During four consecutive quarters of increasing occupancy, from 78.0% in the second quarter of 2021 to 81.4% in the second quarter of 2022, the NIC MAP^® Primary Markets recovered about 37% of the senior housing occupancy lost during the pandemic, equivalent to 3.4 percentage points (pps) overall.

While senior housing occupancy still has room to make up with a gap of 5.8pps from the pre-pandemic level (87.2%), occupancy growth over the past four quarters has been notable and suggests that the market’s recovery remains well anchored in the short and long term. In fact, according to August 2022 intra-quarterly NIC MAP data, powered by NIC MAP Vision, senior housing occupancy is on track for the fifth quarter of gain as it recorded its largest monthly gain in July 2022 since October 2021 and continued to improve through the month of August 2022.

Many factors continue to influence occupancy recovery for senior housing. This analysis will focus on a trifecta of factors – demand recovery (as measured by the change in occupied stock), inventory growth during the pandemic, and the construction pipeline (as measured by second quarter 2022 construction as percent of inventory) — and how these idiosyncratic factors are shaping the senior housing occupancy growth and recovery across NIC MAP Primary Markets, resulting in a slower recovery in some markets and faster in others. The exhibit below provides a zoomed-in view of these measures for senior housing across select NIC MAP Primary Markets since the pandemic began to influence the sector in first quarter 2020. 

Demand Recovery. Within the NIC MAP Primary Markets, 78% of senior housing units vacated during the pandemic have been re-occupied as of the second quarter of 2022, equivalent to over 35,500 units absorbed on a net basis over the period from first quarter 2021 to second quarter 2022. However, 28% of units lost during the pandemic (equivalent to about 10,000 units) still need to be reabsorbed for occupied stock to fully recover and return to first quarter 2020 level. Said differently, second quarter 2022 occupied stock remained 1.8% below first quarter 2020 level.  

Inventory Growth. Over the period from first quarter 2020 to second quarter 2022, the inventory of senior housing properties for the Primary Markets grew by about 34,700 units or 5.3%, although the pace of senior housing inventory growth since first quarter 2020 has remained slow compared with pre-pandemic levels.  

Construction Pipeline. Within the Primary Markets, there were over 35,000 senior housing units under construction in the second quarter of 2022. As a share of inventory, this amounted to 5.1%. Supply dynamics, including inventory growth during the pandemic and units under construction as a share of inventory, varied across markets.  

Senior housing occupancy up from pandemic low in all Primary Markets, but the occupancy recovery is taking a lot longer for some markets than others and has been influenced by both supply and demand dynamics. 

The Lowest Occupancy Rates in Second Quarter 2022. Atlanta and Cleveland experienced the fastest recoveries in terms of units vacated during the pandemic that have been re-occupied. Notably, these two markets saw the largest demand improvements and exceeded pre-pandemic first quarter 2020 occupied stock by 5.2% and 2.3%, respectively. However, due to their respective relatively large increases in inventory during the pandemic, Atlanta (77.8%) and Cleveland (78.2%) occupancy rates remained below pre-pandemic levels and ranked the lowest among the 31 Primary Markets. These two markets illustrate the impact of supply offsetting demand and putting downward pressure on a market’s average occupancy and thereby slowing down its recovery. 

Markets Near Full Occupancy Recovery. San Antonio (81.8%) and Dallas (82.4%) occupancy rates have been recovering fast. From their pandemic lows, San Antonio recovered 5.9pps and is now 1.5pps below its pre-pandemic level, and Dallas recovered 6.1pps and is now 1.4pps below its pre-pandemic level. Interestingly, the occupancy rankings for both markets among the 31 Primary Markets saw notable improvements—San Antonio went from being ranked twenty-eighth in first quarter 2020 to fourteenth in second quarter 2022, and Dallas improved from twenty-fourth in first quarter 2020 to tenth in second quarter 2022. These notable improvements in occupancy rates and rankings are the result of a fast recovery in occupied stock but also importantly a balanced new supply. 

