John Sims of TIS Insurance provides insight into the importance of partnering with experienced operators, risk assessment and management, and opens up the conversation you’ve been putting off.
Lucas: Welcome to Bridge the Gap podcast with Josh and Lucas. We are in Atlanta on a great day and we have an awesome guest today. I want to welcome John Sims with TIS insurance. Welcome to the show.
John: Great to be here. Thank you.
Lucas: Yeah, well it’s so we’re going to get into different topics today. We’re diving into thought leadership about the senior living industry. There’s a lot of things that are taking place. There’s a lot of risk. It’s a risky environment and we’re going to go over a number of those things. Josh, you have known John for a while. How did you guys first meet?
Josh: You know, that’s a really good question. I might have to put that back on John. So I’ve known John for quite a while. And I believe we met by a mutual friend that introduced us. And I’ll tell you, you know, John’s been a great friend obviously a business partner for us as well. And I’ll tell you one of the things that’s always been really helpful that John’s always given me is when we’re looking for a project contemplating whether we should take on a project, maybe it’s a new territory, new state. In our industry, there’s just this so much risk involved and there’s a growing litigious nature around our industry and our space. So it’s really good to have, you know, a trusted partner that you can better understand your risk and the cost of insuring your assets, your people, benefits for employees and that sort of thing. So, yeah, it’s been a great partnership. John’s obviously from my stomping grounds in Knoxville. So it’s very convenient. But John, do you know, I mean, do you remember?
John: You know, truthfully, I think when you started developing the Solinity brand is when you and I became much closer through, I think just various moves in the industry, conferences, seeing each other at conferences, things like that. Certainly to your point, you know, it’s a very litigious environment. You look at what we do to understand from a, you know, M&A and a perspective, what those line items, what those proformas are going to look like is hugely important. So for years now I’ve said, you know, before you do a project, don’t think that, you know, your rates here are going to be the same as your rates here, whether it be workers’ comp, liability, health insurance, whatever it might be. So that piece has become more and more with all the M&A and transactional activity. It’s a huge benefit to our clients to know and to have, you know, essentially calculators for all 50 States. Rates included, be able to talk to Josh, he’s got a project, you know, certainly, you know, making this up, but let’s say in Georgia could be totally different than going to Florida.
But yeah, ever since I think, you know, Solinity, Pedal for Alzheimer’s, you know, being in Knoxville, it’s great to have one client actually in my own city. So we’ll catch up for coffee once a month. And I think probably the last couple of years has been, you know, certainly as we’ve developed our relationship.
Josh: That’s right Well, and so I think you’ve been kind of in the business serving our industry since you were like 12, right?
John: Since I was 11- not quite.
Josh: So tell, tell us-
John: After eight years of college. You know, truthfully, I graduated college, I moved to Nashville, started working for a worker’s comp third party administrator. I was very pigeonholed with what I was doing. Moved back to Knoxville, started working for TIS who at the time had a healthcare practice which was really 99% senior living aging services. So anything from home health, hospice to owner operator, all the way to somebody who was 75 to a hundred buildings. This has been probably 12 years ago. I would say I’ve seen the industry from all different perspectives, from, you know, middle of nowhere nursing home to high end assisted living and over the scope of 12 years, it’s totally changed with, you know, equity partners, reeds, private equity all the different investment vehicles to the operators, the models, the middle market.
I mean, you know, baby boomers they’re going to be in the continuum. And I think, you know, when I started it was, hey, here’s a book, start making calls. All I knew was nursing home assisted living. Today I look at the continuum, totally different. I mean, independent living all the way to, you know, skilled nursing is much broader than just independent and assisted skilled.
So it’s been, it was a huge learning process as I started. But you know, sitting here 12 years later, I fully entrenched both in insurance and senior living. It’s always a challenge. It’s always, you know, a new marketplace. Marketplace is always changing. So for me, I love it. And especially to have a niche specific. It’s a small world, you know, I could be here and see somebody that I saw, you know, a month ago in a totally different state, totally different conference. And it’s good to kind of have a tight knit group that you do see.
