Meet Thomas Wellner, president and CEO of Mississauga, Ontario-based Revera. The company is an owner, operator and investor in senior living with more than 500 properties across Canada, the United States and the United Kingdom, including ownership of a 76% stake in Sunrise Senior Living. With a background in healthcare through previous roles as co-CEO of LifeLabs, and president and CEO of CML HealthCare, Wellner brings a non-industry perspective to his senior living leadership, which began in 2014.
We sat down with Wellner to learn about Revera’s approach to its partnerships, how the company is using technology to solve modern day management challenges, and why it’s always important to stay practical—in business and in life.
Tell me about how you got into senior living.
I have been in the space for two-and-a-half years. I am a Canadian, but I have worked globally for most of my career. Two-and-a-half years ago, I was running a large publicly traded healthcare business called CML HealthCare. It’s basically a smaller version of LabCorp and RadNet together. I was brought into that business to lead a transformation, and we re-focused ourselves on our core strengths in the lab business ended up [merging] the business into one of our competitors called LifeLabs, which is owned by the Ontario Municipal Employees Retirement System—one of the large pension funds in Canada. Through that we did well for shareholders, and I was asked to stay on as co-CEO, which I did for a period of time. Then I got connected to Revera through a reach out; initially, I said “Thanks, but no thanks; I’ve committed to do this transition.” Then they came back and I met the chairman of Revera’s Board and realized it wasn’t just a real estate business; I realized it was much more of a people-serving-people business.
Did you really know what it was when they approached you?
No. One, the branding and the focus was not clear at the time. Two, the sector is relatively underdeveloped so far, and three, it seemed like more of a real estate business—and I’m not a real estate guy. It’s a combination of healthcare and hospitality and real estate. There’s a lot of strength in our understanding of real estate both by our owners, and I can bring a bit of a balance to the mix. It attracted me because I’ve always worked in health-related businesses and it seemed very compelling; you have to be empathetic to want to care and serve elderly people and their families, so that part appealed to me. I like to operate businesses, and I like to invest.
You stepped into a company that operates in three different countries, too.
How did you get up to speed?
I think the product in general is probably the quickest part of it. Certainly we’ve done a lot of work looking at the needs and wants, especially of the boomers segment, and what the retirement communities of the next 10, 20 years are going to look like. That was a natural place for me to learn, and we did a lot of trying to figure out what our strengths and weaknesses were and really looked at it strategically. So that was one part of it. The second part was around redefining the focus of the business.. We were an owner and operator of retirement and long term care assets predominantly in Canada We had done a lot of work to build in more capabilities and re-inject some capital. We’ve been focused on shifting from a predominantly publicly paid business to driving private pay. We’re now an owner, operator and investor in senior living with an international footprint spanning Canada, the US and the UK. We’ve gone from being a 100% owner of real estate to expanding our reach by bringing in partners like Welltower and others to jointly own the real estate, while we retain operations.. We’re focused on growing our Canadian retirement business. We did the deal with Welltower to acquire the Sunrise Senior Living Management platform.
You came in right when it closed, right?
Right. It closed two weeks after I started. So that was one of the reasons it attracted me, actually. I could see the benefits of that [deal]. We’re taking steps to really be an asset manager for investment into the aging demographic. Our preferred model is to operate when we know the jurisdiction. We’re happy to fund developments; we drive acquisitions, but look for partners. In the U.K. as an example, we got into the U.K. through our investments in Sunrise, then we acquired part of Gracewell with Welltower, and we continue to work on that model. Then we’ve added in a lot of innovation to what we’re trying to focus on, to try and differentiate ourselves.
Coming from outside the industry, do you think you bring any strengths to it, not knowing what the product used to look like?
I think you come in with a completely fresh set of eyes. I’ve always worked in a regulated environment, [whereas] a lot of retirement still is [unregulated]. [Having regulation for] SNFs and long-term care is natural. You really have to understand the hospitality part of things. Even though I haven’t worked in a hospitality business, early on in my life, putting myself through university, I worked in restaurants, bars and pubs, so hospitality is part of the mix. I get that.
The model you’re describing sounds very hotel-ish. Is it a challenge to own different brands in different countries?
Even in Canada we have multiple brands because we have an excellent joint venture partner with our Quebec portfolio called Réseau Sélection. We’re the majority capital partner, but Réseau is the operating partner, and they do a great job of development as well as operating our sites. They manage and shepherd that brand in the province of Québec. It is a very distinct market, and we’re looking to do other things with Réseau. In the U.K., we manage multiple brands. It is a challenge, especially when you get into operating models. I think if you have a very fixed operating model, if you’re doing assisted living and memory care, and you’re staffing and operating it, and [then] you bring in a brand that maybe is more independent or more mid-market, it’s hard to have the same staffing to operate that brand. I think different operators fit different brands better, at least in what I’ve seen. What we’re trying to do in Canada with the Revera Living brand is really focus on consistency in the core set of services we offer. We’re really focused on catering to the needs of the mid-care resident. We do care well, but it’s a holistic wellness approach, so [we provide] exercise and nutrition along with clinical care.
