Steve Kennedy, Executive Managing Director, and Scott Tittle, Managing Director – Head of Government Relations and External Affairs, at Vium Capital share about their new focus on advocacy in Washington and providing even better advice to clients. In this episode, we also discuss challenges that seniors housing and healthcare providers are facing and an important perspective on the future PPE spending and more.
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Lucas: Welcome to Bridge the Gap Podcast, the senior living podcast with Josh and Lucas. An exciting episode on today, we’re going to talk about some things that will educate, inform, and influence you. We want to welcome Steve Kennedy and Scott Tittle to the program of Vium. Welcome to the show, gentlemen.
Steve: Thanks for having me so much.
Lucas: You know, Scott, you are brand new over at Vium. We’ve had Steve on before, we’ve had a great conversation about market trends, updates. There’s a lot of shift in our world in the marketplace and in senior living in particular, you have a very diverse background from lawyer, advocate, advocacy, lobbyist. This seems like a very interesting collaboration that you guys have put together. Before we get into your background, Scott. Steve, I’d love to know the thought process of this kind of unique combination of this brand new team member that you brought on.
Steve: Yeah, thanks Lucas. Yeah, we appreciate being on Bridge the Gap. You know, we’ve been around VIum Capital for just over a year and we’ve been very blessed to have success and it’s gone a lot more quickly than we thought. And so now that we’ve established our foundation getting close to closing a billion dollars of financing and just over a year, we really wanted to make sure from the beginning that we were not just a lender and not just another lender, but that we were an advocate and an advisor and a trusted partner to our clients. I’ve known Scott for several years and he’s the right guy on the bus. And if you can get them on this bus, you want to, and so yeah, that was the thought process of from the get-go. How can, how can Vium Capital really just be a partner and an advocate to our clients to help them succeed so we can help them.
Lucas: That’s a great introduction. Scott, tell us about this collaboration and your background in the advocacy arena.
Scott: Yeah. Thanks Lucas. Yeah, I’ve just come off at an incredible six year run as being executive director for the National Center for Assisted Living. For the listeners out there may not be familiar with us. We’re the largest trade association in the country representing assisted living providers. We’re a Federation trade association model. So I work out of Washington DC, but we have 46 state affiliate chapters across the country that are fighting for senior living boots on the ground and state capitals. So it’s been a great work with our state partners, for sure. Did that for about six years and then prior to that, I ran our Indiana state affiliate for five years. I’m a lawyer and lobbyist, healthcare policy person by background from the Indianapolis healthcare market. So it’s been an incredible run and very excited to be joining Vium in this new role.
As Steve mentioned, we’ve been friends for Steve. I think it’s been, I’m thinking about the time when I started at the Indiana Healthcare Association, when you were in your former role at LP and you guys were sponsors for our association. So it’s been it might be eight or nine, maybe close to 10 years since we first met and met the other members of the team including Chris Blanda. So anyway, I’m really excited about this next stage of my career and to be working with an incredible group of professionals who are see themselves as more than just, you know, lenders to their clients. You know, I really think during COVID the important stage that, that outside resource providers have, have seen themselves has been a much more of a holistic approach and relationship with our clients. You know, it’s all hands on deck during COVID for sure. And I know Vium is perfectly positioned to be that for the lending side for our clients going forward.
Josh: So, Scott, I love this background on no, our listeners are gonna find that very interesting, seems a little bit out of the norm from what we hear typically from, you know, a lender or a financial partner to have this kind of emphasis on their team. So with you coming on board relatively recently, tell us a little bit about some of the things that are on your radar, what you’re working on as of now.
Scott: You know I think one thing that we’ve learned during COVID for sure is, you know, the financial impact of this virus on senior housing is significant. We’ve fought tooth and nail in DC with the other national trade associations to make sure that senior living was at the table, whether it was for distributions from the front of brighter relief fund access to funds for PPE, being a part of the the testing distribution channels, and certainly for the vaccination pharmacy partnership program, making sure that senior living was part of that as well. And I think no longer on the financial side, can you just see lending as a standalone service you know, reimbursement regulatory issues, policy issues are inextricably linked to finance and the sector is going to go through a really difficult period of time here if census doesn’t improve more rapidly and with this new Delta virus coming in with a very real possibility of some restrictions on visitation and move-ins, mask mandates, all these trends are coming back again, for sure. You know, might be harder to see census recovering at the pace in which as we know operators need it.
