Sharing a commitment to advancing diversity, equity, inclusion, and belonging (DEIB) in the senior living industry, Argentum, the American Seniors Housing Association (ASHA), and NIC earlier this year formed the Senior Living DEIB Coalition to empower businesses operating in and around senior living.  

The DEIB Coalition believes that not only are DEIB efforts the right thing to do, but data from several studies show that organizations that engage in DEIB initiatives perform better, are more innovative, and manage risk more effectively. That in turn helps to provide the best outcomes for the residents and staff of senior living communities, as well as staff in our respective corporate offices. 

*(WEF) World Economic Forum

Senior Living DEIB Survey 

One of the first efforts the DEIB Coalition undertook was to identify the current state of DEIB efforts in the industry. The resulting survey, conducted by Ferguson Partners, collected information to understand both the degree to which DEIB programs are deployed and the diversity of the participating companies’ respective staffs. The survey marks the first industry-wide effort to collect data on diversity, equity, inclusion, and belonging in the senior living industry. 

Results of the survey can be found in the 2022 Senior Living DEIB Survey Executive Summary. 

Senior Living DEIB Toolkit 

Survey results indicate opportunities for senior living companies to give more focus to DEIB efforts. To aid industry operators and other organizations in advancing their respective DEIB practices, the DEIB Coalition commissioned development of a toolkit to help interested companies customize programs that work for their organizations. 

Developed by The Axela Group, the Senior Living DEIB Action Toolkit for Operators offers resources to assist in your DEIB efforts. 

The DEIB Coalition’s goal is to co-create a plan of action and strategy around DEIB, including the development of resources to inform, equip, and catalyze positive impact and thinking around DEIB. The 2022 Senior Living DEIB Survey and Action Toolkit for Operators are the first of many deliverables. Refer to NIC’s Senior Living DEIB Coalition page to learn more.  

“Organizations reporting an increase in the pace of move-ins has held steady now for several consecutive waves. When the BA.4 and BA.5 variant surge occurred in summer of 2022, the rate dropped from more than 50% of operators reporting an increase in the pace of move-ins to the current ~40%. Operators may now be combatting what is being referred to as the ‘tripledemic’ – a collision of RSV, influenza, and COVID-19 that is sickening millions – which may be tempering move-ins.

Lead volumes being reported are higher now than in most previous waves, but as noted above with the pace of move-ins holding steady, the reported increase in lead volumes is not yet materializing with move-ins.”

–Ryan Brooks, Senior Principal, NIC

This Wave 48 survey includes responses from November 14 to December 11, 2022, from owners and executives of 40 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. 

New questions in the Wave 48 survey asked about the impact of the current operational environment (occupancy rates, operating expenses, inflation, etc.) on the ability to service debt as well as the impact of increased interest rates on the ability to service debt. 

With regard to the impact of the current operational environment on the ability to service debt, almost half (44%) of nursing care operators reported there was no impact, followed by one-third of assisted living, independent living, and memory care operators. Comparatively, one quarter of assisted living and nursing care operators reported the current environment had a significant impact on their ability to service debt, while one-fifth of independent living and memory care operators reported a significant impact.

When specifically asked what impact the increase in interest rates has had on their ability to service debt, nine in ten (89%) nursing care operators report no impact on their ability to service their debt as a result of increased interest rates. This is followed by two-thirds of assisted living (64%) and memory care (63%) operators, and finally independent living, of which 58% reported no impact to their ability to service debt. As for operators reporting a significant impact on their ability to service their debt, 15% of assisted living and memory care operators report significant impact, as did 13% of independent living operators. No nursing care operators reported the increase in interest rates has had a significant impact on their ability to service their debt.

Organizations reporting an increase in the pace of move-ins has held steady now for several consecutive waves. When the BA.4 and BA.5 variant surge occurred in summer of 2022, the rate dropped from more than 50% of operators reporting an increase in the pace of move-ins to the current ~40%. Operators may now be combatting what is being referred to as the ‘tripledemic’ – a collision of RSV, influenza, and COVID-19 that is sickening millions – which may be tempering move-ins.

