NIC Chats Podcast with Ryan Novaczyk

Lisa McCracken (00:01): 

Welcome, everyone, to the latest NIC Chats podcast! I'm Lisa McCracken, Head of Research and Analytics with NIC, and I’m super excited to have our guest today, Ryan Novacek, CEO of New Perspective Senior Living and a dedicated NIC volunteer. 

Thank you, Ryan—I appreciate you joining us today! 

Ryan Novaczyk (00:21): 

My pleasure. 

Lisa McCracken (00:22): 

I’m asking this question for myself as well because I honestly don’t know! I don’t know your background or how you got into the industry, so I’m curious. You’ve been around for a while, but could you share a little history about how you got into the senior living space? 

Ryan Novaczyk (00:38): 

Sure! We’ve been at this for over 25 years. I got into the business because my grandma had Alzheimer’s, and as a family, we couldn’t find a place we felt good about taking her. We took care of her for seven years and learned a tremendous amount about the needs of seniors, particularly those with Alzheimer’s and other forms of dementia. 

We kept her busy every day—raking leaves, shoveling snow, doing arts and crafts, enjoying music, attending family events, going to church, gardening, weeding—you name it. Most of the time, she went to bed tired from a full day, not because she was doped up on antipsychotic medication, which, unfortunately, is far too common in how we treat this disease in this country. 

My father, Todd, had a background in hospitality—restaurants and hotels. I was working on Wall Street in investment banking, mergers and acquisitions, and equity research. We cooked up a business plan in the basement, but nothing happened for a few years. My mom was yelling at my dad to get a job, and he kept saying, It’s gonna work, it’s gonna work. 

Finally, a deal got done. Then two. Then four. Now, we’re at 42 communities, taking care of over 4,000 85-year-olds, helping them live life on purpose every day. 

Lisa McCracken (02:03):
I had no idea that it was a family thing. I'm always impressed to learn the number of families that really have some legacies in our industry. It's pretty impressiveIs your father still involved, or has he stepped back? 

Ryan Novaczyk (02:18): 

He’s our Executive Chairman. 

This business lends itself to a lot of companies that started from caring for loved ones because there was a gap in the market. Many families, like ours, couldn’t find a place they felt good about bringing their loved one, so they set out to create something better—not just for their family member, but for others as well. 

There’s a lot of history behind that. 

Lisa McCracken (02:50): 

Looking back 25 years, when you felt like there weren’t sufficient options—or at least not the quality you were looking for in a particular area for your grandmother—do you think we’ve moved the needle as an industry? 

What changes have you seen over the past 25 years, and where do you think we still need to go? 

Ryan Novaczyk (03:13): 

I think everything has changed. Going back to the beginning, something as simple as using QuickBooks for accounting was the norm. Now, the complexity of the systems we use for basic accounting and finance has increased exponentially. And that’s true in every single aspect of the business. 

The model originally focused heavily on hospitality, aiming to be the antithesis of the skilled nursing environment. Over time, the acuity of our residents has risen. Hospitality is still of utmost importance, as is life engagement and helping seniors live life on purpose. But as residents have aged and their care needs have increased, the complexity has grown significantly. 

On average, our residents have four or five comorbidities, making care more intricate than ever. 

Ryan Novaczyk (04:13): 

And that’s true across every aspect of the business. Sales has changed dramatically—the tools we use, how we identify customers through psychographics and other data, all of it has evolved significantly. 

Technology within the physical plant has also advanced tremendously. Just recently, one of our directors called about a contract for a Trane HVAC system. It’s now software-based, and while you wouldn’t typically think of needing a contract for a software monitoring tool for air conditioning and heating, now there is one. 

Fire protection systems, door access control, CCTV—there’s been a huge amount of change. 

Marketing has also shifted completely. It used to be all about direct mail, but now, close to 80% of our leads come from digital sources. 

Ryan Novaczyk (05:13): 

That’s a massive change. Every year, we’ve seen increasing complexity in the business and a tremendous amount of change—but all for the better, improving the quality of life and healthcare for seniors. 

People do better in a senior living setting than they do at home. Loneliness is a huge issue, and we can help solve for that. 

Looking ahead, with the introduction of AI, I think we’re going to see the pace of technology and its usage accelerate even more. It’s an exciting time to be in senior housing. 

Lisa McCracken (05:55): 

It seems like a lot of that technology and operational complexity is changing rapidly, even just in the past five years. 

