Meet Lucinda “Cindy” Baier, president, CEO and director of Brookdale Senior Living. Having joined the company as chief financial officer in 2015, Baier was appointed CEO in Feburary 2018 upon the conclusion of a strategic review of the company that netted several leadership changes.

With personal experience in caring for aging family members and a background in corporate finance, Baier has held executive roles with Navigant Consulting, Inc., Central Parking System, Inc., and Movie Gallery, Inc., among others.

We sat down with Baier in Brookdale’s Brentwood, Tennessee offices to learn about Brookdale’s ongoing turnaround post-Emeritus merger, some of the changes that are being implemented across the company in the near- and long-term, and why she feels prepared to carry out the goals associated with the new and improved Brookdale Senior Living.

Senior Housing News: To start, tell me about how you got into senior living and how you initially joined Brookdale.

Lucinda Baier: My whole life prepared me for this. I don’t tell the story a lot, but when I was in junior high, my mom was a single parent. She was a school bus driver and she had a car accident that almost killed her, and so I became a caregiver pretty early in life: [managing] meals, bathing, dressing. Ultimately she recovered and my life was able to get back to normal, but then my grandfather had diabetes and he lost his sight. During college I spent three years living with my grandparents so that I could take care of my grandfather. I didn’t really even know there was senior living to be quite honest.

Time passed, I got married, and my husband’s father actually had Alzheimer’s, so we spent a lot of time making meals, trying to see if there were technology solutions that would make life easier. You forget to close the refrigerator door. You forget to flush the toilet. You don’t put metal in microwaves—things like that. We were trying to figure out how to give him the quality of life that he needed at home, and ultimately we needed to get help.

Then Brookdale called. It’s been about three years since I got the first call from Brookdale [on the CFO position], and the minute I got the call, I fell in love with the business. It was something that was really heartfelt for me because who would think you would get to work in a for-profit business that does something that matters so much? I always felt that it’s where I needed to be.

As soon as I got the call to be the CFO [in 2015], it took all my time and attention. I talked my husband into moving to Nashville and six months later we were here, and I haven’t looked back. It’s been just such an honor and such a privilege to work in a business that matters so much. There are very few businesses in the world where what you do makes such a big difference on a personal level. It’s great to be here.

What attracted you to the opportunity?

In my career I’ve been a turnaround specialist. I love a challenge and I love going into a business trying to figure out how to fix it and get the team built around making it better. I never wanted an easy job, and let’s just say Brookdale hasn’t been easy. But what’s great about it is the business has a really strong foundation and some of the challenges that we are facing are very clear in terms of what we need to do to fix them. And so by bringing people together, by rallying them around our vision, I’m positive that we will look back in a couple of years and say, “Do you remember when?” And we’ll be really happy with the outcome.

Before you decided to take the job as CEO this year, were there any reservations about it?

About the CEO job?

Yes.

It’s a big job. I’m an introvert and so there are parts of this job that are hard for me. In a CEO’s role, people need to see you. It takes a lot of energy for me and I’m very private, so I’ve had to get comfortable telling my story. But I have no reservations about being the CEO of Brookdale because we have a really strong team that has very strong senior living expertise. We’ve taken the time to identify the issues that are preventing us from performing better.

I know what we need to do to fix the issues, and I’ve been really excited that somebody like Bill Sheriff, who was the former CEO and a leader in the industry, is partnering with us to help us with the [company’s] turnaround. It’s been so exciting to see how our executive directors and our community associates have responded to Bill coming back and how he is engaged with the business and is unlocking so much energy as we go through this challenging period.

When did you approach Bill about potentially coming back?

About the second day after I was announced as the CEO.

It appeared pretty well orchestrated.

I’m an outsider to the industry, [having been here since 2015]. But I do know that successful businesses build teams and you bring people in to complement you. So my strategy for the business was very similar to what Bill did when he was here as the CEO. Who would better be suited to help us? Further, I met Bill when I was the CFO about two and half years ago. I had lunch with him. I could see the passion that he had for the business. I had a high degree of confidence that we’d work well together and so it was a very quick decision to call him.

So you wake up, it’s your first day as CEO, and Brookdale stock drops 20%. Tell me about that day.

