Transcript Generated by AI 00:05 Mark Parkinson back with Park Place and really excited today that we have a Let's 00:09 Talk segment with John Ponthie. 00:11 And I want to start out by, first of all, thanking First Quality for sponsoring 00:15 Let's Talk. 00:16 It's what allows us to do these interviews without having all sorts of 00:20 crazy, annoying pop up ads on the website. 00:22 And I want to thank Sima and the whole First Quality team for making that 00:26 possible. 00:27 John Ponthie is a person you need to know. 00:30 And when I think about John, I think, you know, 00:32 what would you get if you cross the sort of on the left side, 00:36 a compassionate person who cares deeply about residents and long term care 00:40 facilities, who cares about their families, 00:42 who loves their employees. 00:44 So that's what you have on one side. 00:45 And on the other side, you have a hard ass businessman. 00:47 You put those two things together and you have John Ponthie. 00:51 John is probably one of the most successful people that you may not have 00:54 heard of in the space. 00:56 He started Southern Administrative Services about 20 years ago and it is now 01:01 36 buildings, principally in Arkansas. 01:04 To say that they have been clinic successful at clinical side would be a 01:08 dramatic understatement. 01:09 You can see from the screen that the average five-star score in John's 01:13 buildings is 3.8, almost a full point above the national 01:17 average. 01:18 The average QM score 4.7. 01:22 Nurse turnover 30%, way, way less than the national average. 01:26 Multiple five -tar buildings and multiple national awards. 01:31 Now, if that's all that John had done, we would be featuring here on Let's Talk. 01:34 But that's not it. 01:36 In addition to that, he has disrupted the industry. 01:38 You know, those greenhouses of little 12 unit 01:41 nursing homes that we all kind of heard about maybe 10 or 15 years ago that all 01:45 of us said wouldn't work. 01:47 John has figured out a way to make them work. 01:50 And if we listen to him and if people replicate him, 01:53 I think he will have laid the groundwork for really fundamentally changing the 01:57 sector. 01:58 John, we're so happy to have you here on Let's 02:01 Talk today. 02:01 Welcome to Park Place. 02:03 Thanks for having me, Mark. 02:04 Let me just say that I've admired you and I've respected you and I've known you for 02:10 some time and your commitment to this profession is not as it goes without 02:16 saying. 02:16 And so I'm excited to be here. 02:18 I appreciate that. 02:18 So I'm wondering, are we going to get the compassionate, 02:21 caring John Ponthie? 02:22 Or are we going to get the hard ass businessman? 02:23 You're going to get the unvarnished, OK, you know, raw John Ponthie. 02:28 And I don't think I've ever been referred to as a hard ass businessman, 02:33 but let's go with it. 02:34 Well, we'll go with that and I'll explain it a 02:36 little bit more in the segment. 02:37 Now to go from 1 to 36 is not easy and principally do it in one state. 02:43 How do you explain your your growth and your success? 02:48 That's a great question. 02:49 I didn't set out to get 36 buildings. 02:53 I set out to get one building and operate it well and then two and two turns into 03:00 10 and 10 turns into 36. 03:02 And you know, I think at the end of the day as I 03:07 reflect back, quality was the accelerator, quality brought scale. 03:16 We put our heart into it. 03:17 We did the things you know, we applied some business logic, 03:21 we put our heart into it. 03:23 But we focus early on on differentiation with, 03:27 with greenhouse and with person centered care and quality. 03:32 And I think just people took note. 03:34 And when, when families and, and individuals determined they were at a 03:40 point where they want to sell, they approached us and they care about 03:45 their legacy. 03:46 They cared about their employees, they cared about their community and they 03:49 wanted someone who would continue that. 03:51 So that's, that's, that's our story. 03:53 That's that's and, and as I look back, it's crazy. 03:56 I mean, we didn't set out to operate 36 buildings. 03:59 We just, if you'd have told me 20 something years 04:01 ago, I'd be sitting here today with 36 04:03 buildings. 04:04 I'd say you're crazy. 