As an operator, one of the things we hear often is—how do you keep up with all of it? And beyond that, how do you manage the expense? But at the same time, if you don’t invest in it, there’s a cost to that as well. 

How do you navigate staying on top of it all while also balancing the investment side of things? I’m curious. 

Ryan Novaczyk (06:29): 

You've got to have the right people first and foremost. You've got to have very well thought out, processes, and you need to get in alignment with your capital partner. A lot of those things that I mentioned that we do on the management side of the house hit one, and a lot of those things I mentioned, hit the other side of the house at the operating community level where your capital partners are involved. And the cost has increased exponentially to just run the day-to-day operations of seniors. Housing human resources is another area that, I don't want to say it was ever simple, 'cause people are always complicated to deal with and manage. But the complexity there in navigating those waters and really dialing things in on the recruitment and retention front it requires a great team of folks with great tools and systems and culture. We are huge believers in servant leadership and collaboration at new perspective. And that kind of serves as our North Star. So we kind of add that into the mixing bowl with great people and great process. And continuous cultural improvement, you can kind of solve any problem that's out there. Might not be instantaneous, but if you put your mind to it, you can work through those issues that pop up. 

Lisa McCracken (07:53): 

I observational just sort of the cost and affordability piece. Now, this is on the consumer side of things. As I was preparing for our time together, I was digging around the website and you guys have a pretty cool, it's called senior and assisted living cost calculator. And probably there's some validity to the argument that our sector does sometimes skew a little towards, a higher income private pay group. But at the same time, we also know that sometimes the aging in place on top of the isolation things that you referenced too, but if you need some support in your home, I mean, the cost of aging in your home isn't always feasible either. And I thought you took a really interesting approach with that on your website in terms of some of this cost benefit. And actually, in many respects, it's sometimes more costly to live in your home than it is to have sort of that, that bundled, you know, hair quality, social environment. 

Ryan Novaczyk (08:54): 

In most cases, you're exactly correct. It is more costly to live in your home. And it could be three to four times the price tag of what you'd be paying to live in a senior living community. And probably, you're gonna get worse health and wellness outcomes when you look at the maintenance of most seniors. They probably don't have a mortgage on their home anymore—it's been paid off. But property taxes are real, insurance costs are real, energy costs are real. The cost of food and food preparation has gone through the roof. And it's difficult for a senior to buy in bulk because the gal kinda outlives us guys a little bit, and she's home alone. You're not able to go to Costco and get savings on groceries. 

Ryan Novaczyk (09:45): 

You look at yard maintenance, automobiles, getting to appointments—there's a tremendous amount of cost staying in your home. And if you do need healthcare and senior living or assisted living services, you're bringing in home health. There's certainly a role for home health, and its usage is going to dramatically expand, and it needs to. 

But what you miss out on is that broader setting to enable socialization and life engagement—what we call living life on purpose. Having daily access to physical fitness, a great dining experience, and activities happening. Being able to meet and hang out with friends, new and old, and having an area where you can bring in guests to share your home and common space. 

Ryan Novaczyk (10:39): 

When you look at a senior living community, maybe 100 to 150 units, it's like a whole city with a bar, a bistro, a dance hall, a salon spa, a warm water therapy pool, a rehab center, and a fitness gym. You've got service professionals everywhere, round-the-clock staffing, and on-call nursing in the middle of the night if needed. 

Any way you slice it, seniors tend to be better and thrive in that setting more than in the isolation of their home. And by the way, it's more cost-effective for them in most cases, which is why we put that calculator together to help illuminate those factors. 

Lisa McCracken (11:20): 

Yeah, that's pretty cool. I couldn't help but have a vision in my mind when you mentioned the bar, the pub. Have you seen A Man on the Inside? Ted Danson's first night in the retirement community—they had a good time. If you haven't seen it, check it out. It's pretty funny. 

So you mentioned the right capital partners. New Perspective had a pretty big splash last year with a capital commitment and a clear plan for the organization's growth. Can you talk about that a little bit? 

Ryan Novaczyk (11:58): 

Several years ago, we set a goal of getting to 10,000 seniors living life on purpose, and we're just about halfway there. There's still a lot of work to do, but the pace is accelerating, and it's exciting. 

To achieve that goal, you need great capital partners, equity partners, REIT partners, and lending partners. Every deal is unique, and we've been very blessed with a wonderful equity group and our partners, Bolt and Fengate, as well as a great banking relationship with BMO. 