It’s a higher end product though?
Yes, it is. But we’re trying to get the consistency across the networks. Even though we may not have homogenous sites or locations, we’re fixing some of that through divestments and/or invigorating different communities and reprogramming. As we develop more and acquire more, we have a particular location and a particular set of expectations around finish and focus that we do. Then we can put in our operating model and strive to drive the consistency so that we can take advantage. We’re 100 retirement communities, roughly, in Canada; I believe we should be about 300 once we get to scale. If you don’t have your operating model consistent and you don’t have your core set of delivery activities and programs happening, it’s harder to do that.
I’m curious if the Sunrise acquisition is to help that, because they’re what, 300 communities?
Yes correct, they’re 310 in the U.S., and then in Canada there are 15 Sunrises: three in Québec, and 12 outside of Québec. So there’s also an opportunity I think for us to grow Sunrise in the Canadian market and certainly the U.K. market. We’re doing that through the Gracewell pipeline and other development activities.
Sunrise has remained pretty quiet. I know they’re active, but they’re not a cheerleader of their own activity.
Sunrise in the U.S. is extremely good at running their Sunrise operating model. The other thing is, we’ve been doing a lot of developments. Some of them have been stalled but re-invigorated, and they’ve actually done very well. They’ve done a couple of acquisitions of small portfolios recently, in high barrier-to-entry markets at great locations with difficult zonings. That core capability is strong at Sunrise, and I think the team is doing a great job.
More from the Leadership Series
Sounds like exactly what [Welltower CEO] Tom DeRosa wants to buy.
Exactly! Tom and I have a great dialogue about that. The Midtown Manhattan project has been very exciting for both Tom and Sunrise to be involved in.
Which market do you see the most opportunity in?
Of all the markets, we’ve still got a tremendous opportunity for growth in Canada. We know the market well, and we [also] see great growth in the U.S. in assisted living and memory care.
Do those products exist in Canada?
Standalone memory care is not as common as in the U.S., but there is an emerging market. I think the market is going there. For us, the opportunity is really—and the U.S., especially, is solving—the tax-related opportunities to make the U.S. more of a tax-efficient place for us to invest. Once we do that we’ll be able to more aggressively [invest there]. In the U.K. we’ve also been growing and continue to see growth opportunities, both through acquisitions [and also] development pipelines coming on with Gracewell and some of our investments with Signature Senior Living. And we continue to work with our partner Welltower. The U.K. we see as a very good market. We paused a little as did everybody with Brexit, but we think we have a very strong offering in the upper high-end of privately paid retirement in the U.K., with great locations in and around London and southwestern U.K., so it’s a very good place for us to be.
I can only imagine what the rents must be in London…
They are tremendously robust. As with everything there.
Revera has a close relationship with Welltower. How did that relationship form, and how has that been an instrument to your success?
It’s been a great relationship. I worked for Eli Lilly for many years, and after Eli Lilly I wanted to get an opportunity to work in private equity. I worked for three years leading a business that was owned by a very aggressive private equity group that focused on distressed situations similar to the Cerberus model. I guess the point is, the alignment of values is very important. I think Welltower’s values as a midwestern-based company very much aligns with the values we have in Revera generally. When you’re making decisions, there’s a financial lens you put on them, and then there’s a market opportunity lens, there’s a people lens and a value lens, and I think that makes it easier to make the right decisions. .
Let’s talk about leadership a little bit. What’s your definition of leadership?
My definition of leadership is identifying your strategy and proactively going after it. It’s stepping forward as opposed to waiting for things to react to. I think that’s one of the things I’ve tried to stress in our business as a leader, trying to be a leader myself, if I look back, sometimes I think things hit us on the windshield as opposed to us actually going out and getting them. I think we’re trying to shift the business to be proactive, to be out there. A lot of what we’re doing in our thought leadership activities– I’ve done a lot this year in the Canadian marketplace, speaking out on ageism; we do a Revera report on ageism. We have another ‘CEO’ at Revera, Hazel McCallion, who’s the longest serving mayor in North America. She’s won eight or nine terms, she’s 95 years old, she’s the former mayor of Mississauga, and she’s extremely well known in the Canadian context. We brought her in as our Chief Elder Officer. Hazel is passionate, she’ll talk to residents in a way that I can’t. She’s not very shy about telling me what’s working and what’s not working.