04:05 Yeah. 04:07 But I think it's such a beautiful story. 04:09 You had family owned nursing homes in Arkansas where people were saying, hey, 04:13 it's time for us to get out and to sell. 04:16 And they intentionally came to you because your, your quality reservation. 04:20 Why the focus on quality? 04:21 Where where did that come from? 04:25 You know, I guess you know, the obvious answer, Mark, is, 04:30 is the moral obligation. 04:33 You know, but, and, and, and that's so true. 04:38 And every day I think about the awesome responsibility that we have for the most 04:43 vulnerable. 04:45 But I almost, you know, I, I have to, I have to also say that quality is the 04:53 best business strategy for healthcare. 04:57 I mean, it is a business strategy. 05:00 And so I think at the end of the day, if you provide exceptional care, 05:06 families come to you, good employees want to work for you, 05:11 hospitals want to discharge to you, regulators respect you, 05:16 community support you. 05:19 And then at the end of the day, you're full and all your listeners 05:23 understand what census means in this business. 05:26 If you do right, you get rewarded. 05:30 I mean, and that's also a great message. 05:33 Quality is not just the right thing to do sort of morally, it's a, 05:37 it's a good business decision. 05:38 It's the right business decision. 05:41 We're at a time where some folks are actually succeeding without great quality. 05:46 But in the long run, that doesn't seem sustainable to me. 05:50 I think if you're, if you have a long term perspective as we 05:56 do, it's essential you, you, you can't fool people forever. 06:02 You can't fool communities, you can't fool your employees and 06:07 ultimately you pay the price. 06:09 You either produce quality results or you fail in my book. 06:14 Now, I know you also have a incredible 06:16 commitment to your team and the folks that work with you talk talk about that 06:20 and why that's important. 06:23 You know, that's probably the most personal element 06:25 of this for me. 06:29 You know, we're in a chronically underfunded 06:34 industry. 06:36 I wake up every day knowing I can't. 06:39 We can't, our client facilities can't pay most of 06:42 our employees what they're worth. 06:45 And yet every day they get up like Angels Among Us with a song in their heart and 06:50 perform. 06:51 And they do. 06:52 I mean, by definition, they care for those that are, 06:54 that are harsh to care for. 06:56 They care for those folks that families can't and sometimes won't care for. 07:02 And yet they do it with such grace. 07:05 And I am just eternally grateful. 07:09 And if there's one thing that I can do, Mark, at the end of the day, 07:15 create a place that is that they're proud of. 07:20 I want I mean this everyone defines success differently. 07:23 But if I can, you know, I think about that employee who's leaving 07:27 their shift and they're checking out at Walmart. 07:30 At the end of the day, they've still got their badge on and that 07:34 check out person says how you work at such and such. 07:37 And they say, yes, I do. 07:38 And and they're proud of it. 07:39 I mean that that is a foundational element of success, 07:43 just fundamental pride in what you're doing and what you represent. 07:50 So your nurse turnover rate, your RN turnover rate at 30 is really, 07:55 really low, particularly for an organization your 07:58 size. 08:00 Do you have any advice how how have you done that? 08:04 As a fine question, it's a byproduct. 08:11 You know, I think you treat people right and I just 08:14 so I mean just Captain Obvious stuff. 08:16 But you know, you create a place that people want to 08:20 work and you respect them and you and you and you create a dignified work 08:26 environment and an environment of care for the elderly that that employee wants 08:32 their family to be in at some point. 08:35 That that's the glue. 08:38 Well, it's an it's an incredible record. 08:40 So we, we certainly have gotten the 08:42 compassionate side or certainly feeling that in your in your comments. 08:47 But you've also got this business side. 08:48 You've got an MBA from from LSU. 08:51 You spent I think 15 or so years in the hospital world kind of learning that 08:56 system. 08:57 You started out in long term care. 09:00 I think you were actually as a teenager working. 