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Episode 87: Michel Augsburger

International businessman Michel Augsburger is leading the senior living world with great taste. Don’t miss this great conversation!

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Lucas: Welcome to Bridge the Gap podcast, the senior living podcast with Josh and Lucas. Exciting time here in Nashville, Tennessee, my buddy’s home state.

Josh: That’s right. 

We  didn’t have to come very far. And it’s a it’s exciting because NHI is putting on their Music City Symposium. And today we have on Michel Augsburger, the CEO of Chancellor Healthcare out of California. Thank you so much for being here. 

Michel: Thank you. My pleasure. 

Josh: Not just anywhere in California. We were talking to him. He lives in a beautiful beautiful place. So I’m very jealous. We talked a little bit last night. I had the privilege of spending some time with you, and a cyclist as well. He and his wife ride every weekend, so we shared some good stories about that and wine country. So welcome to the show.

Michel: Absolutely, pleasure to be here.

Lucas: Michel talk to us, you are originally from France.

Michel: Well, my father was born in Lausanne, Switzerland and his mother was born in the south of France and they moved to the south of France when he was young. He came to the United States in 1939, just as World War II was breaking out to go to graduate school at the University of Michigan. The war was getting very serious in ‘39 and he did not end up returning right away. He ended up staying on, getting his masters and doctor’s degree at the University of Michigan and met my mother who enrolled in a French class that he was teaching. She had just graduated from the nursing program at the University of Michigan, and they ended up staying. I was actually born in Michigan, but I’ve spent a lot of my life in France. A few years when I was in my eighth and ninth grade years, my dad was approved for a sabbatical and we moved to Strasbourg, France, which is on the border of France and Germany and he did a second doctorate and I went to Elementary High School in France. So I’ve had a chance to live there. And then since then we have a home in the south of France, when we get a chance to go there several times a year. 

Lucas: I can’t wait to visit. 

Michel: Come on over, come on over.

Josh: I always find it very interesting and I think a lot of our audience appreciates too, people’s pathways to our industry. It seems like the industry always seems to find us, like we don’t really find the industry, but I thought it was fascinating and I even want to hear more about it today. But you touched a little bit on, you were in the restaurant business and not just a little bit in the restaurant business, you were very successful. So tell us about that.

Michel: That was always a hobby, my entry into or entree into senior living, I sort of grew up with it. My mother as I mentioned was a registered nurse, and some point when we were kids my mother and dad bought the house next door to where we were and she decided to open an adult foster home, which was the licensing designation in Michigan for senior care community. So we had five to six elderly ladies living next door who had meals and we went over and did puzzles with them and that type of thing. So I’ve been living sort of in this world, I was just starting on  a very small size with my mother from being a child actually. And then out of college I did one non-healthcare position and then got a call from a friend who asked me if I’d be coming and applying for a job with a new hospital that was getting ready to open in Rockville, Maryland, one of the suburbs of Washington DC, and was hired to oversee their employment and recruiting. And then a few years later the president of the hospital walked in and told me you’re now in charge of developing all of our post acute services, we want to have a nursing home and we want to have assisted living, we want to have home health and so I develop those on behalf of the hospital for about eight years. And then in 1990, I moved to Northern California to run a nursing home company and then in 1993, we started Chancellor Health Care.

Josh: That’s cool. But you had you had a hobby in there. So tell us about the restaurant business.

Michel: As I started to do more travel for work and that type of thing, you know French roots and that type of thing, we like food, we like wine and I started to collect cookbooks and I started to assemble this, my mock menu of what my restaurant would be if I ever opened a restaurant. And after a period of time my family told me it was time to quit talking about it and actually open a restaurant. And I was talking about it to my one of my partners at Chancellor Healthcare, Clooney Stag who is our Chief Financial Officer, and he said I’d like to partner with you and so we opened a small restaurant about forty-five seats out in Occidental, which is in West Sonoma County, a small French Bistro, which was all be “Bistro des Copains” and you know, we knew nothing about the business except the fact that we we ate out a lot in restaurants and we love to eat, we like good food and the hired our team from you know off of Craigslist quite frankly, but we were remarkably successful. We made it into the Michelin guide, we were awarded credit in the Michelin Guide, we got reviews in Los Angeles Times, Wine Spectator Magazine, San Francisco Chronicle, the Boston Globe did a review of the restaurant as far as a place to come if you were traveling to the Northern California, and so we did that for ten years until  our lease expired. And the owner of the building wanted to sell the building, we didn’t want to buy it and about that time we were starting to grow more in the senior living space and decided to close the restaurant, but we had a great ten-year run. We made a lot of friends, ate a lot of good food and drank a lot of good wine. 

