• Posted on July, at 16,

    Meet Sarabeth Hanson, CEO of Harbor Retirement Associates, based in Vero Beach, Florida. The company operates 30 communities in seven states and is partnering on the construction of eight more communities in seven additional states. Having started her career as a teacher, Hanson quickly found her calling in senior living while working for an independent assisted living provider in Connecticut. She then rose the ranks in operations while working for a national provider and has since advanced to the CEO role with HRA, which today manages more than $150 million in revenue and $1 billion in assets while employing 2,000 associates.

    Spotlight on Technology

    How is HRA investing in technology to make sure that you can enhance the resident experience on the back end?

    We have a point-of-sale system with full liquor licenses. If you asked me what I do for a living, I would tell you that I’m in a hospitality business serving seniors.

    Really what that tells you is choice. When you’re creating all that, you’re learning to adapt things, and there is technology that needs to be in place to help support it.

    Is technology a key component of delivering the experience to a higher-end population?

    Our new property in Dallas is nicer than any five-star resort that I’ve ever been in. We’re able to readily attract staff as it’s a little bit more sexy than typical senior living. The chef is right out of the Dallas Four Seasons.

    To be able to attract that type of person, we have to be doing something different and special. Part of that is we encourage them to be creative. They’re able to run multiple dining outlets and we have the technology that they have been accustomed to. They have the support staff that they’ve become accustomed to. In order to do all of that, you have to be in a market where your customer is willing to pay for it.

    We sat down with Hanson to learn about HRA’s growth focus, how the company delivers its residents’ “Best Days,” day in and day out, and where she sees an opportunity to correct some of the industry’s current hiring woes.

    Senior Housing News: Tell me about how you got into senior living.

    Sarabeth Hanson: It’s ironic because I went to college and studied elementary education, psych, and business psych. For my first teaching assignment, I was assigned to an urban area in Connecticut. I started teaching, and noticed that one of the students that I had in my second-grade class had a lot of potential, but he needed a lot of direction. I thought that if I partnered with his family at home, that together we could really make a difference in his life.

    I called his mom. She wasn’t so happy to hear from me and basically told me that when he was at school, he was my problem and I shouldn’t worry about what she does at home. I thought, “Oh, man.” I was so disheartened. As luck or fate may have it, I found my way to a therapeutic recreation director position at a not-for-profit assisted living and skilled nursing community in Connecticut.

    Basically, when I was interviewing for the position, the interviewer said, “Your job is going to be to engage the residents, get to know them, have fun, do things of their interest.” It sounded like I could totally have fun. Within a few weeks, I couldn’t believe how much knowledge the seniors had.

    I realized: Wow, they’ve had incredible lives. They’ve done so many things, they know so much more than I do. I was really enjoying working with them. I wanted to do something really special for the residents, so I went to my administrator, probably in my third week, and said, “Listen, I have the best idea. I’m going to do this really cool event: jazz under the stars, I’m going to have all the residents come and bring their families in and we’re going to have the best jazz band.”

    She’s like, “Oh, bless your heart. Let me tell you all the things that are going to go wrong with your plans. It’s spring in Connecticut, so the mosquitoes are terrible. It gets dark right under your stars, the residents won’t want that. Families, they don’t really like to come out during the week. And what if it rains?”

    I said, “I can handle all of those things. Don’t even worry about it.” I got after it and planned for a lovely evening, ordered a tent, had the maintenance director spray for mosquitoes, made sure the chef had a beautiful menu, tortured the families by calling them every single day and reminding them of this very important event that I needed them to attend. We had the beautician come and make sure everyone was beautiful for the evening. As luck may have it, it didn’t rain.

    There you go.

    The stars were out, the music was lovely and it was well attended. People came to my party, so that was good. At the very end of the night, I was bringing one of the skilled nursing residents back. Her name was Dot. I was bringing Dot back to her apartment and she said to me, “Hey, Sarabeth, you know what?” I asked her, “What, Dot?” She said, “This may have been the best night of my life”. I knew then that I was called to serve seniors. There was nothing else I wanted to do.

    What company was this with?

    This was a just not-for-profit stand-alone community in Connecticut. It was not a big corporation; it was run mostly by the city. It was rated at the time as the number-two not-for-profit AL/skilled nursing in the country. It was lovely and it was tiny.