09:02 Tell us about that. 09:04 Yeah, it's, it's, it's as I think back on it's crazy story, 09:08 when I was a youth and at 15, 16, 17, my summer job was working in a nursing 09:13 home, stripping and waxing floors, you know, cleaning the maintenance shed, 09:18 whatever someone else didn't want to do. 09:21 That was my job. 09:22 And every chance I got to be indoors in the hot summer, 09:26 I took it and I was amongst the elders and I just developed an affinity and I 09:32 thought, you know, someday I'm going to, you know, pursue some professional career. 09:38 Why not long term care? 09:40 Why not management and healthcare? 09:42 So I got a, a business degree from LSU and an MHA 09:45 master's of health administrator from Tulane. 09:49 And the only pathway available at that time was kind of the hospital pathway. 09:53 So that's what I took. 09:54 And my wife expected me to have a job, which was crazy, I thought. 09:59 And so literally at some point after 15, 16 years and hospital administration, 10:04 I'm walking out of a meeting and someone mentions to me about a nursing home in 10:09 their hometown that someone needs to buy and rebuild. 10:13 And that is literally how I got into business. 10:15 So, you know, it's a, it's been a very securities route, 10:19 you know. 10:21 OK, let's talk about greenhouses. 10:23 I think Doctor Bill Thomas came up with the idea of greenhouses about 25 years 10:28 ago. 10:29 He got a lot of national attention for it. 10:31 There were these list of the 100 most influential people in the world. 10:34 I remember one year he was on on those list because people thought this was 10:38 going to revolutionize long term care. 10:41 And they brought the idea to people like me and other people in the sector. 10:44 And we quickly said you just can't do a 12 unit. 10:48 It's not going to work. 10:48 And, and it, it, it feels like it kind of got stunted and, 10:52 and not a whole lot happened, but you've been able to make it work. 10:55 So let let's let's start out first of all, of your 36 campuses, 10:58 how many are greenhouse? 11:02 I had to go back and look at this because I forget, but twelve. 11:05 OK, so of those 12 campuses, 8 are all greenhouse. 11:12 The entire campus is nothing but twelve person cottages. 11:15 The other four are hybrid models. 11:18 One of those things where I'm working in a CON state, 11:22 I can't buy a building and then just, you know, tear it down. 11:26 You know, I've got to, I've got to work and, 11:28 and create something. 11:29 And so I'll go in and maybe renovate that facility to an all private room, you know, 11:35 legacy home and then build greenhouse alongside of it. 11:39 OK, so I, I suspect there's a lot of people 11:41 watching this that don't know what a greenhouse is. 11:43 So, so can you just kind of explain the model 11:45 and, and why you've become so enamored with it? 11:48 Yeah. 11:49 So to be honest with you, you know, our primary operation is in Arkansas. 11:59 Our state census, our state average, you know, is 70%. 12:08 We got to compete and we got to a point where we were building traditional 12:13 facilities and someone stopped me one day and said, John, 12:17 if you're going to build traditional facilities, 12:20 you need to look at the greenhouse. 12:23 And I, you know, Mark, I just, I thought, you know, this is great. 12:28 You know, we've got these wonderful facilities with 12:32 all these, you know, antiques and $30 foot carpet and it looks 12:36 really nice. 12:37 But is it really a differentiation? 12:41 And when I went and looked at greenhouse, I went, Oh my God, this is incredible. 12:45 They're they're very small. 12:47 I mean, why don't you just explain what? 12:48 Yeah. 12:48 So. 12:49 So it's a 12 person cottage, OK. 12:53 And you walk in the front door and there is a hearth room, a living room, 12:59 a dining room, a kitchen. 13:02 And the first thing is you smell what's, what's someone's cooking. 13:07 There are 12 private rooms, private baths, you know, 13:13 in this basically 7500 square foot residential environment and you have 13:21 caregivers that provide care in that 7500 square foot home for those 12 elders. 