• February 6, 2017

    Meet Justin Hutchens, president of HCP Inc. Prior to his current role, he was chief investment officer for the publicly held real estate investment trust, and previously held roles as CEO of National Health Investors and chief operating officer for Emeritus Corp. and Summerville Senior Living, among other industry positions. Now in the C Suite of one of the “Big 3” owners of health care real estate, Hutchens is applying his operations and financial experience toward HCP’s growth path. We sat down with Hutchens at HCP’s Irvine, Calif. offices to hear about how he worked his way through the senior living ranks, what he would have done differently along the way, and why it’s the feedback he’s not hearing—that keeps him up at night.

    Spotlight on Technology

    From an ownership standpoint, how important are technology solutions that are implemented at the community level?

    We underwrite a company and we’re evaluating their capabilities as an operator. We’re looking at their existing operation: How do they run it? How do they communicate with the people they have in place? What’s the result of their service delivery? Is it driving good survey results and satisfaction? Does it deliver financial results that are positive?

    Then we look at companies reaching out to us because they want to grow. As we evaluate their current platform, and given the experience we have of working in large companies and scaling companies, we can make a judgment about their ability to scale and grow. One of the key parts of doing that is to have appropriate IT infrastructure. That includes a CRM system, it includes assessment service planning, software and business analytics where you can [track] move ins and move outs that are occurring on a weekly basis. Being in tune with the changing pricing within your market can have a huge impact on your profitability. There’s a need for analytical information. If you’re going to scale, you have to have a handle on a multi-site business. You can’t do that without adequate technology.

    How about technology that actually interfaces with residents?

    We’re always interested in innovation, certainly. There are good systems in place to help keep residents safe. There are systems that will actually give data back to the provider, that help to know the patterns of residents so [providers] can intervene and help.

    There’s a lot of new technology that’s being implemented today, some that impacts service delivery, some that allows residents to interact with their family through Skype and other video conferencing. Social media is entering the space and is accessible to seniors and widely used. Absolutely if it’s central to the resident, it’s going to be a driver of value for the operator.


    Tell me about how you got your start in senior living.

    It was 1994 when I started, while I was in college. I started as a resident assistant in an intermediate care facility. So I was a caregiver.

    Where was that?

    That was in Greeley, Colorado. I enjoyed the job. I observed management and thought that could be something I could do. I changed my major to human services to learn more about health care and social services, and then advanced my career from starting as a caregiver, then director of admissions and regional director of marketing and business development. I moved up relatively quickly and did a master’s degree in management as well. I found that I was really drawn to the health care profession and saw a lot of opportunity to bring a focus on service delivery and sales and marketing outreach to the business. That was my focus early on.

    Did you stay with that same company?

    I was with the first company for two years, and then I went to a largely skilled nursing company as a director of admissions. I was promoted to an area role and then a regional role where I oversaw 16 skilled nursing facilities and four assisted living communities. Assisted living was relatively new in the late ’90s. It was very different from what was available to seniors at the time, which was an institutional setting in a skilled nursing facility. Within that company there were mergers happening, and skilled nursing had a reimbursement change. It went from cost reimbursement to a prospective payment system, which was a 180 for the industry. Also, managed care was being introduced as a payer source, and assisted living was being overbuilt. I look at that time when both industries were stressed, and I think that created opportunity for me to offer perspective and a fresh approach to tackling some pretty big challenges at the time.

    In the early days, did you ever think you’d be here as the president of one of the largest owners of real estate in the business?

    No, I did not. I’ve always had this perspective: Whatever responsibility I’ve been afforded, to do the very best I can do with it. This was advice my dad gave me early in my career. To the extent I do a good job, I can be a contributor, I can create value and I can demonstrate that I’m a team player and a leader, that should lead to other opportunities, and it has over time.

    Was your shift from operations to finance a deliberate move?

