For the 2018 NIC Fall Conference, the highly popular NIC Talks program returns with eight fresh speakers from beyond the seniors housing and care sector. As in previous years, the TED-style talks are designed to be insightful, highly relevant, and thought provoking – all in 12 minutes. This year’s speakers represent a wide range of talents and experience, all engaged in answering the question, “How am I changing the future of aging?”

In her NIC Talk, Lisa Marsh Ryerson, President of the AARP Foundation, will focus on the value of socialization and the impacts and threats of isolation and loneliness, both on seniors themselves, and on the costs involved in their care. Ryerson has a message: in the future, senior living residents will be known not just for what they did in their past, but what they are doing right now. She believes old age is entering a new era, and will illustrate how the current paradigm, in which seniors value safety, security and comfort, will be replaced as a new generation calls for engagement, connection, and purpose.

There are profound costs associated with loneliness and isolation. Prolonged isolation has been found to be equivalent to smoking 15 cigarettes a day, increasing the risk of morbidity – and the costs of care as well. In a recent AARP Public Policy Institute study, it was found that over four million Medicare recipients suffer from isolation. This population accounts for over $6.7 billion in increased spending annually, which comes to approximately $134 per month per individual.

But there is some good news. Ryerson’s work with the highly regarded Connect2Affect initiative indicates that, beyond adapting to shifting attitudes, investors, owners and operators stand to gain significant benefits by providing social engagement for tomorrow’s seniors. Not only will they achieve cost savings, but, for those that are willing to reimagine how they deliver value to residents, there is now a unique opportunity to align offerings to new demand. Ms. Ryerson says that she’s excited to address NIC’s Fall Conference, in part because she believes “this group is uniquely positioned to build the communities that will meet the demand of boomers, gen x’ers and subsequent generations. They have a real opportunity here.”

The newer generation of seniors will view aging very differently than current seniors housing and care residents. Boomers and succeeding generations will wish to live lives full of purpose, across their entire lifespan. It is possible that children today may reach average lifespans of 100 years. But they will want more than just a long life. They will want a full life, for as many of their years as possible. Rather than “retiring,” these younger seniors will want to remain connected to friends, family and community, and may do so for many more years than currently imagined. They might take up a second career or launch into new experiences that they’d deferred earlier in life. They will not be satisfied to retire and retreat from the community and are likely to demand that the place they call home enable these desires.

As communities begin to address these significant shifts in how seniors, and society, view aging, it will no longer be acceptable to separate and isolate seniors in “age-restricted communities.” Instead, look for “ageless communities” which provide for inter-generational living and plenty of access to the greater community beyond housing and care facilities. Expect these new types of communities to be viewed as assets to the greater community, full of new possibilities for residents, who will live longer and more engaged lives in the homes that they make there.

Be sure not to miss Ms. Ryerson’s NIC Talk for a more detailed and in-depth discussion on the future of aging, delivered by someone whose passion and energy are as compelling as the wealth of research and data she brings to bear on the issue.

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The Labor Department reported that there were 134,000 jobs created in the U.S. economy in September, well below the consensus expectation of 180,000.  However, revisions added 87,000 to the prior two months as August was revised to 270,000 from 201,000 and July to 165,000 from 147,000. The September figure may have been negatively affected by Hurricane Florence. Payrolls have averaged 190,000 per month for the last three months, up from 182,000 last year.

The unemployment rate declined to 3.7% in September from 3.9% in August and was at the lowest rate since December 1969. The jobless rate remains well below the rate of what is generally believed to be the “natural rate of unemployment” of 4.5% and continues to suggest that there will be growing upward pressure on wage rates.  The jobless rate is calculated from a different survey than the survey used to calculate the number of new jobs (the household versus the establishment survey, respectively).

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—rose to 7.5% from 7.4% in August, but was down from 8.3% a year ago.

In September, employment in health care rose by 26,000. In the past year, health care has added 302,000 jobs.

