Welcome to another episode of The Playbook with Mark Collier, an original ASBN series that highlights Atlanta’s emerging entrepreneurs, seasoned business owners, and resource experts. Mark Collier is an experienced business consultant in Georgia, and a faculty member with the University of Georgia Small Business Development Center.
On today’s show, Matt Pletcher of Optimist Senior Living shares his story of meeting pandemic challenges head-on, and his strategies for successfully navigating turbulent waters in the economy.
Transcription:
Mark Collier:
During last year’s pandemic of 2020, a few sectors were under as intense scrutiny as the senior living market, which includes both nursing homes and assisted living facilities. There were widespread reports across the country of senior housing facilities with high numbers of both COVID infection rates and unfortunately deaths among our beloved elderly populations.
Mark Collier:
I’m joined today by a successful operator in the senior housing industry. And he’s going to share his story of meeting those pandemic challenges head-on, and his strategies for successfully navigating through those turbulent waters. Matt Pletcher of Optimist Senior Living is an industry leader in both the development and management of senior living communities. Welcome into The Playbook, Matt.
Matt Pletcher:
Good morning, Mark. How are you?
Mark Collier:
Good deal. Listen, before we delve into some of the particulars of last year, share with me and The Playbook audience your unique approach and business model in your senior living communities, and why optimists is an industry leader in the middle market segment.
Matt Pletcher:
Well, Mark, it’s a very broad industry and we found a position right in the middle where we’re most comfortable producing properties that are luxurious by most standards, but are affordable.
Mark Collier:
Okay.
Matt Pletcher:
And when I say affordable, I don’t mean actual affordable housing, which is a different sector completely. We stay away from the government sector.
Mark Collier:
Okay.
Matt Pletcher:
And our average resident is a pensioner, a middle-market pensioner, teachers, letter carriers, retired military. We even have an LPGA golfer in one of our facilities. So, we make them affordable to that market. And what that does is it makes us extensively recession proof.
Mark Collier:
Okay.
Matt Pletcher:
Pensions don’t go away when the economy goes down, nor does social security. So, our average resident has a pension and social security. And they’re pretty easy to find with 10, 12,000 of them retiring every week at this point, in the United States.
Mark Collier:
Wow. So you’ve got 10,000 retirees nearly every single week in the United States. That’s a fantastic number and a phenomenal upside for the senior market.
Matt Pletcher:
Well, it’s a crazy number. And honestly, we’ll never be able to meet the demand.
Mark Collier:
Yeah.
Matt Pletcher:
If we had a thousand construction companies across the country and we were building a new facility every week, we still couldn’t keep up with it. So we’ve found that marketing in the areas where we have built in the past, we have obviously the reputation.
Mark Collier:
Right.
Matt Pletcher:
But we also have a pretty good domestic … I guess it would be a captive audience.
Mark Collier:
Yes.
Matt Pletcher:
A lot of people in the Northeast where we build don’t want to leave the Northeast, which for me, as a Chicagoan, is crazy because I want to get out of this weather. But they want to be around their kids and of course their grandkids.
Mark Collier:
Right.
Matt Pletcher:
So, we fill a space there as well. However, now we’re about to move into the Florida market, where we believe based on the numbers and the demographic studies that we’ve done, and based on the influx of people to Florida and Texas and Louisiana and Alabama market, Georgia, Carolinas, everybody wants to go to a warmer climate– who doesn’t have the grandkids to keep them young.
Mark Collier:
Right.
Matt Pletcher:
So we’re going into that market and we think we can stabilize properties a lot more swiftly, which makes the properties more valuable more quickly. And allows us to either exit or retain a better profit margin going forward.
Mark Collier:
Makes perfect sense, man. And I’ll tell you another thing, a good feather in your cap. While many senior living facilities and communities last year were experiencing a surge in both COVID cases, and oftentimes, unfortunately, deaths, you were able to beat the industry averages in both categories by a wide margin. So detail some of your successful strategies that you implemented, which enabled you to keep your valued residents safe.
Matt Pletcher:
Well, first of all, I’d love to take total responsibility for the moves that we made. They are the brain child of two of our leaders, the guy that leads our management company and then the president of Optimist, Fred Milky. The two of them decided. When things appeared to be going rapidly downhill with COVID, they pulled the trigger and said nobody in or out. So at first, we were faced with extreme friction from the families. They wanted to see their parents. They wanted to see their grandparents.
Mark Collier:
Absolutely.
