The Labor Department reported that there were 196,000 jobs added in March, above the consensus expectation of 177,000.  This marked the 102^nd consecutive month of job growth.  The latest three-month average is 180,000, less than last year’s 223,000 monthly average but still strong and consistent with more modest growth anticipated for 2019.

January was revised up from 311,000 to 312,000 and February was revised up from 20,000 to 33,000.  Combined, employment gains in January and February were 14,000 more than previously reported. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.

In March, employment in health care rose by 49,000. In the past year, health care has added 398,000 jobs.  Notably, manufacturing employment fell by 6,000 positions after having seen steady growth of 22,000 positions on average over the past 12 months.

The unemployment rate held steady at 3.8% in March.  A broader measure of unemployment, which includes those who are working part time but would prefer full-time jobs and those that they have given up searching—the U-6 unemployment rate—remained at 7.3%.  This was the lowest rate since 2000.

Average hourly earnings for all employees on private nonfarm payrolls rose in March by four cents to $27.70. Over the past 12 months, average hourly earnings have increased by 3.2%, down from 3.4% last month.   For 2018, the year over year pace was 3.0% and in 2017 it was 2.6%.

The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work fell to 63.0% in March from at 63.2% in February, very low but up from its cyclical low of 62.3% in 2015.  The low rate at least partially reflecting the effects of an aging population.

This report, in combination with other recent data on economic activity, will support the Fed’s recent position of pausing interest rate increases.

A conversation with human resources expert Valerie Armstrong on how to develop programs to match the needs of different generations. 

In a tight labor market, the recruitment and retention of top-quality staff is a big priority.  

The labor pool is not monolithic, however, according to Valerie Armstrong, a human resources expert who speaks at senior living forums.  It’s important to understand the motivations of different generations— older, more seasoned workers, millennials and the newcomers in Gen-Z. The creation of programs tailored to each group within the context of a community’s culture can help promote good hiring decisions while slowing turnover.   

NIC recently talked to Armstrong about strategies to find and keep good team members. She is a human resources business partner at Sodexo which provides services to senior living communities, including dining, facilities management and housekeeping.  

Here’s a recap of the conversation.   

NIC: What is your role at Sodexo?  

Armstrong: I have a multi–disciplinary role within human resources that includes onboarding, leadership and frontline training, engagement and retention. We train Sodexo employees as well as people employed by senior living communities. We are a true partner with senior living communities.   

NIC: What’s your approach?  

Armstrong: We help senior living communities brand themselves and market their stories to attract and retain team members at all levels from executive leadership to frontline staff. We help make sure the community’s branding, culture and behavior is aligned. It doesn’t matter what industry you’re in, if those three things are not aligned you will not be able to successfully identify and retain top talent.   

NIC: What are the different generations looking for in a workplace? 

Armstrong:  Many times, when employers start targeting certain groups, they leave others out. We need to take a broad and flexible approach. We have multiple generations in our workforce. That’s one of the things I talk about at industry meetings. Baby boomers are looking for stability. They want to know what the work hours will be and what they’ll be doing. Boomers want a career path they can see. They also have so much to offer the younger generations.   

Gen-Z and millennials want to learn and engage. So their onboarding plans and career paths look a little different than those for the boomers. Millennials want some flexibility to try new things and Gen–Z wants the ability to help build their own career paths.   

We cannot lose sight of diversity and inclusion. Sodexo has a platform on diversity inclusion because it is important to younger people. In fact, 77 percent of younger people will make their decision whether or not to work for an organization based on diversity & inclusion programs.    

If you step back and think about it, everything the younger generation does is about their brand. Gen-Z displays their lives like a museum on social media. They are the curators who invite us in and provide a tour.  This is their brand: a self-portrayal of how they identify themselves.  

NIC: What are some effective strategies?  

Armstrong: Let people know what it’s like to work at the community. It doesn’t have to be a high cost approach. Grassroots efforts are best. It could be something as simple as hosting a “Bring Your Friend to Work Day.” Or asking employees for referrals. We partner with job corps programs and veterans groups. Tap into community groups such as the YMCA and Lions Clubs.  At Sodexo, we may be working with a college down the street and be able to tap into that employee pool.   