That capital stack works well for certain transactions, and we've also built a strong and growing relationship with our biggest REIT partner, Welltower. They've probably been growing their book of business more than any other capital group out there. 

Ryan Novaczyk (12:51): 

We love working with them, and they've got a big appetite for growth, as do we. Depending on the transaction, you try to find the right fit based on the dynamics. Is it a big value-add deal with a turnaround? Is it a brand-new building that's 95% occupied, generating 35–40% NOI margins, where your job is just to keep the car on the road? 

Or is it a massive turnaround effort where the physical plant needs to be completely refurbished, remodeled, and refreshed, and the team needs to be ramped up and improved from a people quality and process standpoint? There are all kinds of deals with different risk profiles that fit differently with various capital partners. 

You certainly don't want to have six, seven, or eight capital partners because asset management has become a much bigger deal for them. 

Ryan Novaczyk (13:49): 

They're much more involved in learning about day-to-day operations, and that's a good thing. The more knowledge capital partners have and the more we can share with them, the better investment decisions we can make together as a team. 

That's one of the changes we were talking about earlier that I didn't mention. We are much more attached at the hip with all of our capital partners, discussing day-to-day operations, sharing ideas, insights, and collaboration. And that's driving good outcomes. 

We're very pleased with where we are in the pools of capital. Now, we just have to execute on the growth plan. There's a ton of great activity happening every single day. We probably evaluate several transactions a week. 

Ryan Novaczyk (14:40): 

Hundreds of transactions are evaluated over the course of a year, but only about 5% or less make it through the funnel. A lot of leads go in at the top, then go through underwriting, investment committee review, and approvals. After that, you still have to negotiate and close the transaction. 

A lot of activity has to happen for a relatively small number of deals to come out the bottom of the funnel. But the team continues to grow, and we're excited about the opportunities in the space. Hopefully, we'll reach our goal of 10,000 seniors living life on purpose in the not-too-distant future. 

Lisa McCracken (15:20): 

That is crazy—the number you just quoted. You definitely need a team to stay on top of that. 

I want to spend a little time talking about the team. You have what I would call a unique structure, but I'm also noticing it's becoming more common. You're not alone in the co-CEO structure, or was it CEO and president? I believe that's the structure in your organization. 

I've seen it work very well with the right setup, but if you don’t have the right structure—and the right people—it can go the other way. Can you talk a little about what the structure is, the rationale behind it, and how you divide and conquer? 

Ryan Novaczyk (16:07): 

I'm one of the co-CEOs at New Perspective. Chris Hyatt is my partner in crime, and we've had this structure in place for a while. I think we were one of the first to implement it in this space—not in business in general, of course. You can go back to Michael Dell, where the CEO and COO had a similar dynamic. 

There's actually a book about it called Riding Shotgun, which is an interesting read. It talks about why it's so important to merge those two roles so that the right hand always knows what the left hand is doing, and vice versa. Given the complexity we've discussed, that was really the reason behind this structure. 

Ryan Novaczyk (16:54): 

This is true in other businesses as well. Netflix, for example, has a co-CEO structure, and there are plenty of other examples out there. When you look at the areas that need to be covered—sales, marketing, human resources, information technology, finance, accounting, treasury management, asset management, investment, risk, legal—the list goes on. 

It's very difficult for one person to tackle all of those things. In a typical hierarchical pyramid structure, you tend to get more latency, slower decision-making, and probably less attention to the team members who need support in each of those areas. 

By flattening the org chart a bit with a co-CEO structure and taking a divide-and-conquer approach, we've found it to be much more effective than the traditional model. 

Ryan Novaczyk (17:58): 

Chris has his areas of focus, and I have mine. I can do his job, he can do mine—though neither of us does the other’s job quite as well—but we figure out a way to get it done. If he's on vacation, I can step into his role, and if I’m working on a big project, he can step into mine when needed. 

It's not just about coverage; it’s about providing more leadership and direction to the team more quickly. To make this work, you need a fantastic partnership with an unbelievable amount of trust between the co-CEOs. We're very fortunate in that regard. 

You also have to be able to practice radical candor with one another and be intellectually honest, even when those discussions are uncomfortable. 

Ryan Novaczyk (18:51): 

Chris and I are blessed to have all those things. That doesn’t mean we agree on everything all the time, but we can usually complete each other’s sentences. Our messaging to the team might be slightly different, but we figure it out. 