    Shortly after that, we moved to Florida. I was able to find my first position in assisted living. We had three small children at the time; I just had had twins. I’d stayed home for four years with the oldest and then the twins for a year, then I thought, “You know what? I have to go back to work.” Because quite honestly, I was torturing my husband.

    I went and took up what was going to be a part-time position in nursing at an assisted living community. When I got there, I realized that serving residents through being a nurse was a different experience from what I had done previously.

    It was a Senior Lifestyle community. I realized that we were missing out on something. We had so many home health nurses in and out of the building, and we clinically couldn’t keep track of them. I thought, “Wouldn’t this be so much smarter if they reported to us? If we had our own?”

    I wrote a business plan. I went to the executive director at the time and said, “We should really do this.” With several other blessings, I imagine, he said, “Go ahead and give it a try.” I was able to start a home health company for them and it had great success.

    We used it as a marketing tool, we used it for retention, and it also was a very nice product to drop some revenues to the bottom line. I think we ran about a 46% percent margin at the time on the home health piece.

    That launched and then I had started to become noted as a leader, and had the opportunity then to take over as an executive director. Then I had the opportunity to do a startup community. It leased up quickly, and ran for 48 months with zero lost revenue days. It was a great time and a great opportunity.

    Then Senior Lifestyle had acquired some assets and said they’d like me to become an area manager. They wanted me to stay in my role as ED and then acclimate these four new communities to get them on board. I was able to do that, and get four of the five at 100% occupancy.

    More from the Leadership Series

    The [Senior Lifestyle] president at the time said to me, “You seem to have something good going. You’re going to look at our Arizona assets. There are two troubled CCRCs. If you can get those to turn around, then I’m going to admit that you’re pretty good at what you do.” I became a regional [manager] then, and my region was Florida and Arizona.

    I was able to bring those communities around, and got them nicely occupied. Then Senior Lifestyle was looking for a vice president of operations to move to Chicago and oversee work from there.

    I didn’t apply for the position because I lived in Florida. I didn’t want to go to snowy country again. I then got a phone call from the CEO, who said, “I’m so disappointed you didn’t throw your name in.” I told him I’d love the opportunity; I just didn’t want to live in Chicago. We worked it out where I would spend a week each month there. I was mostly on the road, anyway.

    I was promoted to vice president of operations, ran the eastern part of the United States and had 48 communities—everything from CCRCs to standalone memory cares, skilled nursing, AL.

    I had a friend who worked for a REIT that both Senior Lifestyle and Harbor Retirement Associates (HRA) did business with. She had called me and said she had a good friend looking for a chief operating officer in Florida. It was up the street from where I lived, about an hour away. It was Tim Smick and it was HRA. I’d never heard of them.

    On a Saturday morning, Tim and I met for breakfast in Vero Beach and started to understand HRA: Tim as the man, Tim as the CEO, and the culture of the company. Tim was running a company for all of the right reasons, and his company really was based on its core values and its mission. A lot of times, companies have mission statements that they hang on the wall, but they’re really not the foundation of the decision-making.

    Talking to Tim, I began to understand he was really making decisions—making sure that his company remains servant leaders and that we were really focused on the core values of the company and so I thought, “Wow, this is pretty amazing.”

    Taking a step back: What made you think that Senior Lifestyle would let you start a whole new home health company?

    I had no idea. I was naive and I was excited and I saw cash being left on the table. At the time, they had a little sitter service, but it didn’t really work through Medicare, so it was missing all that scaled visit revenue. My big thing was that the residents had four or five different people in and out of their apartments in a day because different agencies would send inconsistent nursing staff.

    Ultimately, it was our responsibility to make sure the residents were being cared for. When I did some homework on it, it really wasn’t that difficult to get a license. I thought it was a no-brainer.

    It seems like you have an entrepreneurial spirit.

    Yes, I do. It’s funny because I don’t think of it that way, I just see opportunities and I think: “How can I make this work?” I think that’s been a big part of my success—that I’m able to identify opportunities. It could be something I noticed in a resort or a school and I think “How can we adapt that to meet the needs of residents on our community?” It’s not so much that I’m creating ideas from scratch; it’s really that I’m seeing them and then being able to transform them into something that would work in senior living.
    Let’s go back to the conversation with Tim. Where did you have breakfast?