The strategy is similar to the sales strategies that senior living communities use to find new residents by tapping into referral sources and local organizations.  Each community structures its own local approach.   

NIC: What about turnover?  

Armstrong: Turnover is extremely costly for any organization. When you have a lot of turnover, you also start to lose the essence of your culture. Reward and recognition programs work well. Flexible scheduling is a big plus for the younger generations and working parents.  Primarily, we focus on retention programs that meet the employees’ needs with coaching, communication and engagement. You have to listen and follow up with them.  

Over the last two years, we’ve focused on a two-plus-two coaching program. Conversations are held with employees at least quarterly to discuss two things they do exceptionally well and two things that they can work on to improve. That is the foundation of their career development plan.   

When a person joins a senior living community as frontline hourly employee, they may not be familiar with structured performance reviews once or twice a year. The two–plus-two coaching provides reinforcement and direction in a way that is positive, informal and approachable.  It’s an easy win. 

NIC: How do the different generations feel about feedback? 

Armstrong:  Gen–Z and millennials want frequent feedback. Gen–Z likes face–to–face engagement to help them see where their career is headed and how they can be successful. Baby boomers get a lot of personal reward just helping out their peers and engaging with their peers. They have a lot to offer and they like to engage with the younger workforce. Opportunities for mentoring and team projects are very positive.  

NIC: Minimum wages are increasing in a lot of places. Is the wage rate a big factor in worker recruitment and retention? 

Armstrong: We have to comply with state and federal rules on wage increases. But wages are not everything.  We focus on the enrichment of individuals’ lives.    

NIC: What would you like readers to take away from our discussion here today?  

Armstrong:  This is really all about connection. The recruitment and retention process is about that one–on–one connection. It sounds simple, but it’s not. It takes a well thought out strategy and follow through to make it work.   

Valerie Armstrong is director of human resources for Sodexo Seniors in North America. Connect with her on LinkedIn.  

### 

Feb. 13, 2019 

janekadler@gmail.com 

NIC MAP® Seniors Housing Rate Tiers

Similar to the intent of “class categorizations” seen across other commercial real estate property types, NIC MAP® has recently developed a “rate tiers” approach to our seniors housing property database that is quantitative and objective, with a goal to further segment our data for our clients. Useful to investors, analysts and senior living operators who wish to benchmark their properties to properties with similar rate structures, this approach allows NIC to promote greater transparency within the seniors housing property type and creates greater comparability to other commercial real estate property types.

• The NIC MAP Seniors Housing Rate Tiers Report provides a historical time series of average market rates (AMRs) and AMR annual rate growth, occupancy and inventory for majority independent living (IL) or majority assisted living (AL) property types by rate tier and metropolitan market for the 31 Primary Markets.
• Additionally, the report includes market aggregates for the 31 Primary Markets, Secondary Markets (32-99), and the 99 Primary and Secondary Markets.
• Defined uniquely for each metropolitan market (as opposed to a national average), three rate tiers for each metropolitan area have been estimated based on average market rate (AMR) data that is segmented by quartiles into three groupings: top tier (i.e., top quartile), middle tier (i.e., middle two quartiles), and bottom tier (i.e., bottom quartile). Each quarter, a property is classified into one of these three categories, and the designation of a property can change from one quarter to the next.
• The NIC MAP Seniors Housing Rate Tiers Report has a “same-store” methodology for computing rate growth within each tier. Year-over-year rate growth is computed by using only the properties included within a respective rate tier from one period to the next.

The example below shows the standard four charts found in this report for the New York metropolitan market from 4Q2018.

The following charts display occupancy by NIC’s three rate tiers for majority independent living and majority assisted living across the time series, aggregated for the 31 Primary Markets.

The data tells an interesting story in that independent living and assisting living occupancy results by rate tier have followed different patterns. The occupancy rate for bottom tier majority independent living properties in the 31 Primary Markets has generally outpaced the top and middle tiers since 3Q2006. The occupancy “spread” by rate tier was the greatest during and coming out of the Great Recession, perhaps due to the greater affordability of bottom tier properties, which may have allowed them to maintain higher occupancy rates than the top and middle rate tiers. More recently, majority independent living occupancy rates for the three rate tiers converged and reached a near-term peak close to 91% in the second and third quarters of 2015. Since then, and as the market has softened, the difference in occupancy rates between the bottom and top tiers widened to as much as 3.5 percentage points in 2Q2018, when the average occupancy rate of majority independent living properties in the 31 Primary Markets was at a 4-year low point. Currently, in 4Q2018, bottom tier majority independent living occupancy (91.9%) is 1.8 percentage points higher than in the top tier (90.1%).