Lead volumes being reported are higher now than in most previous waves, but as noted above with the pace of move-ins holding steady, the reported increase in lead volumes is not yet materializing with move-ins. 

Regarding the current share of all full-time open positions across respondent organizations, in the Wave 48 survey, approximately two out of five respondents have between 10% and 20% of full-time positions unfilled, whereas roughly one in five respondents have 20% or more positions currently unfilled. This is an improvement from the Wave 42 findings from June 2022, where one-half of respondents had between 10% and 20% of full-time positions unfilled and another one in five had 20% or more full-time positions unfilled.

When asked about backfilling staff shortages, nearly all respondents (93%) reported paying overtime in Wave 48, and two out of three respondents are currently tapping agency or temp staff (68%). Other identified strategies for finding needed staff include the creation of a dedicated corporate recruiter, shift incentives, and partnering with organizations outside of the senior housing and care industry. Of those organizations currently utilizing agency or temp staff, one-half expect their reliance on agency staff to decrease in the next six months. Slightly under one-half (44%) expect their utilization to stay the same, and only 5% expect their agency utilization to increase. 

There is evidence provided in the Executive Survey Wave 48 that there may be a sign of relief coming with regards to the industry’s staffing challenges. One-third of respondents (31%) anticipate staffing challenges will improve in the first six months of 2023 while another one-third (36%) anticipate improvements in the second half of 2023. About one in six respondents (17%) anticipate it will take until 2024 before staffing challenges improve and finally, one in six (17%) predict the staffing challenges will remain until at least 2025.  

While there may be indications of improvement on the staffing front, staffing and labor challenges certainly persist. When asked whether they were currently experiencing a staffing shortage, 90% of respondents indicated that they were. Of these organizations reporting a staffing shortage, one-third are experiencing the shortage in the entirety of their property portfolio, while another one-third are experiencing the shortage at more than 50% of their properties. 

When asked about providing rent concessions, approximately one-third of respondents indicate they are offering rent concessions to attract new residents. Over the last four waves in which this question was asked, there has been a consistent decline in the rate of organizations offering rent concessions. At the beginning of 2022, Wave 37 findings show almost half (47%) of respondents were offering rent concessions. In November and December of 2022, Wave 48 findings show just over one-third (38%) of respondents are offering rent concessions. 

In the Wave 48 survey, there were no organizations offering rent concessions in all their properties, down from 7% in Wave 46 and 20% in Wave 41. Conversely, almost one-half (45%) of organizations are currently offering rent concessions in just 0-25% of their properties, while one-third (36%) are currently offering rent concessions in 26-50% of their properties. Of organizations who are currently offering rent concessions, the most common forms being offered are rent discounts (39%), followed by free rent for a specific period of time (26%), upgrades to units (13%), and rent freezes (13%).

Wave 48 Survey Demographics

• Responses were collected between November 14 and December 11, 2022, from owners and executives of 40 senior housing and skilled nursing operators across the nation.
• Owners/operators with 1 to 10 properties comprise roughly two-thirds (63%) of the sample. Operators with 11 to 25 properties account for 25%, and operators with 26 properties or more make up the rest of the sample with 13%.
• Half of respondents are exclusively not-for-profit providers (50%), just under one-half operate for-profit seniors housing and care properties (48%), and 3% operate both.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 63% of the organizations operate seniors housing properties (IL, AL, MC), two-thirds (38%) operate CCRCs – also known as life plan communities, and 13% operate nursing care properties,

This is your survey! Owners and C-suite executives of seniors housing and care properties, please help us tell an accurate story about our industry’s performance. While some standard questions will remain for tracking purposes, in each new survey wave, new questions can be added based on respondents’ suggestions. Please let us know what you think.

Wave 49 of the ESI is now live. The current survey is available and takes ten minutes to complete. If you are an owner or C-suite executive of seniors housing and care and have not received an email invitation to take the survey, please contact Ryan Brooks at rbrooks@nic.org to be added to the list of recipients.

NIC wishes to thank survey 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.

