NIC MAP Vision clients with access to NIC MAP^® Data attended a webinar in mid-April on key seniors housing data trends during the first quarter of 2021. Findings reflected the impact of COVID-19 across the seniors housing and care sector and were presented by NIC’s research team. Key takeaways included the following:

Takeaway #1: Seniors Housing Occupancy Fell Further in 1Q 2021 as the Pandemic Continued to Take a Toll

• The 1.8 percentage point decline in the first quarter of 2021 all-occupancy rate for seniors housing to 78.8% pushed this occupancy measure to the lowest level since NIC MAP^® data began being reported in 2005.
• This drop in occupancy was directly related to the COVID-19 pandemic as demand (as measured by net absorption and as shown by the orange bars on the chart below) fell by nearly 8,000 units. Combined with the second, third, and fourth quarters of 2020, net absorption has fallen by more than 42,000 units since the onset of the pandemic.
• Separately, inventory as depicted by the blue bars, increased by nearly 5,000 units, for a total of roughly 18,000 units in the past year.  
• Since first quarter 2020, the occupancy rate has fallen an unprecedented 8.7 percentage points.

Takeaway #2: A Small Share of Properties Have 95% or Higher Occupancy

• As noted above, the average occupancy rate for seniors housing in the Primary Markets was 78.8% in the first quarter. However, that is an average and the range of occupancy rates is broad and the distribution wide.
• In the first quarter of 2020, 33% of properties reported occupancy rates above 95%. In the fourth quarter, this fell to 12% and in the first quarter of 2021 this slipped further to 9.6%.
• On the flip side, in the first quarter of 2020 there were 22% of properties that reported occupancy below 80%. This increased to 40% in the fourth quarter and 46% in the first quarter of 2021.
• Included in the properties with occupancy rates below 80% are those that opened in 2020 during a global pandemic. It also includes those properties that have slipped in occupancy during this period.

Takeaway #3: Assisted Living Occupancy Decline is Due to Both Pandemic-Related Drop in Demand as Well as New Supply

• Occupancy is affected by both demand and supply. The chart below shows how much of the drop in occupancy in the past year has been attributed to negative demand as the pandemic has taken its toll on move-ins and move-outs and how much of the occupancy change in the past year is due to inventory growth in a market.
• The top portion of the image shows the occupancy rate from first quarter 2020 to first quarter 2021. The length of the line shows the absolute drop in occupancy over the past year. San Jose’s occupancy rate for assisted living fell from 92.2% to 72.4%, hence the longest line in the upper left.
• The lower part of the chart shows how much of that decline was due to demand falling and how much was due to growth in inventory.
• In the case of San Jose, most of the drop was due to a demand impact, but inventory growth also had an impact as property was added to the inventory.
• On the right is San Antonio which saw assisted living (AL) occupancy drop from 78.9% to 70.6% in the past four quarters. Most of this decline was due to negative demand; inventory changed very little. This is shown in the chart as the red portion of the line (95% of the change in occupancy is due to the demand effect; 5% due to supply effect). Other markets that had limited supply shocks were Pittsburgh, San Diego, San Francisco, and Los Angeles.
• Miami is a market where occupancy fell 13.5 percentage points since the onset of the pandemic, but it was not just a demand shock that pushed occupancy lower. Inventory also grew during this time (58% demand, 42% supply shock). The other markets that had the lowest demand shock, where supply was also a considerable factor were Sacramento, Washington, D.C, New York, Minneapolis, and Las Vegas.

Takeaway #4: Construction Starts Slowed in 1Q 2021 for Both AL and IL

• Construction starts were weak in 1Q 2021, with 1,079 units of independent living (IL) initiated in the first quarter. On a four-quarter aggregate basis, IL starts totaled 3,862 units, the fewest units started since late 2012. As a share of inventory, this amounted to only 1.1%. For perspective, at its most recent peak in early 2018, it was 3.8%.
• For assisted living, there were 4,863 units started on a four-quarter aggregate basis in the first quarter, equating to 1.5% as a share of inventory. For perspective, at its peak in late 2015, it was 6.0%.
• Like other residential and commercial real estate sectors, starts are also being affected by rising prices and shortages of labor, lumber, and other key building materials as well as higher land costs.
• It should be noted that the starts data often gets revised in subsequent quarters.