However, rate tier occupancy for majority assisted living property types in the 31 Primary Markets followed a different pattern. Bottom tier majority assisted living property occupancy rates were lower than the top and middle tiers leading into and through most of the Great Recession. Coming out of the Great Recession, majority assisted living inventory grew at a faster pace than majority independent living, and occupancy across rate tiers was relatively narrow until it began to diverge around the fourth quarter of 2014, as strong supply growth outpaced demand. Since then, bottom tier occupancy rates have exceeded the top and middle tiers. In 4Q2018, majority assisted living occupancy in the 31 Primary Markets was 85.4%, near its record low rate of 85.3% reached in 2Q2018, when the difference between the bottom and top tiers was the widest at 4.9 percentage points. As of the fourth quarter, the difference between the bottom and top tiers is 4.4 percentage points.

In the coming months, NIC will begin to explore a number of intriguing questions raised by the data:

• Are markets with high top tier AMR annual growth rates dominated by large chain properties?
• Do markets with high variability between the top and bottom tiers suggest the need for greater local focus when analyzing the market fundamentals?
• What are the benefits and drawbacks of investing in metropolitan markets with wide or narrow variations in top and bottom tier pricing?
• Do top tier properties tend to be newer and bottom tier properties older?
• Are top tier properties located in neighborhoods with higher property values than bottom tier properties?
• Does the greater affordability of bottom tier properties help insulate them from occupancy pressures in times of fluctuating local demographic and economic conditions?
• How does AMR annual rate growth relate to changes in inventory and occupancy by rate tier?

The “rate tiers” approach to NIC’s seniors housing property database is, indeed, a “game changer.” This new report provides NIC MAP clients another way to segment the data with increased granularity, allows for greater comparability to other commercial real estate property types, and delivers on NIC’s mission to promote greater transparency within the seniors housing sector.

Seniors housing isn’t quite like other commercial real estate investments. Returns and valuations can be significantly influenced by operational performance which makes acquisition and investment decisions complex. Professionals new to the industry can find underwriting a deal difficult and challenging.     

To help these newcomers get a leg up, NIC is hosting the 2019 NIC Seniors Housing Boot Camp: The Art of Assessing the Deal, on Wednesday, April 10 from 10 a.m. to 4:30 p.m. at the AC Hotel Charlotte City Center.  

Designed for professionals with 1-3 years of seniors housing experience, Seniors Housing Boot Camp is an interactive workshop for professionals looking to familiarize themselves with the unique aspects of investing in seniors housing. 

Individuals with deal-making experience in other sectors will quickly gain practical knowledge by analyzing a “real” seniors housing acquisition opportunity with the input of talented industry veterans.  

Sponsored by NIC’s Future Leaders Council, the event is structured around a case study which includes all the details from a deal that was negotiated in the “real world”. Participants will learn how to evaluate a seniors housing opportunity from experts and then formulate a bid on a property. The actual outcome of the case study will be revealed at the end of the program.  

Prior to boot camp, participants will receive the case study outlining the key characteristics of a potential acquisition opportunity. Throughout the morning, experts will provide detailed descriptions on how to analyze the deal. Topics include: 

• Supply and demand market dynamics 
• Occupancy 
• Operational performance 
• Net income 
• Rents 
• Cost of care 
• Staffing 

Participants will learn how to use tools such as the NIC MAP^® Data Service, gaining skills which will help them better navigate the opportunities and challenges of the sector. They will then apply what they learn in small teams as they develop a bid for the property. Each group is guided by a table captain, a member of NIC’s Future Leaders Council.   

This year’s boot camp, co-chaired by council members Brandi Healey, Ryan Chase, Fritz Kieckhefer and Richard Wang, features several notable programming changes. It will feature a joint networking reception bringing together boot camp attendees and members of the Future Leaders Council.  The reception is a unique networking opportunity for Boot Camp attendees and Future Leaders Council members alike.   

