• September 15, 2017

    Meet Todd Novaczyk, founder and CEO of New Perspective Senior Living, based in Eden Prairie, Minnesota. After a successful career in owning and operating hotels and restaurants, Novaczyk sold his interest in those businesses in the mid-90s and was left to decide what to do next. Based on a personal experience, he and his family became interested in senior housing, and by the year 2000, New Perspective opened the doors to its first community.

    Today, at 20 properties and counting, the company is still a family-owned operation, with Novaczyk, his wife and three children all having held roles in the business in the past or currently. We sat down with Novaczyk to learn about how he got his start in senior housing, where he sees the potential to learn a lot more about residents and their wellbeing, and why senior housing presents “endless” opportunities for the next generation.

    Tell me about how you got into senior living.

    We were monitoring my mother-in-law for a period of time back in the ’90s. She was starting to experience dementia, and we found eventually that she just shouldn’t be in her own home. We visited several times a week, and went over one night to find something smelled funny in the air in the house. We scoured the house looking for what was going on, and finally I walked through the kitchen and saw she had the oven just barely turned on. I opened the oven and there were her slippers. So I take her slippers out and I go out in the living room, “Betty, just curious, but why do you have your slippers in the oven?” She looks at me and goes, ‘Well, because I was cold.” I looked at my wife, she looked at me, and we didn’t say a word. I said “You know, Betty, why don’t you pack a bag and come with us for the weekend?” That was it. She never went back home. She lived with us for seven years. At that time I was in the hospitality business. I had built and owned and managed 61 different restaurants and hotel properties over that 20-year period. We were selling them in the early ’90s and ended up getting out of our last property in ’96.

    Were they franchises?

    Two were franchises, and we had our own family restaurant company and we created our own hotel chain called Franklin Inn—it was kind a hotel chain in New Jersey. We built four of those, and four Italian restaurants that were part of the hotel. Long story short, we divested ourselves of those. It was one of those “What am I going to do when I grow up?” moments. We had built, we knew how to raise money, I knew how to manage, and we had looked for a place for my mother-in-law to live, and never could find one. So we said, “You know, why don’t we try and build some senior housing [properties] that are better than what we’re seeing out in the market?”

    In the early ’90s, a lot of the product out there was just not that exciting. It was bare bones and more institutional. We wanted to do something more social with engagement and activities, a chef-driven type of food service. We opened our first community in 2000 after starting the business in ’98. Now we’re building our 21st community up in west Fargo, North Dakota. We have 2,200 residents roughly. Betty lived with us for seven years before she passed away.

    Was she your first resident?

    No, she always lived in our home and we took care of her. The things we learned from her are really the basic fundamental blocks of our business. We were all about researching brain fitness, physical fitness, social involvement, nutritional improvements. Our four pillars in our company, New Perspective, are those four things. In everything we do, we kind of have a tagline of: “What’s best for Betty?”

    Still to this day?

    To this day, 19 years later. We sit around the conference table and everyone’s arguing about a nickel here a nickel there…Somebody’s ready to fall on the sword to save the nickel, then some someone says: “Well, what’s best for Betty?” And we say okay, spend the nickel! Anyway, so that’s the story, that’s how we got into it.

    When you first talked with your wife about that first community, did you think: Maybe this will be my next thing?

    She’s been in it with me from the beginning. She’s involved on all our architecture, our design. She outfits all the buildings with fabrics, the colors, furniture, artwork, everything. She just has a knack for that.

    Is she still working with you today?

    Yes!

    Sounds like a true family business.

    My younger son was our construction director for six or seven years. On his own, he just developed his own community outside of Green Bay: a 130-unit development, for which he raised the money, put it all together, and he’s off and running. My older son is our president and CFO, Ryan. My daughter, Polly, was our memory care director for about nine years. She now has switched, I call it to the dark side, where she is now working in development with me and her mother. She has two little boys and wanted more flexibility.

    We’ve surrounded ourselves now with some really, really bright folks who are industry veterans and great people.

    When you started the company, was it always the goal to have it be a family venture?