    That was a deliberate move. I was the chief operating officer at Emeritus Senior Living. In my view I had the best operating job in the country. I loved the people I worked with and had a great team. We were performing at the top of the industry at the time. This was in 2009, and in early ’09, as you know, the economy was very stressed. There was an incoming call about this job to run this company called NHI [National Health Investors Inc.]. NHI had not invested in several years, they had a great balance sheet, they had an anchor tenant called NHC [National HealthCare Corporation], which represented about 85% of their business, with tremendously good credit. They wanted someone to come grow the platform. I saw that as a great opportunity to take my operating background, where I’ve walked in the shoes of the clients, and parlay that into the REIT executive role, which turned out to be a very good fit. What the experience in the REIT business has done is to bring a financial background and perspective that I didn’t have yet in my career. I saw that as a very deliberate opportunity to enhance my broader understanding and skill set that I could bring to the industry.

    Do you have any advice to folks who want to rise through the ranks as you have? What would you say to them?

    Make sure that when you’re in your role, that you’re very clear about what your expectations are in the role, and as you achieve—and results are expected of you—that you communicate that to your boss and to others in the organization so that you’re noticed. That’s very important.

    Second, commit to a lifelong learning perspective where you’re getting more and more education. It could be training within the company, it could be pursuing executive education at a university, or getting your master’s degree. But continue to challenge yourself to learn more and broaden your perspective.

    Third, if your career is something that you’re very serious about, geographic flexibility can be very important. In my career, I’ve moved from Colorado, to California, to Seattle, Washington, to Tennessee and then back to California again. Every move has been following career opportunities over a 23-year period. If you’re really serious and you want to take advantage of opportunities, and stretch yourself to contribute to bigger roles and in some cases to new companies, geographic flexibility might be an important aspect of that.

    Is there anything you would’ve done differently along the way, throughout your career path?

    It takes about six months to really get a handle on the roles and responsibilities of being a manager at any level. After a year, you start to hit your stride and start to really create value for an organization. I’ve had a four-and-a-half-year stint, I’ve had an eight-year stint and a seven-year stint, but I’ve had a couple of one-year stints way back in my career. I would [recommend] to try and stay two to three years in your role. Establish that you’ve created enough value for the organization that you’ve been able to be part of the fabric of the company. It’s hard to do that in a year, and it’s hard to really hit your stride and be at the top of your game within a job, [but staying] two to three years establishes that you’ve grown and contributed. When I’m looking to hire somebody, I look for a career path that has at least two to three or more years of staying in each position.

    What do you see as your top three priorities now that you are in this new role as president of HCP?

    One big priority is to help advance the brand of the company. We’ve been through a period where we’ve really reorganized the company, we’ve exited skilled nursing, we have had other dispositions that we’ve pursued that have resulted in a portfolio that is among the best in health care and among the best in real estate. As we advance that brand, the decisions we make as a management team in terms of who we partner with and the quality of the real estate that we pursue, that’s going to define us moving forward. One of my roles for the company is to help position the company for growth, being mindful of the leadership role that we want to play in the industry.

    Another area is to work closely with the senior housing team. We have several operators we work with like Sunrise and Atria and Brookdale and MBK and Oakmont that are looking to grow their companies, so we focus on working with them to help position themselves to grow and to grow with us.

    Another is performance management. People drive culture within a company, and I’m pleased to have the responsibility here to help drive the human resources in the company so that we have a motivated workforce that’s productive and competitive.

    If you could have an executive dashboard to look at every Monday morning, what data points would be on it?

    From an operations standpoint, you want to make sure you have a balanced perspective, because the leading indicators of performance will ultimately determine your financial success. Those indicators include, for example: employee satisfaction, resident satisfaction, employee retention, state survey results and the internal audits that you can do within your company to evaluate policies and procedures to make sure that the community’s being run really well and up to market standards.

    Then you can look at the lagging indicators of performance, which would be census and the rate as it relates to internal rent increases and level of care increases, and from a street rate standpoint, any discount that’s being used in the more competitive markets. Then expenses and, of course, margin. But all of those financial results are driven by the quality of the service delivery that’s occurring. If you’re only focused on one, you’re missing the big picture. It’s about balancing the mission of the organization to care for people with the margin of running a profitable business.

    How about from the REIT standpoint?

    From the standpoint of the REIT, we’re looking at potential partnerships. We continually review potential acquisitions, developments and interface with senior housing operators that are pursuing acquisitions. We have a pipeline that’s under constant review. That’s a high priority.