As far as leading, I like to invest in entrepreneurs and I like technology, and so with bringing technology into the space, there are so many opportunities for us to do innovative things. We’ve basically set up a small team with a Senior Vice President of Innovation, and we have the Revera Innovators in Aging Program. We committed $20 million over the next four or five years to invest in innovations that we believe will affect the residents, their families or our staff. We’ve looked at wounds, falls, incontinence, communications, among others. So [we look for] anything we can do, whether it’s scoping out a light path at night for the resident to find the bathroom, or this sensor that basically predicts changes in gait so you might know earlier on and be able to predict a fall.
I’ve used the example of my own grandmother, who’s 96 years old and was highly active. She drove until she was 90; she gardens. She was out at her cottage [one day] and fell off of her deck when she was 93, broke both her clavicles, ended up in the hospital, had both of those fixed, then had another fall, broke her hip, had that repaired, and now she’s been in a wheelchair in a nursing home. I think if we’d been able to better predict her likelihood of falling—she’s somebody who could have been very independent for a very long time. Any of those things can make it better.
Were you surprised at the lack of technology adoption when you came into this business?
Correct! Again, it’s a very heterogenous space. There are some groups I’ve seen, and some examples in the SNF space– a lot of what I saw in the [Genesis] PowerBack [Rehabilitation] sites that I visited in New Jersey early on, with hydrotherapy and other things, there’s some good technology there. They’re sporadic. Anything in robotics, as an example, if we can take repeatable tasks, and get those so that they’re done robotically, then we can have our care workers concentrate on our residents and the emotional connection, working with the families. Anything we can do to help that, we’ll have much better resident satisfaction, much better family satisfaction. Right now because our systems and processes aren’t as robust as I’d like them to be, we’re spending too much time on lower value things. That’s what we’re trying to use technology innovations for.
During your time at Revera, what’s been your biggest challenge the organization has faced, and how did you overcome it?
The biggest challenge we’ve faced is we’ve really had to transform the business. We had a home health business that was publicly paid; we had a specialized nursing business, predominantly publicly paid; we had a variety of sub-optimal locations in our retirement business. We’ve done almost $4.6 billion worth of transactions to shift that focus. That’s been fun, it’s been energizing, but it’s not been easy. The team has done an excellent job. That would be one thing. The second thing I guess would be the big challenge on getting people to really understand and embrace the future focus for how we want to run our retirement business and the benefits of driving consistency across our network, and what things can be locally flexible to allow for a tailored, individual approach to each resident’s needs. We’re still on a journey to get that right, but operationally, that’s probably one of the bigger challenges.
You continue to allude to technology as a key to helping the business… Is that fair?
A lot of technology holds us back from doing a lot of these things as well. But it’s not the only thing. This is a people-serving-people business, and there are so many little things and behaviors that you have to model and you have to reward, and again, it’s a very dispersed network. You have the exact opposite issue that a hospital has where everything is in one spot. We’re operating and we care for 50,000 seniors each day across three countries at 500-and-some-odd communities; it changes relatively frequently. It’s trying to get that level of connection. Even using technology to connect and communicate with our care teams is a huge opportunity for us. I could visit five communities each day and it would take me five years to get around to all of the sites. You have to figure out ways to do that, but also enhance that with technology.
What would you say is the biggest risk you’ve taken in your career?
I think taking this on was a pretty big risk, but I look at everything as an opportunity. I always enjoy change. I did well with Eli Lilly; I’ve done well with the private equity life and with CML, and I was planning to hang it up, but I like running businesses and I like an environment that has a fast pace to it. This is a noble place and a noble sector to work in. If we can make any changes to enhance the ability for all of us to age robustly, I think that’s a great space to be in.
What’s the best piece of advice you’ve gotten in your career?
Stay practical. One of the things I wrestled with early on in my career was, I started out of university with an undergraduate modern science degree, thinking I wanted to do medicine or research. I found part of the way through that neither [option] was what really turned me on. I come from a family of business owners and investors, so when I finished university I just wanted to get out and get a working experience, and I wanted to do something internationally. A guy named Jim Morton who was a human resources VP at Eli Lilly gave me the advice to just continue to get as much practical experience as possible. Everybody learns differently, and I like the practical. It’s the same for learning real estate. I learn real estate every day.
You talk a lot about innovation, then you say your best piece of advice is being practical. So you have to find that middle ground?
It’s like decision making. Some people will tell you you have to use analytics, and if you don’t combine that with intuition you’re not making the best decision. Neither skillset will give you the best on its own. When I make decisions, I try to look at as much of the balance of both as I can. Can’t just be a gut decision; it has to be combined. If you can do both, you’ll make some great decisions.
Who would you consider to be your mentor, and how have they helped your career?