We expected it to happen. I was prepared for it. And the reason I was prepared for it is my very first earnings call as a CFO. I think it was 9:11 in the morning if I recall. We were doing our earnings call and [former CEO] Andy [Smith] announced the end of our recent strategic review and the stock dropped significantly—I think it was more than 20%. And so we knew that Brookdale was a highly event-driven name. We knew that whenever the [2018] strategic review was ended, the stock would drop.

We also knew that it wasn’t indicative of the value of the company, but it was the need to change [our] shareholder base from people who are event-driven to long-term investors. So it’ll take us some time to recover our stock price. What we need to do is have a plan, build confidence by posting numbers, do the things that we say we’re going to do and the value will come.

As far as the strategic review goes, you seem very confident that you know the path forward. How is the path that you’re laying out different than the one that the previous team held?

It’s very different because Brookdale was probably on more of a national strategy as opposed to a local strategy. I believe that senior living is a very local business, but that we win by capitalizing on the scale that Brookdale has in areas where it makes sense. You can buy chicken for 100,000 residents more cheaply than you can buy chicken for a single community.

I believe that senior living is a very local business, but that we win by capitalizing on the scale that Brookdale has in areas where it makes sense.

But where it matters most is attracting residents into the community, building that relationship that creates a positive experience for the resident and generating referrals for the community. The EDs need to have enough flexibility locally that they can do the things that matter there. Now they’ll always leverage our scale as it relates to industry-leading programming, [compliance and] technology, like electronic medical records. But I think that what we’re doing is putting our decision-making closest to the customer and that’s where we’ve historically been successful.

Not that the industry didn’t value executive directors before, but I think over the last five years people have really started to put a lot of weight behind EDs, where it’s like the ED is the CEO of that building. Do you agree with that statement?

I do. That doesn’t mean they can do absolutely everything independently. We have to have good compliance and good care. But they really do have a lot of flexibility in terms of hiring, pay, staffing, and other key decisions.

Can you really provide that much flexibility in a publicly held company?

You have to stay within guardrails. We spend a lot of time on the right decisions and trying to figure out what decisions have to be made centrally and what decisions have to be made locally. So it’s fair to say that there are some things that the EDs will not have complete flexibility around. We’re going to have to be compliant. We’re going to have to follow laws—there’s zero flexibility on that.

But there are a lot of things where they do have flexibility. They’ll know if their market is very competitive as it relates to servers or dining staff or nurses in particular, so if they need to pay more to get the right quality of person for their residents, then they should do that as long as it’s within a pretty broad set of guardrails that we establish.

As part of the strategic review, a lot of people left Brookdale. Who do you bring in to replace them?

If you’re talking about Andy [Smith] and Bryan Richardson and Dan [Decker], what I’ll say is we have the leadership that we need within the company to turn the company around. We have Mary Sue Patchett, who grew from an executive director and who leads our operations. [She’s] somebody who has a team of division presidents who work for her who have very strong industry experience and [her team is] where a lot of the decisions around operations of the communities are made. So there’s deep industry experience there.

Ryan Wilson joined us about a year and half ago as our chief growth officer. We’ve got that leadership we need within the company.

We’ve also been able to give more responsibility to people who’ve been in the business for a long time. Todd Kaestner is an example. He’s taken on leadership responsibility for our asset management. He’s been with the [company] about 30 years.

Having Bill back is great.

There was some history of bringing people in from outside the industry. Are you going to continue to do that or promote people from within?

I think the focus really needs to be on people who have the right experience for the role. If you think about operations, I think that people who are in our operational chain really need to have senior living expertise because it’s a complicated business and takes a while to learn it.

Again, leveraging the industry experience is important. And in other areas like finance, industry experience is less relevant.

When do you think the turnaround will start to show some results?

I think that you’ll see leading indicators in 2018 around things like retention of staff, move-in trajectory and controllable move-out trajectory. I think it will be 2019 before our financial results take hold and the reason for that is you have to invest ahead, right? This year we’re making a very big investment in our people with compensation growing five-and-a-half to six percent. In 2019 we would expect to see the benefit with those investments.

