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Episode 55: John Cochrane

HumanGood CEO John Cochrane Tells Us Why Senior Living Is A Fun Business

Lucas: Welcome to Bridge the Gap podcast with Josh and Lucas. We are here at the ASHA conference in California. And yes, a little bit of rain outside but we had enough sunshine yesterday and we are here with our esteemed guest John Cochrane, the CEO of HumanGood. Welcome, John!

John: Thank you! Great to be with you.

Lucas: John, let’s dive right into it. You’re a well known figure in the industry- give us some of your background to help frame up how you got to this point.

John: So, it’s interesting. We were just on a panel and one of the panelists noted that almost everyone in this industry gets here accidentally and that includes me. 30 years ago, I was a lawyer, happily practicing law in Chicago with not a thought of working in the senior housing field. Not a single thought until I met John Erickson on vacation. And I sat next to John at dinner and he talked about his vision of creating this community that was active and vibrant and vital and inspiring people’s best lives and I thought, man that is great.

I had a real estate land use and zoning practice with a large law firm in Chicago. So, I invited myself out to Baltimore to get John as a client for my law practice and in the course of visiting him in Baltimore, he once again spun this story about vibrant living and these active, engaged communities and then we took a tour of his own communities, Charlestown in Baltimore. 1,600 independent living units. 2,100 people living in the independent side of that community. The day we toured, I think, they were all out in the hallways. They were everywhere. It was like an ant farm. I’d never seen anything like it. People were active and there was a men’s course and a women’s course and a mixed course and 30 college classes going on and I looked at this place and I’d never seen anything like it. I never knew this field existed.

During lunch, John said to me, you know, my biggest challenge in growing the business is not just building properties, it’s finding people to carry the mission and vision forward. At which point I shocked myself by saying, you know, if you’ve got a place for me, I’d love to work for you.

So, I went home to Chicago that night and I’m telling my wife this story about my visit and I said, you are not going to believe this place I saw in Baltimore. So, I told her this story and I’m getting more excited, my wife is getting excited and I’m smiling and she’s smiling. Finally, she looks at me and says well, obviously, I can see you’re totally worked up by this, obviously there’s a client.

And I had to explain, well no, I didn’t quite get him as a client, he got me as an employee. I took a 90 percent pay cut and 6 weeks later I wrapped up my law practice and I was living in John’s spare bedroom and going to work in this field, which is where I’ve been ever since. There has not been a day in my life where I have regretted it. It is the most exciting adventure and it’s not just been fun, but there’s so much fun to come. It’s such a vital, vibrant, changing field and all changing for the good. It’s a terrific place to be. It’s a terrific place to start a career and it’s a terrific place to transfer in and remake a career.

Josh: That is so fascinating. So, I love what you said on a lot of points but I couldn’t help but say what you mentioned about the future. You indicated that, hey, you know, we’ve had an exciting run here. Senior housing (and) senior living has come so far. You obviously were attracted to it. Didn’t even know about it until you experienced it.

So, you’ve been part of this conference that we’re at today. There’s been I understand I didn’t get to get in there, Lucas did, to hear a lot of discussion- some future predicting and things like that. So, give us a little insight into some of the hot buttons that people were talking about that give you maybe some vision for the excitement that the future holds.

John: First of all, part of the excitement is driven by pure demographics. I mean, you look at the 10,000 seniors that turn 65 every day, this is going to happen for the next 30 years. Long after my career is over, this field is still going to be growing. So, pure demographic growth of the aging population is exciting by itself.

Then you marry that demographic growth to how attitudes about aging are changing, right? We’re approaching aging in a much different way than we did 20, 30, 40, 50 years ago. And then you match that to the changing consumer expectations, layer in some of the challenges that we have of how to provide care, service programming to this group. How do we make this chapter of life vital and vibrant and interesting?

There’s just so much work to be done. The market is so huge that we couldn’t possibly tap this market out fully in the next 20 to 30 years. So, it really is this kind of open field of green field opportunity for us as we remake an industry. And it’s something we’ve done will for the past 50 years. We’ve got a lot of providers, for profits and not for profits of the like, have been in the business for 50 years and doing a great job. But the business is shifting and I guess either people are afraid of change and afraid of that shift and the challenges that are coming or they’re really excited about it. I think the right people will be attracted to this field because of all those shifts that are going on. I can’t imagine a better time to be jumping into this field than today.