There’s a gentleman who I have stayed in contact with, he was a guy named Bill Ringo who was an executive at Lilly for many years. He’s left Lilly and had a very successful career running corporate development at Pfizer; [he] successfully exited a number of biotech companies and he’s been somebody who I find very, very insightful. But every day, I learn every time I talk to [Welltower CEO] Tom DeRosa.
There are lots of great people in this industry. We have a very good board at Revera as well. I’m on the board of two public companies and a couple of private companies I’ve also invested in. I find that I learn from a lot of the board members. Our investment committee chair is another guy [I’d consider a mentor], Dr. Cal Stiller. Cal is one of the fathers of stem cell [research] in Canada; he’s a physician, but he’s also a highly successful entrepreneur. He’s owned and operated nursing homes, he’s on the board of a number of very forward-thinking tech companies. He was one of the founders of MaRS [Discovery District], which is an innovation hub in downtown Toronto. He’s been very supportive, very helpful and gives great advice.
There was another gentleman on our board who’s no longer on our board, named Charles Jones. He’s the managing partner of a group called Bedford Funding. On the investments side, I’ve always enjoyed Charles’ perspective, and he helps me as I think through things, through an institutional investor lens. That’s probably one of the big learnings I’ve had. I’ll tend to approach things, like innovation—I like the practicality of operations, but an institutional investor lens is very important. I’ve worked with pension funds, I’ve worked with partners like Welltower, where you can understand how an institutional investor sees a particular deal. That’s something I think I’ve needed to learn, and it’s some good mentors or examples.
How important do you think technology is for senior living providers today?
Today it’s important, but I think every day that goes forward it’ll become critically important. We need basic things like billing, staffing, communication. All of those things should be much more automated than what they are. If you look at where the hotel industry was 25 years ago, we’ve still got a lot of catching up to do.
What types of technology investments do you think are crucial for operators to have?
Operators usually start where they can concentrate in a particular geography, and they might have one home, two homes, three homes, eight homes, 12 homes—there seems to be a magical number of 25 or 30, and then the wheels start to fall off the wagon, because you don’t have back-office processes, people or scalability. To me, that’s when you start to jump in with technology. Getting the right core IT systems, the core care systems, the core billing systems that fit your scale both where you’re at today and where you’re headed is important.
To get through our filter, technology has to directly impact the resident, the care worker, and the family. That screens out a lot of things. Then we put up a financial screen to say, “Does that technology today have a client similar to somebody paying for it?” If it’s still a pilot or research project, we screen it out. So of the 103 we’ve looked at, we’ve screened out a ton of them because of that. Then it’s a matter of, will it scale? Is it something where it’s easily trainable? Easily rolled out and doesn’t require customization? That screens out a lot [more]. Then we get to ones that really fit our network and our needs. Then we can talk about whether or not, at that point, it’s something we just want to use, or if we want to talk to the entrepreneur for the company about potentially helping them with a capital investment or some kind of convertible process that allows them to scale. If we can scale the technology across our network, that can often create a market. We’ve piloted a lot of these technologies, and we’ve found the best companies tend to be the ones who are not rigid in the way they pilot things, that they’re actually learning and adjusting as they go.
I’ve almost become cynical with all of the pilots. We get so many press releases and I don’t think we’ve ever gotten a follow up press release that they’re rolling it out in a region or across all of their communities, isn’t that crazy?
Yes, I agree! It is.
So why are you going through all this work to have a pilot? Just because it’s free?
Some of them are. When I first joined Revera, I remember our first step was actually cataloging what I call “skunk works” projects that were going on. We had, I can’t remember the number but it was like 180 or 200 different little projects, and those were just the ones that we could get people to tell us about, and they were ones where the director of care or executive director or culinary lead on their own had an idea. At least now we’ve started to catalogue these things, get some of them stopped, and then try to get them so we can scale up and roll out. For us, the big thing is making it work across the network.
You have a lot of communities.
It’s a heterogeneous portfolio, but when you’re rolling things out, you have to be good at it if you’re going to get any value. Or break out and get out and agree that it’s best just done, which I don’t believe.
What do you think the driving force is going to be for operators to finally embrace technology in this industry?
I think it’s going to be around; it may be a push or a pull. Because we operate both long-term care and retirement in Canada, [I’ll use] PointClickCare as an example. Because of the regulations in long-term care, we were one of the early adopters of PointClickCare. So I don’t think it’s necessarily going to be because of regulation. I think it will be that clients, families and care workers are demanding it. I think you’re going to see the space become even more competitive. I think you’ll see examples, and people will either lead or follow. If you’re a fast follower that’s not a bad place to be either. If you can be a fast follower, do a better job with executing technology across a network and innovation across a network, you’re going to do extremely well.