I think that we would love to do de-novo development. And if you think about the fact that we are the largest senior housing provider [in the U.S.], the fact that we have bought most of our communities, we’ve done redevelopment, we’ve built some buildings at our campus but we haven’t built our own communities—that’s a huge opportunity for us. I think that when you build your own communities you have all of the functions that work together to really think about the optimum way to operate a community for seniors and that benefits your core business as well as the new community you’re building.

Do you think that’s been part of the challenge as you’re taking these older buildings that frankly might not have been as well positioned for the resident of today?

I ultimately think this is a people business and it’s based on relationships and care. That’s not to say that real estate doesn’t matter. But I can tell you there are communities that I’ve been into that are not the best assets, and yet they’re highly occupied. The residents are very happy and the community works. What matters is that someone is going to take care of Mom, that she’s happy, that she’s engaged, that the people who are in the community genuinely care about her, that if there’s an issue it’s resolved quickly. That’s what matters.

Have the executive directors responded well to the more local approach that you’re trying?

They have! I have really had a hard time keeping up with all the emails that have come in. I haven’t gotten a single questioning email, but I’ve [received] lots of positive emails about “Love the direction.” “Very excited about the future.” “Very excited that Bill is back—that demonstrates the value that you have and you place on the culture.” So it’s been energizing.

From a cultural perspective, do you have to change anything in order to make that shift to being more local?

We have to win as a team. Brookdale is a very entrepreneurial culture.

Why would you say that, as a publicly traded company?

Well, think about how we were formed. We basically are a roll-up of small senior living companies that have had different cultures over the years. And so we had this heavy national infrastructure that we were putting in place over the top of some pretty entrepreneurial people. If you think about the shift or the pivot in our strategy, it’s really unlocking all that energy that’s been focused on trying to comply.

Does Brookdale need to become private in order to do all this?

Absolutely not. Look, I think that turnarounds are easier in a private setting. You don’t have the pressure of quarterly earnings. But we don’t need to be private to do a turnaround. What we need to focus on is the strategy that we’ve laid out. We need to focus on our associates. We need to build a differentiated workforce. We need to focus on our residents and generate strong relationships that create referrals. We need to take actions for our shareholders that demonstrate the value of our company and ensure that they get a positive return.

Do you think the number of potential deals over the last couple of years was a distraction?

There’s no question that it was a distraction. Any strategic review comes with distraction. What was different for us and what was unfortunate, is that our strategic review played out in the press. All the rumors around who may or may not be buying Brookdale were distressing to our company because recruiters used them to take good people and convince them to leave. The organization is happy that the strategic review is over. They’re grateful that we get to focus on our mission. We are all here because we want to enrich the lives of the seniors that we serve and so getting back to business is pretty exciting for us.

If an acquirer for Brookdale came along today, would you consider it?

The board has said that we will explore opportunities that may be attractive to shareholders. That’s not to say that we need a transaction. We have a very solid strategy to improve the business.

Does a turnaround involve selling any assets?

We’ve announced that we’re going to sell approximately 30 additional assets in 2018. Part of that is the continuation of the portfolio optimization that we talked about previously, but we also are monetizing several assets that are higher performing that are valued very attractively.

Brookdale has a big home health business. Is that still going to be part of your plan for the future?

I think that being able to provide services to the seniors whom we serve is important. The reason that we got into the hospice business is that our residents asked us to. Having personally gone through hospice with my mom, I can tell you that it’s a godsend for the family and for the the resident who needs those services. So having the ability to provide those services is valuable.

I also think that having home health adds value. Because we are close to our residents, we can see when their needs change and we can improve the quality of their life by making that referral sooner.

Do you prefer to own those types of ancillary businesses?

I think the important thing is that we have the services available. At the end of the day, we’re very happy owning the business. But the most important thing is that the services are available.

Let’s talk about the industry in general. Over the next 12 months, do you think the operating environment will get better or worse?

I think that it gets better in 2019. I think 2018 is still going to be a pretty rough year.

If you look at the NIC data, you still have a lot of supply being delivered in 2018. It takes a year or so for the communities that are delivering to get to a stabilized occupancy. And so that’s going to be a pretty difficult macroeconomic environment for all competitors. You’ve looked at the earnings releases, so I’m sure you’ve seen that everybody’s looking at supply headwinds. Labor is tight. I think wages are an issue across the industry for everyone. I think that when we look at the new starts across the industry, we think it gets a lot better in 2019.

