The SHB Interview: Jim Coughlin and Wendy Nowokunski, Northbridge Cos.

Owner-operator finds success by staying close to home.

 

By Jeff Shaw

The joint owners of Northbridge Cos. feel right at home in the seniors housing industry.
Jim Coughlin and Wendy Nowokunski worked together for years at a senior living company that specialized in assisted living. After a national provider acquired the company in 2004, the pair launched Northbridge together, each owning a 50 percent stake in the company. Coughlin assumed the title of CEO while Nowokunski became the company’s president.
Coughlin and Nowokunski are both from New England, and so is their Burlington,
Massachusetts-based company. The entire 16-community portfolio is located in Massachusetts, Maine and New Hampshire.
The properties include 576 assisted living units and 546 memory care units. Six of the assets are stand-alone memory care communities. Monthly rents range from $4,800 to $7,800 for assisted living and $6,500 to $8,800 for memory care.
The concentration of properties in New England gives the pair a competitive advantage, they believe. There are plenty of barriers to entry in New England such as land cost and availability, and knowing the ins and outs of the region enable Northbridge to capitalize on opportunities more quickly and efficiently.
Seniors Housing Business spoke with Coughlin and Nowokunski about why they have no plans to go national, how they tackle ever-
present labor issues, and what the future of memory care may look like.

