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.

At the upcoming 2018 NIC Fall Conference, the “Innovations That Work” session will share ideas on innovative technologies and tools that are changing the way operators and investors care for residents. Rapid-fire, seven-minute presentations on five key topics and moderated by Arnold Whitman, Founder and Chairman of Formation Capital, LLC, will address real-world examples of innovative solutions to some of the most pressing challenges in the industry today. Topics include how to:

• reduce staff turnover
• decrease re-hospitalization rates
• use artificial intelligence to help memory care patients
• apply predictive analytics to achieve 5-star rating and advance patient care
• implement cloud-based software to improve quality at the end of life

Further descriptions are below:

Jayne Keller, vice president of operations at Capella Living Solutions, will share ideas to reduce staff turnover that include how to use innovative thinking to develop a sense of community between staff and residents. Keller will tell us how high staff turnover impacts residents and will explain how the implementation of new perspectives has helped to decrease staff turnover at her properties.

Tim Reilly, vice president of human resources at Benchmark Senior Living, will also address how to reduce turnover rates in his lightning round talk. Reilly will share newly collected data from an analytics software package that can help predict the tenure of job applicants as Benchmark works to attract and retain staff.

Allen Pindell, senior vice president of information services and analytics at Lexington Health Network, uses telehealth solutions for after-hours management of unnecessary hospital readmissions. Pindell will share the win-win approach this innovation has had on patient experience, relationships with hospitals, physicians, and, most importantly, the bottom line.

Paul Liistro, managing partner with Arbors of Hop Brook, has also implemented artificial intelligence and predictive analytics to achieve 5-star ratings and improve patient care.

Alan Fox, executive director of WindChime of Marin, will share how memory care patients are most likely to suffer from falls and have a high rate of hospital admissions. Advanced artificial intelligence has allowed staff at WindChime to monitor resident falls and alert staff to assist in making quicker decisions on how to best care for memory care residents.

And finally, Phil Fogg, CEO of Marquis Company, will share cutting-edge, cloud-based software solutions used to help improve the quality of life at the end of life for patients and family alike.  Fogg will share how this software can help by providing regular patient updates and tutorials for difficult conversations.

If you will be attending the conference, we invite you to participate in this innovative and thought-provoking session on Friday, October 18, from 9:45 AM to 10:45 AM. Join us and learn how your peers are tackling everyday issues by incorporating innovative technology.

To learn more, please visit the NIC Fall Conference website.

The Labor Department reported that there were 201,000 jobs created in the U.S. economy in August, above the consensus expectation of 190,000.  However, revisions subtracted 50,000 to the prior two months as June was revised to 208,000 from 224,000 and July was revised to 147,000 from 157,000.  Payrolls have averaged 207,000 per month so far this year, up from 182,000 last year.

The unemployment rate was unchanged at 3.9% in August and was down from 4.4% one year ago. 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).  Among major worker groups, the unemployment rate for adult men was 3.5%, adult women 3.6% and teenagers 12.8%.

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—fell to 7.4% in August from 7.5% in July and was down from 8.6% in August 2017.  Last month’s U-6 rate was a 17-year low.

In August, employment in health care rose by 33,000. In the past year, health care has added 301,000 jobs.

The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work fell 0.2 percentage points to 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 August by ten cents to $27.16. Over the past 12 months, average hourly earnings have increased by 77 cents, or 2.9%.  This was a nine-year high.  Last year, they averaged 2.6%.

The August jobs report and the acceleration 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 June FOMC meeting, the second increase in 2018.  The Fed has raised rates by a quarter percentage point seven times since late 2015, and most recently to a range between 1.75% and 2.00%, after keeping them near zero for seven years.  The June projections by the Fed now show a total of four increases in the fed funds rate are anticipated in 2018 (two of which have already occurred), up from an earlier expectation of three.  This would bring the benchmark rate to a range of 2.25% to 2.5% by year end.  The Federal Reserve also upgraded its view of the economy by substituting the word “strong” for “solid” in the statement that policy makers released after its meeting.  Further increases in the fed funds rate are anticipated in 2019.  Their projection for the fed funds rate in 2020 is 3.4%.  Hence, it is likely that there will be another 25-basis point increase announced by the Fed at its September meeting in two weeks and another one at its December FOMC meetings.