The total investment return for the senior housing sector was a positive 0.59% in the third quarter of 2022. This marked the ninth consecutive quarterly gain after one quarter of pandemic-related negative returns in the second quarter of 2020 (negative 1.00%). Short-term total returns for senior housing are on par with the broader NPI, which posted a total return of 0.57% in the third quarter. Positive income returns for both the NPI and senior housing were partially offset by negative appreciation, reducing the overall investment return.  

The senior housing income return in the first quarter was 0.83%, stronger than industrial (0.76%), but below the overall NPI (0.93%). The appreciation (capital/valuation) return was -0.24% and followed four consecutive quarterly gains. Current economic and capital market returns have hurt appreciation returns, especially for retail (-0.80%) and office (-1.70%). Further, many investors have reduced their appreciation expectations for senior housing as the impact of the coronavirus has weighed heavily on their view of the sector. The appreciation return is the change in value net of any capital expenditures incurred during the quarter.  

On a longer-term basis, the ten-year return for senior housing was the strongest of the main property types, except for industrial. For this time frame, total returns equaled 10.14%. This compares to 9.48% for the NPI. Income returns for senior housing (5.30%) surpassed the NPI (4.73%), as did the appreciation return (4.67%).  

Note that the performance measurements cited above for senior housing reflect the returns of 189 senior housing properties valued at $10.62 billion in the third quarter. This was the highest property count and market value in the NCREIF time series for senior housing. It’s also notable that the number of properties tracked by this index has grown significantly since the beginning of the pandemic, having been 134 properties in the first quarter of 2020, valued at $6.3 billion. The additional properties may be influencing the overall performance returns of the index.  

Third quarter 2022 market fundamentals data for senior housing showed improved demand patterns and moderate growth in inventory in the 31 Primary Markets, according to NIC MAP^® data powered by NIC MAP Vision. The occupancy rate for senior housing stood at 82.2% in the third quarter, up one full percentage point from the second quarter and 4.3 percentage points from its low point, but still 5.0 percentage points below its pre-pandemic level of 87.2% in the first quarter of 2020. The average masks the wide range of occupancy rates by property, however, with 35% of properties having occupancy levels at or above 90%. While these statistics are promising, future occupancy improvement will be shaped by local patterns of inventory growth and demand, and will be influenced by the broad economy, consumer confidence, inflation pressures, rising interest rates, the ease of development, COVID- 19 variants, and vaccination rates.

Source: Third Quarter 2022 NCREIF Performance Report, NIC Analytics

Moving from Siloed to Seamless

NIC Co-Founder and Strategic Advisor Robert Kramer has identified “Six Key Drivers” that will shape the senior living industry over the next 10 years. Kramer is also Founder & Fellow at Nexus Insights, a think tank advancing the well-being of older adults through innovative models of housing, community and healthcare. NIC Notes is publishing a series detailing each key driver. View the first five installments of the “Six Key Drivers” blog series. 

My sixth key driver shaping the future of senior living is moving from siloed to seamless. What do I mean by that?  We are moving from single-point solutions that are fragmented and partial to integrated solutions that are wholistic and person-centered. The drive is under way to connect data, people, and processes. This will fundamentally change senior living

The integration of business systems is already taking shape. Communicating and coordinating among different operating systems will be much easier for operators.

The big differentiator, however, will be our ability to provide the consumer with a seamless experience. After all, consumers judge us by the overall experience we provide. It’s the experience that counts.

This represents a great opportunity. Operators who give the consumer a personalized, integrated experience that provides housing, community and preventative healthcare will benefit in tangible ways. Residents will have a longer and higher quality of life. Families will have greater levels of satisfaction. And the staff will enjoy a more rewarding, productive working environment. That’s a huge competitive advantage.

The move from siloed to seamless will take time. A truly seamless consumer experience has a long way to go. The integration of business processes is further along, though operators still face a confusing array of software solutions.

There are single-point solutions to manage everything from back-office operations to financial performance. There are platforms to manage the workforce, sales and marketing, clinical data, and resident engagement.

As healthcare technology executive Manisha Gulati astutely points out in a recent article, more technology solutions often only create more dots rather than connections. Providers are overwhelmed.

This is true for senior living operators. They see new technology solutions as dots creating more siloed programs rather than providing an integrated seamless platform.