Seniors Housing Business: Can you walk our readers through the founding of Northbridge?
Nowokunski: Jim and I had been in seniors housing for over 20 years. We met at the last company we worked at, which specialized in assisted living. We were growing that company to a 27-property portfolio in New England before we sold it to a national provider.
Having been passionate about serving seniors all these years, we founded a company that truly focused on quality of life for residents and their families. A lot of the companies we were part of were interested in growth for growth’s sake, or building to an event of some sort such as a sale.
We saw a huge opportunity. There really wasn’t a regional company focused on the consumer, the staff, the leadership, the programs, and truly trying to design what our residents and families wanted and needed. To do that we set our sights on finding the right people for our leadership team that shared our values.
We have many people who worked with both Jim and me for 20 years. We also know it’s a local business, so we committed to being the best, not the biggest. We decided to only own and operate in New England.
The capital was essential in growing our business. We found financial partners that were interested in doing well by doing good. We found a network of high-net-worth individuals to invest.
SHB: How did you connect with the original group of investors?
Coughlin: Initially, the investors that joined our family were individuals and invested on an asset-by-asset basis. About six years ago, we had considerable success with a number of the investors. A group came together and we co-sponsored an investment fund that enabled us to do the next transactions.
Starting from the bottom
SHB: How did you each get into seniors housing?
Coughlin: We were both very fortunate to grow up in the business. We have experience working onsite. We know what it takes on a day-to-day basis to be successful.
SHB: What was the early experience?
Coughlin: My first experience in seniors housing was as a dishwasher.
Nowokunski: I worked in marketing and as an executive director.
Coughlin: The majority of our senior management team came from a community level. Our senior vice president of operations was a former executive director. We brought some incredible hands-on perspective. This helps us with the on-site team because we’ve walked in their shoes before.
Wendy and I concluded that the Northbridge way is for the home office to support and provide resources to the on-site team. In many organizations it works the other way around: the on-site team reports to the corporate office. We found ours to be a very successful model. It helps us attract great on-site leadership that feels supported and learns from the organization as a whole.
SHB: You two co-own Northbridge in a 50/50 structure. Tell me why you choose to establish the company that way.
Nowokunski: We’re quite proud of that. It’s very rare to come across two people with different areas of expertise — his is in the capital raising and financing, where mine is in development, operations and marketing — who are able to see eye-to-eye to do what’s best for the company.
I worked previously where pro formas were built without operational input, and often weren’t achievable. We can balance the varied expectations of our investors, associates and residents.
SHB: Do you ever butt heads?
Nowokunski: I think we’re able to see each other’s point of view and come to terms with it. We have never been in a position — knock on wood — where we make a decision and the other person’s totally not in favor. We usually come to agreement.
Coughlin: We have a very engaged senior management group here at the home office. We have a very collaborative approach for major decisions. With that engaged group, we are not lacking in opinion on the right direction. Having them weigh in guides our thinking on how we’re making critical decisions. We’re not making decisions in a vacuum.
Analyzing the industry
SHB: What’s your opinion on stand-alone memory care versus a combination of assisted living and memory care, since you offer both options?
Nowokunski: There’s a need for both. You’ll see more new and different models evolving in the future.
The demand is just going to be astronomical, unfortunately. Our senior population is going to grow enormously, and the propensity for dementia grows with that.
We do both for several reasons. When we’re building an independent living and assisted living community, we would never build one without a memory care component. Maybe you have a couple where one needs memory care and the other doesn’t, or people just want to remain in the community that they know. That’s always going to be a component of the continuum.
Meanwhile, stand-alone memory care works very well for us. On a national level some are struggling, but it works well for us because we invest an enormous amount of energy into the design and the training for associates. Everybody is very well educated on Alzheimer’s disease.
Because of the specialty nature of the stand-alone memory care, you get residents coming from farther distances to go to a specialized program.
Coughlin: Another lesson we’ve learned on stand-alone memory care is that we’re not just taking care of the resident, we’re taking care of the family. When families choose a Northbridge community for their mom or dad, they’re partnering with caregivers that are specially trained. We can teach the family what to expect.
SHB: What do you consider to be the perfect size for a community in terms of total number of units and square footage?
Nowokunski: Typically our mixed communities range from 70 to 110 units, with memory care accounting for 25 to 30 units of that total. On our stand-alone memory care, we have 60 to 70 units.
For memory care, our buildings are designed in neighborhoods. We like the typical neighborhood to range from 12 to 18 residents with a maximum of 22. That’s manageable. It gives us the staffing ratios to be efficient and not overpower our residents.
Our buildings are designed with each neighborhood having outdoor secured space, a kitchen area, dining area and activity area. It truly is their own neighborhood that residents can get familiar with, as well as the staff within that neighborhood.
Our memory care brand name is Avita, which means “for life.” When you come into Avita, it’s very calming. Our residents’ families say it feels like a spa. There’s a fountain, a fireplace, a living room. It allows the family to decompress before seeing their family member. The staff will be around to say “mom’s having a difficult day today” or “mom’s doing well with this.” There’s a comfort that happens through the design of the building.
Coughlin: Smaller neighborhoods are beneficial for staff. Our associates get to really understand each resident, and they get to know the families. So, we can provide specialized care to the residents.
How to build a company
SHB: What is the ownership structure like for your communities?
Coughlin: We currently operate 16 communities, 15 of which are single-purpose entities that we own and operate with investor partners. The last we operate on a third-party management contract, though we do also have an investment in that property.
We’re very selective of who we partner with. It’s very strategic from a growth standpoint.
SHB: Do you prefer development or acquisitions, and what does your current pipeline for each look like?
Nowokunski: We’ve grown through acquisition of value-add assets, acquisition of distressed assets, ground-up development… we’ve done it all.