Josh: So tell me, were there lessons that you could take from that experience, that 10 years and apply any of that knowledge to senior housing?

Michel: Well I think one or two of the things is was it was it raised my level of expectation for the food that we serve in our communities. One of the things I was most proud of at our restaurant, we made a hundred percent of everything we served by hand. We made our own bread, we made our own ice cream, we made our own butter, we made everything. We obviously bought our proteins, meat, fish, that type of thing but it was a great experience of people coming to the back door with things they had foraged,mushrooms they had found out and so forth and really very essential farm to table and that’s what we’re trying to do in our communities. We’re fortunate at Chancellor Healthcare to have three of our buildings located in Loma Linda, California. 

And I’m not sure if your if your if you’ve ever heard of the blue zones, or the blue zones study but Loma Linda is the only place in the United States that has been recognized as one of the blue zones of the world. There are only five of them. And so one of the things we’re trying to do is put in place in each of our of our communities blue zone diets, which are essentially fresh cooking, healthy cooking, brain healthy foods, lots of plant-based and in minimal meat trying to be very environmentally health-conscious and so forth. So I think that clearly our restaurant experience influenced what our expectations are, what we wanted to do and what we knew you could do with a small staff in a restaurant in terms of what you can do if you only have higher talented people to run your kitchen operations and so forth. 

Josh: Well, that’s a great segway because today as we’ve been listening to panelist talk, all of the conversation seemingly was around labor in our industry and the challenges. Anything from the restaurant business that you learned that would translate on the labor side of how to manage, how to culture, how to get production, high quality?

Michel: You know, I think one of the things we learned is in the restaurant business, especially chefs and those kinds of people, they all view themselves as artists and their a little temperamental and they work much better with general guidance. And you say this is our expectation, this is what we want you to do, do it the best way you can and I think we have found that that is a helpful way to approach management in our communities, set boundaries, set expectations. Give people the resources they need and then let them go for it. And then you hold people accountable for those results. 

Josh: So this is my first NHI Symposium. Lucas, I think it’s yours, it seems like they provide you guys some great value, some some great partnership opportunities, but one of the very first things that was up on the screen right before the panel discussion started was this graph and it was a little bit demoralizing for me to see the data to see this bar graph and you basically see trends in AL and IL rents trending down as far as a percent and then you see wages skyrocketing as a percent trending in the opposite direction. And so that basically was the premise of this panel discussion and we talked a lot about recruitment. We talked about retention. There was a lot of culture talk which was great. So what were some of your key takeaways as far as that discussion goes?

Michel: Well, I was one of the people who stood as part of the group that labor is one of our top two issues, because as I made my comments at the end, I’m absolutely convinced that unless employees love their jobs, love coming to work, are passionate, feel respected and well cared for there is absolutely no way that they’re going to do any better than what they’re treated for the  residents that are entrusted to us. If employees come to work angry, it’s going to affect how they interact. And so as a company our goal is to create great places to work, we want our employees to be excited coming to work. 

I want them to get up in the morning and can’t wait to get there and see Mrs. Jones, to see how Mrs. Jones is today, or chat with Mr. Smith, sit down with him, you know, and talk about talk to him and that type of thing. These residents who come to live with us, each one of them are individuals, they have stories, they have rich histories and to the extent we can engage them and get our employees engaged with him. So everything we do has got to be what can we do to make our places great places to work. 

We just recently took over five communities with the assistance of National Health Investors and one of the things I told every single family group as I went around and met with all the family groups was, you may find this surprising but my first goal here is to make this a great place to work for the employees who care for your loved ones because I think that if we can do that you’re going to be a lot happier with the care and services that you’re getting from our team. So that’s my focus. 

And I learned a lot during  the presentation today, some ideas on some different ways of looking at it at some PTO, some different ideas, one of the things we’re all talking about no matter where you go every meeting is how, what is important to millennials in terms of hiring millennials and obviously more frequent feedback, coaching as opposed to annual evaluations on an annual basis. They want pay more frequently, they want more creative shifts. That wasn’t really talked today about, but I think we’re going to have to start looking at, how do we attract more people who are looking, who’ve been maybe stay-at-home moms who are looking to come back and can only give four-hour shifts as opposed to thinking in healthcare we have to do eight or twelve hour shifts. We may need to start offering people four-hour shifts. How do you deal with maybe we have a growing senior population who are not ready to retire, who are fully capable of working, who may not want full-time work but they might be willing to work for four hour shifts. So I think we have to be a lot more open to looking at sketches, to compensation systems, the benefits in terms of the idea of from Donald Thompson today of letting people convert some of their PTO benefits into higher wages. Those are all ideas that I think will appeal to that group who are more concerned in the immediacy of getting more compensation than they are in getting benefits that they see a little bit more long-term. 