Josh: Yeah. So we have a pretty diverse and growing audience of listeners to the podcast. It’s interesting the comments we get back and the feedback, but today we’re all here. And there’s a surprising number of what I would call new entries into the senior living market. This group of equity, this group of developers in particular that are, have actually pretty robust appetites and aggressive development objectives to enter the senior housing industry. You know, I know there’s, it’s such, it’s so complex and people that do not know and have not worked in the industry have not operated communities. They don’t understand the complexities. So John, from your perspective, what you see, maybe let’s talk today about trying to educate and inform some of our listeners that are relatively new to senior housing and give them maybe some of the one, two or three trends or hot topics that you’re seeing that someone that’s entering senior housing and maybe even those that have been here for a while, but don’t get to see the side of the business that you see. What are some things that they really need to be paying attention to and making sure they’re plugging into and an account for on their proformas?
John: So, you know, to back up a little bit, it’s every week that it’s talking to, you know, a new private equity investor, a new REIT. Certainly tons of, you know, multifamily operators, student housing that, you know, natural progression is to go into senior living. I think, you know, when the economy was much worse, it was where do we go? All of a sudden senior living, you know, it’s a booming trend. With that said, you look at the continuum, at least baby boomers and you’ve got, you know, seven, eight years before they really hit assisted living. So to anybody I’m talking to, whether it be a new acquisition, whether it be a new company you’re about to bite off something totally different than what you’re used to.
The three biggest line item certainly that we deal with are health insurance, workers’ compensation, professional liability. As I tell people, you know, and health insurance is not my day to day realm. We’ve got a group that does that just for senior living. But those are three very big line items outside of staff. And you’ve got small margins that can impact, you know, whether or not you’re making profit or you’re not. And, and you’ve got two totally different pieces looking at worker’s comp, professional liability, where one over here, workers’ comp, you’ve got tons of control. I mean, one thing I did, you know, when I initially started and at the time I think we had two nurses that work for us. Now we’ve got six. Just because of growth in the industry in such a litigious environment that I tried to take in and do visits with them to see, you know, these are women that are very high level, been doing this for you know, 30 plus years, but to see them in these communities they’ve operated communities for years. Now they work for us, but to see their perspective gave me a totally different perspective as far as looking at operators.
Again, you know, worker’s comp to work in collaboration even with, you know, health insurance and wellness, our nurses, you know, rolling out what we call our seven success factors to drive down your premium or your cost of risk. Again, you’ve got a lot of control there. I mean for us it’s, you know, I could spend 15 hours on one account doing, you know, analytics, claims analysis, trying to figure out where to steer visits, risk control. But at the end of the day, if you take control of that piece, you can drive your price down.
Over here on professional liability and certainly it’s, you know, every week I get sent an article of, Hey, rates are going up, tons of carriers have pulled out. You’ve got horribly litigious venues looking at Kentucky, you know, Cocke County, the boroughs of New York, goodness, New Mexico, West Virginia. Frankly the entire Southeast where in a lot of times it doesn’t matter what you do or how good you do things, your price is going up.
So we try and also use those resources, whether it be risk assessments, you know, litigation management plans to put policies and procedures in place to mitigate that exposure to the extent that we can. But it’s a, you know, universally we look at it, you know, insurance, our risk management support services, which is nurses, claims analytics, et cetera. And then employee benefits. And you’ve got 60 people that are, you know, trying to work in collaboration to, you know, drive down those costs as much as we can. But truthfully, the marketplace dictates a lot of that and it’s much tougher these days. So that’s the piece.
Going back to, you know, the proformas, the M&A type, you know, consulting. Again, it’s just totally different. I mean, we’ve gone through one together and you know, happen equity partner and I’m saying, you know, rock bottom is going to be this. And they’re saying how’s that possible? But truthfully it’s half of where the marketplace was. And so you’ve got to make it work in collaboration with all the other pieces of the puzzle. I mean, I’m no operator, but again, I’ve got a lot of folks that work with us that have been operators. I’ve seen a lot of operators from the inside out. And I do think there’s, you know, some quantifiable things that I’ve seen even outside of what we’re doing that had made operators successful. So it’s a unique take having worked with pretty much all shapes and sizes for sure.
Josh: So talk a little bit about to our audience about some of the services outside of insurance. Cause I think you just kind of touched on it and I would butcher it to try to, to quantify. But I know that we’ve used the services and they’re very valuable particularly you know, I would, I would quantify it as a risk assessment or describe it as a risk assessment. I know your team recently did that for one of the properties that we were just going into and you kind of go in and my perspective was you take kind of an unbiased look at all the potential operational risk factors. Give that operator, that developer, that owner a report so that you actually know what you’re dealing with from a very broad perspective and maybe be assertive and implement some policies and procedures and correct some things before you have trouble.