    Well, we never really thought much about it. It was just what we did. My kids gravitated to it. Ryan always has helped me with the financial part. Nick was working with somebody else, and decided to learn about development construction. My daughter was a teacher, and I think she saw that we were having fun and doing unique things. She had a really tight relationship with her grandmother and she had learned a lot about dementia. She ended up going back for her master’s degree in management of aging services at the University of Maryland. So she then became a specialist in memory care and really did a phenomenal job. Everything we’ve designed, we designed with her ideas from things she’s shared with us.

    As the owner of the company is it cool to surround yourself with family like that?

    Yeah! You have to sometimes be able to not take things too seriously, because your kids are trying to make good decisions, and they’re all doing things and sometimes you wouldn’t do it that way. So it’s a little tougher with family sometimes to have that balance, but we’ve done pretty well, and my wife says, “Nobody’s dead yet, so we’re good. Nobody’s dead yet, right?”

    When you started did you ever think you’d have 21 communities?

    No.

    More from the Leadership Series

    What were your ambitions?

    I thought maybe we’d have a handful of communities that we’d kind of run and manage around our market in the Twin Cities. Then one thing led to another, and all of a sudden we’re finding people are calling us from the Quad Cities in Illinois and saying: “Hey, you’ve got to come down here.” Then we’re in Wisconsin and we’re in North Dakota. It almost takes on a life of its own. Things start happening, opportunities will come by and you’ll say: “I never would’ve realized, I never would’ve dreamed, I never would’ve thought we’d be going down this road.” It’ll just evolve. Especially being around this industry, which is really smart, by the way. By attaching yourself to this industry, your runway is just going to be nothing but success.

    I just spoke to 85 executive directors for about an hour, and we talked about their opportunity and what they’re doing. They were all saying, “Well, what degree should we get?” I said, “You know, it doesn’t matter. Just become the best leader you can become. Learn how to lead, learn how to engage people, learn how to listen, learn and help others and you’ll lead.”

    Some of our best managers were 20-year grocery store managers, 20-year Kohl’s department store managers. They decided they wanted to do something more on purpose. They got into our business, and now they’re executive directors. One of the two just got promoted to regional director. The opportunities are endless.

    From your days of owning hotels and franchises, did you learn anything from those industries and those experiences that you’re applying to senior living?

    The thing I carried over was the passion for trying to plan, organize, lead, direct, and control outcomes of an organization. In the restaurant business, the margins are terrible. The margins in assisted living aren’t that great. You had to have great plans, organize well, lead folks directly, control food costs to the Nth degree. I took that over from that business into what we’re doing. I think we run a very well organized financial model, our developments have come in on budget — although not always on time in the current market.

    Todd Novaczyk, Founder and CEO, New Perspective

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    We’ve started to see the NIC data show some occupancy pressure. How do you think operators get through this rough patch?

    It’s pressure in selected areas. The majority of the industry isn’t under pressure. We don’t have any problems sourcing markets that are underserved. There’s somewhat of a herd mentality that a lot of people jump into certain areas for whatever reason, and we just typically don’t. We don’t go there [if it’s saturated].

    Do you see it as an opportunity when other people come in and don’t exactly know what they’re doing?

    It’s a concern we have that we’re seeing a lot of just folks who I would call pure developers, that have no affinity for the industry other than they know it’s a growing segment, so they want to build and earn money from whatever the deal will bring to them as they try and sell them. We’re seeing a number of those kinds of developers, and I’m speaking about our market mainly in the Midwest, where folks are starting to build things. I’m not sure they totally understand how the building should be laid out—whether it’s the room size, common space, or the way a kitchen should be formatted for this kind of foodservice business. We’ll see.

    How did you gain that experience when you got into this business?

    We learned from others. This industry is very open. People are willing to share, and I was so blessed that I came to conferences and I just picked people’s brains. They invited me to come look at their buildings. We were very blessed with good mentoring.

    TECHNOLOGY

    If you could create an executive dashboard that you would look at every Monday, what would be on it?

