Lori Jones, Chief Operating Officer, joins host Greg Puklicz to discuss how 12 Oaks has overcome senior living operation challenges involving staffing, occupancy, and revenue. Lori has over 25 years of experience in senior housing operations and as a Registered Nurse brings a unique perspective to the conversation.
This episode was recorded at the NIC Spring Conference.
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You’re listening to The Roots Podcast by 12 Oaks with host Greg Puklicz, where we’ll be joined by industry leaders to discuss and highlight the character competency and care that is required to successfully manage senior living portfolios.
Greg 00:16
Welcome to The Roots Podcast by 12 Oaks Senior Living, where you can discover the nutrients that make senior living thrive. I’m your host, Greg Puklicz. Welcome to San Diego. Beautiful, sunny San Diego, California where we’re here at the 2023 NIC Conference. And my guest for this episode is Lori Jones. Lori Jones is our Chief Operating Officer and Chief Clinical Officer for 12 Oaks Senior Living. Lori’s been with us a couple years and she’s really doing a great job at helping 12 Oaks elevate its capabilities to remain and enhance our capabilities as a best in class regional operator based in Dallas, Texas. Lori has over 25 years senior housing operating experience. She’s a registered nurse many years in the operations side of running numerous communities throughout the US. Welcome, Lori.
Lori 1:16
Thank you.
Greg 1:17
Today’s focus is operations and appropriately you’re the Chief Operating Officer of 12 Oaks Senior Living. So here we are at NIC and everybody wants to talk about operations – operations, operations, operations. What have you done for me lately, 12 Oaks, or what will you promise to do for me? And that seems to be a real hot topic these days as perhaps 2022 didn’t quite pan out for everybody. It’s been a hard transition out of the pandemic and we’re seeing still a lot of disruption in the industry. So the focus is really become laser sharp on operations and two areas in particular, two areas I know you’re very well versed in and I want to talk about today specifically staffing and occupancy and revenue. First off, Lori, tell me, staffing, what are your biggest challenges you see in staffing at our communities?
Lori 2:22
It’s been challenging managing labor over the last couple years, especially through the pandemic. And one of the biggest challenges that I see is the cost management of it. We’ve seen quite a lot of increase in the labor costs over the last, especially over the last year. Our challenges have been with pay rates and wages. They’ve really gone up quite a bit across the board. And of course we’ve also been combating agency usage as well. And so managing through those costs has been a challenge. Then through that, we want to make sure that we’re recruiting and so retaining folks has been a challenge. The landscape has also changed so much with the Gen Z population and managing the new people that are actually in the industry. Working in the month of February alone, we had a hundred positions that we filled, and of those a hundred positions, 72 of those were caregivers. So our biggest challenge in staffing has been labor management and recruiting. Again, the Gen Z population is a little bit more challenged in what their expectations are in the labor force and how they want to work. So it’s been difficult and we’ve had to be very creative in this challenging time.
Greg 3:32
And that’s what we’re hearing across the board. Staffing is a huge issue and we know staffing is the largest component of our operating expenses. Right? What’s our numbers there? What are we running at on staffing as a percentage of operating expenses?
Lori 3:47
60% of our expenses are labor alone.
Greg 3:51
So I mean, yes, it’s a big area of focus with regard to controllable expenses that we can influence as an operator. So given these staffing challenges, Lori, what are you doing in particular at 12 Oak Senior Living to address these staffing challenges and try to improve our cost effectiveness, our culture, and the quality of our staffing at our communities?
Lori 4:16
There are actually I think two components that we’ve had to really look at and problem solve and there’s a people piece of it and then there’s a management piece of it. And from the people piece of it, we really have been focusing in on coaching and looking at ownership of the labor at each community. So the executive directors really taking ownership and working with their teams. Retention is become a very important piece and so we are working towards different types of onboarding programs for associates, buddy programs, to try to encourage our existing staff to help our staff stay longer so that we can stop the turnover as we’ve had some good retention. We have our in-house centralized recruiting and as I mentioned, we had a hundred folks recruited in the month of February alone. And what’s been really great about our centralized recruiting is that we’ve had nine months running as we track it month over month and we’ve been net positive in our actual people that we’re hiring. So while we’re losing people, we’re also gaining people and we’re gaining more than we’re losing. So we’re making progress.
Greg 5:19
Just like occupancy – tracking occupancy move-ins, move outs – you’re tracking retention, you’re tracking how many new hires we’re making every month, what the turnover is, and so nine months running, that’s been positive. So is that to you indicative of a stabilization in staffing at 12 Oak Senior Living?