    Another high priority is to review and stay in tune with investor feedback. We’re a public company, we have interaction with analysts and investors, we take feedback and we have an open dialogue with our investors. That’s an ongoing priority as well.

    In terms of overseeing the performance of our communities, in our senior housing platform we’re looking at weekly results in some cases; we’re looking at occupancy on a weekly basis, we’re looking at all the indicators I mentioned from a quality standpoint as well as financial indicators on a monthly basis. That’s certainly in the dashboard.

    Then, the other piece is capital allocations. We’re making decisions, there’s hundreds of millions of dollars flowing in and out of here each year at HCP. So we’re making decisions about selling non-strategic, non-core properties and then acquiring higher quality properties that are a strategic fit for us moving forward. There’s a lot of planning and timing that’s considered to make sure that we hit the guidance expectations that we set forth in the market while having a lot of moving pieces that we’re managing throughout the year.

    We’ve been hearing a lot about services being a competitive edge. What’s your take on providing more services on the community level? Do you see that as a differentiator?

    The most important differentiator in an assisted living, independent living or memory care community is the quality of the service that you deliver, and to have a culture centered around being responsive to residents, responsive to families, communicating as a team and focused on care delivery. Quantity of services is great as long as you’re doing them all well. First priority is the quality of the service delivery and satisfaction of families and residents that are involved with the community, measuring and acting on it.

    How do you gauge it?

    You do surveys. You have suggestion boxes. There’s a book called “A Complaint is a Gift” and as an operator I used to say, “It’s who I’m not hearing from that keeps me up at night.” I want to know all of the issues so that we can respond to them and ultimately not just respond to individual issues, but make process improvements over time so that we can make progress down the road. With the satisfaction surveys and suggestion boxes including employees, residents and families, and interacting with employees directly, [and with] residents and families, there’s a lot of good information you can take that’s driven by those who are delivering the service or the beneficiaries of the service.


    What’s your definition of leadership?

    A good leader has self awareness and is able to be completely comfortable getting and encouraging feedback from those that they’re leading.

    In my role as a leader, I always try to see every decision from a 360-degree point of view so I have a full understanding of the pros and cons related to the decision, and then it helps us to be decisive in choosing a path forward. A big part of that is having and being open to a feedback loop. Part of doing so is, you’re lowering your ego and you’re encouraging others to step in and offer their perspective. That’s important.

    It’s important to communicate clearly. I prefer to be an on-the-table communicator, so everyone knows where I’m coming from all the time. It doesn’t mean I’m always right, but you’ll know where I stand. I think really good leaders will communicate clearly and they’ll be an upfront communicator.

    I prefer to be an on-the-table communicator, so everyone knows where I’m coming from all the time. It doesn’t mean I’m always right, but you’ll know where I stand.

    During your senior housing career, what was the biggest challenge you faced and how did you overcome it?

    In the operations part of my career, the biggest challenge was participating in the merger of Summerville Senior Living into Emeritus Senior Living. Summerville was a national privately held company; I was the chief operating officer. Emeritus was publicly traded, about a third bigger than Summerville. The decision was made to take the Summerville operating platform and integrate it across the combined company. That was a big challenge.

    The first challenge was to identify the talent pool that was going to run the company going forward, and reorganizing the company. At the time, it was over 300 properties in 36 states, and we had close to 20,000 employees, so it took a lot of communication and a lot of planning to be able to implement the system across the board. Any time there’s change in an organization, there’s tension. That’s just part of change. To be able to help lead people through that—manage and see the goal of a well-run, organized company that’s delivering top-tier service to seniors—was the challenge, and it was the opportunity. And we did it! We pulled it off, both companies came together and Emeritus was at the top of its game.

    From a REIT standpoint, part of what attracted me to HCP was that HCP was in the process of making a decision to choose a new path for the company. We had a struggling, very large skilled nursing tenant. We had a Brookdale relationship, and Brookdale has been working through integration issues they’ve had with their merger and some change in leadership, so that was an opportunity. Then there’s the underlying platform, it’s a 30-year-old company that’s been an industry leader for most of those 30 years, and with a team effort, if we could get it back on track we’d be well-positioned to be an industry leader for years to come. I was very much attracted to the challenge of being part of a team to course-correct HCP, and we’ve been able to do that. We’ve added some tremendously good leadership to the team that’s helped to get the company on track.