Operators wonder: Will the latest innovation be topped in a year or two by something better? Or by a solution that offers more integration?  It’s hard to invest in a system that may quickly become outdated.

At the same time, we need to recognize that we are at an important inflection point in the evolution of the senior living industry. The first phase of innovation has been the development of these point-in-time or episodic solutions. The next phase of innovation will be connecting the dots, moving from these individual silos to longitudinal solutions that enable communication, coordination, and meaningful integration to provide a complete health and wellness experience for the resident.

Advances are being made in the integration of business systems and their data by companies such as Eldermark, PointClickCare, MatrixCare and Yardi. We are moving from siloed to seamless.

As senior living makes this transition, what is our top priority?   

The first question we should ask is of the consumer: What matters to you? What do you want to experience in the later years of your life? The answer is our roadmap.

Older people in the years to come will expect a hassle-free, seamless experience. So will their families. The most valued service will be navigation to handle all the things the resident or family doesn’t want to deal with.

That includes healthcare. We cannot provide a seamless experience unless we recognize and proactively engage in the resident’s experience of and delivery of healthcare.

The average assisted living resident has 13 chronic conditions. As we discussed in Key Driver #4, healthcare is being reframed. The government is moving to a value-based care system. Taxpayers will not be able to fund the fee-for-service system as it currently exists as costs for the care of an aging population spin out of control.

Today’s consumer experiences a fragmented healthcare system, shuttled from doctor to doctor and to different settings with little coordination. Older people and their families are extremely frustrated. While healthcare talks about a continuum of care for the patient, the reality of the patient experience is the exact opposite. Patients, their data and their families get confused and lost as they’re sent from one silo to another.

How does senior living fit in?

We like to talk about the continuum of care, but our services are fragmented too. We often see other types of providers or settings as competitors instead of working together to provide a better experience for the older adult.

A recent hint of change came from the Aging Media Network. It just hosted a conference to connect executives from across the senior care continuum to discuss synergies. C-suite executives from different settings are exploring how to reshape care delivery to older and complex populations. Unfortunately, much of the discussion is focused on care competencies and business model requirements and not on what matters most to the individual—the older adult.

Senior living has a key role to keep people out of the hospital and to help manage their chronic conditions. If we want our residents to have more life in their years as well as years in their life, then how we provide for the management of their chronic conditions is essential.

This doesn’t mean senior living providers necessarily have to go into the insurance business or provide primary geriatric care services. But we do have an opportunity to see that our residents get those services. The move to home of healthcare services can and must include the home that is senior living.

How?

Companies are emerging that integrate the healthcare experience. I call them the integrators. American Health Partners is one example. Its business model is to provide a continuum of care that empowers people to obtain excellent healthcare that fits their lifestyle. The company seeks to deliver the right care at the right place through institutional special needs plans, senior living and rehabilitation, pharmacy for long-term care facilities, home health and hospice, among other services.

Another example is BrightSpring Health Services. It provides complementary home- and community-based health services for complex populations in need of specialized and/or chronic care. Services include supportive care, clinical and pharmacy solutions across many settings. A third example is Lifespark.

Aggregators play a role too. They aggregate the lives of high-risk Medicare beneficiaries in a local market and seek to integrate their care experience as they assume their healthcare dollar spend risk. Landmark Health, Lifespark, Curana Health, ChenMed, VillageMD, WelbeHealth, Aledade, and Oak Street Health are examples of companies doing this work. We provide an enormous potential value to them because we house the very high-risk, high-cost Medicare beneficiaries they seek to serve: their beneficiaries. They provide value to us because our residents need the healthcare they provide.

Operators can start by considering some basic questions:

• Who is providing medical services in my building? (This type of information is available through NIC MAP Vision.)
• Is any service in my market providing true care navigation and integration? Care navigators, sometimes called coaches or guides, coordinate the healthcare experience. They help the individual receive the right care, at the right time and in the right place.
• Which companies in my market are aggregating the lives of high-risk seniors who account for the most Medicare spending? They could be our partners.

Moving from siloed to seamless is a confusing and messy process. But as the future takes shape, the transformation will be worth the effort for operators, and especially for our residents.