Key Takeaway #5: Preliminary Closed Seniors Housing and Care Volume: $2.4 Billion in 1Q 2021

• Transactions activity remained relatively muted in the first quarter of 2021 as the number of deals closed decreased significantly from the fourth quarter of 2020 as many buyers remained on the sideline for the most part and perhaps some would-be-sellers elected to wait.
• However, with deal count low there were two larger deals—one with Omega as the buyer in a $400M deal and one with Brookfield as the buyer in a $600M deal. The seller was HealthPeak in both of those deals as they continued to sell seniors housing properties.
• In terms of dollar volume, the first quarter 2021 registered $2.4B. The $2.4B represents an 8.9% decrease from the fourth quarter of 2020 when volume registered $2.6B, but it is a 28% decline from a year ago when volume registered $3.3B in the first quarter of 2020.      
• Dollar volume continues to be lower than prior to the pandemic but has picked up since the second and third quarters of 2020.

Interested in learning more?

While the full key takeaways presentation is only available to NIC MAP Vision clients with access to NIC MAP data, you can download the abridged version of the 1Q21 Data Release Webinar & Discussion featuring my exclusive commentary below.

Download Abridged Presentation

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 market fundamentals in the Wave 26 Executive Insights survey data through mid-April show signals of headway. Leads volume is up and the shares of organizations reporting accelerations in move-ins continues to trend positively with each of the care segments reaching new high points in the survey time series. Exactly when these leading indicators will translate into higher occupancy rates being reported across the sector is yet to be seen.”

–Lana Peck, Senior Principal, NIC

NIC’s Executive Survey of operators in seniors housing and skilled nursing is designed to deliver transparency into market fundamentals in the seniors housing and care space as market conditions continue to change. This Wave 26 survey includes responses collected April 5 to April 18, 2021 from owners and executives of 81 small, medium, and large seniors housing and skilled nursing operators from across the nation, representing hundreds of properties and thousands of units across respondents’ portfolios of properties.

Detailed reports for each “wave” of the survey and a PDF of the report charts can be found on the NIC COVID-19 Resource Center webpage under Executive Survey Insights.

Wave 26 Summary of Insights and Findings

• According to Wave 26 seniors housing and care survey respondents, on average, nine out of ten residents (91%) of their respective properties—including all care segments across their portfolios—have been fully vaccinated for COVID-19. Having residents vaccinated has made a significant impact in opening communities. As stipulated by a variety of disparate state guidelines, many respondents commented that their organizations are now able to resume in-person tours, offer limited/socially distanced communal dining, and allow small indoor gatherings, worship services and larger gatherings outdoors. Others are now allowing family visitations in apartments and resuming off-site excursions of vaccinated residents. Many organizations indicate they continue to mandate mask wearing in community areas. 
• Staff uptake of the vaccine, however, leveled off between Waves 22 and 24 and has just recently increased slightly from over half (55%) to nearly two-thirds of staff in survey Waves 25 and 26 (63% and 64%, respectively). As a result of the vaccination rates, one-half of organizations have been testing staff at least once a week for COVID-19 since the Wave 24 survey, but two-thirds are testing residents only if symptomatic (up from half in survey Waves 24 and 25).
• Aside from the need to test staff more frequently, and the costs associated with testing, one-half of respondent organizations indicate they probably will not or definitely will not make the COVID-19 vaccine mandatory for staff (52%); however, one-quarter probably will or definitely will (24%). The share of organizations that would consider making the vaccine mandatory for staff has remained steady since the Wave 23 survey conducted in late-February to early-March. A NIC blog post on April 15 reported that new cases among staff have fallen, but less so than for residents and that new cases for staff are 2.4 times higher than among residents, the highest rate since CMS started reporting data in late May. Whether mandatory COVID-19 vaccination for staff will grow among operators is yet to be seen.
• In the Wave 26 survey, respondents were asked if their organizations had seen an increase in resident lead volume since the beginning of the year—and if they had—is lead volume above pre-pandemic levels? As shown in the chart below, roughly four out of five organizations reported an increase in lead volume (84%). However, only one in five reported lead volume currently above pre-pandemic levels (20%).