13:30 So it's like a self-contained 12 person nursing home and then you might have 6, 8, 13:36 10 of those on campus and you've got your other support personnel, 13:40 nurse practitioners and therapist and social workers and, you know, 13:44 other support personnel who make the rounds through those colleges. 13:49 So let's talk about how you be able to make it work because one of the things 13:54 that people initially said was 12 units won't work. 13:58 And I think one of the mistakes the greenhouse made is they were really 14:00 trying to defend the concept of no, you can just build one or two of these 14:04 and make it work. 14:04 That's right. 14:05 And we would do the numbers on like, it just doesn't work because you know, 14:09 there's so much care that you need in the nursing home. 14:12 So the first thing that you've done to make it work, 14:14 it seems to me is that you've really done it at scale. 14:16 You don't just build one or two of them on a campus. 14:18 No. 14:19 How many do you typically build? 14:20 I wouldn't build less than 6. 14:23 I wouldn't advise anyone to do less than 6. 14:25 They're just not enough economies of scale. 14:27 You can't you can't make that work. 14:29 In my independent judgment, 10 is the sweet spot. 14:35 10-12 person cottages is the sweet spot. 14:38 So you on the same campus, you've got ten of these buildings. 14:41 They're all the same. 14:42 That's right, each have 12. 14:44 And so that's one way you made it work. 14:46 The second way you made it work is that the care people love living it. 14:50 Love might be they compared to a traditional nursing home. 14:53 They love living in these buildings. 14:55 I'll just say it this way. 14:57 You give me side by side a, a traditional facility, 15:01 I don't care how nice it is and a greenhouse beside it. 15:07 And they both provide exceptional care a family tours and they're coming to a 15:13 greenhouse 9 out of 10 times. 15:16 And the other 10% I can't explain. 15:18 So I mean, it's that easy. 15:19 I mean, it is, it is a, it is a level of differentiation that's 15:24 palpable when you walk in the door. 15:26 You get it. 15:27 Mark, I'll just give you just a, just a quick example. 15:32 After we built our first, I was scared to death. 15:35 I said, you know, it was just work. 15:36 I'm not sure, you know. 15:37 And so I remember going up on a Saturday and walking in and there was a group of 15:44 families that were sitting and watching a Razorbacks game with kids running around 15:51 and with one of the family members in the kitchen cooking, you know, like brownies. 15:59 And they saw me and they kind of I said, oh, my God, this is, I mean, 16:03 families want to come and stay. 16:05 They belong. 16:06 It's not a place where you know, and I'm, let me just stop for a second and tell 16:12 you, I am a very extraordinarily proud 16:15 operator of traditional long term care facilities and the people in those 16:20 facilities are second to none. 16:23 I'm just telling you, if I'm being honest, I mean, 16:27 all I build now is greenhouse because that's where I mean, 16:31 it is the disruptive innovation that I think is the future of healthcare. 16:37 And so, you know, you and I can agree. 16:41 So if you can work with me here, you know, let's just agree that we're going to 16:47 abolish all nursing homes, OK? 16:49 I mean, I need your yes, I need your help. 16:52 It's not going to happen. 16:53 You and I both know that that nursing homes are here forever, OK? 16:58 And even if you could afford individualized care, 17:01 there aren't the people to do it, OK? 17:04 So what's the next best place? 17:06 Everyone in this industry, their job is to create the next best 17:10 place. 17:11 I think I found, I think greenhouse is it. 17:14 It provides the right environment of personalized care with with a dignity and 17:22 it provides scale on the campus. 17:26 It's a little bit more expensive to operate, but not much. 17:30 But what you get in return is exponentially more value. 17:34 So, you know, the first thing that we talked about that 17:37 you've been able to make it work is that you put 6 to 12 of them on one side, 17:41 right? 17:41 The second thing is because of this great environment and people wanting to live 17:46 there, you have crazy occupancy numbers. 17:49 What? 17:49 What are your occupancy numbers? 17:52 Essentially 100%, Yeah. 17:55 I mean, I bet you combined in the state of 17:58 Arkansas. 