NIC MAP Vision clients, with access to NIC MAP^® data, attended a webinar in mid-April on key seniors housing data trends during the first quarter of 2022. Findings were presented by the NIC Analytics research team. Key takeaways included the following:

Takeaway #1: Senior Housing Occupancy Edged Up in 1Q 2022

• The occupancy rate for senior housing—where senior housing is defined as the combination of the majority independent living (IL) and assisted living (AL) property types—rose 0.2 percentage point from the fourth quarter of 2021 to the first quarter of 2022 for the 31 NIC MAP Primary Markets. This marked the third consecutive quarterly increase in occupancy. For perspective, this was a 2.5 percentage point increase from the pandemic-related low of 78.0% recorded in the second quarter of 2021 but was 6.7 percentage points below its pre-pandemic level of the first quarter of 2020.
• The 0.2 percentage point increase in occupancy in the first quarter is encouraging in light of the highly contagious omicron variant that was rampant during the early months of 2022. It is a testament to the success of the COVID-19 vaccines and to the infection control policies operators have put in place to keep residents safe.
• Continued, albeit moderating, demand and weak inventory growth associated with the slowdown in construction starts in 2020 contributed to the occupancy increase in recent months.
• More specifically, demand, as measured by the change in occupied inventory or net absorption, continued to recover in the first quarter of 2022, increasing by 2,761 units in the Primary Markets. This was below the rapid pace seen in the third and fourth quarters of 2021, however. Since the recovery began in second quarter of 2021, 26,683 of the 45,499 units placed back on the market have been re-occupied, or 59% of those units.

Takeaway #2: More Than Six Percentage Points Needed for Occupancy to Recover

• For senior housing, occupancy had fallen 9.2 percentage points from peak to trough and through the first quarter of 2022, occupancy has recovered by 2.5 percentage points. This means that another 6.7 percentage points of occupancy has to be recovered.
• The strongest recovery to date has been in assisted living. Overall, occupancy is up 3.7 percentage points from its low point, but it remains 6.8 percentage points below its Q1 2020 pre-pandemic level of 84.6%.
• IL occupancy was 1.4 percentage points above its low point, but remained 6.6 percentage points below its pre-pandemic peak, almost the same as for AL.
• And lastly, nursing home occupancy fell a very large 12.5 percentage points and has thus far recovered 3.6 percentage points of occupancy, almost the same as for AL, but it remains furthest behind its pre-pandemic occupancy at 77.6%, with a 9.0 percentage point gap. Note however, that the first quarter occupancy rate for NC is almost the same as for AL at 77.6% versus 77.9%, respectively.
• Within senior housing, AL occupancy remains below IL occupancy, but the pace of occupancy recovery has been more in the need-based AL majority property type. That said, anecdotally, we are hearing that the socialization aspect of IL is attracting new residents after the long-extended pandemic related period of isolation for so many older adults.

Takeaway #3: Construction Activity Still Slow in Most Markets

• This heat map shows which metropolitan markets are experiencing the most construction activity. Looking at the right-hand part of the grid, those markets that are shaded brighter red are seeing the most construction as a share of inventory. This includes Miami where construction as a share of inventory amounted to 10.7% in the first quarter (2,739 units in 17 properties). This was the second most ever (first was in 2Q 2021). And at 8.5% of inventory, Portland, Oregon’s construction was at an all-time high at 1,813 units in 12 properties.
• Atlanta stands out on this heat map, with its red shades, but construction as a share of inventory was relatively low for Atlanta at 9.4% (18 building and 2,371 units). This is well below the 17.4% share seen in Atlanta in mid-2017, when there were 30 buildings under construction (over 3,000 units). Since that time, the inventory of senior housing in Atlanta has increased by 33% (more than 6,000 units).
• The flip side is Sacramento where construction as a share of inventory shrank to 1.3% in 1Q 2022, down from 16.8% in 2019, with only three buildings underway with 160 units. Pittsburgh is also notable in that construction as a share of inventory was virtually zero in 1Q 2022. This was a dramatic shift from a share of 9.5% in 2019.
• For perspective, for senior housing, this equals 5.3% of inventory for the Primary Markets and it peaked at 7.8% in late 2017 and more recently at 7.5% pre-pandemic 1Q 2020.

