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The Rewards, Challenges, and Opportunities for a CFO in Senior Living – Part I

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A conversation with Diane Bridgewater, Executive Vice President/Chief Financial and Administrative Officer at LCS

The senior living industry has and will continue to see tremendous growth. With it come many rewards, new opportunities, increasing complexities and financial pressures to overcome. Diane Bridgewater, executive vice president/chief financial and administrative officer at LCS® and recent recipient of a prestigious CFO of the Year award, talks about what it takes to stay grounded and help keep a company’s revenue/assets financially strong.

What do you find most rewarding about your career and working in senior living?

Two Ps. First, I’m drawn to work that truly makes a difference, work that has a Purpose. Senior living fits “purpose” completely and the sphere of impact is incredible. We’re able to enrich the lives of the seniors we serve, and we have the opportunity to make a difference in the lives of senior’s families. Second, I’ve had the great fortune to work with incredible People. People who are bright, have the highest integrity, who learn from each other and, most importantly, enjoy working together.

Since joining LCS in 2006, how has the company’s financial world changed?LCS-Bridgewater--178-edited

A lot! When I arrived, LCS had an ownership stake in fewer than a dozen senior living communities. Today, we have ownership in nearly 50 communities. Our accounting and tax teams consolidate and report across more than 200 legal entities across all business lines, and work with ownership partners in both the public and private sectors. I smile thinking back to when I joined LCS, and I was told I shouldn’t expect a lot of mergers and acquisitions! It illustrates how much you can do with a strong purpose and good people.

In terms of reporting, a decade ago we’d fully consolidate books on a quarterly basis. Today, we do it monthly, and with significantly more entities than we’ve had in the past. We’ve also improved efficiencies to turn around all financials in one-third the amount of time. It’s important for governance and reporting for all senior living businesses, to have timely financials to maintain and monitor growth in your top and bottom lines.

How is the focus of your job and financial approaches in senior living evolving?

Years ago, the heavy focus was timely and accurate reporting. Today, it has expanded, and there’s increasing focus on what the financial information is telling us. It’s more forward-thinking financial planning, analysis and business decision reporting. You have to understand the implications for the future, and what you need to do moving forward to drive profitability.

We often describe a financial triangle with 3 key components:

  • At the base are actual reporting and transactions (GAAP and TAX)
  • The middle is financial planning and analysis, and the ability to provide value through business decision support
  • The top is identifying areas to help drive profitability (through efficiencies, more cost-effective capital structure, effective tax planning, etc.)

You need an accounting team with the skill set to establish a firm foundation that then allows for the middle and top of the triangle to support operations, management and ownership.

Talk about the need to understand tax basis reporting, GAAP, fair value GAAP, and how approaches differ from other industries.

With the breadth of product types in senior living, the diversity of owners and communities we manage, we’re a playground for curious accountants! For some owners, their sole focus is tax basis accounting and reporting. Others may be GAAP basis reporting, and others fair value GAAP reporting. The focus varies across ownership groups and product types. Our top-level audit firm has indicated that they don’t have another client with the diversity of complex accounting topics we encounter across the LCS business lines. It’s a salute to our team’s depth of experience in finance and accounting. We stay sharp and current on skills and practices, and we have the ability to address unique situations as they arise and what your senior living community or entity might need.

You recently received the Deloitte CFO of the Year Award in addition to many other accolades over your career. What achievements and successes are you most proud of?

LCS-Bridgewater--044-editedThe teams we’ve been able to build and work with. Success is only possible when you surround yourself with the best, and with people who have strengths that are different than or complement your own. Recognition can be humbling because, in every instance, there is someone I know who is equally or more deserving and anything I am proud of was only accomplished working with others!

In addition to professional achievement and success, the Deloitte award is also based on a reputation for high ethical standards. What does that mean to you?

I was wired to do the right thing. It’s how I was raised. It’s how I live. My father was a colonel in the Marines, so I never knew any other way to live. I couldn’t work in an organization with a culture that didn’t align with this fundamental value.

You’re heavily involved in the community with advocacy and philanthropic work. Why are you so passionate about that?

There is a quote from Mahatma Gandhi I’m fond of. “The difference between what we do and what we are capable of doing would suffice to solve most of the world’s problems.” I believe all of us who are blessed to live in this country with the life and freedom we enjoy have an obligation to give back. It reinforces human connections. I’m particularly attracted to helping underprivileged youth and work that involves their health and education. Data suggests the impact of giving a child a chance has an exponential and long-lasting impact on society. I’m also a passionate advocate for women in leadership roles. In the past I was often the only female in meeting rooms. I’ve seen phenomenal women not recognized or given as many opportunities to go after bigger goals and take risks. So women, believe in yourselves and go get it!

What’s left on your list of accomplishments to fulfill in your career?

It’s two-fold. First, I want to help drive the success of LCS by focusing on our ability to deliver on our promises to residents, community owners, and all stakeholders in a manner that is congruent with our principles. Second, I want to make an impact on future leaders. I’d like them to be able to look back and remember work we did together and how it shaped their development in a meaningful way.

Like what kind of leader, a future president?

Sure, why not!

Stay tuned…

As we get closer to Tax Day in April, Part II of the conversation with Diane Bridgewater focuses on:

  • Potential tax reform that could change the game for senior living providers
  • Changes to accounting standards and how they could impact revenue recognition and equity
  • An outlook on industry complexities and keys to drive value
  • Strategies for managing risk in senior living
  • Advice for someone exploring a career in accounting or finance and infusing principles across various senior living disciplines

About Diane Bridgewater:

Diane Bridgewater provides strategic, financial and business operations leadership to LCS and the LCS Family of Companies. In addition to directing all financial aspects of the company, Diane is responsible for overseeing the company’s insurance business line and captive insurance company results, the group purchasing organization, CPS®, An LCS Company, information technology, compliance, regulatory and legal matters. Through Diane’s diligence, LCS is able to achieve exceptional financial results, increased levels of productivity and outstanding performance outcomes — each of which drives the company’s ability to deliver an outstanding experience to our clients and partners. Diane serves on the Board of managers for Life Care Companies LLC and the board of directors for LCS Holdings, Inc. Diane received Bachelor of Arts degrees in accounting and French from the University of Northern Iowa, and earned her CPA license in 1986.