    We went to the Vero Beach Resort and we ate at Cobalt, so we were having breakfast and having this great conversation. Honestly, I had met with several other CEOs of other companies throughout my tenure with Senior Lifestyle, and I was very appreciative of Senior Lifestyle. It gave me so many opportunities and they trained me to be able to excel at higher levels. I didn’t think that I had reached my max potential with them yet and I never had any thought that I might make a career change. I had met with others and they made offers, and my take was, “No, I was just really meeting with you to figure out how you’re doing things, how I can incorporate some of that…how can we do it together better, because at the end of the day, there are enough residents to go around and if we’re all here to be servant leaders then why can’t we share best practices and good ideas?”

    Fair enough.

    I had done that before, so then I was meeting with Tim and I was thinking during breakfast that “Man, this feels like a really good fit.” Our values are aligned, and it was an hour and 15 minutes from my house to his corporate office. Things feel really good, right? We’re talking and all of a sudden it’s lunchtime and the lunch crowd is coming in. I was walking down thinking, “Oh man, this could be a really big decision.” Then I go out to my car, jump in and I have a parking ticket and I’m like “All right, what’s with the mixed signals? Come on!”

    As it turned out, two months later I joined Tim’s team. At the time, we had 17 communities. We’ll open our 31st next week.

    When Tim approached you for the COO job, was it always the plan to have you be COO for a while and then take over the CEO position? Did he pitch that to you?

    Yes. During that first breakfast we talked about the fact that he was 60 and he had made a commitment to his wife that he would enjoy some retirement time. When he got to 65 or 66 years old he’d be looking for that, and that he wanted the COO he hired to be his successor.

    From day one, I started to lay the foundation for the direction that I would like to see it go. It was fantastic because Tim’s goals aligned with mine, as did the other officers on the team. At that time, in 2012, we were just starting to come out of the Great Recession, and in my second week, we broke ground on our first new development project. We thought maybe we would do one or maybe two communities a year through development. I was really able to get in there and program the space and come up with some unique concepts and decide really what is the best layout and design.

    Together with the chief development officer and the rest of the team, we were able to put some cool things together. As it turns out, this year we’ll open nine communities and we have ten opening next year, and 32 in the pipeline for beyond that. Our plans escalated a little bit, so with that I was able to build an infrastructure of team to support it, and now we’re in the market with a little acquisition activity too — because the infrastructure’s there and it also will helps us grow territories and regions. We’re very careful in our development about understanding the operational intensity of our business.

    How did Tim approach you to say: “Okay, you’re ready for the CEO role?”

    We had been working toward it.

    Did he give you a timeline? Or was it just, “When you’re ready, I’ll tell you.”

    Five to seven years was going to be his timeline, and his thought pattern was that he would stay on as chairman and managing partner because he loves what he does and he’s passionate about the company and who we are. But he was hoping to take vacations, take a couple of days off during the week and not necessarily be in at eight o’clock every morning.

    Last year we did a dividend recap, so Tim was able to diversify his portfolio a little bit. At the closure of the recap, that was the starting point for me to be able to take over. Like everything else, it didn’t go as quickly as planned. We originally thought maybe it was going to be last June… and as it turned out I was at a Christmas party at Tim’s house, and I was with my husband and my daughter was with me and he was introducing me to his friends as the new CEO as of the first of the year, I thought, “I guess that’s our start.”

    My husband looked at me and he goes, “You are?” I go, “I guess so.”

    Did anything change when you took on the CEO job?

    What we put our efforts into is anticipating needs and offering residents experiences that they didn’t expect to have in an assisted living or a memory care community. You have to understand that in the case of our customer, there’s two of them. It’s the 53-year-old firstborn daughter who is a part of the sandwich generation, still raising her children, has a career, and now has aging parents that need more than she can do. She’s positioning herself to make a purchase for her parents that is the most expensive purchase she’s ever made, that she has not wanted to make. Then, there’s the 84-year-old senior who is in the fight of their life for their independence.

    When you ask the daughter, “Hey, what are you really looking for here?” the answer is: “Safety. Second, safety. Third, safety.” You ask the resident, and the answer is: “Independence, independence, independence.” When you realize that these two things are pretty far apart, how do you bring it together and make everybody feel good about this decision at the end? We’ve done that through hospitality, through offering choice—the choice between dining in three or four different restaurants.