Lucas: Absolutely and one of things that Lynne Katzman said on the panel is she said, it’s going to be a disruption. There is disruption that will take place and how do the operators position themselves to be able to be- to meet that market demand? And one of the big topics that came up, and specific for you John, was affordability. Talk to us a little bit about that.

John: Well affordability is really one of the big challenges we have in our field. We’re kinda by-for-cated in that- and our company is a prime example of this- we have continuing care communities that are now life place communities, which tend to cater to a fairly wealthy clientele. There’s a large entrance fee required. There’s a large monthly fee required. There’s a whole package of services that comes in with that. It’s a great model that works really well for a small portion of the population- the top 10 to 15 percent of the demographic.

So, similarly, in our company’s case and in our field’s case, we do a terrific job of low-income subsidized housing. We have 60 communities that serve 5,000 residents in low-income subsidized housing, with some supported services by which we do service coordination. So, we don’t provide services to those folks but we connect them to local services.

Well, that’s all fine. But in the middle are 70 percent of the people who don’t want or can’t afford a traditional community will never qualify for a government subsidy and they’re looking for something to fill that gap.

When we talk about the disruption facing our field, there is going to be disruption. We need to adapt our models to changing expectations and new markets. If we do that, we have an opportunity to be tremendously successful, to carry our missions and our visions forward in a way that’s bigger than anything we could have imagined. If we don’t adapt and find new models and new ways of reaching the market, we’re going to be left in the dust. (7:11-7:34)

That’s the flipside of the opportunity, is there’s risk if we fail to adapt. Our company is looking very hard at the middle market and one of the things I talk about is we all talk about the middle market as if it’s this modelif of there’s a middle market. There are a dozen middle markets that are going to require different solutions and they’re going to create different opportunities for people.

When I talk with industry colleagues about reaching the middle market, what many of them are doing, and there’s nothing wrong with this, but what many of them are doing is looking at the CCRC concept, trying to figure out how to skinny it down and reach kind of one step down in the demographic. You know, that’s fine. That will open up the market and create some new opportunities.

We’re taking a slightly different approach in that we do a superb job of developing affordable housing -government subsidized housing- providing limited services and helping to revitalize neighborhoods. So, what we’re looking at (is) can we take that model of affordable housing and use that as our platform into the lower middle market?

We think there’s a tremendous need, a tremendous opportunity and a big void in the marketplace (in the lower middle market) and we don’t see a lot of other people moving into that void

Josh: I totally agree and I love that you touched on a point that I don’t think too many people are talking about because I think what you said about the middle market, a lot of people want to just categorize that as one big market and it’s very interesting. I’ll be speaking on a panel in a couple months and half of the panel discussion that we’ve been kind of preparing ourselves for is to define what the middle market is and what does affordable mean? Or what does more affordable mean? So, that’s apparently a question that a lot of people are trying to figure out and how is there various models. So, I like that you take the approach that, hey, let’s just agree that the middle market, there’s a lot of flavor within there and a lot of opportunities and it sounds like you guys have a great model that you think will fit in at least one of those pillars of the middle market. That’s fascinating.

Lucas: And one example that you gave- go into talking about the community. You talked about the food trucks and the culture there.

John: Yep. So, when I talk about adapting our affordable housing model, there’s one community in particular that I think is really prime for this kind of adaptive repositioning into a middle market product and that is NO IDEA and that is a community that we developed for another organization in Seattle. It’s a mixed-use, mixed- income intergenerational community. So, we have a four story building- ground floor retail, second floor office. Above that we have residential, mixed income, not all seniors- some seniors, some family, which is also kind of interesting so it’s multigenerational living. All united by a plaza at the ground floor and in the ground floor retail we have no big box chains, no national chains, but they’re all local organizations trying to build their organizations.

We have the tacoreia, we have the local coffee provider, a very successful coffee shop. We have an early childhood development center that serves the neighborhood, so it brings children into the community, allows tutoring opportunities so generational opportunities for the residents.

And then something really interesting happens on the plaza, we’ve got this plaza that united these three buildings and we have music once a week that shows up, so you have a vibrant outdoor scene. In addition to the restaurants that are in the retail section, we have about six or seven- I’ll call them food cart providers- who come in and you have a falafel court, you have a pizza cart, you have something else and it can vary. And what’s nice is it gives people choice in dining. We don’t have to be the provider. It varies from week to week so they get some variety. It brings in people from the neighborhood into the community.

