Labor shortages and the delta variant likely limited further occupancy gains. 

NIC MAP® data, powered by NIC MAP Vision, released its latest Skilled Nursing Monthly Report on November 4, 2021, which includes key monthly data points from January 2012 through August 2021.   

Here are some key takeaways from the report: 

Skilled nursing property occupancy increased for a seventh consecutive month in August, albeit at a slower pace than recent monthly gains, rising only 14 basis points from July to 75.2%. The occupancy rate is now 378 basis points above the low point reached in January 2021 (71.4%).  At the beginning of the year there was cautious optimism for increased occupancy through 2021. However, the rapid spread of the contagious COVID-19 delta variant created additional challenges for skilled nursing operators to increase occupancy at a faster pace.  In addition, considerable labor availability issues within the skilled nursing sector have caused some properties to limit admissions due to staff shortages.  The question remains as to how fast the industry can increase occupancy to a sustainable level as staffing shortages are likely to remain. Occupancy remains low compared to February 2020 pre-pandemic levels of 85.6%. 

Medicaid patient day mix edged higher, ending August at 66.1%.  It has increased 278 basis points from the pandemic low of 63.3% set in January 2021 and is close to its pre-pandemic levels. Meanwhile, Medicaid revenue mix increased slightly from the prior month, ending August at 50.4%. One element of the Medicaid revenue share of a property’s revenue is revenue per patient day (RPPD) and that has declined 0.8% ($2.08) since the pandemic high of $246.17 set in February 2021. RPPD has likely declined due to less reimbursement support from most states as COVID-19 cases within skilled nursing properties declined.   

Medicare revenue mix ended August at 20.3% and is down from its pandemic high of 25.0% set in January 2021. Medicare RPPD is down 2.4% ($14.03) from its pandemic peak of $576 in June 2020. Medicare revenue mix and RPPD continue to decline as fewer COVID-19 cases in properties have resulted in less need for utilizing the 3-Day rule waiver and per day reimbursement for COVD-19 positive patients.   Meanwhile, Managed Medicare revenue mix decreased slightly ending August at 10.4%.  However, this is 211 basis points above the pandemic low of 8.3% set in May 2020. 

Managed Medicare revenue per patient day (RPPD) decreased in August and is down 4.1% ($18.90) from August 2020. The persistent decline in managed Medicare revenue per patient day continues to pose 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 August 2021 at $562 and managed Medicare ended at $445, representing a $117 differential. Pre-pandemic, in February of 2020, the differential was $98.  As prior reports show, this trend will be monitored closely as operators and investors continue to adjust to the dynamics within healthcare delivery.  

To get more trends from the latest data you can 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 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. 

Interested in learning more about NIC MAP data? To learn more about NIC MAP data, powered by NIC MAP Vision, and about accessing the data featured in this article, schedule a meeting with a product expert today.

The following analysis examines current conditions and year-over-year changes in inventory, occupancy, and same-store asking rent growth—by care segments within CCRCs (CCRC segments) compared to non-CCRC segments in freestanding or combined communities to focus a lens on the relative performance of care segments within CCRCs during the third quarter of 2021.

NIC MAP^® data, powered by NIC MAP Vision, tracks occupancy, asking rents, demand, inventory, and construction data for independent living, assisted living, memory care, skilled nursing, and life plan communities (CCRCs) for more than 15,000 properties across 140 metropolitan areas. NIC MAP data currently tracks 1,188 not-for-profit and for-profit entrance fee and rental CCRCs in these 140 combined markets (1,112 in the 99 combined Primary and Secondary Markets).

3Q 2021 CCRC Market Fundamentals

After five quarters of negative absorption (change in occupied stock or a measure of demand) during the pandemic, CCRC unit absorption rebounded in the third quarter of 2021 to the strongest pace since 4Q 2008. This (and negative inventory growth) helped push occupancy up to 85.4%, which is 1.1 percentage points above its pandemic period low during the previous quarter, but still 6.2 percentage points below its pre-pandemic occupancy rate in the first quarter of 2020 (91.6%).

Non-CCRC occupancy averaged 77.1% in 3Q 2021—8.3 percentage points lower than CCRC occupancy. On a year-over-year basis, entrance fee CCRC occupancy (88.0%) was 6.9 percentage points higher than rental CCRCs (81.1%), and not-for-profit CCRC occupancy (87.0%) was 6.0 percentage points higher than for-profit CCRCs (81.0%).

CCRCs vs. Non-CCRCs: Care Segment Detail

The table below compares each of the care segments—independent living, assisted living, memory care and nursing care—in the Primary and Secondary Markets tracked by NIC MAP Vision. The table shows the 3Q 2021 total open units, average occupancy, average monthly asking rent—and year-over-year changes for CCRCs and non-CCRCs.

CCRCs: Stronger Occupancy and Rent Growth, Weaker Inventory Growth Than Non-CCRCs

The CCRC independent living care segment had the highest 3Q 2021 occupancy (89.1%), followed by CCRC assisted living and memory care (84.0% and 83.3%, respectively). The difference in 3Q 2021 occupancy between CCRCs and non-CCRCs was the highest for the independent living segment (8.7 percentage points), and the lowest for the nursing care segment (2.8 percentage points).

The highest year-over-year asking rent growth was in the CCRC assisted living segment, followed by nursing care and memory care (ranging from 2.4% to 2.2%). The lowest was noted for non-CCRCs in the independent living care segment (0.5%). Note, these figures are for asking rates and do not consider any discounting that may be occurring.