Takeaway #4: East and West Coast Markets Outperforming Other Markets

• The map below shows occupancy rates for the NIC MAP Primary Markets in the first quarter benchmarked to the Primary Market average of 80.6%. Markets with higher occupancy rates are colored deeper shades of green, while those poorer performing markets are colored deeper shades of red.
• It becomes clear that the strongest occupied markets are along the coast and the lesser occupied markets are generally in the center of the country.

Key Takeaway #5: Transaction Activity Dominated by Private Buyers in 1Q 2022

• Of the $1.2 billion of closed deals in the first quarter of 2022, private buyers represented $877 million, or 76% of the closed volume. For context, private buyers represented 43% of closed volume in 2021 for the entire year, with the public buyers coming next, representing 35% of closed volume in 2021.
• Private capital has been a steady source of capital for many years, especially the private partnerships and family regional owner/operators have been a steady source of liquidity. Private buyers have represented 35% or more of buyer activity in seniors housing and care every year since 2016.
• The private buyer is any company that is not publicly traded—for example, a private REIT or single owner or partnership, family offices, etc. The public type is just that: any publicly traded company. The institutional type is usually the equity funds that manage pension money or other types of institutional money. And cross-border represents any buyers from outside the United States.
• Note that the transactions data discussed in this key takeaway is only the closed property sales transactions throughout the United States. It does not include deals that have been announced in the quarter and not yet closed. It is also important to remember that this data is preliminary for the first quarter of 2022 as data points could be updated with other deals being captured as we learn about their closings. These updates typically occur as public records become available and given slower recordings within public records it is possible this data is updated more so than usual, especially when it comes to single property transactions that are under the radar from public announcement and reporting.

Interested in learning more?

• While the full key takeaways presentation is only available to NIC MAP clients with access to NIC MAP data, you can access the abridged version of the 1Q22 Data Release Webinar & Discussion featuring my exclusive commentary below.

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• To learn more about NIC MAP data, powered by NIC MAP Vision, an affiliate of NIC, and accessing the data featured in this article, schedule a meeting with a product expert today.

The educational programming topics at the recent 2022 NIC Spring Conference focused on the theme “A New Day” for the senior housing and care industry. Read below the opening remarks by Kurt Read, Chair of Board of Directors, NIC, and Principal, RSF Partners, in which he offered a glimpse into the new day, with opportunities awaiting in the sector.  

“Any time there’s a big moment of disruption, I think it’s really important to step back as an investor to look at the space that we’re in. Let’s set the stage a little bit here: We look like we’re at the end of a 12 plus year credit cycle, which in my 30 years in the industry, is the longest cycle that I’ve ever participated in.

Interest rates are rising. We have a war in Europe. Inflation is spiking. Market volatility is increasing. There is change everywhere, but capital is really interested in what we have to offer. We have a simple, easy to understand story around the drivers of growth in our space. And we have demonstrated good returns over the long run. Those are things that attract capital. However, the pandemic has accelerated the recognition that senior housing and care is an important part of the broader healthcare ecosystem. And many of the sessions here at NIC are going to talk about that.

So what does that mean to be part of the healthcare ecosystem? Let me give you a couple of fas just to set the stage on how we fit into this. As you know, healthcare spending is roughly 20% of GDP in the U.S. — that puts it at over $4.1 trillion a year. The health insurance industry has over $2 trillion a year in revenue. And just three of the larger companies in the health insurance space — United, Aetna CVS, and Humana — have more assets than our whole industry combined, about $480 billion. Why is that important? Because the health insurance industry is large, it’s healthy, and it’s well capitalized. And what are they looking at?

A growing number of their members live in our buildings and are more and more part of the equation of the increasing costs. And they require a lot of care. If you’re a health insurer or a risk taker in our space, they look at our space and say, “we’re not the senior living industry, we’re not the skilled nursing industry, we’re not the CCRC industry.” But, we have their members that are either pre-acute or post-acute. A pretty interesting distinction from the way we look at it.

And they have a business model that’s pretty easy to understand; sort of three things they’re looking at. One is they need to increase membership, particularly in their special needs plans, because those are the most expensive members they have. They need better, more integrated care delivery networks. Think about what that means. It’s all of you in this room (the care delivery network). And they need better, more integrated data. That’s why it’s so important for all of us to continue to contribute our data to NIC MAP Vision.