17:59 If you combine all the waiting lists, I don't know how many. 18:02 I mean, there's a comma in there. 18:04 Yeah. 18:05 You, you've got greenhouses that have waiting 18:07 list of like 6 to 12 months for people to move into them. 18:10 It's ridiculous. 18:11 And so I mean, I think the viewers understand the 18:13 difference between being 80% occupied, which is what the sector is nationwide, 18:17 and being 100% occupied. 18:19 It's exponential what it does to your bottom line. 18:21 So if if I'm, you know, so I think greenhouse is a model for 18:27 people who want to do well and want to do good. 18:32 I mean, if you want to do both or and or you need 18:37 to compete. 18:39 Now, if I'm in, I'm picking on, I, I don't know much about the state of New 18:44 York or California, but if I'm there and you know, 18:48 the building codes are so difficult and I'm already at 95% occupancy, 18:53 do I really need to, you know, And so I, I can't speak to that, but I, 18:59 I think in a vast majority of the, of, of the country, you know, 19:04 I got to a point where if you're building private rooms, 19:08 greenhouse is not much more at all, if at all. 19:12 There you go. 19:13 And I got to a point where I said I don't want to be 5 years from now and someone 19:19 build something a couple miles down the road. 19:24 That's the trump card. 19:25 Yeah, yeah. 19:26 And it's, and, and I think greenhouse is the trump card. 19:29 I, I think I, I see how people and I see how, 19:34 how society embraces it. 19:37 So the third reason that I think you've been able to do it is again, 19:41 it's because of the clinical results. 19:43 People want to live in these so much. 19:46 You don't have to buy the most expensive piece of ground that's right in a, 19:50 in a locale. 19:50 Talk a little bit about that. 19:52 Well, I mean, you've got to find your economies. 19:55 I don't need the most expensive piece of dirt in town. 20:00 I can pick a site that is suitable for this, you know, 20:03 campus for this park like setting and people are going to come to you. 20:10 The other thing is, you know, people overcomplicate it. 20:14 It's a 7500 square foot building and now we're building, you know. 20:22 A new model that's sanctioned by the greenhouse that's basically a 12 person 20:28 cottage and a twelve person cottage that's joined by dietary facilities. 20:33 So by by by the kitchen, it maintains the intent and the integrity 20:37 of the model and, and, and gives you a little bit more economy 20:42 scale. 20:43 You can bring in a little bit more sophisticated culinary expertise. 20:46 It's just an improvement on the model. 20:48 But but it's a 7500 square foot building that you you're replicating 10 times on 20:53 campus. 20:53 Now. 20:54 You might go from a hip roof to a Gable roof and change some colors, 20:58 but it's not complicated. 21:00 So, and maybe you've already spoken to this, 21:02 but what kind of clinical results do you see? 21:05 How how do the patients do in these buildings? 21:07 You know, exceptional, we've been thrilled with the clinical 21:13 results and it's not so much and, and I think that's, 21:19 that's that goes without. 21:21 So I mean, I think that's just that's a that's been 21:24 studied and academicians have looked at it and it's real. 21:29 It's not that the results are there, it's why the results are there. 21:34 And if I were to pinpoint it, you can't be invisible when you're 1 of 21:41 12. 21:42 The people, the caregivers that gravitate to this 21:46 model want to care. 21:47 They're not just assigned tasks. 21:51 They are there to provide for the well-being of those elders. 21:57 And they know them intimately. 21:59 They know Miss Jones, she didn't eat her full breakfast. 22:02 She her gait is different today. 22:05 Something's just a little off that knowing those relationships, Mark, 22:10 if you hear nothing more from me, this is the magic of it. 22:16 You're able to create relationships and that small intimate environment that it's 22:22 just hard to do in a larger institution. 22:25 It's that easy. 22:26 And when there is a deep knowing and a commitment and a family of families and 22:32 that caregiver is responsible for that elder, I mean, 22:36 it feels in their heart the magic has I mean, 22:39 that that that is the magic of the model. 