Matt Pletcher:
And we took a very firm stance, and as difficult as it was, we closed the doors. We also sent home a lot of employees who had spouses who were first responders, who were emergency room doctors, nurses, medical technicians, pulmonary technicians, all of the people that we’re going to be and who were already were, but we’re going to be on the front lines of the fight against COVID.
Matt Pletcher:
And what happened was miraculous. My partners are quite– We, we had one case.
Mark Collier:
Wow.
Matt Pletcher:
And that case– Yeah. I mean, it’s a little bit of dumb luck, right?
Mark Collier:
Yep. Yep.
Matt Pletcher:
We certainly thought we knew what we were doing. The guy that leads our management company is an elder care attorney in Massachusetts.
Mark Collier:
Okay.
Matt Pletcher:
We don’t want to go a foul of anybody’s family.
Mark Collier:
Sure.
Matt Pletcher:
Forget the laws. The laws aside, they are what they are. And we obviously follow those regulatory guidelines, all that kind of thing. But we’re not in this business to become zillionaires.
Mark Collier:
Correct.
Matt Pletcher:
We’re in this business to provide a valuable service for a vastly underserved population in our country. And is vastly underserved, as we said, primarily because so many people are retiring. The baby boomer population is a large population.
Mark Collier:
Yes, it is.
Matt Pletcher:
They’re retiring at vast numbers. So in order to protect them, we made that decision and boy, oh, boy, people were very angry early on. But I’ll tell you what, Mark, since then we get letter after letter after letter. They stop us when we’re in our facilities and thank us. And I don’t want to break my arm patting myself, or patting the guys on the back, but that’s a pretty good feeling. We’re doing some things, right?
Mark Collier:
It is.
Matt Pletcher:
Additional to that, one of the things that’s pushed us in a direction of maybe changing some policies going forward, we’re looking at a whole bunch of new technology. And some of it is not widely available commercially yet.
Mark Collier:
Okay.
Matt Pletcher:
A lot of it is stuff that’s been used in the … call it the intelligence world, or for, let’s say, tracking people in crowds.
Mark Collier:
Okay.
Matt Pletcher:
We can pull somebody’s temperature. With one of the new technologies we’re considering, we can pull somebody’s temperature, an individual’s temperature, from a crowd of three or 400 people in an instant. Those are some things that we think that the industry is going to move toward.
Mark Collier:
Sure.
Matt Pletcher:
There are a lot of things being done. Sanitation is sanitation. We keep our facilities very clean anyways, but if we can do it even better without … we don’t want to risk anybody’s health.
Mark Collier:
Right.
Matt Pletcher:
If you put stuff on your hands every day and kill all the germs. For young guys, like you and me, we could affect our immune systems– in a negative fashion. We want to push people outdoors.
Mark Collier:
Yeah. Yeah.
Matt Pletcher:
The best thing to fight anything that’s an illness is that glowing ball of fire in the middle of our solar system, because it gives us its vitamin D. We don’t have a cold and flu season. We have a less vitamin D season in the Northern hemisphere. So, we look at those things, and look at potential walkthrough bits that we can put right at our front door, that are using UV and electromagnetic and all kinds of things. Again, stuff that was previously used in say an Intel and security type of scenario.
Mark Collier:
Right.
Matt Pletcher:
And those are the guys that we’re looking most closely at, because they’re innovative like us, although they’re more innovative, I think. But those are the guys that we can take their stuff, practice it, and roll it out to all of our facilities, if that works in just one. Now, obviously we’re going to start with that stuff in the Northeast. In Florida, our people are outside.
Mark Collier:
Yeah. Yeah.
Matt Pletcher:
So, it’s not to say that we won’t put it in Florida if it works. But if we can keep our residents in an outdoor environment where they can enjoy their lives more, they’re not shut in, they’re going to maintain a healthier status anyway.
Mark Collier:
No, that makes perfect sense.
Matt Pletcher:
Yeah. There a lot of things that we can do besides just locking the doors and telling everybody to go home. So that’s what we’re looking at, because quality of life at the end of the day is the most important thing for us to provide for our residents. We also have workout facilities and physical therapists and all of the types of things that you’d normally see. But in a lot of senior apartments, if you will, in the what we call light assisted living arena, don’t have those types of things. They expect people to go out and do it elsewhere. So we’re trying to innovate in that area as well, because an active person is a healthy person.
Mark Collier:
Absolutely, Matt. Well, you guys, I mean, kudos to you in terms of not only reducing the number of infections, deaths down to a minuscule number of one. I mean, that is a testament to a lot of things you guys are doing right
Matt Pletcher:
There’s a little bit of luck in there.
Mark Collier:
Sure.