The labor force participation rate, which is a measure of the share of working-age people who are employed or looking for work was unchanged at 62.7%, near its cyclical low of 62.5% in October 2015.  The low rate at least partially reflecting the effects of an aging population.

Average hourly earnings for all employees on private nonfarm payrolls rose in September by eight cents to $27.24. Over the past 12 months, average hourly earnings have increased by 73 cents, or 2.8%.  Last year, they averaged 2.6%.

The September jobs report and the annual increase in average hourly earnings will provide further support for increases in interest rates through 2018 by the Federal Reserve. As widely expected, the Fed increased the fed funds rate by 25 basis points at its September FOMC meeting, the third increase in 2018.  The Fed has raised rates by a quarter percentage point eight times since late 2015, and most recently to a range between 2.00% and 2.25% after keeping them near zero for seven years.  It is widely expected that the Fed will raise rates at the next FOMC meeting to be held in December, with another three rate hikes anticipated in 2019, pushing rates toward 3.4% by 2020.

For consumers who save, higher rates are good news as their returns on CDs and money market accounts will grow at a faster pace.  But for borrowers—both consumers and businesses–higher rates are not good news as their borrowing costs will be higher.

This year at the 2018 NIC Fall Conference, we will be introducing Peer-to-Peer Salons as one of our newly enhanced educational program opportunities.  The Peer-to-Peer Salons provide a forum for an exchange of ideas across various perspectives from fellow industry professionals.  Salon participants will engage in discussions to gain new insights and better understanding from their peers on issues that the industry faces today or possibly in the future.

These timely topics will be professionally facilitated by Lisa Spinali—a thought leader who helps build cross sector solutions for public good—to ensure the discussion will have an impact on participants. This learning forum is unique compared to other educational sessions at NIC conferences.   Salon participants will share and potentially debate their respective viewpoints with colleagues to give shape and color to the discussion topics.

Our list of topics this year are:

• 9:45 am – 11:00 am -Labor Market: How Can We Better Navigate the Associated Challenges at Our Properties in the Increasingly Tight Labor Market?
• 11:15 am – 12:30 pm-Penetration Rates: What Opportunities Exist for Us to Increase the Penetration Rates Across Senior Care Properties Going Forward?
• 2:30 pm – 3:45 pm-Market Underwriting: Given the Current Competitive Market Conditions, How Do We Best Identify or Underwrite Markets for Investment?

If you are attending the 2018 NIC Fall Conference, we hope you will join us on Thursday, October 18th to participate in one of the three Peer-to-Peer Salons.  The salons are designed to engage all participants as we learn from one other. By participating in this session, you will gain insight on how fellow industry professionals are tackling hot button issues which can make a difference in how you navigate your business as you explore various options and potential paths forward.  Hope to see you there!

The NIC MAP Data Service recently released national benchmark data through mid-year 2018 for actual rates and leasing velocity.  Key takeaways include:

• Average initial rates at the time of resident move in were below average asking rates for both majority independent living and majority assisted living properties, with monthly spreads larger for majority assisted living properties throughout the entire reported period.
• As of June 2018, initial rates for majority assisted living properties averaged 9.2% below the average asking rate, which equates to an average initial rate discount of 1.1 months on an annualized basis, up from 1.0 months in December 2017. The discount for majority independent living properties was smaller at the equivalent of 0.6 months rent and was down from 0.9 months in December 2017.
• Average in-place rate growth for majority assisted living properties has accelerated since year-end 2017, with the average in-place rate in June 2018 up 1.5% from the year-earlier average rate. Similarly, for majority independent living properties, in-place rate growth accelerated during the past six months, with year-over-year rate growth of 1.7% in June 2018. The acceleration could be seasonal, as leasing activity generally picks up during spring and summer months. Compared with year-earlier growth rates, the June pace is relatively steady.
• Growth rates for average majority independent living initial rates were 4.8% above year-earlier levels in June 2018, registering the strongest pace in the 17 months that NIC has reported annual growth rates and significantly more than the in-place rate growth of 1.7%. In the time that NIC has reported this data, annual growth in initial rates have generally been negative and underperformed rate growth for in-place rate, so the June pattern bears watching.
• Growth rates for average majority assisted living initial rates averaged 2.0% from year-earlier rates in June 2018, also above the in-place rate growth of 1.5%. Annual growth in majority assisted living move-in rates has been stronger than in-place rate growth, however, for only four of the past 12 months.
• The rate of move-ins exceeded or equaled the pace of move-outs in nine of the last 12 months for majority assisted living properties. In January and February, the rate of move-outs exceeded move-ins which may be related to the severity of the flu season. There was no clear monthly pattern for majority independent living properties in the past 12 months.

