Meet Michael Grust, CEO of Solana Beach, California-based Senior Resource Group. With a career that began in homebuilding, Grust soon became interested in the operations behind senior living, which at the time, was very limited and consisted mainly of independent living and skilled nursing. Beginning with just a single community SRG has grown to 32 communities in six states today.
Spotlight on Technology
Do you think the industry’s done a good job of investing in technology up to this point?
In terms of improving our ability to be more efficient on the operational side—yes, absolutely. As an industry, we continually need to seek ways to infuse technology into our daily operations. Electronic medical records is one example. Embracing technology that allows us to capture information and data about our operations and our customers is paramount to enhancing our ability to become more efficient operators.
Are you bullish on the technologies that are going to help your care team do a better job?
It’s all about engagement. I can have the greatest building, and I can have the best location, but when that adult child or that prospect steps over the threshold, they are going to make a decision based on “feel.” They’re going to look around and get a sense of: Is the staff engaged? We train our people to heighten their awareness of how powerful that message is in terms of their interface. At the end of the day, somebody could walk in and do due diligence on us. They might determine it’s a great dining program; the building looks terrific; it’s well located; but is this population engaged? That’s what this is really about.
We sat down with Grust to hear about what he sees as the biggest challenges the industry faces today, why scale is very difficult to achieve in senior living, and why even though he was a partner, he opted to take on the executive director role at the company’s first community.
How did you get into senior living?
I initially was in the homebuilding business, right out of college. I was working for a homebuilder by the name of Kaufman & Broad. Building things and developing was something I really enjoyed doing.
Ultimately I was [recruited] to Los Angeles by a master plan developer. I was then transferred to South Carolina, which was not easy for a Chicago boy. I ran development for a master-planned community there. It was a golf course development, which in some ways was a de facto active retirement community. We had two golf courses and 100 employees. I got a real feel for an aging population and was intrigued by it. About four years in, we acquired a piece of land in Rancho Bernardo, California, just east of San Diego. They asked me to come back because they couldn’t figure out how to build senior housing. This is 34 years ago… think about that!
We developed it, built it, and recognized that we weren’t an operator, but I was intrigued by the hospitality aspects of it, the communal living, and providing meals. There was no assisted living because it barely existed back then. It was independent living with skilled units only.
The president of the company said, “You know, this an intriguing business.” We were a public company and we had been taken over… so we said, “There’s no better time than now to dip our toe in the water.” Shortly thereafter, we came across an opportunity in Solana Beach, California. This was about 1988. A local developer was trying to build a senior living project which was more of a prescriptive living environment that simply didn’t resonate with the market. They didn’t understand what this style of living was all about. We bought into that partnership and I decided if I was going to understand this business, I needed to run it.
Is it true for the first building you bought you actually made yourself executive director?
Yes, I did! And frankly, I had no knowledge on how to sit across the desk from the customer. While this was independent living, I quickly realized I also needed to understand the healthcare, hospitality, and real estate aspects of the business because that’s what senior living really is—the balance of all three of those disciplines.
Tell me about that first day when you took over as executive director.
Well, it wasn’t too tough; there were only about nine residents. The building was pretty empty. I had to learn how to build an operational staff. We didn’t have any care at that particular point in time, but very early on we realized that our people needed more help with daily living. So I partnered with a local hospital to get some home health care available.
What did you learn?
I learned that [prospective residents] were scared. They were not in denial, but they were certainly nervous about this decision to move into a communal setting and what it meant. Did it mean giving up their independence? Did it mean giving up who they are? Was this a prescriptive environment where their daily routine would be directed by others? Had they given up all of those things?
“I’m not ready yet,” is the mantra of our customer. They are never ready to move into this type of setting. I quickly learned that you have a lot of staff you are responsible for whose job it is to deliver on a promise to these residents. We had to understand their wants and needs and there was quite a range of both. You had people who were just moving there for the community, the meals, some programming. Then there were some folks that were moving for other reasons. They were moving in because their adult children were concerned about their well being and wanted them to be in a setting where if something happened, somebody was there to respond.
In that first building that was obviously not full, were there any sleepless nights? You were creating a product that didn’t really exist.
No. Frankly just the opposite. It was an exciting time because we were trying to invent a business and solutions for people. And I knew, that ultimately, this was a business model that would be rewarding because we had an opportunity to make a difference in the lives of our customer. Our biggest competitor was the home. It still is. We need to be a compelling reason for somebody to select us. My intuitive marketing skills started to set in and started to focus on building relationships. How we could provide solutions and not make the process so cut and dried? We started to recognize that we needed to build trust with the community; that we were a viable solution for Mom or Dad.