Matt Pletcher:
But good, strong decision making and decisions that are based on our residents and not necessarily the bottom line, I think are the best way to go. I’ll tell you what, word of mouth gets out. Hey, these guys have had nobody’s sick.
Mark Collier:
Oh, yes.
Matt Pletcher:
And they’re knocking down our doors right now, to the extent that we’ve actually had some offers to purchase some of our facilities, because they’re so well run. So I think that the future for us is bright, as long as we maintain the same ideology going forward.
Mark Collier:
Sure.
Matt Pletcher:
The residents come first, the bottom line fixes itself. In fact, this is a great business, and it’s an easy business to make money in. It’s a lot easier to make money in it, if your residents are healthy and safe.
Mark Collier:
Absolutely. So in terms of last year’s pandemic, has it changed the landscape of both the senior housing residents in particular and the overall market in general? How do you see the demand shifting in the future in terms of senior housing development?
Matt Pletcher:
Well, I’ll tell you what. Human beings are fickle creatures. They make decisions oftentimes on what they hear on the news today, or what they heard yesterday. The market itself is seeing a whole lot of changes. There have been a lot of bankruptcies.
Mark Collier:
Yeah.
Matt Pletcher:
The long-term care facilities are having a tougher time than guys in our space are, but there’s a shakeout going on right now.
Mark Collier:
Okay.
Matt Pletcher:
You have a lot of REITs and a lot of big Wall Street funds with extremely deep pockets that are making a lot of offers that people can’t refuse or don’t want to refute.
Mark Collier:
Correct.
Matt Pletcher:
But the stress of this last 14 months or so has destroyed a lot of business people’s minds. Nobody wants to have a bunch of their residents die.
Mark Collier:
Yeah. Yeah. Yeah.
Matt Pletcher:
So there are a lot of broken hearted business leaders that are saying, Hey, I’m done. I’m going to sell off and be done.
Mark Collier:
Yep.
Matt Pletcher:
You also have a mindset in the public sphere that, Hey, I don’t want to go into one of these facilities where a whole bunch of people passed away. I want a brand new spanking clean … So I think there’s an interesting opportunity there, but we don’t want to build as fast as we can, so that we build subpar properties.
Mark Collier:
Right.
Matt Pletcher:
But we do want to enter the market in a deeper fashion, maybe start two, three, four or five of these things on a yearly basis. And we think with the industry mindset going to technology and just … it’s a more aware industry at this point.
Mark Collier:
Right.
Matt Pletcher:
Taking that awareness and taking our philosophy on how we build. We build for, I don’t know, a hundred dollars a square foot less than than the next guy in our space. We do that because we’re efficient. We use the same contractors.
Mark Collier:
Yep.
Matt Pletcher:
We use the same suppliers. Although let’s be honest, with supply chains being down– lumber’s 185% cost of what it was at this time a year ago. So, we’re making some changes. We’re going to build more block and concrete, which changes our stature as far as code is concerned.
Mark Collier:
Yeah. Well, block and concrete in Florida is pretty much the code anyway, because of the hurricane standards down there.
Matt Pletcher:
Well, it is up to a certain level above grade.
Mark Collier:
Okay.
Matt Pletcher:
And then you can do sticks above that.
Mark Collier:
Okay.
Matt Pletcher:
But it’s more cost-effective for us now to go block all the way up.
Mark Collier:
There you go. All right.
Matt Pletcher:
So it creates a stronger in that market, creates a stronger structure.
Mark Collier:
Yes.
Matt Pletcher:
There’s less maintenance, there’s less fire risks, all of those things. So some of the things that we’ve been forced to do as a company, that have come about because of the COVID crisis, will push us into what we think is going to be a far more interesting substructure of what we used to be.
Mark Collier:
Absolutely.
Matt Pletcher:
I think everything considered, we personally have changed our thinking. It’s a lot more safety-minded for our residents, which I think is a good thing.
Mark Collier:
Absolutely.
Matt Pletcher:
It’s a costly thing because we overdid it last year. It costs us a lot of money to send 40 or 50 or 60 employees home and still pay them, because we didn’t want to lose our best employees.
Mark Collier:
Correct.
Matt Pletcher:
So we lost a lot of dough in that aspect of it. However, we’ve gained residents. We’ve gained a market share. And we’ve gained a prominence that I think we can carry forward forever, as long as we maintain this same mind, which is we’re not in this to be trillionaires. We’re in this to make a good living and provide a service. And then our desire thereafter is to branch out and start providing housing to veterans and some other classes, if you will, protected classes maybe, whatever you want to term it as. But try to go into a … have an altruistic wing of our company, where we do even better for people without having to reach into their pockets to do so.