22:43 So I describe you as a hard ass businessman. 22:45 I think I was trying to make the point that most people that advocate for these 22:49 greenhouses are not good business people and they haven't really thought. 22:53 But you have. 22:54 I mean, that this is not just some, you know, compassion thing. 22:58 This is also a business thing. 23:00 You know, without getting specific numbers, 23:02 how do these buildings do compared to your traditional facilities? 23:07 Exceptionally well. 23:10 Let me just say it this way. 23:12 I didn't bring a income statement for you, but I can't build them fast enough. 23:19 When you look at at what you get and the appeal of the model, it is, it is just, 23:28 you know, you could see it for yourself. 23:33 I'm going to leave greenhouse for a minute and come back to you as we get 23:37 towards the close of this, which is I think people have certainly, 23:40 you know, seen the, the compact, the caring and the, 23:43 they understand your character, which is incredible. 23:46 It's certainly come through in your comments. 23:49 We're in a time where in the last five years, 23:52 probably half of the long term care facility owners have sold and and a lot 23:56 of them have made a lot of money. 23:58 And you're in a position now where you could sell and I'm sure you could walk 24:01 away with hundreds of millions of dollars. 24:04 How come you haven't sold? 24:06 And are you going to continue to own these things? 24:09 Well, let me first apologize to you because my 24:11 phone is ringing. 24:12 As you know, we're conducting this interview and it's 24:16 probably someone calling to offer to buy my buildings. 24:19 Yeah. 24:20 OK. 24:21 And they're not for sale. 24:23 OK. 24:24 I this is not, I mean, you don't make the investment in this to 24:29 walk away from it. 24:32 I want this to last in perpetuity. 24:34 I believe I've got a magnificent team that I mean, I've got the easy job. 24:40 I mean, this is hard. 24:42 I mean, I don't have to tell you, you know it. 24:43 You've lived it personally and you've administered a network that represents, 24:49 you know, almost the entirety of this industry, 24:53 you know very well. 24:54 And it's hard business. 24:56 It is a hard business. 24:57 And the least I can do is commit myself to them. 25:02 And I hope that this goes in perpetuity and that my team, who I, 25:07 I dearly love and who are committed and equally as compassionate about it, 25:14 carry this mission forward. 25:16 So I, I know from being around you, you, you care about this more for your team 25:21 than you do for yourself. 25:24 You know, I've been more successful than ever 25:26 thought I might be. 25:27 I mean God's grace, call it whatever you will. 25:30 And you know, what would someone give me if I sold? 25:35 I mean, you know, bunch of money, money, I mean, but, but, but, but, 25:40 and that's great, you know, that's great. 25:43 But you know, they say money doesn't have happiness and 25:47 it doesn't. 25:48 If you tell me how much you know and who to write the check to, 25:52 I'll make it happen. 25:53 But it it's it that's doesn't do it. 25:56 I mean, at the end of the day, we're all on this earth for a limited 26:01 time. 26:02 And as you get older, you know it, I mean, you just start to reflect on, you know, 26:06 what did I do to make a difference? 26:08 What is my legacy? 26:09 What, you know, how did I leave this earth better than I 26:13 found it kind of thing. 26:14 And that is just, you know, that it, that weighs on me every day. 26:18 And anyway, I, I think the future, quite frankly, 26:23 is going to be a lot of fun. 26:26 I, I, I, I'm looking forward to the neck. 26:28 I think we just got started and I think value based care is going to be a 26:33 fantastic thing. 26:34 And I think for people who are quality operators, 26:37 they're going to see a lot of opportunity to provide better and more care for the 26:43 elderly and value based care. 26:46 John, you've made a huge difference in your 26:48 life already and I think there's a lot more to come. 26:50 And thanks for being here with us today. 26:52 It's been very, very inspiring and very informational. 26:55 Thank you so much for being Mark again. 26:57 Thank you for having me. 26:58 Yeah. 26:59 And thank all of you for your continued support of Park Place.