Markets with the Highest Rates of Construction. Looking ahead, markets with the largest number of units under construction as a share of existing inventory, such as Miami, may experience a slowdown in occupancy growth as new units enter the market. This is also the case for Portland where demand recovery has been slow but due to relatively weaker inventory growth during the pandemic, the market maintained a relatively high occupancy rate in the second quarter of 2022 at 85.0%. However, second quarter 2022 units under construction of about 2,100 units and accounting for 9.8% of existing inventory may impact the market’s occupancy growth in the next two years if its pace of demand remains slow. 

This analysis showed that the senior housing industry has been on a steady recovery path from the pandemic since the middle of 2021, and the second quarter of 2022 was no exception. Recovery, while consistent nationally, has nevertheless varied by metro.

To learn more about NIC MAP Vision data, and about accessing the analysis for all NIC MAP Primary Markets, schedule a meeting with a product expert today.

This week, NIC released a white paper on the active adult rental property type to give potential investors valuable information about this emerging segment’s characteristics and potential residents.

The paper establishes a definition for the active adult rental property segment which is needed to help bring common understanding to and insights on the growing opportunity. Defining the property type offers basic guideposts around what the segment is—and is not.

What are active adult rental properties? NIC defines the active adult segment as follows.

Active adult rental properties are age-eligible, market rate, multifamily properties that are lifestyle focused; general operations do not provide meals.

These properties aim to provide independence coupled with opportunities for social engagement that reflect the active lifestyle of their tenants. Clearly defining the segment will enable better data collection on the growth and performance of the sector, which supports the transparency investors need and ultimately provides greater access and choice for older adults.

In creating the definition, NIC considered several criteria to support clarifying this segment:

• Age-eligible: The property must restrict residents based on age. This typically means at least one resident in the household must be 55+, 62+, or 65+, depending on the local governing jurisdiction.
• Majority market rate: NIC excludes low-income housing tax credit properties from the definition.
• Multifamily: Single-family, home-only communities (SFH) are excluded. Similar to the housing data collection, it would, however, include data on attached or detached SFHs within communities with majority multifamily dwellings.
• Rental properties: The definition excludes for-sale properties.
• Meals not included through property operations or base rent: The definition does not include properties that provide lunch or dinner or allowances/credits for meals. Active adult rental properties may, however, offer meals such as continental breakfasts or happy hours.
• Not a static definition: This property type, and NIC’s definition of it, is expected to evolve as the segment matures.

Millions of baby boomers who will soon need to consider their housing options, and a growing number of people with lower acuity health needs prefer an active, community-based lifestyle lived alongside generational peers. If the senior housing community is to adequately provide access and choice for these seniors, better data to enable more transparency is desperately needed.

This white paper, “Active Adult Rental Properties: Defining the Emerging Property Type,” represents an initial step forward. Data collection is still in its nascent stages. With our new definition, however, NIC MAP Vision is collecting segment-specific data allowing potential investors and other market stakeholder to access data on the characteristics and financial performance of more than 200 active adult properties across the country. NIC MAP Vision is expected to provide more robust data, including operational performance and additional property coverage, by early 2023.

The Active Adult white paper on this emerging property type is available for download on our site.

Reframing Health and Healthcare

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 bi-weekly series detailing each key driver. View the first three installments of the “Six Key Drivers” blog series. What follows is an analysis of the fourth key driver: Reframing Health and Healthcare.

Our new customers, as discussed in Key Driver #3, have a different take on longevity. They are not content to just live longer, they want to live better. They want their lifespan to as nearly as possible to match their “healthspan” or “wellspan.”

But what does that mean? And how do we help them accomplish that?

My fourth key driver shaping the future of senior living is the reframing of health and healthcare. Senior living providers must shift their thinking about what constitutes health, what drives health, and ultimately what drives well-being.

This shift in the understanding of what drives health, and where and how healthcare is delivered presents enormous opportunities that had not previously existed for senior living providers. We have the opportunity not only to develop new and valuable partnerships, but also, and more importantly, to deliver a better product and experience for residents, and potentially even for those who live outside the walls of our communities.