You live with your customer 24 hours a day. What other management model has that type of complexity? Therefore, as time has progressed, I have tried to build a culture of compassion and commitment that recognizes not just the complexity but the responsibility we have. Not only are we building a company but working to create an organization that people want to be a part of and that they feel is setting them up for success. As such, training becomes an enormously important element to insure a heightened awareness of how our customers’ needs vary tremendously. We have a SynRGy program in our company. It’s a program that emphasizes that residents and staff are in “wellness” together. I want wellness for my residents. I also want wellness for my employees. It includes training modules that teaches staff how to engage our customers and become a meaningful part of their lives, within boundaries, recognizing that quality of life and wellness has a different meaning for everybody. That’s really what we’re providing.
You live with your customer 24 hours a day. What other management model has that type of complexity? So as time has progressed, I have tried to build a culture of compassion and commitment that recognizes not just the complexity but the responsibility we have.
Looking back at that first community, is there anything you wish you had known then that you know now?
Not really. Every speed bump, every lesson learned was an important foundational tool to learning this business.
I still believe we’ve got a lot to learn. This industry didn’t exist 30 years ago; people didn’t live as long. We’re only capturing a whisper-thin piece of the population, but the age wave is still three to five years ahead of us. We have to be expecting that there’s going to be surprises along the way and complexities that are going to present themselves. The management of this business is so complex; its imperative that the industry have reverence. I think that’s one of the areas this industry doesn’t really understand. There’s a lot of operators out there that I don’t think have appreciation for the complexity and responsibility involved.
More from the Leadership Series
Do you think there are enough good operators right now?
No. There are some big, big operators out there, but it’s a small industry and scale is not something we do very well. I think you have to be able to understand the local nuances of your market. You have to be able to stay in touch with both your employees and your customers. When you are talking 300 or 400 or 500 buildings, it’s very challenging.
Do you think scale is possible in senior living?
No. Again, it’s a complex business and this isn’t just meals, housekeeping and meds reminders. It’s delivering on a promise with a lot of moving parts. Scale is a challenging proposition. The bigger you get the more that can fall through the cracks. It makes us vulnerable especially when you’re addressing the care side of the business. You’ve got to have best practices in place. Some form of third party accreditation is important.
We’ve started to see the NIC data show signs of occupancy pressure. How do you think operators get through it?
In terms of having too many units and not enough people, I think again we are in a slight valley here.
I think there are enough people that are age-qualified out there. Our portfolio is well north of the average. We’re 95% occupied, and some communities still have waiting lists in very competitive markets. I think our message has been that of delivering on a promise over time. At the end of the day, we want to be measured by that satisfied customer and their adult children. We may be asking more rent than most people in the marketplace, but we deliver more. Our dining program is dynamic, with over 30 menu items and 12-hour dining; our programming is embedded with rich and diverse offerings; and our most recent fitness initiative focuses heavily on the fitness elements that are really quality-of-life catalysts in terms of balance, strength, cardio.
Talk about Alzheimer’s and treating dementia, but finding some of the things you can do is more [productive]. Cardio health and brain oxidation—believe it or not—does as well as some of the drugs in terms of helping slow down the onset of Alzheimer’s. Recognize that you have to show up every day and deliver on a promise regardless of the market you’re in. You’ve got to give people compelling reasons to move into the community.
One of the things we keep continuing to hear about is the shortage of people who come to work in the industry.
Very much so. That’s a bigger concern than finding residents.
Everyone talks about it, but how do you make working for $12 an hour that great of a place to work?
Well in San Francisco, it’s $15 an hour. You have to pay more. There’s no question. We’re competing with the same employees on the same trajectory as people in hospitality. Cornell, Washington State, USC, and others are trying to create some awareness. It’s something we need to focus very, very heavily on, getting people interested in our business.
We need leaders in this business. We have five regional human resource folks that literally all they do is reach out to the market. It’s one thing to get somebody to answer your ad, but we have to make sure they have some sort of passion and commitment to this business and that we get the best possible fit for us.
TECHNOLOGY AND LEADERSHIP
One of the things we hear a lot about is data. If you had an executive dashboard you could look at every morning what would be on it?
We have one but we’re constantly refining it.
What’s on it?
We look at a wide range of metrics daily and weekly. From food service to marketing…we need to understand operational staffing.
What we try to do is produce data in multiple views so that we can get a richer insight into the qualitative and quantitative aspects of the business. These dashboards need to evolve because the deeper we can dive into data the more we can learn about our customer. We can get a sense of what goes on daily and we can get a sense of the daily blocking and tackling which helps us guide and course-correct as need be.
Obviously we look at occupancy, we look at the meals served, we look at the people that are on various levels of care, we look at people that are leaving and we have exit interviews. [We look at ] all the financial attributes and staffing. We have a ‘flash report’ and a staff meeting on Mondays. For each property, we see how many meals were served, how many people attended, were there episodic things that happened that we need to be aware of, and how did sales and marketing do? How many sales calls did each marketing person make? I have a high level of awareness for regional management. There’s certain blocking and tackling elements in this business, in terms of building relationships, that we expect of our salespeople. We look at many different measurables to determine whether they are setting themselves up for success.
What’s your definition of leadership?