This Seniors Housing Actual Rates Report provides aggregate national data from approximately 250,000 units within more than 2,500 properties across the U.S. operated by 25 to 30 seniors housing providers. Note that this monthly time series is comprised of end-of-month data for each respective month.

The second quarter 2018 NIC Skilled Nursing Data Report was released last week.  The report includes key monthly data metrics from October 2011 through June 2018.  The report also includes the latest urban vs. rural and revenue mix trends.

Here are some key takeaways from the report:

1. Pressure on skilled nursing occupancy continues as the latest data shows occupancy decreased 79 basis points to a new low at 81.7% as of the second quarter 2018. Year-over-year occupancy decreased 137 basis points from 83.1%.  The decline in occupancy is not unexpected as the data has shown a decrease from the first quarter to the second quarter in past years as well.  The second quarter decrease in occupancy was evident across all geographic areas with rural areas experiencing the sharpest decline, dropping 89 basis points quarter-over-quarter.

2. Quality mix declined 127 basis points at the national level to end the second quarter at 34%, which is the lowest level within the time-series data going back to October 2011. Year-over-year quality mix decreased 142 basis points from 35.4% in June of 2017. The main driver of the decrease in quality has been the decline in Medicare patient day mix which fell 129 basis points quarter-over-quarter and now stands at a time-series low of 12.1%. Medicare patient day mix has declined 452 basis points since October 2011.  However, the trends in quality mix are completely different when looking across geographic areas as quality mix has increased 135 basis points in rural areas since October 2011.
3. Managed Medicare patient day mix also saw an expected seasonal dip from the first quarter to the second quarter 2018 as it decreased 41 basis points ending at 6.4% at the national level. When compared to a year ago, the data shows that the growth in managed Medicare patient mix has been relatively flat with a 4 basis point decrease, which is an interesting trend considering the discussions about the increase in managed Medicare throughout the sector.  However, this could also be reflecting more pressure on length of stay from managed Medicare which could result in lower overall patient days.  This recent trend also shows up when looking at managed Medicare revenue mix year-over-year as it decreased 11 basis points to 9.9%.  Although the data shows a drop quarter-over-quarter in managed Medicare across all geographic areas, the managed care penetration varies when comparing urban vs. rural areas.  Rural area managed Medicare patient day mix stands at 3% whereas urban area is at 7.7% as of the second quarter 2018.  Managed Medicare plans can choose to operate in more densely populated and/or more affluent and healthier areas which could explain the lower penetration in rural areas.

4. Private patient day mix at the national level increased slightly from the first quarter to the second quarter 2018. However, the longer term trend continues downward as year-over-year it declined 78 basis points to 8.8%.  This downward trend persists across all geographic areas, but the level of private day mix is considerably different in urban vs. rural areas.  Private patient day mix is highest in rural areas at 15.4% which is a significant portion of patient days and reflects the fact that there are fewer options for private pay in rural areas.  This is also evident in the revenue mix reflecting the financial importance of private pay for rural skilled nursing properties as 13.9% of revenue comes from private pay as of the second quarter 2018.

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. NIC maintains strict confidentiality of all data it receives.