The old model of how our U.S. health system is structured and healthcare is delivered is one of sick care. If you get sick, you go to the doctor. Treatments are tailored to the individual’s illness or condition, assuming you even have access to care. The model is curative, reactive and passive. If you fall, for example, you are treated for your injuries. There is no focus on how to prevent the fall in the first place.

The sick care system is a fee-for-service model. Healthcare providers are paid to treat illnesses and injuries. As the older population grows and lives longer, federal and state governments are seeing healthcare expenses explode.

Medicare benefit payments in 2021 totaled $689 billion, up from just under $200 billion in 2000. Medicaid spending grew 9.2% in 2020. Federal and state governments have to reign in healthcare costs.

Driven by the government’s priority to control costs, a new and more nuanced model of healthcare has gradually been emerging over the last decade. Sick care is being replaced by well care or value-based care.

In stark contrast to the sick care model, the wellness model is preventative, predictive and participatory. Residents are empowered to participate in their own healthcare. They can help to control their own health outcomes by their behavior. Data can be used to predict who is at risk for certain conditions or ailments. And interventions can be designed to prevent bad outcomes.

Industry consultant Anne Tumlinson defines value-based care as a system of care delivery where the primary financial reward is tied to improving patient outcomes, measured against the cost of care. Government payers also want insurers and/or care providers to take on the dollar risk for the health of seniors because the current trajectory of spending is unsustainable.

It’s important to note that many healthcare providers have not yet adopted value-based care—a key point as senior living providers consider various healthcare partners in the years ahead. Many providers remain in the fee-for-service model of care.

What Determines Health

As the value-based healthcare system continues to evolve so too has the definition of health.

The mapping of the human genome provided insights into the influence of heredity on health, which experts say accounts for about 30 percent of an individual’s outcomes. Medical care is only about 10 percent of the equation. The remaining 60 percent is now understood to be shaped by personal behavior and the social determinants of health.

This is critical to senior living owners and operators. The social determinants of health are defined as the conditions in the environments where people are born, live, work, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks.

Where do you live? What kind of housing do you have? Is transportation readily accessible? Do you live in a food desert? What kind of social interactions do you have? Are you lonely? Social isolation can drive depression which drives a host of physical ailments as well as the obvious mental and emotional issues.

Notably, the pandemic brought mental and behavioral health out of the shadows, and it will not recede again. (See Key Driver #1). We have come to recognize the key role mental health plays in overall well-being.

Our behavior has an enormous impact on health, particularly in regard to the management of chronic diseases. Do you smoke? Do drugs? Or drink? We know from studies that a healthy lifestyle consisting of a good diet, regular exercise and mental stimulation can add as many as seven years to the average person’s life.

A New Paradigm of Wellness

How will this new understanding of health and healthcare impact senior living providers in the decade ahead? For years, we didn’t want to say our buildings were involved in healthcare. We essentially built a moat around our buildings. There was no need for federal regulators to take an interest in our industry.

The pandemic changed that thinking almost overnight as senior living became the front line of defense in a national healthcare crisis. It signals a radical shift from a moat around our buildings to a moat around the hospital. What does this mean?

Any entity holding the healthcare dollar risk for that older adult is interested in partnering with us. Under value-based care, providers are incentivized to keep people out of the expensive acute care system. So, we are part of the solution by addressing the needs of our residents to reduce hospitalizations and emergency room visits.

Insurance companies and other payers play a big role. Medicare Advantage (MA) plans are growing quickly in popularity. It’s estimated that already 46 percent or more of Medicare beneficiaries are enrolled in MA plans, a number only expected to grow. The companies that underwrite the plans are incentivized to help people better manage their own health and thus minimize their need for costly crisis care.

In particular, MA plans tend to focus on those who are at greatest risk—the top 20 percent in terms of healthcare spend—in an effort to help the break the cycle of hospitalization, discharge and rehospitalization. This vicious cycle is expensive. And each time the older person enters the acute care system, he or she usually has a poorer quality of life afterwards.

Why does this matter to senior living providers? They are in a unique position to partner with healthcare providers to help manage the chronic diseases common among their resident population. How?

We know our residents. The housekeeper or dining server notices when Mrs. Jones is having an “off” day. Senior living providers can be the eyes and ears of the healthcare team to coordinate appropriate interventions. In other words, we are part of the solution.