Josh:One of the things, too, I’d be interested in your take on, so I was interested in how much time was spent talking about how many efforts and initiatives are now being placed on the experience for the applicant, for the inquiry for an employment position and several of them said they were putting just as much emphasis and money and thought and intentionality into creating a great experience for a potential applicant as we do a potential tour. So are you guys thinking about that kind of thing as well?

Michel: Well, we’re certainly thinking a lot more about that. This is the first time I just started this about six weeks ago, we have, we’re not as big as some people, but we have three regional directors of operations and about six weeks ago I asked them to give each of them to give me on Friday at the end of each week, I want a list of open positions in each of their buildings every Friday so that I can monitor our open positions in terms of which buildings are focusing, so that we can help them develop strategies for trying to fill those open positions. And so some of the ideas that we heard today, this immediacy and speed to hire and so forth, some of our states put up big roadblocks to hiring. In California for instance, anybody we hire in an assisted living or memory care community has to be fingerprinted and it has to run through the California Department of Justice, as well as the Federal Bureau of Investigation. And unfortunately, some of those times, we’re not hearing back from them for five or six days. So this issue is for us, speed to hire would be okay we’ll make a commitment but we can’t get you started room or even let you be in the building for five or six days till you’ve got that criminal clearance associated with the building. 

Josh: Well, I’d be interested to talk more about that at some point because you know, I’m hearing more and more of that because obviously everyone including all of us, are very concerned about having the best, most qualified staff that have had the appropriate background checks, but some of the processes, specifically I think the ones that are kind of state imposed or processed through the state, as we know the federal and state governments always aren’t the most efficient and flexible organizations. And so I recently heard that Georgia, the state of Georgia was about to implement and sounds like something very similar to what California has which you know, sounds great as far as when you’re just pitching it, oh this will be a much higher standard of quality background check. It may or may not be you know that will still stand to be tested, but what has anybody thought about the labor challenges and what does that process look like because some people speculators in Georgia are saying hey, this could be one or two week turn around because the state of Georgia is probably not really even ready for this, so that’s that’s daunting

Michel: In California, we have annual meetings. I’m on the board of the California Assisted Living Association, and we just met with the head of licensing and things and people are asking questions one of the issues that came up is not only do you have to get initial clearance, but then if somebody has something on their record, you get them approved for waivers and they go to apply at a new building they have to go through the waiver process again, there’s no automatic sort of associating with the next building and so forth. So there are roadblocks in this process. In Illinois is another thing we’ve learned since we just took on these buildings back on April 16th, is the fact that state of Illinois takes forever to process these clearances. And so I see this list that I mention I get from my regionals, they have a bunch of positions and I’ll say where are we with filling them, and they’ll say well I’ve got ten people waiting for clearance with the Department of Health with the state of Illinois, you know, they’re in there, we’ve offered, they’ve accepted. But in the meantime as they talk today, people need jobs they need income and if they can find someplace to go to work where they don’t need to do that, and a lot of lot of our front-line workers, in terms of working in dietary or those types of things, or in hotels housekeeping could go to the Hilton or go to the Omni just as coming to work for Chancellor Healthcare. 

Josh: Well, you know what, I think part of the process is that there are tons of great organizations that do the same processes in the private sector that do it much more efficiently from a time perspective and a cost perspective, but I think that’s one of the challenges where some of the initiatives from some of the organizations that have partnered with the podcast are really trying to bring the industry together for one loud voice to the federal and state governments to say, “Hey, here are some best practice standard we’ve got to put in place to tackle this challenge of affordability”, and this is I think one of those huge topics that we hear over and over again, so I appreciate that you actually brought that up because that’s something our audience needs to be talking about with their legislators and with their other different organizational impact in advocacy groups. So thank you for spending some time with us today.

Michel: It was my pleasure.

Josh: And thank you for the opportunity to meet with you and we’ve got a lot planned here over the next few hours. This is a great event. Lucas, what do you think?

Lucas: It’s a great conversation and we’re just around such good quality people that are really loving what they’re doing, such a passionate group of people here. And so I hope our audience really does feel that that energy and we’d love to connect with you in our show notes with Michel and his organization. Feel free to reach out to us on btg and thank you for listening to another great episode of Bridge the Gap. 

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

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Episode 87: Michel Augsburger