It’s pretty easy to see where this is going. Whether you’re a small operator, a developer, a large investor, we should all anticipate that this well-capitalized health insurance industry will be a force for change both in capital formation and in operations. At NIC and NIC MAP Vision, it’s clear that we need to remain at the forefront of creating more consistent, timely, useful data to engage with risk takers in the insurance industry at both the granular level (that means in your buildings) as well as at the industry level.

I’m a private equity investor. We’re raising our eighth fund. Am I bullish on investing in the senior living space? We are very bullish. We anticipate investing a lot of our next $500 million fund in the senior living business.

Why? Let me just remind you, other than the obviously wonderful demographic growth story, as we shift our focus to the baby boom generation, which is 62% larger than the silent generation we have been serving, let’s talk about the structural characteristics of our industry quickly that make it very favorable to invest in this space.

First, there’s an aging stock of supply in our industry. Second, rents are not correlated to the broader economy. Demand is inelastic; it’s driven by need. Our residents are not tied to the labor market (even though we’re having trouble with staffing) because they’re already retired. The industry is highly fragmented, which means there’s great opportunity for consolidation and growth. It’s notoriously difficult to scale. So those participants who can execute have a big advantage. Why is it hard to scale? Local markets matter. Customer demand, competition, land usage, and labor markets are all driven locally. Operations are a complex mix of real estate, wellness, healthcare, and hospitality. That’s hard to do. Branding has a limited effect. Families only make the decision to use our product once or twice in their entire lives. And regulations are a confusing mix of local, state and federal rules.

And lastly, one of my favorites is, you can’t offshore personal care.

All these factors favor dedicated, focused, expert participants and combine to create a terrific environment to earn a premium return on your effort.”

Experts weigh in at 2022 NIC Spring Conference.

Rebuilding occupancy is a top priority for the senior living industry. But the old roadmaps to success don’t necessarily apply in the wake of the pandemic and quickly changing market conditions. The labor shortage and shifting consumer preferences only make the task to fill units that much harder.

Effective, new strategies to attract residents were detailed by industry and outside experts at the 2022 NIC Spring Conference. The panel discussion, “A Roadmap for Building Back Occupancy,” was followed by lively breakout groups for participants to share successes and brainstorm new ideas.

“Building back occupancy is key,” commented NIC President and CEO Brian Jurutka at the Spring Conference. He added that the session on occupancy was first on the three-day program, reflecting the importance of the topic and the Spring Conference theme of “A New Day.”

Putting the discussion in context, occupancy rates are improving despite the emergence of new COVID-19 variants. Senior housing occupancy increased to 80.6% in the first quarter of 2022 in the 31 NIC MAP^® Primary Markets, a 0.2 percentage point increase from the fourth quarter of 2021 and a 2.5 percentage point increase from a pandemic-related low of 78.0% in the second quarter of 2021, according to NIC MAP data, powered by NIC MAP Vision. (The numbers were released in early April, after the Spring Conference.) This is the third consecutive quarter of increasing occupancy.

At the Conference, panel moderator and property appraiser Colleen Blumenthal, COO, HealthTrust, noted that occupancy rates vary widely. Coastal markets are faring better than inland markets. New supply in Atlanta and Dallas is filling quickly. Other markets without much new supply are still struggling. “Each market reacts differently,” she said.

Here are five ideas from the panelists on how to boost occupancy.

1. Address changing consumer preferences. Panelist Derek Dunham, vice president at Varsity Branding said consumers have changed. They are well informed about senior housing. “They’ve done their research,” he said. They don’t want to focus on the pandemic but want to know how the community responded to the health emergency. But he added that consumers are making decisions faster because they’ve already done their homework. “They know what they want,” he said.

   Adult children want to understand how mom and dad will be kept safe, according to panelist Courtney Siegel, president at Oakmont Senior Living. The company has opened 12 communities since 2020 and they are 90% occupied. Oakmont produced a new tool kit for on-site team members that provides healthcare resources for consumers. “We have to get the consumer comfortable to move into the building,” said Siegel.

2. Strengthen referral networks. Demand for post-acute beds is growing at New Jersey-based Ocean Healthcare. “We have seen a turn back to pre-pandemic referrals from our acute-care partners,” said Joe Kiernan, chief strategy officer at Ocean Healthcare. Demand is also strong for the company’s home health services.