    We spend a lot of time, attention and resources on creating the best programs we can, creating what we call “Best Days.” You know that day that you’re so excited for two months from now? You’re going to be doing three of your favorite things: travel somewhere…spend the day at the beach…going to go out to this really super cool concert that you’ve just been dying to see. You wake up in the morning and think: “Yes. Today’s the day. I’m so excited.” Well, that’s the day we try to create for our residents.

    How much of this comes back to when you created that jazz night?

    It’s a lot like that.

    Sarabeth Hanson, Harbor Retirement Associates

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    How do you scale it?

    I think you scale it by hiring people with heart. The first thing for me is hiring a team that has the heart to want to make the difference. If they have the heart and they want to make the difference, we’re going to figure out how to make it happen. It doesn’t all have to happen in the same grand scale. You could make the biggest difference simply by closing somebody’s blinds in the evening or setting a new program that changes things for them.

    Part of what we really focus on, as a company, is our leaders at the community level are really the CEOs of their businesses. They are encouraged to be innovative and a little disruptive in what we assume assisted living should look like. They’re encouraged to share their ideas and best practices. They’re also, on the flip side of that, held accountable. You need to know when it’s time to pull up and say, “Okay, gave it a try. Didn’t work out,” but you need to then say, “I own this.”

    Give me the example of how you expect them to be disruptive.

    We have a community that was one of our first to introduce multiple dining venues. What we found was people are creatures of habit, and residents were going to the main restaurant every day and sitting in the same seat with the same three table-mates that they had since the day they moved in. We had three empty dining venues, and nothing was changing.

    We have a community that was one of our first to introduce multiple dining venues. What we found was people are creatures of habit, and residents were going to the main restaurant every day and sitting in the same seat with the same three table-mates that they had since the day they moved in. We had three empty dining venues, and nothing was changing.

    Together with the executive director, we came up with the “Chef’s Fare” program. Included in the rent, residents received a set number of dining dollars. That main restaurant had the meal that was included in the rent while the other venues had a small upcharge for the a la carte options. The Great Depression babies are more frugal and they were thinking, “I’ve already paid for this meal in my rent. Why would I pay three more dollars to get a cappuccino at the bistro? It doesn’t make sense.”

    We created the Chef’s Fare program where they, in their rent, would save a certain number of dining dollars to be used at any of our dining venues. That was very disruptive. You don’t find that in assisted living. There was a lot of pushback from a lot of people. We had to do a lot of educating to get the regulatory agencies to agree to it.

    The states were saying, “You have to provide three well-balanced, nutritious meals.” Those are available, but we were also offering choice. The states were having a little bit of a struggle with that, thinking we were trying to find a way to not provide those meals, but, in fact, we were actually trying to provide more options.

    It was disruptive. It took a lot of time for that program to be understood not only by the regulatory agencies but by the consumers. We got them to understand that even when they went to their daughter’s house for dinner on Sunday they hadn’t lost anything; they could keep the dollars so the next Sunday they could host their daughter. Or they could go to our wine pairing dinner. The dining dollars were going to cover that.

    All of a sudden, those very frugal people started to say: “Wait. I don’t have to get up and have that big, full breakfast if I don’t want to? I could grab a freshly baked blueberry muffin and a cappuccino at the bistro and then have a nice lunch or have surf-and-turf one night during the week?” That was pretty disruptive. We had to be brave in doing it. We had to stick to our guns.

    Do you think this comes back to providing an individual customer experience?

    Absolutely. It’s about anticipating their needs and understanding them. We’re not only doing that through our hospitality program with dining but also through life enrichment. It really is understanding, “What is your ‘Best Day?’ How do we make it?”

    We have found that really understanding our residents and what they want is creating the Best Days for more than one person at a time although we’re featuring somebody at one time. I really can relate to that, given I have an 83-year-old mother. She looks independent and still lives at home. She wants to do what I do on the weekends. She does not want to sit and play bingo.

    She wants to go to shows. She wants to go to my kids’ sporting events. She wants to go out for a nice dinner. She also wants to go eat a chicken wing at the local sports bar. For a long time, we thought our seniors wanted a pastoral setting where they could sit and watch the grass grow and play bingo on Tuesday. We have found that to be very different.