Several years ago, I was talking to a United Healthcare executive who said he’d give anything to have eyes on his plan members 24/7. What he meant was that he had no control over the social determinants of health, or his members’ personal behavior such as healthy eating, exercise, and socialization. It was hard to keep them healthy. My response: “I’d love to introduce you to a whole host of senior living providers who have their eyes on your plan members 24/7. We should chat.”

How Senior Living Providers Can Benefit

So, where and how should healthcare be delivered to residents?

The pandemic highlighted this question of where and how to deliver healthcare. Residents could not be sent to doctors’ offices because they were closed at the start of the pandemic. The hospitals were overwhelmed.

Now, the “where” of healthcare means delivering services to the home to the greatest extent possible. In our case, that means delivering healthcare on site to residents, a trend only likely to accelerate.

The “how” of healthcare delivery now means the use of technologies such as telehealth and remote patient monitoring. Healthcare professionals will make house calls to our residents and coordinate care with geriatric specialists.

This change in the “where” and “how” of healthcare delivery creates enormous opportunities for senior living providers in the future. But it also raises a lot of questions.

What kind of healthcare partnership makes the most sense? What kind of technology and data base do I need to enter into any type of partnership let alone make the partnership work? If you don’t have good data, you are not even a candidate to be a partner. What kind of doctors should I be looking for? What kind of value-based care program or payment model should I engage with? How do I deal with different payers and payment models? These are the kinds of questions senior living providers are asking or should be asking.

The answers will depend on the senior living provider and the local healthcare and payer market. Some senior living providers are partnering with physician practices that specialize in geriatrics. The team, which often includes nurse practitioners, can visit residents on site and/or be available 24/7 via telehealth. A quick call to the healthcare team can avoid a trip to the emergency room.

Here are three programs that serve as differing examples of how to integrate the new approach to healthcare into a senior living setting. Each model also provides the opportunity to bring services to seniors who live outside the walls of the senior living community.

At Juniper Communities, the Connect4Life program integrates clinical providers, their services, and communication protocols to provide individualized, coordinated care to residents. A medical concierge has the responsibility to make sure communication happens between clinical providers, the Juniper team, the family, and resident.

In the Twin Cities, Lifespark offers a proactive, whole person approach to address how seniors really want to live—a richer, fuller, healthier life. The Lifespark Complete program offers seniors a life plan featuring a life management advisor to guide the senior who works alongside a specially trained geriatric medical team, all of whom are supported by a technology platform that allows for the real time exchange of information and the predictive analytics to promote well-being.

Another example: senior living provider Generations has recently partnered with Blue Zones, an organization owned by the Adventist Health system. Blue Zones or longevity hot spots were first identified by Dan Buettner. He categorized the lifestyle habits of Blue Zone residents—the healthiest and longest-lived people in the world.

Generations already had a partnership with the Adventist Health system, co-developing three senior living campuses together. Residents at Generations’ communities will now have access to the Blue Zone program which emphasizes wellness. The Blue Zones brand also has wide recognition which will help attract new residents interested in a healthy lifestyle.

These three examples suggest features that will be essential to any successful integration of healthcare and senior living:

• An individual (advisor, concierge, life manager, etc.) who has a trusted ongoing relationship with the older adult and ensures good, timely communication between the resident, their family, healthcare providers, and the senior living staff.
•  A specially trained geriatric medical team that begins with a focus on what matters most to the older adult, not on his or her latest health incident, chronic disease, or setting. (This concept will be explored in more detail in Key Driver #6: Moving from siloed to seamless as fragmented healthcare solutions migrate to integrated, consumer-centric care systems that are setting, disease and payer agnostic.)
• A database that allows real time transfer of essential information among all those involved in the care of the older adult and the ability to deploy predictive analytics.

As an alternative to these partnership models, some senior living providers are even starting their own insurance groups to actually take on the healthcare dollar risk for the residents in their buildings.

Whatever the approach, the benefits of a strategic healthcare partnership focused on wellness are potentially enormous. Healthier residents can translate into a longer length of stay. The average assisted living resident stays from 18 to at most 30 months. Extending the length of stay for each resident by just a month can have a huge impact on ROI.