If we have a disagreement, we take it offline rather than airing it in front of the broader group—though occasionally, we’ll debate things openly and just work through them. We’ve found the co-CEO structure to be refreshing. It’s new, fun, and exciting. Others in the space are replicating it, and we’ve done several interviews on the topic. There have also been a number of articles recently about more companies trying it. 

It’s not for everyone. But if you have two people with the right mindset who can check their egos at the door and focus on helping seniors live life on purpose, I think they’ll find it’s a better way to run a business in our space—and maybe in general. More companies outside of the senior living sector are experimenting with it as well. 

Lisa McCracken (20:06): 

Yeah, good for you. I do think the ego check is a big one, along with communication and trust. That’s awesome. 

I want to go back to the growth conversation for a moment. With all the transaction activity you mentioned and the different opportunities you're vetting weekly, I didn’t hear anything about new construction. Is that in there somewhere? Maybe, maybe not yet? 

Ryan Novaczyk (20:32): 

It's out there somewhere—where exactly, I don’t know. Laughs. 

The development and construction side has been unbelievably frustrating. Construction costs are still way too high, coupled with interest rates that are far above where they used to be. It’s very difficult to make the economics work for a new construction project. Unfortunately, I don’t think that’s going to change anytime soon. 

These headwinds for new construction and development are happening at a time when there’s a lot of acquisition opportunity. We’ve identified three emotional shifts that we think sellers are going through in the marketplace. 

First, there are folks who have been in this business for 20, 30, even 40 years. They’re at the end of the road and ready for retirement. They’ve gone through four-plus years of hell on wheels getting through COVID and coming out of the pandemic. 

Ryan Novaczyk (21:38): 

Hopefully, this is the year we get back to pre-pandemic occupancy. I think that's going to happen, and after that, it’s going to take off like a rocket ship because of the supply-demand imbalance—partly due to the lack of new supply being brought online through construction. 

Those sellers care deeply about the industry. They care about their residents and team members, and they want to make sure whoever they pass the baton to has a similar mindset—servant leadership, collaboration, and helping seniors live life on purpose. 

That mindset resonates with this pool of sellers, creating a lot of opportunities. We might not always be the highest bidder on a transaction, but we’re often the best fit for the seller. And for many of them, that matters almost as much as the financial side of the deal. 

Ryan Novaczyk (22:31): 

Then you've got the tourists, as we call them—people who got into the business thinking it would be easy. I think there are more tourists among the development shops, the merchant builders. The mindset was, Oh, it’s senior housing, the baby boomers are coming, it’s going to be great, we’ll build all these projects. 

Then COVID happened, and suddenly everyone realized, Oh… pardon my French, this is healthcare. This is an 80% operations business that happens to need a real estate box to operate in. That epiphany is happening, and those folks are now moving a decent amount of product to buyers who are in it for the long term, rather than just a quick real estate pop. 

Then you’ve got the startups that grew—maybe they got to three, five, or eight buildings, or even just one. 

Ryan Novaczyk (23:20): 

And it's just very difficult to get the business to scale. It's tough to have all the team members needed to manage everything we discussed earlier—to have a full-blown human resources team, a full-blown IT team. If you’ve got five buildings, you just can't afford that. So you end up with a mix of insourcing some things, outsourcing others. 

You don’t have any buying power, which makes procurement tough. You don’t have leverage on health insurance—that’s tough. General insurance is also very difficult when you’re smaller because you don’t have a diversified pool of assets to offer a carrier for better pricing. Everything is challenging, yet these companies still have aspirations to grow. 

We think there’s going to be a lot of M&A activity around these opportunities. It may not just be real estate changing hands—it could involve management companies being acquired or merging with a larger group. 

From the discussions we've had, it's too soon to tell, but I think there’s going to be a lot of activity this year. I think you’ll see us transact in that area, where two groups could run faster together than they can apart. 

We believe these three emotional shifts will continue driving growth and fueling our goal of 10,000 seniors living life on purpose. 

Lisa McCracken (24:46): 

Yeah, there’s always that conversation about organic growth—it’s possible, but it’s hard work. I mean, all of it is hard work. Then there’s growth through partnerships, which I don’t see as one versus the other. I think we’re going to see plenty of both. 

You’re part of our group helping with the committee behind the NIC Growth Conference, and the reality is—something you obviously support—we need to give these operators the tools they need to grow in smart ways, share lessons learned, and build a stronger industry. At the end of the day, their success benefits everyone. A rising tide lifts all ships, so to speak. 

Is there any advice you wish you had early on during those tough growth years? Any lessons learned that you’d share with others who are in that smaller, scaling-up phase? 