So, you take this community- senior communities are often kind of sequestered and we build a moat around them to keep people out. This community model is very different in that it is a true community model that brings the entire community in and activates and energizes this local community. I think if you poll seniors about what they’re looking for, they want choice, they want affordability, they want intergenerational. This does all of that. We think that while it’s a complicated model to build because of the financing, because of the various uses of the development, we think we’ve got a formula to make it work and then we’re going to try and build that in a site in the Los Angeles area, prototype it, make sure it works the way we think it will, and then hopefully scale it.

Josh: I love that. So, we’ve talked a lot about intergenerational on our program. It’s obviously a buzzword these days- a lot of people talking about it. I love that you guys are doing it. Could you maybe, I’ll put you on the spot here a little bit, but maybe wouldn’t mind pulling back the current a little bit on your experience with the intergenerational, the young and old, the programming aspect and even some of the, what you alluded to, even that’s a new concept to get developed because of you’re crossing multiple pillars, multiple financing silos. So, there’s obviously a lot of things we could spend time talking about.

But, what are some of the things that maybe you have learned through the process, through trial and error that for that’s out there maybe trying to put together a model or do something like that that you can say, hey, here’s an experience that we learned the hard way and that we had to retool. Is there anything that comes to mind?

John: I don’t know that we’ve had to retool anything substantial as we look at that model. I think in some respects it’s probably- we have a lot of fear about intergenerational stuff. I know seniors who don’t want to be around kids and you’ve got to keep separation and you’ve got to do all of these things. There’s some truths to that but I think we have more fears than are reality based.

I think it’s been easier to manage than we expected. It helps, of course, that the early childhood development center is in a separate building. It’s connected to the community but it’s not next door to residential. But I think in many respects, what surprised us is how successful the intergenerational aspect has worked, how readily, for example, residents have embraced a tutoring program. And so, what started out as six kids coming into the residential building for a tutoring program has morphed into 70 kids coming over for a tutoring program. Instead of one day a week, it’s 3 days a week.

So, the intergenerational mixed has worked far more successfully than we might have anticipated and I think it really lends an important aspect to the success of the community. It lends a vibrancy that you can’t otherwise get.

I think a mistake in what I’ll call senior housing is it’s strictly seniors. Seniors tell us, we don’t want to be separated from the community as a whole. Yes, we have some unique needs, we may have some unique desires and wants and we want some programming that may be unique to us, but there’s a lot of commonality and I think we need to recognize that and feel less afraid of creating those communities.

Josh: Well, we’ve talked about that a lot, the great the value just in relations and legacy and information that exists when you bring old and young together. There’s such great value at both ends of the spectrum. And so, excited about that and that’s something that I obviously wish you guys so much success because I think the more successful models that are created, you know, your debt and your equity side of the equation, which is oftentimes difficult to figure out on these new developments that people haven’t really done proven models. As you prove a model, it’s going to open up great opportunities for a lot more of that. I really believe in it.

Lucas: John, one of the comments that you said that struck me is a very simple comment but there’s a lot behind it. You said, this business is fun and one of the things that we talk about is the perception of the open market that may have not experienced senior living. They have no idea what that is. But our experience is that it is fun and it is a great place to work. How do you think we bridge that gap?

John: That’s really a $64,000 question and I’m not sure what the answer is because this is a fun business. I’ve been in it now for 25 plus years and often described it as I’ve never had a bad day, by which I don’t mean everyday everything goes according to plan, that has never happened, and there are certainly days that there are challenges and there are things happening that wish wouldn’t happen, but I’ve never gone home at the end of the day and said, man, I wish I was practicing law again. Or I wish I was doing something else.

Every single day I’ve the office, I’m grateful for what I do. And I will tell the story about how I used to be an executive director in a community. At the end of the day, every single day, I would get up from my desk and wander through the dining room. That was how I exited the community. I would spend half an hour to an hour wandering around the dining room, visiting with residents, visiting with family, visiting with team members and it was the best hour of the day because all I heard were comments about how much people loved their lives, how much they appreciated the team members, how much they enjoyed the relationships, how grateful they were for the lives they were able to live in these communities, how grateful the team members were for the relationships they had.