Lori 5:38
Absolutely. And then with the other things that we’re implementing, as I mentioned, our retention programs, our buddy programs, we also focus in on Great Place To Work, that’s important so that we can not just do the surveys to get feedback, but actually act on the surveys and create action plans. Each executive director creates action plans around how we can retain our team and help them thrive at 12 Oaks. A culture is really critically important. That’s what 12 Oaks is really known for is we have a great culture and it makes a big difference in the retention piece. So yes, we’re making positive gains in our recruiting and we’re seeing some improvements with regards to the retention. Then we also have to manage through it and that’s where working with the RVPs has been really important. Working with them on the accountability and the coaching and the ownership for them. I’ve created certain tools for them, tracking tools, especially when it comes to the labor costs and the labor management, routine calls with the RVPs them with their EDs to review these tools and to make sure that we’re staying ahead of the game on labor and that we’re addressing overtime. Overtime is one of the biggest costs that we have. And so we have to have that visibility and transparency.
Greg 6:44
Yes, so overtime is a big thing. So as our staffing levels are coming up slowly and we’re stabilizing, tell me more about what specifically you’re doing to kind of have the RVPs help the eds on their scheduling and staffing and trying to cut out overtime.
Lori 7:04
Well, the tools that I’ve developed are real time and we’re also moving to a new platform Paycom that’s going to also help give us greater visibility into this because we have to manage the hours to budget obviously, and then also make sure that we are managing the people that are working those hours and Paycom is going to help us be able to have visibility into who’s working, what shifts and how we can reduce our overtime that way.
Greg 7:27
So will you be able to drill down into an actual week or shift and into the individual person and see how they’re assigned? Tell me about that process a little more and how you’re making sure that our budgeted hours are not being exceeded in a given week in a department.
Lori 7:43
Right. That comes back to these reports and looking at them with the RVPs and making sure that we’re addressing the EDS and their management coaching and teaching them how to utilize the tools as well. The Paycom will allow us to have more visibility as well besides the reports that we’re currently using.
Greg 7:58
What other tools are you using to manage staffing?
Lori 8:01
We’re getting creative and we have a new tool that we’re highlighting in a couple of our communities called Crew and it’s getting amazing feedback from the executive directors. It’s a communication tool that the executive directors can use with their teams that will actually push out open positions and staff and also helps us manage our overtime that way as well. A staff can grab a shift, it’s an app, actually, and it’s working well and getting great feedback.
Greg 8:25
That’s good. Yes, and that’s good real time feedback that’s making sure all the staff on site are engaged, they know about the available shifts. Right? And the ED and care directors can schedule so as to minimize overtime and appropriately priced staff for the required position. So in addition to staffing challenges, we need to get operating expenses under control and historically that’s one thing I’ve seen over the years that 12 Oak Senior Living has done a really good job at is keeping operating expenses in line with budget. And I think a lot of the systems you’re implementing are going to even sharpen our ability to do that to be a best in class operator. Having control of these operating expenses is a paramount importance. That’s controllable in a lot of instances through the systems you’re implementing. The other side of the equation, of course is revenue. Right? And we know there’s been occupancy challenges though occupancy I think has been coming up recently. I’d like to hear some of your thoughts on that. And what are your biggest challenges in growing revenue in the communities today?
Lori 9:38
Occupancy is at the forefront. That is our biggest revenue lever, if you will. And then the other challenges of course is rent increases. We’ve been really focused on driving our revenue through rent increases and then of course looking at our care revenue. I think one of our big focuses for quarter four coming into the new year was to really take a look at pricing and make sure that our higher exposed units are more competitive from a pricing perspective to help drive our revenue, but we have to really focus on driving revenue because the expenses have gone up, especially in the labor piece. So we have had a very strong focus on revenue growth and looking at these levers. Again, prepping the team in quarter four was very instrumental in getting to our budget for the new year, but exceeding our budget for the new year.
Greg 10:23
So what did you do to prep the team?
Lori 10:25
We had a lot of coaching and education and reviews and line by line reviews with each community, everything from an expense perspective, but also from the revenue we looked at ERIs, rent increases. We looked at what people are currently paying and what they could bear potentially going into the new year, especially with things like social security increases to prepare our budgets as well as prepare them. And so there was a lot of coaching and education and teaching and training just around those revenue levers and what it’s gonna take to get where we needed to be. And as a team, we came together with realistic goals, realistic strategy and budget planning sessions. And then we were able to carry that into our budget planning with our ownership groups. And again, the pricing was a real key component of helping us to take a look at our highly exposed units and then have very good budgets that will actually drive revenue and drive occupancy.