Ryan Novaczyk (25:52): 

Well, I’ll share a couple of stories on that, but you’re right—that’s exactly the topic we’ll be covering at the NIC Growth Conference in Indianapolis this May. I think it’s going to be a great opportunity for smaller operators to learn from those who started with one, then grew to two, then 10, 20, or 50—sharing lessons learned along the way. 

We’re also going to provide real-world insights into practical steps they can take on their growth journey. The goal is to help them scale their businesses efficiently and in a way that minimizes risk as much as possible. It’s going to be a great discussion. 

Ryan Novaczyk (26:43): 

In Indianapolis, and I’m very much looking forward to sharing best practices across the different areas we’ll be covering—whether it’s employee-related topics like recruitment and retention, using data to drive those efforts, reducing risk, or improving resident health and wellness. 

Value-based care is another big discussion topic, both at Spring NIC and the Growth Conference, along with integrating ancillary healthcare services around the residents we serve every day. 

Going back to lessons learned and advice—we’ve been very blessed along the way. One of the unique aspects of the senior living industry is that it’s not like McDonald's and Burger King, constantly competing across the street from one another. Our number one competitor is people staying in their homes. 

Ryan Novaczyk (27:34): 

Right. To that end, you typically see an exceptional amount of collaboration and sharing among operators in this space. Whether it's at the Argentum Conference, NIC Conference, or NACHA Conference, you see that on display. 

When outsiders join an organization and attend one of these events, they’re often shocked. What do you mean you told your competitor how to run their memory care program? You shared a technology insight with them? It’s a completely foreign concept to them. 

If I could go back and give myself advice 25 years ago, it would be this—don’t be afraid to reach out to your peers and have those discussions. You’d be surprised. They’ll pick up the phone, they’ll listen, and they’ll bounce ideas off you. 

Ryan Novaczyk (28:29): 

I literally just did this with a guy I met at a charity event a year ago. He runs a 10-unit memory care community just east of Minneapolis. He called me because they were having some recruitment and retention issues, so we brainstormed solutions for 15–20 minutes. 

I built a relationship—who knows, maybe something happens between our two groups down the road. But the key is leveraging the resources that are available, especially those put forth by trade groups. NIC has been a leader in that space, Argentum has been a leader there as well, and reaching out to collaborate with peers is invaluable. 

We've benefited from countless thought leaders over the years who have shared tremendous insights and intellectual property with us, helping us build our organization. 

Ryan Novaczyk (29:19): 

It's all been in the spirit of we've got to get better together as an industry. If we do a really good job, that helps mitigate regulatory complexity and the challenges we have to navigate. In a way, it becomes a self-policing mechanism. 

The key is to reach out to your peers and collaborate. We did a fair amount of that, but I wish we had done even more early on. We've learned so much from our peers over the years, and it's helped us in immeasurable ways as we've grown the organization. 

Lisa McCracken (29:53): 

Yeah, and candidly, there are more resources now than ever. There’s really no shortage of networks or support available. 

We appreciate you sharing your thoughts with us, and I know the listeners will as well. 

Ryan Novaczyk (30:07): 

And the way to do that is to come to the Growth Conference in May in Indianapolis. Laughs. 

There will be plenty of operators there to connect with and learn from. 

Lisa McCracken (30:14): 

Indianapolis is great. Shameless 

Ryan Novaczyk (30:17): 

Plug for the conference. 

Lisa McCracken (30:18): 

Yeah, I'm very passionate about the growth topic because I believe in smart growth. People are very open about what has worked, what hasn’t, and this is really the first thing. 

Ryan Novaczyk (30:31): 

If a company isn’t busy growing, it’s busy dying. And if you want the best people, you need to be growing because they want to grow their careers. 

Growth is important—it’s fun, exciting, and challenging. It’s a lot of hard work, but downsizing? That’s not fun. Laughs. It’s not exciting—it’s even more challenging. 

So, set that North Star and grow. That would be my advice to share with folks. 

Lisa McCracken (30:59): 

I stole this saying years ago—I heard someone say, Pick your hard. Right? It’s all hard. So pick the hard that moves you in a positive direction instead of stagnation or the alternative. 

Well, thank you again, Ryan. I appreciate it and look forward to continuing to watch your organization and the great work you're doing. 

And thank you to all our listeners of the NIC Chats podcast. You can access this episode, as well as other NIC Chats podcasts, on the NIC website at www.nic.org. 

Thanks for listening today!