Industry icon John Moore, the Chairman and Chief Executive Officer of Atria Senior Living, will be the keynote luncheon speaker. Moore will provide his insights into the trends impacting the industry and the major drivers shaping the future of seniors housing real estate.  

At the end of the day, teams will present their property bids along with the rationale for their offers. The results of the actual deal will be discussed so that participants can judge their work against the actual outcome. This aspect of the workshop provides attendees a chance to walk through a deal from start to finish. It’s also a great opportunity to network and get to know the future leaders of the industry.  

The 2019 Seniors Housing Boot Camp is fully booked. Learn more about future workshops here.  

• Occupancy in Narrow Range Since April 2018 
• Managed Medicare Revenue Mix Now at 11% 

NIC released its fourth quarter 2018 Skilled Nursing Data Report last week, which includes key monthly data points from January 2012 through December 2018.  The report also includes the latest urban vs. rural comparative data points as well as revenue mix trends. 

Here are some key takeaways from the report: 

1. Occupancy continued to hold in a narrow range as it has over the past several months.  Overall occupancy ended the fourth quarter of 2018 at 82.4% which was virtually unchanged from the third quarter and down 35 basis points from 82.8% in the fourth quarter of 2017.  It has hovered around 82.5% since April 2018. The fourth quarter occupancy trend varied by geographic area with urban areas experiencing an increase, while occupancy in rural and urban cluster areas declined from the third to fourth quarter of 2018. The occupancy rate ended 2018 at 80.4% in rural areas and 83.7% in urban areas, representing a significant difference of 330 basis points.  

1. Managed Medicare revenue per patient day (RPPD) increased in the fourth quarter of 2018, albeit slightly, ending the year at $430. Any ease in pressure on managed Medicare RPPD would be a positive for skilled nursing operators as the last few years have seen a continued downward trend. The managed Medicare RPPD has decreased from $495 in January of 2012 to $430 as of December 2018. There has not been a quarterly increase in managed Medicare RPPD since the fourth quarter of 2016 when the RPPD was at $449. However, RPPD is down 1.7% compared to a year ago in December of 2017 when managed Medicare RPPD was at $437. Managed Medicare RPPD trends varied by geography as rural areas saw a decrease and urban areas represented a slight increase. Urban cluster areas increased as well. 
2. Private revenue per patient day was relatively flat from the third quarter to the fourth quarter of 2018. It has continued to be range bound over the past few months, but it has declined since February 2018. This is notable because it has steadily increased over the past few years. However, the latest data suggest there has been a slowdown since last year. Whereas the private pay RPPD did grow at 1.7% compared to a year ago in December of 2017, it oscillated around the $262 range for several months.  Private RPPD decreased the most in rural areas representing a quarterly decrease of 1%.  It was relatively steady in both urban and urban cluster areas. Meanwhile, patient day mix continued to hold steady as it has the last several months. 
3. Skilled mix held steady in the fourth quarter 2018 at 24.8% which is somewhat common from a seasonal perspective when comparing the third to fourth quarters.  The data usually shows a flat to slight increase from the third to fourth quarters. The quarterly change was driven by an increase in Medicare patient day mix and a decrease in managed Medicare mix. However, compared to December 2017, skilled mix decreased 56 basis points as the pressure on skilled mix persists. The continued pressure over the years has been mainly due to the decline of Medicare patient day mix which was down 110 basis points from a year ago. Managed Medicare patient day mix was up 28 basis points compared to a year ago. The decline in skilled mix over the past year was most pronounced in urban areas as rural areas saw a slight increase. 
4. Managed Medicare revenue mix was the only main payer type that increased from third quarter 2018 and is now at 11% overall. This highlights the importance of continuing to follow the trends of managed Medicare for operators and investors.  Compared to one year ago, Medicaid and managed Medicare revenue mix increased while Private and Medicare decreased.  

The NIC Skilled Nursing Data Report is available here. There is no charge for this report.  

The report provides aggregate data at the national level from a sampling of skilled nursing operators with multiple properties in the United States. NIC continues to grow its database of participating operators in order to provide data at localized levels in the future. Operators who are interested in participating can complete a participation form here. NIC maintains strict confidentiality of all data it receives.