of using all of those different experiences. And one of those is when we were equity, when we were debt, when we were trying to be a service provider on the asset sales side. We saw clients that needed to know where you’re headed, right? So I call it kind of a north star and you need to have, you need to ask yourself, where are we headed geographically? What, who do we want to serve and how do we want to serve them? That’s your resident pool and population, and then your staff, right? How are you doing? What’s your outlook toward your staff right now? We all know that labor is a challenge to find it, and the cost of it is going up. And that’s now going to skew our economics. And as a result, we really do need to have a strategy, right? About what are we, again, geography, product type, and what’s our outlook and how do we want to engage with our pool of staff? So we have to, that’s one of the things that we think is important is not just going and doing the day to day and being caught up in our activities. It’s kind of like we have ADL’s activities of daily living. Let’s not get caught up in the ADL’s of our business. Let’s really figure out what do we want to accomplish, set our goals, and then start to chip away at those, even though it’s going to take time to do that,
Josh: Torey, I am tracking right with you. And I love the way that you’ve phrased this opportunity to evolve to better. Your first point, the topic of strategy, the first thing I’m thinking of is that I’d like to know kind of your gut instinct, kind of the pulse. You get to talk to a ton of different decision makers and leaders in the industry, across the country, probably even beyond our boundaries as a country. Do you think that people as a whole, like the operators, the developers owners are at a point coming out of COVID to where they’re actually thinking strategically the dust is settling enough, or are we still kind of hit in the face and still trying to just get our bearings and our heads are duct. What’s your pulse on where we are as an industry thinking strategically?
Torey: That’s a great question Josh, and I say here’s how I think about it again, as you guys know, personally in our phone calls in the past, and as people that have run across me more than once, know that I like to use images about to illustrate what I’m talking about and I think this is like the person that has a really bad back either a disc problem or something. And they used to play tennis and go for walks and hiking and all that, and their back hurts and they can’t do it. Right? So the pandemic effectively is like that underlying condition or that the government money that’s been sloshing around out there has been, it’s like a steroid to the underlying condition. It makes us feel better. We can still go play golf. We could still run these businesses as we were kind of doing it before. We’ve had some assistance and now that steroids start to wear off. We’re going to have to deal with the bad back. We’re going to have to go in for surgery. So I think Josh, to answer your question, that we’re still in that transition from weaning off of steroids to really facing what is coming, which is we do have labor shortages. We do have labor costs going up. We have now supply costs. We have different things we’re going to have to deal with. I think that different people are in different stages of that realization of where we are, but that we are headed. You know, people say, oh yeah there’s going to be distress and the lenders are going to be well, yeah, it’s all going to start to happen. So back to my pile up, this is the cars have piled up and the 18 wheelers that were behind the cars are still coming. And whether those 18 wheelers can avoid the cars and we avoid some of the ugliness. I think that’s where we have the opportunity to get those cars off, by rethinking what we’re doing. So I think people are different to answer your question more directly. I think people are in different stages of that process of realizing that what was, we may get close to something like that, but it’s still gonna be a bit choppy as we head through and get to that final resolution point. We’re not there yet.
Josh: So that’s a really good analogy. And thank you for using that. That’s how I talk and understand in story form. So that helps me a lot, and I’m sure it helps our listeners. I don’t want to spend too much time because there’s so much good stuff here to talk about. I don’t want to run out of time, but thinking strategically, I would say that’s one of your strengths. You’ve gone in and helped retool and strategically position a lot of different companies through the years. And it’s been fun to watch from the outside. Looking in, I have found when I have dabbled in that arena of going into whether it’s at the community level or really any team and trying to get people to think strategically sometimes is a bit of a challenge, especially when people are still kind of licking their wounds a little bit. Can you give some practical takeaways or maybe a one starting point for that leader that’s listening. That’s trying to get their team on the bandwagon of thinking kind of holistically strategically, what would be some advice to them?