With all these new communities coming into the market competing with your existing communities, what can you do to help your executive directors? And how does Brookdale set itself apart in order to compete with these new communities?

The first thing that we do is a competitive readiness plan. We make sure that the community is attractive. We make sure that we have the right team in place. We do the right amount of targeting with regard to marketing. At the end of the day, making sure that our residents are happy is the most important thing that we can do when new competition enters.

LEADERSHIP

You talked about staffing. How do you attract the best and make them stay? And what about for those who worked for Brookdale previously. How do you recruit them back under the new leadership?

It’s not just about pay and benefits. It’s about being part of a mission—something bigger than yourself. I think most of the people who work at Brookdale are most attracted to the mission. That is something we really embrace. I think it’s about the leader [whom] you work for and that leader helping you develop your potential as much as you want to develop. So one of the things we can offer as Brookdale that others can’t is career progression. If you think about the fact that we’ve got 1,023 communities, you can start as a server in the dining room and you can become part of community leadership. That’s a very attractive career progression.

If you want to do something differently, you can work in a different part of the country. You can become oversight, whether it’s the district or regional roles. Even [EVP of Community Operations] Mary Sue Patchett started her career as an executive director and now she’s an executive vice president in charge of all of the operations of the company. We can demonstrate how being a big company gives our associates the opportunities for training and development that no one else can match.

Are you using that as a way to recruit younger people or those who might already be in the industry?

I think the associate value proposition applies to all of our associates. Now what specific part of the associate value proposition is relevant to a specific associate differs. What is meaningful for everyone is having a good team where people will support you and allow you to do what matters most to you, which is focus on our residents. That’s consistent. With regard to ‘career-pathing,’ that is more of an issue for younger associates or for associates who are interested in taking the next step of their career regardless of age.

What’s your definition of leadership?

I believe that leadership is a privilege and I also believe in servant leadership. Those are the two most important tenets. The really good news for me is that Brookdale has always believed in servant leadership.

I believe that leadership is a privilege and I also believe in servant leadership. Those are the two most important tenets.

I interviewed Andy Smith when he was CEO and he said that too.

And Bill Sheriff said that before him. We have a track record of 35 years on that. With regard to leadership being a privilege, I think that the expectations of a leader are higher as you advance in your career. We need to remember that we are responsible for 100,000 residents [whom] we serve, the 75,000 associates who make Brookdale their home, and the shareholders who have trusted us enough to invest so that we can continue our mission. Every day I focus on whether we’ve met the needs of those constituents because we have to succeed for all of them.

Did your view of leadership change once you became CEO?

The responsibility that comes along with being the CEO is very real and you feel it the day that you take the chair. I always knew that being a senior leader at Brookdale was a responsibility that I took seriously, but now I’ll tell you that every time that we have a storm or we have a customer service failure issue, I feel it. I want to get behind it. I want to try to understand what didn’t go right and if there is anything that we can do to prevent it from happening again.

With respect to your job, a lot of people have said, “I don’t think I would have taken it,” for the fact that it’s really hard. When you had the offer, did you think, ‘Gosh this is gonna be tough?’

I knew it was going to be tough. Early in my career, someone told me this and it really stuck with me: If you take heat and pressure and you apply them to ordinary carbon, you produce a diamond. And so I spent my career looking for challenging situations, looking for opportunities where I thought I could make a difference. I’ll tell you that nothing worthwhile is easy and there is nothing that matters more than making Brookdale successful.

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

I take risks every day. I’ve always looked for challenging jobs. Sometimes I wish I would have taken the easy path, but that hasn’t been my approach to life. That has generally rewarded me. At the end of the day, you go into something, you know it’s hard, you get a team pulled together that can do something that they may not even think is possible. At the end when you’re successful, the reward is just tremendous.

Define success at Brookdale.

Success at Brookdale is when we are a talent magnet. When we have tens of thousands of associates who are pursuing their careers and they are happy. When we have residents who are engaged and are delighted with the services that we provide. When our shareholders are getting a market-leading return. That’ll be success.

Do you think that there need to be more publicly traded senior housing operators?