    Well, you have the basics of tracking clinical care metrics, which are important, and we need to do that. We’re just starting to talk about getting data on things that we would ask questions of a new resident coming in. Like: On a scale of one to ten, how well do you normally feel? Well, then in 30 days or 60 days we could ask that question again. If we find out they said, “Well, I normally feel very well 70% of the time,” and all of a sudden, 60 days later they say: “You know, I’m feeling pretty well normally,” we know that something has taken place in her attitude and her mind that she’s more engaged, that now all of a sudden here she is really involved in life, living life on purpose. That’s the type of data I personally would like to see. I’d love to see if you said “How lonely do you normally feel?” and if somebody says “I feel lonely like 70% of the time,” and in 30 or 60 days they say, “I’m not very lonely anymore,” all of a sudden that graph is going down and that is significant data that tells me those teams are doing something extraordinary with those residents to get them to feel better, and to feel less lonely. Another one is monitoring gait. If we had data where we test residents as they come in, and we can design programs and help them monitor gait, it’s a real foreteller of potential problems for health.

    You didn’t describe anything financial on that dashboard.

    We know what the metrics are. You know occupancy numbers; that certainly is a metric we track. We track it every day every and week. NOI… you know where you are with your expenses. That’s blocking and tackling. But for my personal dashboard, I want to see that kind of stuff. I want to see if people are less lonely.

    If you see somebody change, how can you tell what made them change?

    You may be drawing a conclusion that if they came in saying, “I really don’t feel very well most of the time,” and now all of a sudden, 60 days later, they’re saying, “Boy, I feel pretty good,” you’ve got an attitudinal change there. Now that doesn’t mean there aren’t physical issues. We have to do the clinical blocking and tackling. We have to make sure we deliver the meds right, we have to make sure they get therapy, we’ve got to make sure we’re giving the insulin shots properly — and maybe it’s as simple as helping somebody button a piece of clothing because their arthritis is so bad they can’t button. Certainly you’ve got to have that blocking and tackling.

    With 21 buildings right now, do you have a number in mind of where you’d like to be?

    It’s such an exciting time in the industry because the opportunities now are coming quicker. More communities are starting to say, “We need assisted living,” and economic development directors are reaching out to people like us, so I think the opportunities are there. I would say we are kind of trying to build our team of really high-quality, experienced, passionate people to be able to deal with the opportunities. I’m not going to say we’re going to build six more or 60 more.

    Could we double the size? Yes.

    Can you actually make a company that’s better than just your regional operator? Can there be a national operator? Do you think it’s possible?

    When I have conversations with our chief operating officer, Chris Hyatt, about his experience working for Emeritus, with 515 communities in 46 states, that’s way too much for me. I think having a core like we do in the Midwest, and possibly looking at another area where we could develop a regional cluster, but you want to have a cluster because you want to have people who all can function in a fairly tight geography and support each other. You can have your meetings and it’s just a better deal. I would see that maybe we could end up having one or maybe two more selective regions that we’re going to try and develop in, but again, we’ll see. We’re going to take it a day at a time.

    LEADERSHIP

    What’s your definition of leadership?

    The way I evaluate good leadership is by looking at the folks who are reporting to the leader, or the manager. Their attitudes, their initiatives, their outcomes either reflect that that person is truly leading or not. I look at leadership more from the standpoint of: What are the folks around you doing? Are they accomplishing their personal plans? Are they accomplishing the goals of the organization? Are people genuinely happier when they’re around that person? Or are they fearful? You can see that and sense it just by hanging out, by being around people and talking. Not that you’re asking leading questions, but you can ask them a few questions and you’ll know how they’re being led or not being led. That’s not really a definition, but that’s how I would evaluate a leader in our organization.

    During your senior housing career, what’s been the biggest challenge you’ve faced?

    Our biggest challenge today, yesterday, and for sure tomorrow is going to be attracting quality, passionate people who really, truly want to be in service for this group of 85-year-olds that we serve. That’s our challenge, that’s been our challenge. Nineteen years ago, when I started this business, finding those people was our number one-challenge and it’s been consistent through the whole process.

    Where do you think you find them?

    You just have to be willing to talk and talk to enough people. The best thing is finding out who our best people are and have them recommend people, because they know what it takes and what they have to do to be the good leaders. They recommend people to us who are also winners and champions — people who want the same experience their friend does. That’s kind of one of our best sources of personnel.