Torey: For sure. So I’ve always, like I said, a moment ago, I recognize the people and wanted to work with them as partners and serve them, the people that had a heart for this business. Right. And so they should be asking themselves what, you know, being innovative about what has to change, what, where is this going? Whether they like it or not. And that is I think that, you know, we’ve all known for the long time, the technology, a place where we have to hit, right. So I was talking with an equity provider; a head of a private equity group not long ago. And they were talking about technology and harnessing data and analytics. Right. And so you said, yeah, I was talking to one of my operators not long ago and the person said I get it, I get it. But just tell me what you want to know from the data and I’ll go talk to my data person and they’ll just print it out and send you a file. That’s not you and the person said they miss the whole point, right? The point was, you can’t go backward, looking only has to use what your historical, financial, clinical, physical plant information. And if you don’t have that infrastructure in place today, it’s not something that you could probably afford all at once to change everything tomorrow, but you need to have a plan about how do we make these platforms run more efficiently and effectively using the historical financial clinical and physical plant data to drive our decision making into the future. It’s not just looking back, but it should be utilizing that stuff today to be able to guide business decisions today.
Josh: Have you found in looking at organizational landscapes and organizational charts that under kind the stereotypical fabric of most of our operating organizations that they have leadership in place with the skill set to examine and be in a position where they have someone on the team that has the skill set of looking at something like technology and be forward looking on that or are we even a little bit behind the times, as far as our organizational charts.
Torey: You know, it’s again, a great question and a great lead into what, the way that I view it. And it almost looks like we prepared this, even though we did it really isn’t organic conversation that’s happening. But I agree with Josh that the people that I’ve worked with in the space of what I call the developing operator, right. Whether it’s going from zero to five, to 15 to 25 to 50 communities. There’s an evolution and an arc there, right? And so we’re sometimes in the early part of that arc and evolution, you don’t have the people. It’s not that you don’t want the people, and it’s not that you don’t have people, maybe they are there but people are stretched thin. Can you access the infrastructure experts expertise that you need to ask those questions and get them answered? And I think sometimes the answer is when you get to scale, whatever that is, whether that’s 15 communities, 20 communities, you get to scale and you say, yeah, I now have sufficient cash flow from operations to afford the people that I need to look at this and that. And the other thing is right. Until you get there. This is, again, my other analogy is like trying to, you know, everyone in a neighborhood trying to build a state-of-the-art gym in their basement, right. We should probably be thinking about joining Equinox . We all can use the state-of-the-art equipment. We can all then hire a personal trainer, a nutritionist, a spa person, we can do that as an extra, but having access to the necessary tools. If we say, we want to get into shape, if we want to run our communities as a state-of-the-art proposition, we should probably join up with them. And that’s one of the things that I see as, as efficiency and effectiveness is how we take the pieces that are more fungible and the cost can be spread across a number of platforms, right. As opposed to everyone doing it and addressing it in their own way. So I think to your point, Josh, if we can utilize one person to think through this for the type of client, the type of developing operator, we might not have to have to go out and incur the costs of that specific person. So if we have somebody that’s expert in technology and says, this is how we utilize data and analytics to then run the platform and then guess what that’s going to make that operating group much more attractive to equity and to debt because they’re able to harvest their information, it’s reliable and it’s timely, right?
So having somebody think about how you do that? It might not be somebody on your staff today, but should you be thinking, where can I find that person to help me with? They’ve already thought through it and spent a lot of time doing it. The answer is yes, absolutely. So whether it’s on the team or it’s something that the team can access in a way that’s economical. That’s exactly what I’m trying to build right now is how do you access those people in an economic way that doesn’t give you a competitive disadvantage. Okay. It’s basically, so another analogy here is like, let’s just say that there was a word processing program out in the market, a spreadsheet on the market and its graphics and a program on the market. Right. But they were never really pulled together. You know, it’s like, basically you’re trying to say, how do they talk together? How does it work? I need to do a spreadsheet and create a memo and then do a deck of a presentation deck. Right. Well, guess what, it’s basically creating the Microsoft office suite, where they all are designed to work together. Just because you use Microsoft Office, doesn’t give you a competitive advantage. It just gives you the tools you need to go out and compete in the market. Right. So we’re trying to just give people the base platform and access to the right things, to then be able to use it right. To then make your business better and serve more residents.