We’re dedicated to New England, which makes it very difficult to grow a portfolio from development because the lack of availability of land. The development cycle is anywhere from one to 3.5 years. We currently have three ground-up developments in the pipeline and two value-add acquisition opportunities in the pipeline as well.
Our whole growth strategy is being very prudent, making sure each property stands on its own, sticking to our geographic market area and meeting the needs of the particular market.
We have no intention of being the biggest. We just want to be the best at what we do. We’ve been asked many, many times, “When are you going national?” It’s not something we want to do.
SHB: Why not go national?
Coughlin: We’re very involved in every community. We go out to the communities once or twice a year for listen-and-learns. We talk about what we’re doing well, what we can do better, insights the associates have. So it’s really important our communities are accessible to the home office.
Staying local also helps us know the talent we’re hiring. Having 30-plus years of experience in this space, there are a lot of relationships we can leverage to bring in the appropriate talent to be leaders.
We also have a competitive advantage. We grew up in the area. We have very close ties to the experts here. It’s very challenging for the competition to develop scale in this market. They typically buy their way in if they want to get into the New England marketplace.
Solving the labor puzzle
SHB: What is the biggest challenge facing seniors housing today?
Coughlin: You’ll hear it from every operator: Attracting and retaining the right labor pool is the biggest burden we’re faced with right now.
We’ve been successful because we’ve invested a lot of time, energy and enthusiasm into our culture. They say it’s difficult to attract millennials to this sector, but we’ve been able to tap into some incredible associates that have adopted the Northbridge way and provide incredible care.
Nowokunski: According to the U.S. Bureau of Labor Statistics, we’ll need 1.3 million new caregivers in the next five years. That’s pretty daunting, especially given the shortage that we’re seeing today in the labor pool.
A lot of companies are partnering with colleges. We’re starting at the high school level because we believe we’ve got to instill in them that desire and drive about this industry before they make [career] decisions in college. That’s how we build our future workforce.
We have a program specific to one of our Avita projects in Needham, Massachusetts with an all-boys school. Kids come over and learn foodservice, or programming, or activities or the business aspects. Over the years we’ve grown that program from five kids per year to 25.
Coughlin: At the end of the semester, we invite the families of the kids to come in and provide them with recognition. A family member came up and said, “Thank you for changing my family’s life. My mom has full-blown dementia. We as a family were really struggling to manage her needs. It was destroying us.
“With the guidance that you provided to my son, he taught our entire family what was going on in mom’s world. We were able to adjust our thinking of what we could do with my mom. This has been the best part of his whole high school experience.”
Nowokunski: We have to be so creative as an industry when it comes to labor. We need to look at new and different ways to get people involved in this business and show them how rewarding it is. It’s a huge challenge, and it will continue to get more and more challenging over the next few years.
Coughlin: Many of our competing operators are doing “predictive indexing” that figures out the traits of good workers. Our team, being a tad bit rebellious, was not going to ever succumb to us making our hiring process stringent. We threatened to come up with a program that tested aptitude and personality.
We tested the idea on a core group. We had a large contingent join us at the NIC conference. We said we hired a consultant and were going to test it on them.
We walked them down to Build-A-Bear Workshop and made them build a bear that reflected their personalities. Then we walked them to the bar across the street, where the bartender said, “I’m your consultant” and analyzed each bear. Now we have all the bears displayed on the wall at the home office.
Doing well vs. doing good
SHB: You both do some nonprofit work unrelated to seniors housing. Tell me a bit about what each of you does.
Coughlin: I’ve gotten very involved in being the vice chair of an organization called Caritas Communities that develops and operates housing for those coming out of homeless shelters. It’s the first step back into society. It leverages my real estate background and the social services aspect of our business.
The second thing I spend time on is a board position at Beth Israel Needham, a local hospital. There’s so much change in the hospital space. It’s a very dynamic management team. I’ve found it to be very informative and a win-win for lessons learned to bring back to Northbridge.
Nowokunski: As a company, we’re very philanthropic. We are such believers in the idea that if we’re doing well, we also want to do good. We want to give back.
The Cure Alzheimer’s Fund is a group of people in the Boston area who have pulled together some of the greatest minds and research on Alzheimer’s disease. They’re funding research to find a cure.
Over the past couple years, we’ve done fundraisers for them. Last year was quite an undertaking. Jim and I rode our bikes from each one of our communities. We had a little party/fundraiser at each community as we arrived. It gave us really sore legs, but it gave an opportunity for all the communities to participate — families, residents and associates — in something bigger than themselves.
We rode 385 miles over six days from Brunswick, Maine, to Plymouth, Massachusetts. It was inspirational. We need to do something because Alzheimer’s disease is becoming such an epidemic by just the sheer number of people aging.
Coughlin: It was supposed to be 350 miles, but we got lost.
Nowokunski: The other thing I’m very passionate about is the One Angel Foundation in honor of my niece who was killed in a skiing accident at 22. She had touched so many lives with mission work, particularly children.
The foundation built two schools in Honduras, some housing for families with fresh water and a playroom at an orphanage in South Africa. It also offers scholarships for underprivileged children in the Unites States.
SHB: What would people in the industry be surprised to learn about both of you?
Coughlin: We’re both artists. I don’t think anybody knows that. That’s been the genesis of our artist-in-residence program, which involves having trained artists teach first-time artists at our communities. It’s been amazing to see what folks accomplish.
Nowokunski: My dad lives at one of our communities, and he was an engineer his whole life, so his left brain was overtaxed. Painting has really opened his right brain. It’s just extraordinary what he’s been able to do with art through this program.
He has Parkinson’s disease and we have a tool that he uses to help him paint. The improvement in his painting — he’s 88 now — is amazing. The life it brings to residents is incredible.
Coughlin: When we first started the company, we couldn’t afford office furniture and artwork. So one weekend I spent the entire weekend painting all of our corporate art.
SHB: Is the art still there?
Coughlin: One [piece] is in Wendy’s office. Some of them didn’t make the cut.

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