   Metrics are crucial to boost post-acute occupancy. Providers must understand what measures their referral partners are looking for in value- based arrangements. “A big factor is lowering the hospital readmission rate,” said Kiernan. He added that population health departments drive referrals now more than social workers.

   Oakmont tracks data such as falls, the use of psychotropics and outcomes on a daily basis to improve care. But metrics are not shared with consumers. “They’re looking for trust,” said Siegel. It’s more important how they feel about the relationships they have with the on-site team, “That gives them the confidence to move,” she said.

3. Retool recruitment efforts. The tight labor market impacts occupancy. Some communities can’t take new residents because there’s not enough staff to care for them or process admissions. Ocean Healthcare launched its own staffing agency to stabilize staffing so it could grow occupancy. “We staffed our own buildings,” said Kiernan.

   Other ideas to recruit and retain workers include higher pay, bonuses and flexible work schedules. Some communities in high income areas are adding workforce housing for their employees.

   At Oakmont, talent recruitment is as important as consumer marketing, utilizing all communication channels, including social media, to reach potential employees. Another idea: Oakmont hired a full-time staff member to recruit applicants at job fairs at universities, colleges, and trade schools, generating dozens of applicants in difficult California markets. “It’s been very successful,” said Siegel. “We are full-time recruiters.”

4. Reconfigure older buildings. Many older properties have small studio apartments. The obvious answer is to combine units though that’s not always possible, according to Dunham. Make sure the small units are professionally staged. “Let people see the possibilities,” he said. Target consumers on the lower end of the income scale with emails of floor plans of units that are immediately available. “They might not think they can afford to live there,” he said. Small units might also serve as workforce housing or guest suites.

   Make sure online marketing campaigns match the available inventory. “Your marketing plan will evolve based on your vacancy,” said Siegel.

   Ocean Healthcare grows through acquisition, including the purchase of older county nursing homes. Group rooms are reconfigured as private rooms. Larger spaces are dedicated to clinical programs. “We need to attract people,” said Kiernan, noting that hospitals are creating private rooms for patients that look like hotel suites.

5. Improve tech offerings. Consumers expect robust wi-fi. The panelists also agreed that residents and families are looking for choice. A robust tech platform that allows the resident to order services or meals to-go can be a selling point. Zoom stations give residents an easy-to-use option to connect with family.

The session wrapped up with reports from the breakout groups. Some highlights: rate concessions don’t work and hurt long-term operating income; design needs-based housing more like a typical apartment building to make it feel like a discretionary choice to move in.

When will occupancy return to pre-pandemic levels? Kiernan thinks it will take 18-24 months though some regions will get there sooner. Siegel said it will depend on execution at the property level. Dunham added that some communities are having record years now.

Moderator Blumenthal emphasized the differences in markets. Some markets have already recovered; others will take a long time to reach pre-pandemic occupancy levels. Also, new residents are frailer than previous ones because they waited to move due to the pandemic. “Their length of stay may not be as long,” Blumenthal said, which could stretch out the refilling process. But in the effort to increase occupancy, stakeholders continue to explore a variety of new ideas.

More than 1,700 attendees gathered at the 2022 NIC Spring Conference in Dallas last month, surpassing turnout expectations as participants expressed a bullish outlook for the senior housing and skilled nursing sectors after a few challenging years.

A premiere industry event, the 2022 NIC Spring Conference engaged attendees in three days of results-oriented networking, information sharing, and educational sessions. The conference theme — “A New Day”— highlighted the shift from the challenges of the pandemic to the upcoming opportunities for senior housing and skilled nursing.

In opening remarks, NIC President and CEO Brian Jurutka reflected on the pandemic’s two-year impact on the industry. He noted the heroism of frontline workers and the resilience of owners and operators as everyone joined together to protect the most vulnerable Americans. “It’s too early to say the pandemic is behind us,” said Jurutka. “But we are finding ways to live with COVID, and it’s a new day.” He added that recent data show an industry rebound is underway.

The 2022 NIC Spring Conference welcomed the return of face-to-face receptions where industry stakeholders could socialize and strategize, and of the popular Braindates^TM that facilitated topic-focused small group conversations.