Josh: Oh, I love that. So, Lucas, I’m going to continue to just geek out here for a little while with Torey. So you’re going to have to just like, but in the conversation whenever you want, cause this is like, I’m getting into a little bit of operator mode here, but I’ll tell you you’re touching on something that’s near and dear to my heart because you know, not many people know that my day job is managing communities. But over the last 15 years, I’ve gone through this painful thing. And I think sometimes being an early adopter of technology and how much technology and innovation has started pouring into our industry, I’ve fallen victim. You know, this is confessional. I have fallen victim to that, scratch and sniff everything that looks cool. And you know, that every salesperson tells you it will change the way your organization does this, but without having someone strategically, either a partner or a team member designated that really understood that line and how it all communicates together and how we turn that into actionable processes that improve the forward trajectory of the organization. That was something that I lacked. So that leads to frustration. It leads to team frustration. So again, we could have a whole podcast about this because talking with a lot of operators that have been in similar, even that are much larger than we are, that has been a symptom. And kind of an issue that I’m hopeful of this kind of compression, this pressure that we’ve gone through when we come out on this backside, we’re a little bit more strategic with that. So appreciate that topic. I’ve got another question then I’m gonna shut up for a little bit and let what Lucas talk. I don’t want to chase too much of a rabbit, but I think when we start looking at organizations, our organizations, Torey it’s very natural to start fixing the internal, right in like what’s the red line issues that we have the most control over.
I’m wondering what your opinion is and this is purely whatever you want your opinion to be on this. But as we look at a changing industry and evolving industry, how much do we in our organizations and as an industry, have the ability to change, versus how much are we going to have to get outside the walls of our community? Even from a regulatory standpoint, I think about helping to shape our industry because there’s so many, like fences put up around us by whether it’s regulators or legislators or things like that. I’ve kind of got this feeling that for real evolution and real change, we not only have to look at our organizations, but we’re going to have to figure out how we also educate people on what the industry should be, where those fences should be. Do you have any thoughts on that?
Torey: Uh, I do. High-level thought, which is one of the best ways to figure out where the direction we should hit is going to be based once again on the data, right. It’s going to be basically, who are we serving? How are we serving them? What are we doing for them? What does that look like? And to the extent that we have the right answers and can be closer to real time awareness of what’s happening, that’s going to help guide those conversations with regulators and legislators and so on. I mean, oftentimes what we see is there’s a problem. You think back to the storm that happened in Florida a few years back where all of a sudden the people died because there was lack of air conditioning. And then the regulators show up and say, everyone needs to have generators like, you know, tomorrow and it just made no sense in a lot of instances. Right? So I say that to say that it’s usually a reaction as opposed to a reactive process as opposed to proactive. And so I think we need to be proactive by saying, what do we have, where do we want to go? How do we serve our residents? And our hearts are right, I mean look, I by no stretch of the imagination, do I downplay the economics of this? There are investors, there are economic forces that we need to do this to be able to, I would say there’s when I was a young lawyer and I interviewed in a law firm, I realized that there was the business of law and the practice of law, right? We all practice law, we all want to do fun, interesting cutting edge things, but you have to do it in a way where you make enough money to do that. Right. And so in this business too, it is a business. We do need to be cognizant of the fact that we’re going to take money from investors and they need to get a reasonable return. And we do have lenders and we need to pay them interest. And then guess what, there is an element that we can make a profit, right? So we need to, as we’re addressing all of those things. I do think that we need to have the information necessary, to be able to respond in a proactive way to legislators and to regulate, right. And this is how we are going to, so sometimes that’s going to be courageous. Sometimes people like I’m just going to keep my mouth shut and not say anything and hope they don’t come asking me questions. Right? Well, sometimes we need to go out and say, Hey, look, if you’re not asking these questions, here’s what you should be asking about. Right. Here’s what we should be doing. And this, we do this, this and this, and we’re going to be serving residents and staying out of trouble and come regulate me. That’s fine. We’re going to do this in a way that takes care of people in the right way. So I think that, yes, it is something that we need to be proactive about and to be courageous about a lot of times, people don’t have the courage to go take steps that might be innovative and look, and sometimes innovation, sometimes there’s going to be well-known, it’s going to be failure, but nobody really wants to talk about that. But that then guides the success, right. It’s just the door or window that closes, and we need to find another entrance or exit. Right. So that it guides the direction we go.