It was such an affirming way to end the day and that’s been true in the entire career and that’s still true today. Somehow we’re not telling the story in a way that has legs with potential team members. We’re not telling the story of why this is meaningful, joyful, fulfilling work. And yes, it’s work and it’s hard and there’s days that are sad, there are things that happen that we don’t like. But I can’t think of another line of work that has the emotional payoff that our work has.

Josh: So, we’re firm believers in that and we in no way have it figured out, that tough question like why is the perception so negative around our industry? But, I will say, one of the things that we are seeing that operators are finally catching onto and I think our industry has just been behind on this is the adaptation of digital media and understanding that people, the way people receive information and gain information and search information is not what it was, even three years ago. And we’re very slow to adapt.

We’re living proof of this on the podcast. Our migration was, you know, hey, you know, why isn’t there a senior living podcast? Like, everyone listens to podcasts. So, we created this and we- the need has been validated because they’re like, oh, we’re actually talking. We’re actually able to hear about what’s going on and we didn’t have to go to that conference to hear it. So, it’s great.

John: You just touched on something that’s really important and that is how slow we are to pick up new technologies and to adapt. That really is the biggest threat that faces our field. We talk about occupancy challenges and labor challenges. All of that’s true and we can find our way through all of that. But, we’re so slow to adapt to technology. We’re so afraid of it. Our storytelling is terrible. Our vehicles for storytelling are terrible. The fear we have of technology is confounding to me and that shows up in every aspect of our business. It takes us using paper systems 60 days today to go from an application to getting someone on the floor working for us. That is ridiculous.

Josh: Yeah.

John: You talk to millennials today. They want to apply online. They’re going to use their phone for an application. Forward-thinking companies are doing interview by Skype and by chat. They’re making decisions within 3 days, not 60 days, and they’re getting people started and engaged with their companies early on.

It frustrates me to no end that we’re not successful doing that because we have such great stories to tell. If Chick-fil-a can hire people in 7 days and all you’re doing is going and handing out burgers and chicken sandwiches to people, why can’t we do the same thing with such a great story to tell? Why can’t we use these technologies more effectively to tell these stories?

I was just talking to someone just before I came over to this podcast about just this very issue of how do we use these technologies to story tell and to make decisions and to move our business along faster?

We are going to adapt or we’re going to be left behind. My fear is that the disruption is not going to come- the disruption is going to come. It’s either going to come from one of us from the field today. We’re going to disrupt ourselves and remake our field. Or it’s going to come from outside. If it comes from outside, it’s going to be a lot harder for us to live with. (20:02-20:17)

Josh: Totally believe that. So, we could have a-whole-nother podcast just about that particular topic. It’s very fascinating to us. One of our passions and one of our missions is to be able to influence the industry and having folks like you, talking about that, it is a wake-up call. But, I’ll tell you, it’s so prevalent. I’m out there every single day and I can’t believe how many communities that have so many positive things going on. You can’t even find them online and there’s nothing there. And if you do find it, it’s three years outdated information. And so, that simple of digital technology and application, ability to be adaptable, is a key.

So, I know we’re going to be hearing more about that in the future.

Lucas: Yeah. John, thank you so much for your time today and thank you for your engagement on LinkedIn. That’s another big thing is that the leaders in the industry, the C-suite, for them to actually be engaged in conversations online I think is hugely impactful and you are one of those people and I’m really grateful.

John: Thank you, it’s hugely impactful for me and so that’s where we- where I see new ideas and engage with thought leaders. That’s where we engage with you, obviously, and it’s a great technology. It’s a great way of connecting to where the field is going, what’s happening inside and outside of our field and how are we moving along in the common mission?

Lucas: And so, people who are listening right now, what’s the best way for them to connect and to HumanGood if they want to get involved?

John: The best way to connect with us is to go to the HumanGood website- If you Google HumanGood, you’ll get right to our website and then you’ll find about us and anybody can contact me and they will get an answer from me.

Lucas: Excellent. And you have a beautiful website by the way. It speaks to a testimony of what we’re talking about here. So, John, thank you for being here. Thank you for being on this show and your thought leadership on the panel and everything that you’re doing.

John: Well, thank you and thank you for inviting me. I enjoyed talking with you.

Josh: It’s an honor.

Lucas: That’s another great episode of Bridge the Gap.

Thank you to our supporting partners NHI, RCare, NRC Health, TSOLife, ERDMAN and Sherpa.

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Episode 55: John Cochrane