Compare and contrast Baltimore

Today was another big day on tour.

We saw another of Erickson's sites, a not-for-profit competitor's site of a much smaller scale (400 people) and a site providing a rental model in the assisted living/residential care space.

The Erickson model and the smaller competitor's approach allowed us to compare and contrast delivery systems. Erickson has road-tested its approach and adapted it continuously to service opportunities and market trends. They have continuously adapted the services offered, the style and size of apartments and do a complete make-over of each site every five years. Because of their massive scale they can also deliver services, undertake construction etc at a much better rate than smaller operations.

The smaller, NFP alternative has found itself in a place not unfamiliar to our NFP providers. It has been running profitably and has built up reserves. Existing residents have been happy and the model has remained in place for decades. However, seemingly, all of a sudden to them, they are experiencing vacancies and their amenity and accommodation units are no longer hitting the mark. They have now entered into a huge and rapid refurbishment program of their common facilities, restaurants etc but from our point of view had not undertaken a full strategic analysis to determine the full picture of what their market wants from them in the future. I asked the question - what's more important to your customers, upgrading the communal facilities or updating the accommodation units? Their response was that they just don't know, but they hope they are doing the right priority first. This is a classic reminder to plan, aim, fire rather than in any other order.

The site offering the rental model in the assisted living/ residential care/ dementia care space is part of the Sunrise group. They are a very large and apparently very successful company that operates facilities of a much smaller scale (100 units) but does not own the sites. They pitch their services to the middle to upper end of the market. On top of the basic rental for the room, they then charge people on a fee-for-service basis for their additional services.

We were generally impressed with the design of the accommodation, the more intimate feel of the operations and the caring approach to their dementia-related customers (in the "Reminiscence" wing)! It seems that the USA is one of the few countries where the rental model has taken off in a big way. Erickson does not see itself in competition with Sunrise in that Erickson is in competition with people who want to stay living in the family home. Erickson's "lease for life" model would appear to provide a better "peace of mind" deal to people than a rental approach where some people live a lot longer than they expect to and actually run out of money to pay the rent.

The Erickson community we visited today was their original one (Charlestown). It is on the site of a disused seminary of historical significance. As part of the approvals process, the chapel in the seminary has been completely restored and it is an unbelievable marble-lined structure of amazing proportions. The chaplains in our organisations would kill for this, figuratively speaking of course.

We also spent a lot of time with John's son, Mark, today and had the chance to discuss philosophical, management and leadership issues with him over dinner. This was interesting. Mark's views are more liberal than many of the older "market is king" people we have met here. He sees a meaningful role for the State in providing safety nets for people and his line on such things as Obama's health reforms is pretty similar to how most Australians see these things.

We found ourselves on a good wavelength with Mark on most issues. However, after a beer and a wine or two, we had a great discussion about "what is the best way for older people to live?" Here, we found we were coming from quite different standpoints. Our view is that people should stay living in their own home and in their own community for as long as possible. Having been asking the questions and doing all the grilling of people for the last 3 weeks, we found the boot on the other foot.  Mark questioned why this is best when so often it is a recipe for isolation and for people to stagnate and become inactive? After all, isn't it true that if you don't use it, you lose it? In this respect, Mark is firmly in the same camp with his Dad - living on a well-resourced community campus gives people 75 plus another lease on life.

The Erickson group has a research facility into ageing, a training group and various philanthropic foundations. Mark teaches at the training facility and has learned a lot about management over his short career, partly through adversity. In all fairness, we should point out that the Erickson group got into financial trouble during the GFC by diversifying into untried markets at the wrong time and it was eventually bought out. John retains a role as the R&D man and as founding guru.

It's been a great visit with the Ericksons. It has been provocative for us - see Sarah Mitchell's comments on this blog. At the end of the day, Vaughan and I agree that you can't take a view like John does that there is one best way for older people to live. We stick to our guns that it is all about maximising the range of choices for people. We think that this time spent with the Ericksons has essentially broadened our view of the spectrum of choice that can be offered to older people. Erickson Communities are what you might call "full service communities" that offer a lot more than traditional retirement villages in WA due to their massive scale and core philosophies. Could they be made to work in WA or more likely the Eastern States? We'll need to ponder that one.

Ray