Greg 11:14
We tried to, in our communities, structure leases so that they don’t all renew on January 1st or some other date. That gives us more flexibility through the year to move rents as necessary depending on what current market conditions are. But I know we’ve been pushing upwards to 10% rent increases at a lot of communities and one of the things I I heard pretty consistently was the people we had to convince the most about renting increases were the executive directors.
Lori 11:43
Right. Yes. And it was, I developed a tool initially and now we’ve got that automated, which is really great to help the executive directors actually take a look line by line at their residents and their rent increases so that they can have conversations with folks individually and still have a goal of meeting that 10%. So you’re correct, we set a goal of 10% and that’s an average that we’re shooting for. Each resident may have a different opportunity to the market and so we pulled that market opportunity into it as well. Again, giving visibility to the executive directors and the flexibility to work with them individually to get that average to 10%. It is being very instrumental in helping us with our continued revenue growth.
Greg 12:21
So we’re rounding the corner now on the first quarter. How are we doing on revenue in the 12 Oaks portfolio?
Lori 12:30
Well, what’s really exciting is our year over year revenue growth and this is with five new communities coming on in the last six months. We have 2 million in growth year over year, which is really exciting. And we are well ahead of budget for the first quarter and we’re actually 2% ahead of our occupancy budget. We have 25% of our communities actually are now up and over 93%. And our net for the first two months of the year is a net plus 70. So we’re really making progress and we’re doing a lot of really focused things. Like I mentioned, we’ve prepped a lot in the fourth quarter and then we were able to execute come January 1st, so we didn’t wait for the new budgets, we hit our new budgets running.
Greg 13:11
No, that’s so important, right? Getting ahead of the curve and those are some really good statistics, some real good proof of thesis that these systems and processes that you’ve implemented are really starting to pay off and we’re seeing good budget performance. So from an operating point of view, 12 Oak’s mission is to be a best in class regional operator and best in class means that we have full understanding and control about those things we can control within our operating expenses and that we’re doing everything possible to maximize revenue at our communities. What is it you think that makes 12 Oaks different? How is it that we are able to sustain ourselves as best in class operators? What are the things that you’re doing to help achieve that designation?
Lori 14:05
I want to start off by saying that what sets us apart is our culture and our people. We have people that have stayed with 12 Oaks, have grown up in 12 Oaks that have such a heart and a passion for our seniors and what we do that really sets us apart that way. And with that comes the heart and the willingness and the eagerness to learn and grow and leadership has been so critically important. And that’s been a big focus of mine is working with the team on leadership, on the people piece, making sure we’ve got the right people in place that have the right heart and the right desire to grow and become excellent. And the leadership is so critically important and I’ve been working on that with the RVPs and the RVPs and the executive directors and so we’ve just seen some real tremendous growth in ownership and accountability.
Lori 14:45
People seeing the bigger picture. When it comes to what makes a successful organization, obviously it’s how we serve our residents and how we treat our residents and our families and what goes on at the community level is so critically important. But on a bigger picture, there has to be the understanding of what it means to be a true leader and how to lead the teams to excellence. We have a high bar, we have a high bar of excellence with expectations. Along with that comes in the coaching and the training that we do with the teams, with RVPs and with the executive directors has been our high-touch model. It makes it much more effective. We have an RVP that will have five to six communities in their portfolio, mostly, not always, but mostly within driving distance to their own homes.
Lori 15:25
So we believe in work-life balance. We want people to have their own personal life and I think that we do a good job of taking that time. I mean, we do things like lunch hour is a sacred hour and people stop working and they go sit in the dining room and they enjoy each other’s company and actually don’t work. And that’s so important for the culture. So I just wanted to start by saying culture is critically important to our success. And then we also have a solutions department that’s really exciting. Our solutions team, they’ve made a transition in the last, I would say in the last year of being just consultants for us, but also helping with the accountability piece. One of the things that we – why we’re seeing good results with occupancy is because our solutions team now is going in as a consultant to go in, but they come along, they’re like a paraclete, they come alongside, they help, they coach, they teach, they train, they set systems up and their consistency and being there with the team has been making a difference in getting things to stick. Our focus has been getting things to stick. In other words, when they leave, things will continue to function and I believe that’s getting better and better and better. And that continues to make a big difference with us as well.
Greg 16:26
At the end of the day, the proofs in the numbers and it sounds like the years off to a good start. We’re achieving our objectives, we’re achieving our budgets for our clients, and all due to everything you’re doing to lead the operations team to those successes.
Lori 16:42
Thank you. We have a great team.
Greg 16:43
We do indeed.
16:45
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