Building relationships and trust with people you work with. Providing them with a vision, collaborating with them. My organization is very flat. There’s not a hierarchy here. We formulate our vision together. I believe if your people feel as though they’ve got a seat at the table as you craft the vision, they’re going to be more likely to execute that vision. It’s a very collaborative environment. It’s really easy to inspire people by connecting with them and providing them with a level of respect and connection. I think the collaborative exercise becomes fun; we’re solving problems, we’re anticipating the future of something, and you need people who feel as though they all are collaborating and part of the solution.
My organization is very flat. There’s not a hierarchy here. We formulate our vision together. I believe people if your people feel as though they’ve got a seat at the table as you craft the vision, they’re going to be more likely to execute that vision.
Reflecting back to high school, being captain of the football team was not something that I lobbied for. And not because I was the best athlete, it had nothing to do with that. I had the ability to build relationships and trust. To work as a team and promote a “do as I do not as I say” kind of thing. I found that rule really helps in terms of connecting with people and having people want to lock in shoulder to shoulder with you to get something accomplished. When I worked in South Carolina, I was transferred from Chicago. I had to learn how to build trust and not come in as the expert. Recognizing we are all in this together and we have a mission here: and that’s to run this community. Take your ego out of it. You need to have confidence that you can help people when there’s a rough patch, but you have to build strong relationships to be a good leader.
During your senior housing career, what’s been the biggest challenge you’ve faced?
It’s ongoing: finding good people. You’re only as good as your people. Recruit and retain and inspire these people to be part of the team. Take a look at the average length of stay for people in my company, it’s 14 years. My vice president of operations has been with us 27 years; he started out as an executive director. I recognize the complexity and it’s really not been about anything other than enjoying what I do and feeling fulfilled in terms of delivering on a promise. Being very measured in how I grow the company; very thoughtful; and never trying to get in over my skis.
So you don’t want to be Brookdale?
If being Brookdale means being big, and managing a company with a huge scale… I don’t want to be Brookdale. We’ve got a huge responsibility to deliver to our customer and our financial partners. I just want to do great work. We want to be in a position to feel proud of every community and I want each community to be filled with satisfied customers that are fulfilling a quality of life they couldn’t achieve anywhere else.
What’ the biggest risk you’ve taken in your career?
When I invested in that first building and took money I didn’t have into the partnership. After that, we brought in institutional capital and gave them and ownership in the company. We ultimately bought them out. Losing control of your company in order to grow has its risks.
Did you bet everything on that first community?
How much did you invest?
I’d accumulated some, borrowed some, signed on the dotted line for some. That was the catalyst along with my partner, a gentleman by the name of Martin Fenton.
You put all the money you had into it, there had to be some sleepless nights, then. You were developing a product that didn’t exist.
Yeah, it’s funny you say sleepless nights. Maybe risk is something I don’t quantify the same way. I was more excited about it than having sleepless nights.
Was it fun?
I wouldn’t give up the last 30 years for anything in the world, and even though I’m getting long in the tooth, I feel like I have a lot of road ahead of me. This is an exciting nexus of the industry. The real age wave is upon us. You can see it if you squint a little. It’s almost here. I’ve built a company up through the good fortune of having a lot of great people who have connected to the same vision. I feel like the best is yet to come. So to do something you love every day — I’ve got a kid who’s about to graduate college, I’m trying to convince him that that’s what he’s got to find, that’s what’s got to draw him.
What’s the best piece of advice you’ve received in your career?
The best piece of advice I was given was in sports, and I’ve carried it over to business. It’s going to sound pretty primitive, but here it goes: It ain’t the skill, it’s the will. I feel you have to be willful if you want to achieve something in life and that comes in a lot of sizes, shapes, and forms. I feel like my whole life I’ve been sort of an overachiever in terms of learning something, figuring things out, being self-taught. Being willful about leaning into the hill and embracing the task at hand, I think, is ultimately what gives you the foundation or premise for success. Whatever you do, be willful.
Who would you consider to be your mentor and how have they helped your career?
A mentor in terms of compassion and thoughtfulness and integrity was Martin Fenton, who was my partner initially when I started the company. Those are attributes that taught me a lot. Being a street kid from Chicago, there’s a different kind of learning curve. Martin taught me how to be authentic and treat people with dignity and respect.
Say I’m about to graduate from college. What would be your pitch to me about why I should look to senior living?
Because it’s a very dynamic industry. It’s healthcare, hospitality, and real estate. Depending on the area, if you want to develop great things, you can build great environments. If you want to serve this customer, you can make a difference in their life. The complexity of this business offers a very robust opportunity to be in a meaningful career that can take you on a journey…which I think is so rewarding.
What’s the biggest challenge the industry faces?
Finding people to work, finding people that want to jump on board and serve this population.
Do you believe the industry is finally taking that seriously?
Yes I do.
What does the future of senior living look like?
Very bright. Serving the needs of an ever-growing population.