Senior living providers can also leverage their focus on wellness and prevention to keep their residents out of the emergency room and the hospital. We can show a proven track record to residents, families, healthcare providers and those holding the healthcare dollar risk. But remember, not all providers are on board with value-based care. You have to be discerning in your partnerships. Many physician practices don’t get this, and many health systems don’t get it yet either.

If our policy consists of a van to take our residents to their doctor and on weekends we call the paramedics, that approach will eventually put you out of business. As the focus continues to shift from sick care to well care and value-based care in the decade ahead, senior living providers can be an integral part of a solution that benefits us all. Ultimately, healthier residents enjoy a higher quality of life which should be the common goal of residents, families, healthcare providers, insurers and payers, and senior living providers. Everyone’s interests can be aligned.

This leads to a need for partnerships. It’s a very rare senior living provider that can do it all in this world of well care and value-based care.

When senior living providers look for healthcare partnerships, data and analytics will play a key role along with providing a seamless integrated experience for the resident. (We will explore these concepts in our next two posts on the key drivers, publishing in the coming weeks.)

The value we will have to provide to future residents is to demonstrate that we enable not just a longer life, but a life span that as nearly as possible matches their “healthspan” or “wellspan.” That is our challenge.

Next up: Key Driver #5: The Increasing Importance of Data and Analytics. Market data by itself has limited value. In the future, Market data will be coupled with personalized health, genomic, social determinants of health (SDOH), lifestyle and psychographic data, and aggregated by local markets. The applications for the future use of this kind of data will be transformative for the industry.

Data from the recently released 2Q2022 NIC MAP Vision Actual Rates Report showed that for the sample of Actual Rates data contributors, all three care segments (independent living, assisted living, and memory care) hit record high year over year growth of asking rates for the second quarter in a row. In the recently released report, monthly data of actual rates and leasing velocity are presented through June 2022, including data on rate discounting and move-in/move-out trends. Read on for further key takeaways from the recently released report.

Seattle was added as a newly covered metro market in the second quarter Actual Rates Report. NIC MAP Vision continues to work to onboard new data contributors and is dedicated to reporting more metros. It is only with the support of Actual Rates data contributors and officially certified Actual Rates software partners that expanded metro-level reporting is now available. For more information on which metropolitan markets are now available to NIC MAP Vision subscribers, please contact a product expert at NIC MAP Vision today.

A few of the key takeaways from the 2Q2022 NIC MAP Vision Seniors Housing Actual Rates Report are listed below. These key takeaways are from the Segment Type report. Care segments refer to the levels of care and services provided to a resident living in an assisted living, memory care, or independent living unit.

Key Takeaways

• Asking rate growth accelerated in second quarter 2022. All three senior housing segment types– independent living (IL), assisted living (AL), and memory care (MC)– experienced the highest recorded growth in the time series for year-over-year asking rates in 2Q2022. Notably, IL had the largest year-over-year increase for asking rates at 9.4% in June 2022, followed by MC (8.9% in April 2022) and AL (8.7% in April 2022).
• Average initial rates for residents moving in were below asking rates for all three care segments in second quarter 2022. Of the three segments, IL segments had the most initial rate discounting of 10.5% ($388) in June 2022. This discount was equivalent to 1.3 months on an annualized basis. Initial rate discounting for IL segments has not been this strong since April 2020 when it was at 10.6% ($355). MC segments had an initial rate discounting of 8.9% ($691) in May 2022. On an annualized basis, this discount is equivalent to 1.1 months. AL segments had initial rate discounting of 7.5% ($434) in June 2022, up from a discount of 6.6% ($352) one year prior in June 2021. The June 2022 discount was equivalent to 0.9 month on an annualized basis.

• Move-ins outpaced move-outs for April, May, and June 2022 for all three care segments (IL, AL, and MC).
  • Memory care segments reached a pace of move-ins of 3.8% of inventory in June 2022. Move-outs were at 3.1% in June 2022 for MC, below the recent peak of 3.9% in January 2022 following the post-holiday spike in Omicron.