Timely educational session topics included rebuilding occupancy, boosting NOI, and how to recruit and retain workers, among other crucial issues. Plus, a new educational session format allowed for group discussions among attendees after hearing from expert panelists to tease out the important details of the timely topics.

See the April edition of the NIC Insider Newsletter for expanded details on the event.

Conference attendees may access high-quality video recordings and the corresponding graphic illustration boards of each session. In addition to the video recordings and illustrations, presentations are still available in the mobile app for download.

Mark your calendar for the 2022 NIC Fall Conference, coming to Washington, DC, September 14-16. If you’d like to be notified when registration opens in May, complete the form here.

Just over one-quarter of respondents noted that the severity of their staffing shortages across their organizations was severe, while two-thirds indicated the problem was moderate. Of significance, one-quarter of respondents had more than 20% of full-time positions currently unfilled. Regarding tenure of full-time employees, on average, just under one-half of organizations retained more than 80% on the job after one month. However, after one year, only 17% of organizations still had over 80% remaining on the job. Staffing shortages are often due to the inability to fill nursing aide positions, but wage competition and the inability to hire nurses also factored highly. Some alternative methods that have been successful in recruiting caregiving staff include offering daily pay, engaging resident marketing departments in developing staff recruiting strategies, providing housing in the community, offering flexible schedules that use different start times to accommodate childcare and school schedules, and more. Nearly nine out of ten organizations report that rising operating expenses are among their biggest challenges. NOI has been pressured for many operators due to the impact of labor shortages and higher wages, rising insurance costs, inflation-related higher-priced materials, and the pandemic-related decline in occupancy rates. Nearly 60% indicated that their operating expenses have increased between 6% and 14% since the beginning of the pandemic, with 30% reporting that expenses have risen 15% or more.

–Lana Peck, Senior Principal, NIC

NIC’s Executive Survey of senior housing and skilled nursing operators was implemented in March 2020 to deliver real-time insights into the impact of the pandemic and the pace of recovery. In its third year, the “ESI” is transitioning away from the COVID-19 crisis to focus on other industry challenges. While some standard questions will remain for tracking purposes, in each survey “wave,” new questions will be added. To understand operators’ labor and staffing issues, many new questions were added to Wave 39.

This Wave 39 survey includes responses from March 7 to April 3, 2022, from owners and executives of 69 small, medium, and large senior housing and skilled nursing operators across the nation, representing hundreds of buildings and thousands of units across respondents’ portfolios of properties. More detailed reports for each wave of the survey and a PDF of the report charts can be found on the NIC COVID-19 Resource Center webpage under Executive Survey Insights.

In the Wave 39 survey, just over one-quarter of respondents indicated the severity of their staffing shortages across their organizations was severe (27%), while two-thirds (67%) reported it was moderate. Attracting community and caregiving staff continues to be among operators’ most significant challenges. When asked about backfilling staff shortages, all of the respondents (100%) are paying overtime hours in Wave 39, and three-quarters (75%) are currently tapping agency or temp staff—down from a peak of 89% in the Wave 36 survey conducted in December 2021.

Roughly one-half of organizations reported that staffing shortages were due to the inability to fill nursing aide positions (54%). Wage competition (44%) and the inability to hire nurses (33%) were also commonly cited. Too much competition from other industries and staffing agencies was cited by roughly one-quarter of respondents (23%, respectively). Nevertheless, three-quarters of respondents (75%) are optimistic that staffing challenges will improve in the second half of 2022 or 2023.

Respondents were asked in the Wave 39 survey to share innovative methods they had found to be particularly successful in recruiting caregiving staff. Beyond generally increasing wages, offering flexible schedules, hiring and referral bonuses—all of which have been reported as effective to a greater or lesser degree—the list below includes some alternative ways to attract caregiving staff:

• • Daily pay
  • Scholarship programs/full tuition for nursing degrees
  • Personalizing sign-on rewards and benefits to individuals
  • Engaging resident sales and marketing staff in developing staff recruiting strategies
  • Perfect attendance bonuses for new hires at the end of 30, 60, and 90 days
  • Social media campaigns
  • Dramatically increased wages by 10%-15% in the last six months
  • Immediate phone follow-up after interviews
  • Housing in the community
  • Educating managers on how to manage more effectively in today’s environment
  • Offering employees access to the community wellness programs and clinic
  • Hiring in-house staff recruiters to update job ads every two days (acting as our own staffing agency)
  • Reduced new hire paperwork and utilized online document signing tool–now getting people hired
    and into communities in less than 24 hours
  • Flexible schedules that use different start times to accommodate childcare and school schedules
  • Hiring agency staffing that has worked in the community and wants to stay with us long-term