    Do you have other types of properties aside from the high end?

    Yes. We have “classic communities” that include 15- to 20-year-old studio apartments. We just repositioned two of those in South Florida. Along with our partner, we were able to provide a lot of the choices and the amenities that we are able to put into our new communities and reposition these buildings to have those same things.

    Now, they have a beer and wine license, a grab-and-go bistro, and really great sundry stores. They have three different dining venues. They have a large programming space that can be divided into different smaller spaces. Our focus is to be doing parallel programming all the time because one size doesn’t fit all in programming.

    In the future, is your focus on the high end?

    Yes.

    Why did you make that decision?

    I think to offer that level of amenity and that level of staffing and that level of choice, hospitality, life enrichment, Best Days…you need to be at the price point where you could still have your margin and create that environment.

    We’re going after the top decile and we are not bashful about that. We do have our classic communities that are not in that same price point. You have to know your market and you have to know your customer.

    There’s occupancy pressure right now with all these new buildings being developed. Does that worry you?

    It does. Not so much for our new development, but more for our classic communities.

    LEADERSHIP

    What’s your definition of leadership?

    I define leadership as creating an environment where the people want to follow you. Setting the example, setting the tone where people are attracted to you and what you’re doing, and are eager and wanting to follow.

    During your senior housing career, what’s the biggest challenge you’ve faced?

    My biggest challenge is continuing to attract people with heart — being able to sniff out those with true heart. For me, it’s resisting that urge to say, “This is good enough,” and holding out. If that means we have to do it differently than we had planned to do it, then that’s what we have to do.

    It’s continuing to resist the urge to hire somebody a little better than mediocre and waiting for the right person.

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

    The biggest risk I took was making the leap of faith to join HRA. It was a much, much smaller company. There had been C-level turnover. Tim had just bought his partner out, and I was in a company that was growing, stable, where I was respected and upwardly mobile. I knew that and took the leap of faith to join a smaller company where I felt that I could have a very big impact and where I felt that we could take it to the next level in a rather swift period of time.

    What was Tim’s pitch to you to have you come join?

    That’s the whole trick, it wasn’t a pitch. It was him telling this story about who he is.

    I’d been with Senior Lifestyle for 14 years, I’d grown up through their ranks and knew everybody, from [CEO and Founder] Bill Kaplan to care partners—I knew everybody in the mix.

    When I joined, it was a very hard decision because I’m a very loyal person, but when I made the decision and I joined HRA, what Tim had told me was that he was in the business to make a difference, which was exactly the words I had used. We talked a lot about servant leadership, which was exactly the words that I used.

    Servant leadership continues to be something that’s brought up among leadership in this industry. Why do you think that is?
    It’s a biblical term, and at first I was more careful about using it, but really it’s the golden rule.

    We can’t be successful in our business if you don’t have the heart for it, and if you don’t have the heart from the top, you’re not going to attract the heart throughout the rest of the organization.

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

    The best piece of advice I received in my career came from my father, who told me not to be afraid of taking a risk, and not to be afraid of sharing my opinion. I remember at the time talking a lot about it, and I don’t often talk about being a female in leadership because to me that doesn’t make a difference—leaders are leaders. That’ll be what it is, but my father telling me he was an executive at Sikorsky and Pratt & Whitney in the engineering side, and he said to me, “You know, women often are too quiet. You’re too smart to sit and be quiet. You let people know what you’re thinking, you let people know your ideas.”

    The best piece of advice I received in my career came from my father, who told me not to be afraid of taking a risk, and not to be afraid of sharing my opinion.

    It took me a little while to believe that that’s what I should really do, but then once I realized that I did have some good ideas and I was thinking of some things that others were not, it really has served me well.

    Would you consider him be your mentor in your career?

    For sure, my dad was my business mentor. He has since passed but he was always the person that I would call when needing to have a sounding board on a decision that I was making. He was not in the business, but he was a businessman, and he would always say “business is business.”

    The way you described starting the home health business, doing the jazz night, all these different things, it sounds like you are entrepreneur. Is that a fair observation?

    I think so, yes.

    Any desire to start your own company one day?

    This is my own company!