• The shares of organizations reporting acceleration in the pace of move-ins for each of the care segments set new high points in the time series. Between two-thirds and one-half of respondents note that the pace of move-ins accelerated in the past 30-days. Increased resident demand was cited by nine out of ten respondents (88%) as a reason for acceleration in move-ins. The majority of respondents report no change in the pace of move-outs for each of the care segments (74% to 91%).

• The Wave 26 survey data continue to show a trend in the shares of organizations reporting higher occupancy across all four care segments, and each of the care segments set new peaks in the time series. Between one-third and more than one-half of organizations reported upward changes in occupancy.

• The degrees of occupancy change vary. As referenced and shown in the chart above, occupancy increases in organizations with independent living residences peaked in survey Waves 25 and 26. As shown in the chart below however, while fewer reported occupancy declines, more reported no change in occupancy rates in Wave 26 (50% vs. 39%).

• In the face of historically low occupancy rates according to NIC MAP data in the first quarter of 2021 (record low of 78.8% seniors housing occupancy rate), on average, about 50% of respondents to the survey since July 20 indicated their organization was offering rent concessions. As of Wave 26, three out of five respondents (61%) with multiple properties in their portfolios are offering rent concessions in more than half to all of their properties.

• Most rent concessions included discounts and/or free rent for a specific amount of time (73% and 65%, respectively). Non-monetary and other benefits frequently mentioned by respondents included move-in assistance and/or covering all or a portion of the new resident’s moving expenses.

• Like prior waves of the survey, four out of five respondents to Wave 26 indicated their organization was experiencing staffing shortages in their properties. Of those respondents with multiple properties in their portfolios, 80% had staffing shortages in more than half to all of their properties.
• Staffing shortages that were experienced by many operators prior to and exacerbated by the pandemic persist. Nearly all respondents to the Wave 25 survey were paying staff overtime hours, and four out of five organizations were tapping agency/temp staff. In Wave 26, survey respondents described various strategies that operators are implementing to attract staff. As depicted in the word cloud below, most organizations commented that they are offering hiring/sign-on bonuses, bonuses for employees who refer new hires, and wage increases. Others are staging job fairs and recruiting events, offering flexible shifts/schedules, and enhancing benefit packages. This qualitative data will be quantified in the Wave 27 survey.

Wave 25 Survey Demographics

• Responses were collected between April 5 and April 18, 2021 from owners and executives of 81 seniors housing and skilled nursing operators from across the nation. Owner/operators with 1 to 10 properties comprise 60% of the sample. Operators with 11 to 25 and 26 properties or more make up 40% of the sample (19% and 21%, respectively).
• Roughly one-half of respondents are exclusively for-profit providers (48%), 43% are nonprofit providers, and 9% operate both for-profit and nonprofit seniors housing and care organizations.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 71% of the organizations operate seniors housing properties (IL, AL, MC), 31% operate nursing care properties, and 40% operate CCRCs (aka Life Plan Communities).

Owners and C-suite executives of seniors housing and care properties, please help us tell an accurate story about our industry’s performance.  Now, more than ever, we need your response so that we can track firsthand the inflection point on occupancy. This will be a turning point and we want all of our industry stakeholders to know when this important moment occurs. 

The current survey is available and takes 5 minutes to complete. If you are an owner or C-suite executive of seniors housing and care and have not received an email invitation to take the survey, please click this link, which will take you there.