John: No question. I mean it starts at the front end with, you know, mitigating risk the day somebody, I mean setting expectations. I mean that’s a huge piece of the puzzle as far as when your residents are coming in. If you set expectations, you’re much less likely to get in a position where, you know, you have litigation. So that’s kind of, you know, the starting process with certain policies and procedures, whether it be shared risk, arbitration agreements too. I mean we’ve got a menu of services from, you know, in general to Josh’s point, kind of the first step is what we’d term, you know, an enterprise risk assessment. Just to go through and it’s not to be critical, but certainly, you know, somebody with 30, 40 locations, they don’t always have eyes on every community.
And if you go to anybody I go to, what’s your number one challenge? And it doesn’t matter if it’s high end assisted living or you know, middle of nowhere nursing home staffing and you’ve got, you know, a trend of millennials coming in and you’ve got team members transitioning out and they’re not always the same. So that piece, you know, HR is becoming a huge piece of what we do on the benefits side.
But to your point, you know, to get that baseline enterprise risk assessment and really then go to the executive team, you know, whether they have two communities or 50 and figure out where we can help, you know, supplement the services that they’re doing, the policies and procedures that they have. And sometimes it’s, you know, for us to do a plethora of things. Sometimes it’s because two of our nurses have been in the courtroom as expert witnesses. Sometimes it’s doing litigation management if something were to fall through the cracks. Because if you, there’s so many things you can do before let’s say a claim goes to mediation that determine whether or not it settles for 75,000 or 350. And that is going to make all the difference in the world. If you have one community and it settles for 350, that line item could be the difference in you staying open.
So it’s very much, you know, taking that piece then looking at all the historical claims, data, crunching the analytics we’ve gotten, you know, internal platforms we utilize for that. And then to, you know, trend and implement resources where necessary because in the current marketplace, that’s what you got to have to give to the carriers to garner the best results from a placement standpoint.
Josh: So I’ve got another question for you and this kind of goes to the educational piece for that group that may be out there that’s new to senior housing, but maybe they’ve been very successful in another vertical like multifamily. So we recently, and you’ll remember this, I’m sure had a situation where we partnered with a very strong group in multifamily and, you know, they had their insurance relationships, their broker relationships, great group. And you know, they came to us with a proforma that was very detailed and their estimated cost of some of those big budget risk insurance issues. And to me, I remember looking at it thinking, you know, it looks like, you know, the cost for that insurance may be pretty high. You know, maybe we should have another group that’s specific in senior housing experience. Take a look at that in healthcare.
And when we did the apples, apples to comparison, you know, I think you guys came back with even with another group that was in senior housing and the numbers looked a lot different and although it was a very well respected broker, a lot of experience in business in the multifamily space, explain to those groups that may be entering. Like we’ve talked a little bit about the whole risk assessment that value enterprise assessment, but how is there oftentimes such a big difference in the negotiating power in the leverage that a group like yours has over another comparable broker from a different vertical to help to drive down cost.
John: Yeah. And I, I would say I could probably spend an hour talking about just that. There’s so many things that go into it and truthfully, I mean every, you know, opportunity from our side, you know, taking your specific example, you know, I think I looked at those pro formas and knowing, you know, what the community was, number of units. I mean immediately I know who the players are going to be.
One thing that helps tremendously. I mean, you know, if we start at the very beginning, sometimes it’s doing pre-risk assessments you know, it’s selling the Solinity brand because that’s not, you know, who the current operator is. But then it’s also the clout with the carriers. You know, to have top five status with four or five of the largest liability carriers in the country, it makes a difference when you can call somebody at the top and say, hey, you know, you’ve been with this individual before, maybe… with the prior operator.
And you know, in that particular case, the unquantified expense as well as the other broker had gone and they, I think had a $25,000 deductible. And so if you were to have a couple of claims, all of a sudden that line item, that was double what we ended up doing, I mean, it could blow up by $50,000. So in that case it was, you know, knowing the marketplace, you know, knowing your history, selling that piece. And we were able to do something that was, I think, probably half. And it was also a first dollar policy.