Regarding the current share of all full-time open positions across respondent organizations, significantly, one-quarter had more than 20% of positions currently unfilled. However, about one-third had 10% or less unfilled. Regarding tenure of full-time employees, on average, just under one-half of organizations kept more than 80% on the job after one month. However, after one year, only 17% of organizations still had over 80% remaining on the job.

Nearly nine out of ten organizations say that rising operating expenses are among their most significant challenges. Almost 60% indicated that their operating expenses have increased between 6% and 14%, with 30% reporting that expenses have risen 15% or more. Single-site organizations generally had lower increases in operating expenses than larger organizations with more properties in their portfolios.

Due to the pandemic, senior housing and care operators found it necessary to make greater use of technology for telehealth, resident and family communications, staff scheduling, and virtual and digital marketing. In 2022, more than half (55%) indicated that IT capital expenditures were between 5% and 10% of their total operating expenses. One-third (34%) reported that they were between 0% and 4%.

Across 39 waves of the ESI, the pace of move-ins has closely corresponded with the overall incidence of COVID-19 infection cases in the United States. This is demonstrated in the timeline below that shows the share of organizations reporting an increase in the pace of move-ins during the prior 30-days. Data from the Wave 39 survey, which was conducted in March, reflects an increase in the share of operators reporting acceleration in the pace of move-ins after the Omicron variant peaked and cases declined sharply in the U.S.

In the Wave 39 survey (reflecting operator experiences in March), between roughly 45% and 60% of organizations with independent living residences, assisted living residences, memory care residences, and nursing care beds reported an acceleration in the pace of move-ins. The largest increases were in higher acuity settings such as memory care and nursing care, but substantial increases were noted for assisted living and independent living, as well.

Most respondents reported no change in the pace of move-outs, which may support occupancy stability or increases in the coming months. While few organizations observed an acceleration in the pace of move-outs, of those that did, nearly three-quarters reported residents moving to higher levels of care (73%)—higher than in the Wave 38 survey (53%). This appears to be reflected in the large increases in the pace of move-ins in care segments serving residents with activities of daily living (ADL) needs.

Roughly 40% of respondents to the Wave 39 survey reported lead volumes above pre-pandemic levels in March—an increase from the prior survey (33%) reflecting results in February. Smaller operators are still less likely to have achieved lead volumes above pre-pandemic levels than larger organizations (as was noted in Wave 38), but single-site organizations saw the most significant gains. Single-site operators with lead volume above pre-pandemic levels rose from 15% to 40% in Wave 39. Given pent-up demand coming out of the pandemic and questions about the sustainability of record-high absorption rates in the last half of 2021 per NIC MAP Vision data, this measure in the ESI may be a leading indicator to watch with regards to occupancy recovery.

Wave 39 Survey Demographics

• Responses were collected between March 7 and April 3, 2022, from owners and executives of 69 senior housing and skilled nursing operators from across the nation. Owner/operators with 1 to 10 properties comprise roughly one-half (58%) of the sample. Operators with 11 to 25 and 26 properties or more make up the rest of the sample (1% and 25%, respectively).
• Just over one-half of respondents are exclusively for-profit providers (54%), about one-third operate not-for-profit seniors housing and care organizations (35%), and 11% operate both.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 71% of the organizations operate seniors housing properties (IL, AL, MC), 22% operate nursing care properties, and 40% operate CCRCs (aka life plan communities).

Owners and C-suite executives of senior housing and care properties, please help us tell an accurate story about our industry’s performance. If you are an owner or C-suite executive of senior housing and care and have not received an email invitation to take the survey, please contact Lana Peck at lpeck@nic.org to be added to the list of recipients.

NIC wishes to thank respondents for their valuable input and continuing support for this effort to provide the broader market with a sense of the evolving landscape as we recover from the pandemic. This is your survey! Please take the Wave 40 survey and suggest new questions for Wave 41.