    What’s the biggest risk you’ve taken in your career?

    The biggest risk was leaving the chief operating officer role at Emeritus with people I’d largely been working with for eight years in the biggest operating platform in the country, to go run NHI. Knowing I was walking into an environment that was largely foreign to me—I’ve been a client of REITs, but had not been a capital allocator in my background. It was a learning curve to step on the other side of the table to run a REIT. I had no reason to make a change except to take an exciting challenge.

    If you follow my experience at NHI, it went really well. We added a lot of new operator relationships, deployed around $3 billion in capital around my time there and established a brand. I’m very proud of the experience, but I would say it was far and away the biggest risk I took in my career.

    Justin Hutchens, President, HCP

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    What’s the best piece of advice you’ve received in your career?

    Granger Cobb was the CEO of Summerville and Emeritus. I worked with him for eight years. He liked to talk about the fact that there’s no such thing as status quo. You’re either moving forward or backward. His style was to move forward all the time. That’s a style I’ve emulated—to always choose a direction and work really hard to get there and never allow yourself to be stagnant.

    Who would you consider to be your mentors?

    I’ve been really fortunate that every step along the way in my career I’ve had people who have taken an interest in what I’m doing and how I’m contributing to the company. So it’s hard just to pick one mentor. I’ve been doing this a long time now, but I’ve been in a C-suite role for 14 years, and you don’t get there on your own. You get there because you have people that are around you that are helping and guiding and leading you. I’ve been really fortunate that I’ve had many more good examples in terms of how to conduct business, versus the experience of learning what not to do.

    What are some of your greatest strengths as a leader?

    Listening and seeing problems from a well-rounded point of view. Getting consensus around taking action and then moving ahead with action.

    What are your weaknesses as a leader?

    I’ve been complimented that I can be very instinctive, but I also think that can be a weakness because what might be crystal clear to [me, may not be to everyone else]. I need to step back and take the time and articulate my point of view and bring others along. That’s something I’ve learned to do over time.

    Say I’m about to graduate college, what’s your pitch to me on why I should look to senior living as a career path?

    Senior living is never boring. It’s a people business. It’s a complex business because of all the people that are involved. You have a customer that’s with you 24 hours a day, seven days a week. The service delivery to that resident is critically important but also complex, because of the time that they stay with you. You can approach the career from many perspectives. You can be a nurse, you can get into maintenance, you can be a chef, you can be an office manager, you can be an administrator, or you can get into sales. A wide variety of different skill sets are needed to run a senior housing community or senior housing company. I’d say there’s a lot on the menu in terms of opportunity. The best operators I’ve been around have been operators that have a team that collaborates together to deliver a service and create value. It’s a growing industry, it’s a diverse industry.

    Senior living is never boring. It’s a people business. It’s a complex business because of all the people that are involved. You have a customer that’s with you 24 hours a day, seven days a week. The service delivery to that resident is critically important but also complex, because of the time that they stay with you.

    The senior housing industry is full of entrepreneurial leaders that are delivering similar services, but very differently. There are cultural differences, and that makes it really interesting. There’s a strong mission orientation to the business, and so it’s a very rewarding industry.

    Do you think that the industry does a good job of taking people who are on the front lines and giving them paths to climb the ladder?

    Surely I’m an example of that. I’ve worked my way up in the industry, and I know a lot of people that have. I meet people that are running buildings that started as an aid in the kitchen, or started in care delivery, or started as a nurse. I think it does happen, but I do think that there’s much more opportunity to [develop a] career path within the industry. I’d like to see more of it. You can’t beat somebody who’s actually been in the role of directly serving and caring for people, and having their perspective as they step up and run a company.

    How about developing the next generation of leaders? Is there anything that HCP is doing on that front?

    Within HCP we’ve gone through a process of identifying key talent internally, and we’re working with that talent to develop them and expand their horizons, give mentorship, give opportunities for people to participate in meetings and projects that are outside of their daily duties so that the workforce is continually evolving. We think that’s important. I think making sure there’s a feedback loop of advice is important; we have that here and we extend that to our clients as well.

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