Mark Collier:
That makes perfect sense, Matt. And I’ll tell you, when you do business the right way, looking out for your end-user customers, the success is going to follow. So I typically would– commend you on the model for that. Now, let’s look ahead. What emerging trends do you see in the senior living development and management sectors as we advanced through 2021 and beyond?
Matt Pletcher:
Well, that’s a loaded question. First and foremost, everything we’ve spoken about to this point, the COVID stuff, other infectious issues and viral issues, there’s been little or no flu reported this year, which I think could backfire.
Mark Collier:
Yeah.
Matt Pletcher:
But I’m not a doctor. I’m not a virologist. I’m not an epidemiologist, but the flu will be back.
Mark Collier:
Correct.
Matt Pletcher:
Unless everybody wears masks and everything for the rest of forever, which I don’t see happening. It can’t.
Mark Collier:
Yeah.
Matt Pletcher:
It’s an environmental disaster happening already, with the masks and gloves and everything winding up on beaches, and wrapped around ducks throats and everything. You see it every day on the news these days. But that, I think, is the biggest aspect of where this industry goes. The emails that I get on a daily basis, the email lists I’m on with various different outfits that provide industry news, the first and foremost aspect of every one of those top five bullet points are all COVID related.
Mark Collier:
Yep. Absolutely.
Matt Pletcher:
So I think that provides us an opportunity because, well, while we’re focused on it, that’s obviously not our only focus.
Mark Collier:
Right.
Matt Pletcher:
We think we know what to do going forward, where that is concerned. It’s going to allow us to innovate in other areas. And I think we can catch the industry back on its heels, and gain an even greater market share if we continue to look at things in that way.
Mark Collier:
All right.
Matt Pletcher:
So that’s first and foremost. Secondly, there’s a lot of consolidation.
Mark Collier:
Yeah.
Matt Pletcher:
And with consolidation comes opportunity because when these gigantic organizations have 30, 40, 50, 100, 200 assisted living facilities around the country, some of them fall through the cracks.
Mark Collier:
Yep.
Matt Pletcher:
That allows us to gain market share. It tarnishes their brand. So there’s opportunity for us there as well. And I don’t like to benefit by other people’s shortfalls, but … In a capitalist society, our desire as a business is to pick up where everybody else falters.
Mark Collier:
That makes sense.
Matt Pletcher:
And we’re better at this than any big REITs or any big Wall Street firm that’s not in our business. They’re business is that bottom line.
Mark Collier:
Yep.
Matt Pletcher:
And when they only care about that bottom line, it makes us look all the better. And so I see those trends happening, and I see a lot more people looking to move to below the Mason-Dixon line, where it’s warmer.
Mark Collier:
Correct. That’s going to be where your growth market is. It’s going to be in Florida, Texas, and in the Sunbelt. So I fully– agree with you there.
Matt Pletcher:
Less deaths down there from COVID, all across the Sunbelt because people are outside.
Mark Collier:
All right.
Matt Pletcher:
So all of these things come into play. And there’s more, if we got into a really granular economic discussion.
Mark Collier:
Yeah.
Matt Pletcher:
But I don’t think that’s the right discussion to have here. I think that the trends are go south, build wisely.
Mark Collier:
Yeah.
Matt Pletcher:
And, gosh, almighty, we cannot continue to build the way we used to, given the current cost of all of the product we used to build, because of supply chain shortfalls. So, we’ll innovate, and we’re going to attempt to lead the industry in a direction. Hopefully they don’t follow us too closely because then they’ll compete with us more. But we intend to be on the forefront of most of the new stuff.
Mark Collier:
Very good.
Matt Pletcher:
And technology and our building process are going to be the two things that drive it the most.
Mark Collier:
All right. Matt Pletcher, Optimist Senior Living. I want to thank you for taking time out of your busy day to come and share with us the history of the senior housing market, where it’s going, and how you guys are using smart management principles to dominate that industry. Thanks again for coming in to The Playbook today on ASBN.
Matt Pletcher:
Well, thanks for having me, Mark. And thanks for all you do for ASBN. I’ve been a fan of yours for a long time.
Mark Collier:
I appreciate it.
Matt Pletcher:
Keep doing it. There are a lot of younger people out there that need to learn from guys that lead businesses, probably not for me. But I watch everybody you have on, and it’s a terrific venue. And you’re doing a great job, and I’ll continue to be a fan.
Mark Collier:
Thank you very much, Matt. Thanks again. And you have a fantastic day, sir.
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