Negative inventory growth was reported for CCRCs in the independent living, assisted living and nursing care segments. CCRCs have had historically lower rates of inventory growth (year-over-year change in inventory) by segment than non-CCRCs. Negative inventory growth can occur when units/beds are temporarily or permanently taken offline or converted to another care segment outweigh added inventory. The highest year-over-year inventory growth was reported for the non-CCRC memory care and independent living care segments (4.8% and 4.2%, respectively).

All the New CCRC Units Under Construction are in Five Markets

Comparatively very little development of CCRCs has occurred in recent years (the median age of CCRCs is 35 years). Approximately 60% of existing CCRC units in the Primary and Secondary Markets are at properties that have been developed since 1980.

As shown below, considering all CCRC units under construction (both new and expansion units, not-for-profit and for-profit) 76% are located in four markets: Washington D.C., Austin, Memphis, and Knoxville. Construction as a share of existing inventory is highest in two Tennessee markets: Knoxville (29% or 149 units) and Memphis (21% or 299 units).

Setting aside expansion projects, the share of new CCRC units under construction in the Primary and Secondary Markets was 39% in 3Q 2021, (61% are expansions on existing properties). All the new CCRC units under construction are located in just five markets: Washington D.C., Memphis, Minneapolis, Baltimore, and Orlando. Nearly three-quarters of for-profit new CCRC construction (71% or 1,400 units) and one-half of not-for-profit new CCRC construction is in Washington, D.C. (51% or 378 units).

Look for future blog posts from NIC to delve deep into the performance of CCRCs.

Interested in learning more?

To learn more about NIC MAP data, powered by NIC MAP Vision, and about accessing the data featured in this article, schedule a meeting with a product expert today.

*This blog was originally published in Ziegler Investment Banking, Senior Living Finance Z-News.

The Labor Department reported that nonfarm payrolls rose by 531,000 in October 2021. The consensus had been for an increase of 312,000. This was an acceleration from September when jobs grew by an upwardly revised 312,000 (originally reported as 194,000) and from August when jobs increased by 483,000, up from 366,000 as originally reported. Through October, the year-to-date monthly average job gain has been 582,000. Nonfarm payrolls have now increased by 18.2 million since its pandemic trough in April 2020 but are still down by 4.2 million or 2.8% from their pre-pandemic level in February 2020.  

Separately and from a different survey, the Labor Department reported that the supply of labor as measured by the labor force rose by a muted 104,000 in October, well short of population growth. With the household measure of employment rising by 359,000, the jobless rate fell to 4.6% from 4.8% in September. The labor force is 3.0 million below the February 2020 level. Many had speculated that the labor force would increase since enhanced unemployment benefits had largely expired, and schools largely reopened. The jobless rate is now 1.1 percentage points above the pre-pandemic level of 3.5% seen in February 2020, but well below the 14.7% peak seen in April 2020.

The underemployment rate or the U-6 jobless rate was 8.3% down from 8.5% in September 2021. This figure includes those who have quit looking for a job because they are discouraged about their prospects and people working part-time but desiring a full work week.  

The data show that the U.S. recovery from the pandemic continues. The COVID-19 Delta variant likely weighed on the economy in August and September as lower job numbers suggested. Employment in the leisure and hospitality industry increased by 164,000 in October and has risen by 2.5 million thus far in 2021, but it is still down by 1.4 million or 8.2% from February 2020.

Health care added 37,000 jobs in October with most of the gain occurring in home health care services (up 16,000) and nursing care facilities (up 12,000). Employment in the broad health care sector is down by 460,000 since February 2020.  

Today’s report is important as the Federal Reserve wants to see “substantial progress” in the economy as it shifts monetary policy and notably today’s report is important because it gives the Fed a gauge on the path of wage growth and inflation.  

Indeed, average hourly earnings for all employees on private nonfarm payrolls rose by $0.11 in October to $30.96, a gain of 4.9% from a year earlier, the strongest year-over-year gain February 2021. With the mix of job gains in October skewed towards low-wage workers, the 4.9% gain may be understating wage growth. The data suggests that rising demand for labor associated with the recovery from the pandemic is putting upward pressure on wages.  

Soon after their Federal Open Market Committee meeting (FOMC) in Washington D.C. this week, the Fed announced that they are ready to shift gears and are relaxing their aggressive bond buying program, a necessary precursor to allow the Fed to increase interest rates more freely when and if they view inflation as too serious a threat to stable economic growth. Moving too fast on an interest rate increase could crush the path of economic growth and moving too slowly could cause inflation to become embedded in the economy. Such a discussion has not been the focus of policy makers and pundits for more than 30 years.  

Senior living providers and investors are familiar with the financing options from Fannie Mae, Freddie Mac, and HUD. Less well known are the government-subsidized loan programs for healthcare facilities through the U.S. Small Business Administration (SBA). Liberty SBF is a specialty finance company that offers SBA, conventional and bridge loans.  

NIC Chief Economist Beth Mace recently discussed the SBA program and other financing options with Alex Cohen, CEO at Liberty SBF.  Here is a recap of their conversation.  

Seniors Housing Market Fundamentals Show Improvement in Demand.

NIC MAP Vision clients, with access to NIC MAP^® data, attended a webinar in mid-October on key seniors housing data trends during the third quarter of 2021. Findings were presented by the NIC Analytics research team. Key takeaways included the following: