• April 21, 2016

    Meet James Balda, President and CEO of national industry association Argentum. Balda has led the association since early 2015 (when it was still called ALFA: the Assisted Living Federation of America), after an executive role with the National Restaurant Association.

    In his time at the helm, he has worked with the industry to lay out some pretty big plans for the future including a professional credentialing program for executive directors and developing new industry standards. He has also learned quite a bit about senior living in his tenure. We sat down with Balda to hear about what assisted living can learn from the restaurant business, how the industry will be best served by preparing now for future federal oversight, and why senior living needs to educate early when it comes to future leaders.

    How has the transition to the new ALFA gone?

    Great, actually. Things are going really well, I think in large part due to the board’s engagement and focus. One of the things that attracted me to the position was that they had a clear understanding of the direction they wanted the organization to go in terms of how it’s going to help the industry. Really with three priorities around community level standards, professional credentialing for executive directors, and then working more collaboratively with our state partners on state legislative and regulatory issues. We’re continuing to move forward on all three of those fronts.

    Was that really changed from the past?

    The mission hasn’t changed, but how we execute against that mission was a bit new. The organization has always had a good relationship with state associations and has always been very engaged in state public policy initiatives, but what was new was the development of standards and an executive director professional certification program.

    Why do you think that’s needed?

    As the industry has progressed, one of the issues it’s facing in the coming years is residents who are living longer and needing higher levels of care. As more and more people are coming our members’ communities, that’s just going to cause policymakers to look at our industry more closely. If we can get ahead of that and create standards that say, ‘We as professionally managed senior living communities will adhere to these standards,’ I think that’ll protect us from future onerous and unnecessary regulations. The certification program is a first step towards recognizing the best of the best in terms of executive directors, but also lays the groundwork for us to be able to articulate to folks that want to come into the industry that there is a career path. You can come in as a direct care worker, and ultimately you can run a $25 million business if you follow this kind of career path.

    Tell me about the process of becoming the CEO of Argentum. How did you find out about the opportunity?

    The ALFA board had brought a recruiting firm on board to work with them. They reached out to me directly. I wasn’t even aware of the opportunity and frankly wasn’t even looking. As they started to explain the position to me and sort of the direction that the board had outlined for the organization, and then as I got to better understand the industry, I really felt that it was an opportunity that I wanted to explore.

    How long did the process take?

    Good question. From start of the process to my first day, roughly six months.

    What attracted you to the position? You came in at a pretty interesting time. You had the One Voice Campaign that just didn’t work out.

    It was, it was. A great opportunity. I worked for someone one time that said a big part of being a successful CEO is just being in the right place at the right time. I sort of felt like this was one of those situations, where you’ve got a growing industry, an industry that knew it needed to make some changes if it was going to be successful long-term and was looking for somebody to help lead that change, and so it just felt like the right place at the right time.

    So when you got the offer, did you head to google and type in “what is assisted living?”

    When I first got the call, I did. I didn’t know what it was. I knew what [Sunrise Senior Living] was, but I didn’t know what assisted living was. I needed to better understand the industry, and one of the great things about the industry itself is it’s sort of a combination of really some great elements. You’ve got health care, hospitality, food service—I’ve got that background, having been with the National Restaurant Association and health care having been with America’s Health Insurance Plans—you’ve got real estate, and all of that comes together to create an environment that helps seniors thrive. That’s fascinating to me. I think for the industry, it’s a great opportunity to learn from all of these different segments. How does hospitality do something really great that we can tap into, like revenue management? What’s the restaurant industry doing that’s creative and new that our residents will really appreciate? That kind of thing.

    Is there anything that the restaurant industry is doing that you think the senior living industry can learn from?

    Yes I do, and I didn’t expect this, although I should have. The restaurant industry is very labor intensive and service-oriented, so for them, a lot of their challenges were workforce-related. How do we find talent, improve training and keep talent? I spent about six months last year doing a bit of a CEO listening tour with members and other stakeholders, and that was ultimately how we identified the five imperatives that we’re going to adhere to as an organization that are going to impact the industry. The one issue that everybody wanted to talk about was workforce. Where are we going to find the talent? We did some analysis, and we’re going to need about 1.2 million new folks in this industry in the next 10 years. Where are we going to find them? At the same time, restaurants, hospitality, retail and healthcare are all trying to find that same talent.

    Where do you think you find it?

    Start early. One thing the restaurant industry has done a really good job with is a program called ProStart at the high school level. It’s a two-year home economics program essentially, but for restaurants. It has culinary components to it and restaurant management programs. They put through roughly 100,000 students each year. How do we create a direct care worker program in high schools so that if the students want to go to college, great, and if they don’t, hey, we’re an industry that’s ready to train them and help move them forward? There’s definitely an opportunity for us to learn from other industries.

    Is that something students would get credits for, through the school?

    Yes. Then there were also mentoring elements to it. Part of it was that you had to have a certain number of hours in a local restaurant, doing different positions within that restaurant. Those are all things that our industry could easily take on. Well, I shouldn’t say easily, but could and should probably consider.

    What’s your stance on the movement across the country to raise minimum wage to $15?

    More from the Leadership Series

    It’s going to be tough for operators. The thing that nobody seems to consider with minimum wage hikes is when you raise minimum wage, everything else goes up along with it. That’s just going to put more cost pressure on our operators. Now, is that a trend that’s going to continue? Most likely. There’s a lot of conversation and debate and dialogue, particularly with the presidential election going on, around income and equality. So I think the industry is going to have to find alternative ways to deal with some of that cost pressure. That’s one of the things we want to help them figure out.

    James Balda, CEO of Argentum

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    Do you think they should start planning now?

    I think the smart operators are.

    How can you help them with that?

    Well, one of our initiatives we call Operational Excellence, which is how do you do more with less? How do operators leverage technology, and how can we help them identify some of that technology? It’s still going to be a highly labor intensive business, but how can technology help streamline some of that? How can you find savings through utilities and sustainability programs? How can we help educate the industry about that? In the future, are there tax incentive opportunities for our industry? One of the things that’s always intrigued me, and there’s no appetite for it in today’s political climate, but when you talk about minimum wage, policy makers say you can pass that cost onto consumers if you absolutely need to. The restaurant industry—having come from that, they would probably kill me if they heard me say this—but they can raise menu prices if they have to, and the customer can decide whether or not they will pay it. Our residents though, they have to have that care. It’s not an option for them. They are the point where they need that type of assistance and care, so it’s not something necessarily that can be passed onto the customer.

    What’s your definition of leadership?

    I think there are three components to leadership. One is vision, and getting consensus from people on what the vision and direction should be. Then I think it’s motivating folks to achieve those goals. Then I think the critical piece that at times is overlooked is making sure that your team has the resources to successfully execute against that. So I’d say vision, motivation and execution.

    During your time here, which hasn’t been super long yet, what’s been the biggest challenge the organization faced and how did you overcome it?

    Historically, the organization outsourced a lot of its activities, and understandably so. Years ago the organization had gone through some financial issues and was struggling a bit, so it made sense at the time for the organization to outsource some functions. It’s a much more flexible model to pursue, but what it didn’t do was give us the resources or capacity to take on some of the new priorities our board had outlined for us. We’ve been pulling a lot of that back in house and hiring some staff so we can successfully watch our standards program and certification program and engage with our state partners. That’s been a bit of a sea change for the team here, but it’s going well.

    Was it tough to convince the board to get behind it?

    No, I don’t think so. I think they understood that where they wanted to go was going to require more in-house capability.

    What’s the biggest risk you’ve taken in your career?

    That’s a good question. Probably this role.

    Why?

    In this position, it’s all on you, right? You have to get a good team on the bus and understand where you’re going. At the end of the day, I have to be accountable to the board whether we accomplish our goals, and there’s really nowhere else for them to look. Somebody I worked with years ago told me to never be afraid to fail. It was a risk worth taking.

    Did you see it as a risk when you were thinking about taking it?

    Yeah, it’s a big change. My wife and I had plenty of conversations about it—is it something we wanted to do? But again, don’t be afraid to fail.

    Who would you consider to be your mentor and how have they helped your career?

    I’ve been fortunate to work with what I would consider to be some of the best CEOs in the association business. Working with Dawn Sweeney at the National Restaurant Association was phenomenal experience, and really the whole team that she built there. I learned something from every single person on her senior management team. What I took away from working with her was the importance of strategy and vision and understanding where you want to go, and then having the right team to help you get there. I would also say that I was fortunate enough to work with Karen Ignagni in America’s Health Insurance Plans, and continue to this day to be impressed with her ability to bring the industry together around public policy issues, identify a position and a solution, and then go out and execute from a public policy perspective.

    Future Leaders of Senior Living

    Say I’m about to graduate college. What would be your pitch to me about why I should come to senior living as a career?

    I don’t think there are very many industries where you can truly do well by doing good, and I think this is one of those industries. It’s also one of those industries where you can do that and it can also lead to an incredibly successful career. Again, that whole notion of starting as a direct care worker and ultimately running a $25 million business. Where else can you do that? At the same time, you’re providing care on a daily basis to seniors that need it. I think it’s that combination of mission and business that will really attract people to the industry.

    Do you think the industry does a good job of taking those people on the front lines and giving them a path to succeed as a career?

    You know, I’m still new. I’m still learning. I think there’s room for improvement. You’ve got some operators that do a phenomenal job with it, but I think that’s part of what the association, what Argentum needs to do, is bring the industry together to outline what that career path is so it can be articulated to potential employees, guidance counselors in high schools, folks at community colleges, folks at universities. We need to get a coherent message out on what that career path is. I think that’s part of our role.

    What about developing the next generation of leaders? What’s Argentum doing and what could the industry as a whole be doing?

    So there are some programs out there now with universities. We partnered with USC on an executive leadership-like program. We host in conjunction with our annual conference an executive director leadership institute that attempts to bring executive directors to the next level. I think there’s more that we could do in that space. We’re talking with other universities about how to create a truly national program that could be in various pockets around the country. I think what we’re doing with the certification program is going to go a long way towards helping that. Our executive director certification program won’t be for all executive directors, it’ll be for the best of the best. So if you’ve been an executive director for at least three years and you are truly at the top of your game, you can sit and take this test and almost become a CPA within the industry, so to speak. That will sort of be a beacon that others in the industry can look to. I want to achieve that. I want to be the best of the best. I think that will go a long way in terms of helping that next set of leaders.

    Regulation in Senior Living

    Argentum is very active at the state level, and many members feel it makes the most sense to keep regulation there vs. federal. Do you think that the industry should expect more scrutiny from the federal level as well?

    I think over time, it’s inevitable. That’s part of why we need to develop standards now. It’s part of why we need to, to the extent we can, get consistent regulation in the states. The U.S Government Accountability Office is currently conducting an investigation into the use of medicaid funds in senior living communities. One of the things they specifically asked the GAO to take a look at was discrepancies in state regulatory models. So to the extent that we can get some consistency across those models, we can take that off the table as an argument for federal oversight down the road. Now, you know, for the most part our industry is private pay. It doesn’t engage in federal reimbursement, but there’s still a high level of regulation today from the federal government. Nearly 30 agencies in one way or another touch our industry. There’s current regulation at the federal level, but predominantly it’s at the state level, and that’s where we need to keep it.

    Do you think the government can help drive that technology? Looking at ACOs and things like that, everybody is trying to figure out how senior living can participate in those. You obviously need the data to be able to participate in ACOs.

    A lot of our operators are trying to figure out what their role might be in that space. For those operators who might want to be in that space, they’re going to have to leverage EHRs, because they’re going to have to be able to report on their quality indicators and outcomes. It’s just going to be part of the process. I think you’ll see those operators adopting technology much more quickly than perhaps others.

    Do you see a day when Medicare starts to pay for assisted living in some form?

    No. One, I don’t know that the industry wants Medicare to pay for, because it does open up the industry to more oversight, and people still have visions of what happened to skilled nursing years ago. When we think about the boomers that are going to be coming into our industry and demanding a lot of different things from what our current residents demand, the industry’s going to need to be able to innovate and adapt. I think federal oversight, like what you have on the skilled nursing side, prevents that. I don’t think the industry has an appetite for moving towards that.

    It’s almost like the boomers don’t fit the federal regulations.

    They don’t! When have they? That being said, where CMS is trying to go, in terms of Medicare payments with bundled payments and ACOs, I think there is an opportunity for our industry to come in, potentially, as a subcontractor. If not on a revenue share basis, perhaps a fee-for-service basis contracting with the hospital directly, or contracting with the managed care organization directly. I don’t see appetite for direct reimbursement from Medicare.