So the ability to work with an incredible group like Vium going forward to help clients through this difficult financial crisis, it’s no longer that you can just be a lender you’ve gotta be able to tie policy, regulatory and other public policy concerns in and through lending as well. So I see it as a great opportunity for me to bring what I know on the policy regulatory side, lobby and advocacy in DC and our state capitals to a great team at Vium.
Josh: So talking about the advocacy with the regulatory environment in specifically dealing with that, are there any big challenges or obstacles that you see in front of us that are glaring as an industry that we’re going to need to overcome? Let’s say over the, over the remainder part of this year.
Scott: You know I think this year it’s all about the financial situation for the sector, right? Some of our association surveys show that 40 to 45% of operators aren’t sure what they can do over the next 6-12 months with current revenues and current census levels. That’s concerning. You know, there’s only so much money coming out of the provider leaf fund. You know, there were several hundred billion dollars that went to state and local governments and we’re fighting again very hard in our state capitals to make sure it’s the most funds do trickle down to the long-term care sector, including senior living, but it’s not gonna be enough. And so operators are gonna need to find ways to be very creative on the service side to make sure that they’re, you know, managing expenses best they can, but also find new ways to fund operations going forward.
So I think that’s going to be the role. I think this year, it’s going to be all about the financial challenge, but a huge component of that of course is labor. And when you talk to operators, the biggest challenge they have right now is holding onto current staff, the costs of agency staff, and then very close third on the expense side, which I think that the public at large really can’t appreciate very well is the cost of PPE. You know, what’s been asked of operators through this crisis to, to find PBE through through struggling distribution channels increased spike costs. And then also just making sure they’ve got an ample supply going forward. That’s a significant cost center for operators as well.
Josh: So one thing I want to dive in and we won’t chase this rabbit hole too much, because I could probably pick your brain for hours on this, but I think there’s a ton of our listeners out there that don’t fully understand legislative and regulatory processes, a huge sector of the senior living industry is made up of small, relatively small owners and operators that all have unique situations all across the country. Many of them are part of or maybe not part of a state association, a state affiliate of an organization like you led. But they don’t fully understand how they can impact or influence policy or advocacy as a one-off community and how the connection runs from the local community through state, to the regulatory environment. Can you talk about some of the collaborative efforts from a policy standpoint that might be taking place that are ensuring that those small regional operators out there, their voices are heard.
Scott: That’s a great point, Josh mean, I think as we look at if you look at other national trade associations, right, like think about pharma you know, pharma is I’m not terribly familiar with their entire membership. You know, there are six to eight to 10 large pharmacy companies in the country, they’re makeup pharma, and then some smaller regional operators. Couldn’t be more different on the long-term care side. If you look at skilled nursing facilities, there are 15,000 or so skilled nursing facilities in the country, the largest operators Genesis, of course. But their market share, I mean, is it one or 2%? I mean, it’s really small. I mean, you think about how diverse the senior out, this skilled nursing facility side is it’s even more so on the senior living assisted living side of to your point, Josh, right.
I’ve seen numbers depending on how you scale it. If you look at licensed assisted living operators throughout the whole country of like 15 beds or above, which is a larger facility, you’re talking about maybe 24, 25,000 total facilities across the country. But if you scale it all the way down to the really small facilities, like even four units, you get into the 40,000 numbers. I mean, there are so many assisted living, senior living providers out there, to your point there, a small family owned you know, independently owned. And so the trade association serve and as an incredible opportunity, whether it’s OCHA, NCAL, LeadingAge, Argentum, ASHA, to be that voice, whether it’s in DC or in state capitals. And so we’ve actually seen, we actually saw during pandemic at NCAL our membership increased we were worried about membership decreasing both on the skills and AL side, just because of financial strains, but we actually saw membership grow. And I think it’s because people saw there was value and information flow of value at being the table, value in having access to data, updated guidance documents. So we actually saw an incredible value. So I would encourage listeners to, to, to be part of the many trade associations you can, I think that that collaborative effort is really important. And we said that association management is just like long-term care, it’s a team sport. And I think you gotta be at the table to have the most the most up-to-date information.
Kind of back to your question, Josh, I think as I look back at the pandemic, the collaboration in DC among all the national trade associations has never been better. We started meeting right away on a weekly basis every Wednesday morning with five or six national executives to make sure we were all coordinating sharing data, sharing information, sharing what we’re hearing from the White House and CMS and Capitol Hill and then coordinating those efforts.