I don’t think the ownership structure, public or private, matters. There are a lot of owners in senior housing, and I think one of the things that makes Brookdale successful is that we have the benefits of size and scale that we can use to make the quality of lives of our seniors and associates better. I don’t know if more publicly traded is necessary or not.

You have to admit though, it would be nice to not have the microscope on you all the time.

When you are a leader, you’re always on stage. The good thing about having a microscope on us is when we are successful, and I genuinely believe that we will be successful, everyone will be watching.

There are a lot of people in the industry who are rooting for you. It’s been interesting to watch. What’s the best piece of advice you’ve received in your career?

There are so many. ‘Do what you say you’re going to do’ is probably the best piece of advice. ‘Listen more, talk less,’ is another really good piece of advice. Communicate more than you think is necessary.

Whom do you consider to be your mentor?

My biggest mentor is my husband. And that’s probably surprising, but he’s someone who I trust completely. He knows me very well. He knows what all of my weaknesses are and tells me how to do better. He’s got strengths in areas where I don’t and he gives me really good advice.

What was his advice on this job?

Go for it. And now, “Work harder…You need to focus on these three things…What were you thinking yesterday?” I get lots of advice every night when I come home. In addition to my husband, I’ll say that early in my career there were a couple of executives, Bob Angle and Mike Barry, who really gave me very good advice. I’ve been pretty lucky in that I found a lot of mentors throughout my career and believe it or not, I have residents in our communities who are mentors now. There is a resident, Ken Garretson, who is in one of our communities in Florida, whom I consulted before I took the job.

How’d you know him?

I met him through Brookdale and he has been among our resident leaders. He has taken the time to visit many of the communities and when I think about messaging, he’s like, “OK, Cindy, you didn’t balance this quite right.” Having that resident to help with focus is fabulous.

What are some of your weaknesses?

We could be here all day! I can be too direct and sometimes being direct can come across as being harsh. I also think I have terrible work-life balance. But the good side of that is that it’s allowed me to engage with a lot of our associates and with our residents and keep up with the fast pace of change that we need for the business.

What are some of your biggest strengths?

I am completely dedicated to the company mission and to the success of Brookdale. That is the single most important thing to me. I’m pretty good with change. I learn very quickly. I listen and I reach out to people who know more than I do about the issue that I’m facing. I think having advisors, and having the wisdom to listen to those advisors, is a pretty big strength.

Have you talked to Andy Smith since you took over?

Yes I have. I waited about 30 days, to let the dust settle, and we had breakfast. Andy sat in the chair before me, not that long ago, and I asked him for his advice. What would he have done differently? What did he suggest that I should do differently? It was a good conversation. I think that Andy is a very smart person. I think that he cares about Brookdale deeply. I’m grateful that he is open to my reaching out from time to time.

What’s the biggest challenge the industry faces?

Oversupply. I think for the future, the biggest challenge, and this is probably a current challenge as well, is that people would prefer to stay at home and age in place. That’s probably the single biggest issue that we have to face. I think that technology and the changing health care landscape is something that we’re all going to have to address.

Do you see Brookdale in the future continuing to be part of the government reimbursement aspect of the business?

I do. It’s a small part of our business today. I think it’s a necessary part of the business and I think it’ll be part of our business going forward.

Do you think assisted living in general will start to become part of the bigger plan for the government in terms of reimbursement?

I know that assisted living should be part of the whole health care solution. If you think about the outcomes that we have for post-acute discharges, they’re better, right? Because fragile seniors are in a supportive environment where they get proper nutrition, they’ve got help where they need it. And so you can get a better outcome at a lower cost by using senior housing.

Whether the government will ultimately choose to pay for that or not, I can’t say. But I can say that it’s a big part of the solution.

The government recently announced that Medicare Advantage could be used for in-home private care, which could be a game-changer for senior living. Brookdale would be well positioned to take advantage of that?

We are well-positioned.

Is that part of your strategy in 2019?

Bringing all of the solutions that we have for seniors is absolutely part of our strategy. We’re still working through exactly how we’ll approach the new change in payment.

What what does Brookdale look like in 12 months?

We’ll be smaller. We’ve announced that we have a number of community dispositions underway. We’ll be more focused, we’ll be more successful. People will be happier. Our residents will be more engaged, our net promoter scores will be higher. And hopefully our [share price] will improve.