Josh: I appreciate that. I really appreciate that. So, as we start, there’s so many things I want to talk about, but again, Lucas, you jump in here and you cut me off wherever we get it. Cause I know we’ve got a limited timeframe. But you know, let’s fast forward a little bit because I think when we start talking about the trajectory of an industry and changing and evolving sometimes we get interchange bull terms and senior housing gets meshed in the middle of healthcare systems. Long-term care, you know, everybody asks a little like, where is senior living? What is senior living? What is senior housing? Where are the lines blurred? And now we’re starting to see emerging models that are kind of combined. So when you think of the future of senior housing, where we should go, where we are going and think about combining service offerings, can you talk just a little bit about what that is?
Torey: I can probably talk a lot, but I’ll just try to limit it to a little, but let’s just talk. I mean I’m not the smartest guy around, but we all know that there are more people that are aging than in this current bubble. So we’re just about to start the beginning part of the wave of the baby boomers, right? So 1946 and 1964, those boomers are not yet at the age where we need to start thinking that they’re even, they’re starting now to consider going into what we would call seniors housing, right. So independent and assisted and memory care. And if they have an issue into long-term care, so skilled nursing and whatever else might be there. So as the numbers of people start to go up, the reality is and in our health system, we all know it is expensive, right. It might not even be great, but it’s expensive. And so how do we deal with this bigger number of people? I think the best way to think about it is we need to get people where they need to go at the best in the most appropriate setting. So not everyone needs to be in a hospital, right? So the people that need to be in hospital in the acute care setting that is very expensive with the best care they should be there. Absolutely. But then, you know, when they’re able to transition into something that today resembles a skilled nursing facility, and then from there they can transition into something that resembles a seniors housing community with higher levels of care. In my personal experience, my dad is 93. He went into the hospital for five days and they said, you need to go to a skilled nursing facility. He said, no, I’m not doing that. He’s back in his assisted living with the highest level of care. And with some assistance from hospice and so on. He’s in a place where he can best be served for his current needs. And so how do we do that? How do we facilitate that? So how do we make sure that the people that need acute care are there and then they can transition into a skilled nursing or equivalent when needed or into a seniors housing type of an environment when needed and possible? I think a lot of that is making sure that the information, again, it comes back to data analytics and the flow of electronic information to be able to follow that person right now, typically what we see as the hospitals and hospitals and health systems have a certain way of handling electronic medical records, which is not compatible with skilled nursing and not compatible with seniors housing, guess what?
We need to fix that. We need to have some, and it’s going to be the way that I view it. Josh says that it’s not just going to be, because someone says I’m an innovative thinker, so I’m going to spend money to go do it. They’re going to say I’m a competitive person that wants to keep my kids fed and allow them to go to college. How do I best do that? Well, guess what, learn how to play with the hospital. So you can be the off-taker for their people as they go into skill, as they go into seniors and can go back the other direction. You need to be on a platform where that information can flow easily and freely today. It doesn’t today. And so that for me is not just a question of innovation and wanting to do it because it’s cool to be the person you want to, you want to preserve your competitive advantage, figure out how you invest in that.