So it’s, they’re all totally different. But that’s the first thing we do is we need to get an of the company and then we need to back into our, I mean, I’ve got a document down here that’s probably 300 pages long and we internally have, you know, a checklist of tons of things that before we ever get this to market, we’re looking at. And from there it’s not always a pretty pit. It’s not always a pretty picture. So for the boxes that we’re like, well, we need to work on that, you know, maybe it is implementing litigation management, you know, maybe it’s onsite training, maybe it’s falls management. So there’s a lot that goes into it. But knowing the marketplace, having some exclusive carrier relationships, having the clout, I mean, in that particular case, that’s what really brought the cost down.
Josh: Well that’s really cool. So I think part of what I heard you say there too, for that group that’s entering, looking like, hey, can we do this on our own? Do we need to partner with an experienced operator? Or someone with a good risk mitigation practices, risk assessments and things like that. How important is that in this growing space that we call senior living?
John: Yeah, I mean it’s hugely important. I mean, if you go to senior housing news, you know, senior living, new senior housing business, whichever website it is, aside from transactional, it’s about once a week that there’s something on litigation. And I think truthfully it’s maybe, you know, when insurance agents are out there saying that, you know, the marketplace is going up.
And let me preface this by we’re, you know, for all of our insurance we want to be totally transparent. If something looks like it’s going to be a negative as far as the renewal, we’re well out in front of it, months ahead of it. You know, explaining what the different options might be. But you’re in a marketplace where if agents are acknowledging that all of a sudden the carriers, you know, are sitting there saying, we have all the power, which we want to fight back. You know, with the resources we have to, you know, say look, this is a good risk. You don’t have all the power and it’s all those different things that go into, you know, the negotiating, the relationships with carriers. I mean it all makes a difference.
Josh: That’s awesome. Lucas, do you see a lot of that, I mean you’re on the construction side of the business, in terms of this issue from what you deal with and providers are people talking about these things as well?
Lucas: Well, I think that they are, and this has been a great learning experience for me because I, I’ve had these conversations on the construction side, clearly worker’s comp, general liability. I’m experiencing that personally. So to hear about the different risks that are associated with operation. Josh, time and time again, we talk about the complexity of this business. And it’s, it’s good to hear you John. Talk about, ‘cause when I think of insurance I just think of like it’s an unmovable number. It kind of is what it is, but it truly sounds like that the relationships on the insurance side matched with the complexity of the business creates both a challenge and an opportunity. And if you’re able to change the narrative, create the story and show the risk assessments that there really could be some, some upside on an opportunity to get it right.
Josh: Well and I think from the operator’s standpoint, you know, I think one of the things that was kind of an unintended benefit of having a strong relationship with a partner that can help as an operator us up our risk management game can equip us with tools and policies and procedures. ‘Cause quite honestly from an operator’s perspective, there’s so many things we have to deal with. And you know, I think oftentimes because it’s so complex on risk mitigation in so many areas, we think, gosh, how can we come up with all the policies and procedures, the training and things. So if you have a partner that is in the space committed to equipping you to help drive down those costs, it’s that whole team component that we’ve talked about, such a growing complex industry with actually great opportunities and doing such great things.
It is very much the more you can collaborate and bring a winning team together, particularly on the risk mitigation side, I think it’s just a win-win.
Lucas: So John, as we round out the show these are conversations that you’re having every single day. And I can only speak for myself, but I imagine that you encounter this, the insurance conversation is typically not the most exciting conversation that they have during the day.
John: This is going to be the least watched podcast.
Lucas: Well, no, this is, this is a great topic for the podcast, but I know that you experienced this, but people, you know, you mentioned it’s complicated from an operator’s perspective, but this is an area that they can not put their head in the sand, right?
John: 100%. And I mean, again, they’re all totally different. You know, you see, I think one of the crux of the industry is, you know, a lot of times REITS are, you know, private equity, you ever, it might be from their standpoint with other deals they’ve done outside of this industry, they want excessive limits. Well, now you’re in a marketplace where to have excessive limits, number one, it’s a tremendous expense, but there’s also the other side. Where does that put a target on you? Because if it’s discoverable, you know, as far as an insurance policy and a plaintiff knows that you’ve got 20 million in limit, that makes you a bit of a target. Truthfully, we’ve been looking at, you know, several alternative ways to potentially structure given, you know, a very litigious venue. Let’s take a Cocke County, Kentucky. But you know, seeing alternative, you know, type vehicles, you know, seeing more and more captives risk retention groups where you can kind of control your own destiny per se, have more hands on with the claims handling, but even this structure, lower limits.