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

    Most people would say it’s personally guaranteeing every dollar of debt the company has. With 20 communities, that’s not a lot compared to the big companies, but we’re personally guaranteed on it. That’s really just par for the course; you have to do that to be in business. I would say our bigger risk really is creating and trying to champion new programs in assisted living that haven’t been done. We tried a program a few years back, and we spent a whole lot of money and guess what? It didn’t really fly. Probably because we maybe didn’t plan and organize it well enough, and maybe we’ll revisit it one day. But those risks where you trial-and-error, you try some things and you spend money — you might go out and buy a whole bunch of equipment to do a certain thing and you find out it doesn’t work. Those risks to me seem to be the ones I’m most fearful of.

    Not all that debt?

    No, because I believe so much in what we’re doing. I believe in the industry and I believe in its long-term value.

    What’s the best piece of advice you’ve received in your career?

    The best advice, I got from my dad a long time ago. He was an airline mechanic, so he fixed engines; that was his specialty. Number one, he said always, always do good work. The reason he was so committed to doing good work is because he knew that engine he fixed, that’ll work. Then secondly he said you’ve got to have a little fun. He said make sure you keep it a little light and just enjoy every day, and enjoy what you’re doing. Third, he said “…and then try and make a little money.” That was it, that’s probably the best advice I’ve ever had.

    Was your dad entrepreneurial?

    In a sense he was. He always had a second job. He was a rototiller guy; he had his own business. He’s been dead for a number of years, but I came across one of his old business cards for his rototiller business. He’d go to work all day and work as a mechanic at the airline and he’d rototiller until dark in the spring and summer. In those days, in the ’40s and ’50s and ’60s, you just wanted to put bread on the table. In a sense he was an entrepreneur in that he created for himself what he needed, but he always has this good job as a mechanical engine guy. He loved what he did. Just loved it.

    Who do you consider to be your mentor?

    For 20 years when I was in the hospitality business, my partner was a guy named Jack Chabot. Jack is now 88 and is still just going gangbusters. He was my restaurant and hotel mentor. He helped me understand how to source deals, find real estate, sit with a banker, sit with city council members and get them to see the wisdom of letting us build a restaurant in their city. He was just an all-around great guy, easygoing, and he taught me just not to sweat the small stuff; that there are enough problems in the world that we didn’t need to add to them. He’s still living the dream.

    What do you think the biggest challenge the industry faces is?

    I think the biggest challenge is going to be people.

    Why does it feel like this has been obvious for so long but the industry’s finally paying attention?

    We’re a young industry and we’ve been doing okay, and there’s a ratio of potential carriers to residents now that’s okay, but now all of sudden because of technology and data, more people are now realizing that the number of caregivers, dietary, maintenance, and care directors are going to go down significantly in the next 10 to 15 years. We’ve got to find ways in the industry to retain folks, provide them a great environment, a lot of love, a lot of care to feel good about what they’re doing and [make them] want to stay. We can’t afford this turnover ratio we have right now across the industry. That going to be our challenge, because the demographic of the 80+-year-old is going the other way. So you’ve got the caregiver demographic going down, and you’ve got the 80-year-olds living longer and longer and longer. They’re going in opposite directions. Because of communication, we are learning about it firsthand now every day.

    What is New Perspective doing to attract talent?

    We’ve got a number of initiatives that we’re working on internally and working with our teams because they’re the ones out in the communities who really have their hands on the pulse of what’s going on. We’re trying to give them the resources they need to help them go to market to try and figure out how to attract people. We’re trying to help educate them more to say: “You need to be more involved with your people, respect them, certainly hold them accountable, because they want to do a good job and give them feedback. Give them the love that they’re doing a great job because retention is going to be the key for the industry.” We’ve got to find a way to have people feel good about what they’re doing, and good about the organization, in order to stay.

    We always talk about bringing people into the industry but your focus seems to be on retaining them.

    Retention is going to be talked about. What do the surveys really mean? When they say “I’m somewhat happy,” what does that really mean? How do we get the people who are kind of in that middle group to buy in and to say “I want to be here. I want to make a difference. I want to be a contributor to this solution.” We need to find ways to serve them better and not do it in a phony way where they somehow think we’re giving because we want to get. We want you to feel tremendously valued. You have to do your job, you have to do the blocking and tackling, no question about it. You’ve got to do what’s right by the resident, but at the end of the day it’s about providing them an environment where they can say: “I really feel good about this. I like it here.”