—

That brings me to the conclusion of my series on the Six Key Drivers Shaping the Future of Senior Living. I’d like to note that I’ve enjoyed getting your feedback and look forward to more of your comments. I’d also like to add that the Six Key Drivers identified in this series do not represent an exhaustive list but rather a work in progress. Other drivers, such as industry leadership changes, technology, innovation in capital structures, and environmental, social and governance (ESG) initiatives will also shape the future of the industry.

My key point is that ultimately, we must offer our next generation of residents an aspirational setting and experience. Otherwise, they will pursue other options to avoid the senior living setting. By adopting an aspirational dynamic, we can change the expectations and even the lived experience of aging, especially in our later years.

Lastly, I’ll conclude with one of my favorite quotes from Bill Gates that certainly applies to our industry. “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.”

The U.S. Bureau of Labor Statistics reported that nonfarm payrolls rose by 263,000 in November 2022 and the unemployment rate remained steady at 3.7%. The November increase was roughly the same as average growth over the prior three months (282,000), but well below the year-to-date average of 392,000 and the monthly average of 562,000 seen in 2021, and higher than the average monthly gains of 164,000 seen in 2019. Market expectations had called for a gain of 200,000 jobs. Revisions subtracted 23,000 positions to total payrolls in the previous two months. The monthly gain paints an image of a still growing, but slowing, labor market.

Today’s labor report will add further impetus to the Fed’s policy conviction of increasing interest rates. It is looking for the job market to slow significantly and for the inflation rate to be tempered before it will adjust its aggressive stance on monetary policy. In a statement this past Wednesday, Federal Reserve Chair Jay Powell indicated that the central bank is likely to raise the fed funds rate further, but by a lesser 50 basis points at its upcoming December meeting, down from 75 basis points in the last four rate hikes. Indeed, the Federal Reserve raised short-term interest rates for the sixth time this year on November 2nd. That marked the fourth consecutive 0.75 percentage point increase and followed earlier increases in 2022 of lesser amounts. The latest increase pushed the Fed Funds rate to a range of 3.75% to 4.00%, up from 0% at the beginning of the year. The rapid rise in interest rates is the most aggressive pace of monetary policy tightening since the early 1980s and is in response to inflation which remains uncomfortably high.

Employment in health care rose by 45,000 in November and has increased by an average of 47,000 per month in 2022 compared with 9,000 in 2021. Employment in nursing care facilities grew by 2,800 jobs from last month and 23,500 from year-earlier levels and stood at 1,369,500 positions. Separately, and despite headlines about job losses in tech sectors, the information sector added 19,000 jobs.

In the household survey conducted by the BLS, the jobless rate was unchanged from October and stood at 3.7% in November. In September, the jobless rate had once again fallen to its pre-pandemic level of 3.5% seen in February 2020. Both months’ unemployment rates are well below the 14.7% peak seen in April 2020. The underemployment rate was 6.7% in November, up from 6.8% in October.

Among the major worker groups, the October unemployment rates were 3.3% for adult women, adult men (3.4%), teenagers (11.3%), Whites (3.2%), Hispanics (3.9%), Blacks (5.7%), and Asians (2.7%).

Average hourly earnings for all employees on private nonfarm payrolls rose by $0.18 in November to $32.82. This was a gain of 5.1% from year-earlier levels, lower than the upwardly revised gain of 6.8% seen in October.

The labor force participation rate slipped back to 62.1% in November from 62.2% in October and was below the February 2020 level of 63.4%.

Earlier this week, the BLS released the results of its October Job Openings and Labor Turnover Survey (JOLTS report) that showed the number of job openings fell by 353,000 positions to a seasonally adjusted 10.3 million. That was below the peak of 11.9 million in March, but still well above their pre-pandemic level in early 2020 when it averaged 7.0 million. This means that there are roughly 1.7 open positions for every person looking for work in September, down from 1.9 in September, but much higher than 1.2 in 2019. The hirings rate fell to 6.0 million, the lowest level since January 2021 and the quits fell for the second month in a row to 4.0 million, the lowest level since May 2021.