It’s been a great work, great collaborative work with the other trade associations. And I have to say that the if you look at the, the, the role that we played to make sure that senior living as the table with respect to distributions of the fund that senior living was able to receive the free tests that rapid tests. And then also be part of the pharmacy furniture program that was an absolute direct result with all the great collaborative work. And so again, I would encourage your listeners to consider joining a trade association just to make sure you have a seat at the table, and you’re part of that advocacy voice.
Josh: Wow. Love that. So, Steve, this is obviously a strategic move for Vium to bring on someone of this caliber and this background. What are you hoping that this brings as far as value and emphasis on not only your clients, but kind of influencing your vertical and our industry?
Steve: We feel like it’s the next logical step to meeting that Vium that we had when we launched by him. And that is to be a more holistic provider advocate and partner and not be in the background but being on the front lines. And so, a lot of us have been very active specifically in a HUD, senior living mundane world for a long time. And we’re doing right now, you know, a lot of transactions, well, those types of transactions become a little bit harder to value when you’re looking at your trailing 12 cashflow and, you know, having to take away some COVID related revenue and add back some non-recurring COVID expenses and how can we underwrite projects and appropriately sized them so it makes sense for the for the sponsors and the operators, but also it makes sense for the HUD mortgage insurance portfolio, you know, we need that to be strong.
What we’ve done historically is build really good relationships with, HUD senior living leadership staff from Roger Lewis and Roger Lucaf and their team. We want to double down on that and we want to be able to provide to them even more value, not just on working together on how to value properties, but also, how can we make sure that we’ve got a seat at the table. They have a seat at the table when it comes to how senior living is represented in Washington. And we saw a lot of that, that success that Scott talked about sometimes senior living, look, we’re smaller than multi-family, we’re smaller than hospitals, but, but we’re so important to so many parts of our society in particular right now, as we care for our aging is, is we have to be on the front line arm in arm with those, with those bigger participants.
Josh: You know, Lucas, we talk a lot on this network about building relationships and investing in relationships. We talk a lot about our partners investing in relationships and being more than just the product or service provider. And that being all, you know, interested as a partner to the industry in your day job, what do you think this is? This is as far as the move, I mean, what’s your take on this? It seems like a great relationship builder.
Lucas: I love the creativity behind it. And, you know, there’s a phrase that we’ve used for years, Josh is that we’re better together, right? And to be the tide that rises all boats takes a lot of different people with different backgrounds and different skill sets. And like I said, I love the creativity behind this, Steve. I think it’s an important move. I think it’s a good model for other people in the industry to follow. And I think it’s going to be very interesting to see this play out. It’s a complex issue that we’re facing, raising occupancy and balancing out all of these extra expenses that the industry is faced with. The challenges, which direction do you go? What are our value propositions? Senior living’s big value is community, care, relationships, congregate living, and the challenge of stripping all of those major value props away with distancing and masking and things like that is very challenging. And so you know, I think that the industry has got to continue to get very, very creative and very, very real on how you’re able to bring community back. I think that that’s going to be part, it’s not a secret ingredient. It’s the best ingredient that senior living has to offer for people that want to spend some of the last moments of their life in a place where they feel loved, a place where they feel welcomed, and a place that they feel like they’re a part of a community. And so this is a big challenge that operators face. And I think that continuing to be creative and continue to coming up with ideas like you guys are doing is going to be a part of what is going to get the operators back into a position where they need to be, and a part of presenting that message to our general public to say, senior living is very safe. This is a safe place to live. And so I think that taking back that narrative is going to be very important.
Josh: Yeah, I totally agree. Well, this has been a fun conversation there, there needs to be a lot more conversations around these topics. You know, Scott, welcome officially to the Vium family, appreciate all that you’re doing already and all that you’re going to do for the industry, for your clients. Steve, it’s always great to have you on we’ve had you on before, and it’s good to see you again, we’ll be connecting with you very soon at a big event in Nashville. And you know, our listeners as Lucas will share are gonna want to connect with you all and be picking your brains and strategizing with you all. So very glad for you all to be on our show today.
Lucas: Absolutely, Steve and Scott, and also thanks to I am for being a great partner and supporter and sponsor of the VIP Ignite Experience. It’s going to be in Nashville on August 16th. It’s going to be an incredible event to ignite change and to build trust, which is all a part of what we’re talking about here. So thank you, gentlemen, Scott, thank you for your time today.
Scott: Hey Lucas, Josh. Thanks so much. I look forward to be back and maybe we can dig into some individual topics going forward. But anyway, I’m really excited about this new role. Thanks so much for having me. I really appreciate it.
Lucas: Our pleasure and Steve. Great to see you again.