And then, you know, again we’re, you know, trying to do some fairly cutting stuff with how can you also secure from a worst case scenario but you know, defend yourself and push these plaintiffs away. And it’s a, I mean, it’s a big problem in certain states, so it’s yet universally, it’s, again, I could sit here and talk about it all day, but it’s from start to finish and talking about policies and procedures. You know, our nurses have been there, they’ve seen everything at this point. You know, having done this for 12 years, I feel like I’ve seen a lot. So to understand, first thing we do is, you know, we got to get to know you as an operator and then from there we take that back and we figure out how can we help? And sometimes it’s, you know, one item. It’s, you know, presenting at your annual executive director’s meeting. Sometimes it’s, you need something in your mind as a 1.8, we’ve got to drive down this cost.
So if from there it’s a lot that goes into it from claims management, litigation management, getting attorneys involved and you know, reviewing management agreements, trying to get waivers as far as insurance. As I mentioned earlier, this is probably why I wake up at, you know, 2:30 every morning. But it’s, it’s, it’s a lot. And our ultimate goal is to, you know, get to a place where, you know, we’re transparent, we’re going to tell you what the market is, but within that certain market, get to you a place, get you to a place where it’s best case scenario for you from an expense standpoint because again, it’s a large line item.
Josh: Well, I’ll tell you John. So we really appreciate not only taking time for the show today to help educate and inform our audience, but appreciate all the give back that you guys do and the commitment you have to the industry that we all love. You attend these conferences, you speak on panels, you partner with our podcast to make it possible, you give back to nonprofit charities and all the things that you guys are involved in at the community level and philanthropic. So we really appreciate everything you’re doing.
John: And likewise, I mean, I have people all the time that are like, hey, can you introduce me to Josh and Lucas? And so all you are doing, I mean, you really are bridging the gap in an industry where the gap is both team members side. It’s also residents and it’s a big gap. And so, you know, I think there’s tons of different philosophies on those two pieces and how to handle that. But yeah, it’s incredibly informative to watch the podcast, whether it be, you know, somebody at a high level like, you know, like an Eric Mendelson or somebody that’s you know, just has a different product. And a lot of those, I mean, of course I’m, you know, pigeonholed, but I look at that and the first thing I think is risk. And so it’s incredibly interesting. All the podcasts and certainly thank you all for having me. Obviously you all are doing great things in this industry, so congrats to you all as well.
Josh: Thanks so much. What an awesome show.
Lucas: Yeah, well part of the strength of the industry is the people that help support the industry.
Josh: That’s right.
Lucas: Vendors and partners. And we’re really big on wanting to strengthen all stakeholders in this business so that we can all be better together. And so vendors and partners that provide products and services to the industry, the better that they can be educated about the nuances and the needs and the culture of senior living, the better we all are. And John, you’re, you’re, you’re right at the top of that list. So great job.
We really appreciate you coming by today. I know our listeners, they’re going to have questions about this. There’s, I think their heads are spinning. Anything in like, am I covered? Is there enough? Like, where am I? I need, you know, I need to be on this as something I’ve maybe put on a shelf and I haven’t talked about this in awhile. So we’ll connect with you in the show notes. We encourage our listeners to reach back out to us on btgvoice.com. Hit us on our social media pages and we’d love to connect with you. And thanks for listening to another great episode of Bridge the Gap.
Lucas: You know, Josh, we talk a lot about telling the love stories of our business and creating the right relationships to help drive thought leadership and elevate the platform so that the industry can be as best as they can be. You know, we all need each other and we need partners to help us power and fuel the energy behind the podcast.
Josh: Yeah, and I’ll tell you, TIS, John Sims, a great example of that; (they) have been an excellent partner to us. You know, I think one of the most exciting things about these partnerships for us is we’re just super blessed to not only have partnerships that align with elevating the vision, the mission of senior living, but they’re just good people. Like we actually are friends with these people, we’ve known them for years, and the collaboration is key. John Sims, TIS has been a great partner to us, not only at the podcast level but a great partner to me in the industry helping to up our IQ, to help us risk mitigate, to help us be better as a team. So we say it a lot much better together than we are apart.
Lucas: Exactly. Great head and great heart behind the business. TIS insurance. Thank you so much for supporting everything that Bridge the Gap is doing.