Additional key takeaways are available to NIC MAP Vision subscribers in the full report.

About the Report

The NIC MAP Vision Seniors Housing Actual Rates Report provides aggregate national data from approximately 300,000 units within more than 2,600 properties across the U.S. operated by 25 to 30 senior housing providers. The operators included in the current sample tend to be larger, professionally managed, and investment-grade operators as we currently require participating operators to manage 5 or more properties. Note that this monthly time series is comprised of end-of-month data for each respective month.

Interested in Participating?

The Actual Rates Data Initiative is an effort to expand senior housing data and we are looking for operators who have five or more properties to participate. We have expertise in extracting data from industry leading software systems, such as Yardi, PointClickCare, Alis, MatrixCare, Glennis Solutions, and Eldermark and can facilitate the process for you.

Operators contributing data to the NIC MAP^® Actual Rates report receive a complimentary report which allows them to compare their own data against national, and metropolitan market benchmarks.

In addition to receiving a complimentary report, your organization benefits through:

• More informed benchmarking, strategic planning, and day-to-day business operations,
• Increased transparency, aligning with other commercial real estate assets in terms of data availability,
• Saved time, Actual Rates data is collected electronically directly from operators’ corporate offices, removing the need for telephone calls to individual properties, and
• Enhanced investment and efficiency across the sector.

Learn more.

“Given the challenges on multiple fronts for skilled nursing operators, recruiting and retaining staff is a number one priority. Operators must build a culture that supports and strengthens their staff”

– Bill Kauffman

NIC MAP Vision released its latest Skilled Nursing Monthly Report on September 1, 2022. The report includes key monthly data points from January 2012 through June 2022.

Here are some key takeaways from the report:

After four months of increases, skilled nursing occupancy declined slightly in the month of June. It decreased 9 basis points from May to end the month at 77.3%. There has been some positive momentum in occupancy as it is up 522 basis points since the low point (72.1%) reached in January 2021. However, COVID-19 cases created additional challenges in 2021 and the staffing crisis in the sector is still a significant burden on skilled nursing operators. Occupancy is down 9.0 percentage points from the pre-pandemic February 2020 level of 86.2%. As staffing and inflation pressures persist, operations for many operators will be under pressure but the long-term demand for skilled nursing services is expected to grow over time.

Managed Medicare revenue per patient day (RPPD) increased in June but is down 1.4%% from last year in June 2021. The continued decline in managed Medicare revenue per patient day poses a challenge to skilled nursing operators as the reimbursement differential between Medicare fee-for-service and managed Medicare has accelerated during the pandemic. Medicare fee-for-service RPPD ended June 2022 at $581 and managed Medicare ended at $458, representing a $123 differential. Pre-pandemic, in February of 2020, the differential was $98. As managed Medicare continues to grow, operators and investors should pay attention to this trend and adjust accordingly.

Medicare revenue mix and RPPD have increased for the second month in a row. This is seemingly due to increased cases of COVID-19 from the month of April as more cases have resulted in additional need for utilizing the 3-Day rule waiver and per day reimbursement for COVD-19 positive patients. Medicare revenue mix ended June at 21.9% but is down from its pandemic high of 24.8% set in February 2022. Medicare RPPD is down 2.0% from its pandemic peak of $593 in June 2020. Meanwhile, Managed Medicare revenue mix was down 17 basis points to 10.5% in June. However, this is 240 basis points above the pandemic low of 8.1% set in May 2020.

After increasing two months in a row, Medicaid patient day mix decreased 72 basis points ending June at 65.4%. However, it has increased 250 basis points from the pandemic low of 62.9% set in February 2022. Meanwhile, Medicaid revenue mix declined 134 basis points from the prior month, ending June at 49.6%. One element of the Medicaid revenue share of a property’s revenue is RPPD and that has declined 2.1% since the pandemic high of $254 set in October 2021.

To get more trends from the latest data download the Skilled Nursing Monthly Report. 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 to provide data at localized levels in the future. Operators who are interested in participating can complete a participation form on our website. NIC maintains strict confidentiality of all data it receives.