And you know, this is basically we’re working off of fax machines and faxes are going to go out of how do you, how do you transition to PDF, right? Because everything now functions on PDF, forget about faxes and FedEx. Right? When I was a young lawyer, everything went out my FedEx and faxes. Today it doesn’t exist. I mean, FedEx does to a certain extent, but everything’s done by the internet, right? But digital transmission of documentations, you close deals now, no one ever gets together. So how do we do that? How do we transition and say we know we need to get to a place where there can be a much closer to seamless flow of information between acute care between skilled seniors housing. That is the future. It has to be in the future, just from a pure economic perspective of societal economics.
It has to be, we have to solve that problem. The people that recognize that are willing to be courageous around that and willing to put their dollars back into it. And what I’m trying to do is to create a platform that can assist with that by saying, let’s be a collective here, right? That doesn’t make us all competitors, but there are certain aspects, like a Republic, right? An economic Federation where we can all join in for the benefit. It’s like the NFL, right? They have rules. They compete against each other. They all want to win at the end of the day, but they come together to make that organization better and to run efficiently. Right. We need to do the same thing.
Josh: Totally agree. And I think Lucas, you and I have talked a lot about this. I think we’re kind of at the perfect intersection of not only is that what our industry needs. I think the emerging technologies are going to allow that to happen, but I also think this next generation, the boomer generations that you were describing and defining they’re going to demand it. And I think for the first time in my career of almost 17 years of senior housing, you know, senior housing is not even what it used to be 15 years ago. It’s changed a couple of times. And I can think of what used to be the services you could only safely get in a healthcare facility or a senior living assisted living community now because of technology and innovation, people have the choice to get that at home.
And I think rather than being resistant to that as senior living providers, if we will embrace that and become part of that system, it actually helps everyone. Because quite honestly, with the capture rate that we of age income, qualified people do a pretty poor job of capturing all those people in the U S and in our small little industry, there is more than enough agent income qualified people for us to be able to have many more beds filled than even are out there right now, if we do a good job at that. So Lucas it, man, you’ve just been like patiently waiting. What are you wanting to get in on here?
Lucas: Well, I don’t know about the listeners, but this feels like watching a great movie where at the end, you just have this feeling like there’s going to be a part two. And so I am really looking forward to that because Torey, you’re on fire with this, we’re drinking from a fire hose on this, in the best way possible. And so I would love to have you back on Torey to go into more detail on this last section of our conversation. I think that would be great, a part two.
Torey: It would be my pleasure. And frankly, I know that many people are watching this and the folks out there that take away from this part, one of the movies and stay tuned for episode two, that people can jump ahead. I am looking for people that want to be early adopters and innovators and say, you know what? I don’t know what it is, but let’s talk about it. And you have a platform and smart people around you to help do something and think through stuff, we’d be happy to do that. And we’re looking for people to help to change the industry. Right? We can take the pieces that we know today and help craft a place tomorrow. It’s like a ship you’re in your port today. You’re going to sail for another port. You may get blown off course by a storm. You may choose to go to a different port when you’re halfway there. But you need to have a direction. And I say this is a direction and I am happy to speak with people and to continue to share ideas in episode two. If that’s what you guys would love to do, I’d love to come back and talk to you more about specifics. But I think they’re finding that. And to go back to your point, Josh, how do we do it? I think it is that mix of having an innovative mindset and actually a lot to go out and jump out and be one of the early people to say, I might be wrong, but I’m going to remain competitive. And if I’m wrong, I’d better do it, get it out of the way quickly so that I could be right and continue to serve people and create opportunities for myself with challenges comes amazing opportunities.
Lucas: With challenges comes amazing opportunities and we appreciate you head-on approaching that and addressing that too, where a great conversation, a lot of value out of this episode. Josh, I can’t wait to see all of the content that we are able to clip out of this to bring back to our audience. So let’s continue the conversation on social media. The best place to do that is at BTGvoice.com, you can get the transcript of this episode. You can connect with Torey and his team. Also, we’ll put this in the show notes to connect with Torey and I would say ping him on LinkedIn, and then we’ll make sure that all of their information is there to reach out and continue this great conversation. Thanks for your time, Torey. And thanks to everyone for listening to another great episode of Bridge the Gap.