NIC wishes to thank survey respondents for their valuable input and continuing support for this effort to bring clarity and create a comprehensive and honest narrative in the seniors housing and care space at a time when trends are continuing to change in our sector.

Unlike home health and other post-acute sectors, skilled nursing operators and hospitals have not entered into many joint venture partnerships. The COVID-19 pandemic, however, may be the wakeup call hospitals need to consider more integrated relationships that strengthen alignment. In the latest NIC Leadership Huddle, titled “Skilled Nursing Integration: Will COVID be the Catalyst for Tighter Hospital Partnerships?” health system executives got together to discuss joint ventures with skilled nursing partners.

Andre Maksimow, senior vice president, Kaufman Hall, began the discussion by illustrating how a Kaufman Hall client’s discharge pattern has changed over the pandemic. The Northeastern health system, which typically discharges 22,000 Medicare and Medicare Advantage patients annually, sent far fewer patients to skilled nursing facilities (SNFs) last year. “It’s a two-order effect, a compound issue,” he explained, pointing out that, on one hand, there was “less volume coming out of the hospital,” and on the other, “less going to skilled nursing versus home health.” Skilled nursing providers in the area are currently seeing a 25% reduction in overall discharges.

“I can tell you that we have fundamentally shifted as a provider organization in how we view our post-acute discharge process,” explained Dr. Mark Terpylak, D.O., FACOG, senior vice president, Population Health, Summa Health. His organization used to ask what kind of care they could qualify a patient for upon discharge. “We don’t do that anymore,” he said. Instead, his staff ask whether they can send a patient home. “If we can’t, then we work our way up the ladder in the other direction. That comes in large part with our movement into risk.” He explained that he looks to his network of providers to deliver lower-cost, value-based care, as his organization shifts their financial model.

Asked whether discharge volume to skilled nursing facilities would remain lower than pre-COVID rates, Dr. Terpylak responded that, “when possible, we’re not going to discharge to another facility…if it serves the patient and their family well, we’re going to try to get them discharged to the home.” Only if the patient fails to qualify for that course will the hospital send them to skilled nursing. He looks for skilled nursing partners who share the health system’s values and are, “committed to providing care for those folks in the most cost-effective fashion.” He also noted that for healthcare organizations and providers who bear risk, “we are not financially aligned with the typical skilled nursing operator.” He explained that this presents an opportunity to align in a different way, which he spoke to later in the discussion.

David Dafilou, CAO, CIN & vice president, Capital Health System, agreed that his organization would not revert to pre-COVID patterns. “Patients would much rather go home…they don’t want to be in the hospital at all. They don’t want to go to another facility. When possible, they want to go home.”

Maksimow asked why healthcare organizations are now interested in closer relationships and partnerships with skilled nursing facilities. In answer, Bryan Crum, director, Post-Acute Care Management, Summa Health, said, “We still have a big need for the right level of care at the right time…we want more patients that had been going to SNFs…going to home health. But we still want to utilize our SNF partnerships more.”

Addressing the same question, Dr. Terpylak explained that his system has historically been facility-based – and, as a result, was more comfortable sending discharges to another facility. “We had a very narrow-sighted view of what happened after folks left us. We didn’t really think much about it.” That is changing, and the healthcare organization is looking more closely at what happens when they discharge patients to a skilled nursing facility, and also at what happens once they leave that facility on the other end of a stay. “We need to find a different way to align ourselves with the skilled operators in our market that are open to partnering around a different methodology, different metrics, and a different level, frankly, of care integration.”

Given the new interest amongst healthcare organizations in forming partnerships and joint ventures with their post-acute providers, are SNF operators reaching out to upstream providers? Brian Cloch, principal, Innovative Health, LLC, pointed out that in years past his organization tried – but couldn’t get their calls answered. That, too, is rapidly changing, although in Cloch’s experience, many healthcare organizations, even when taking on risk, are still not fully embracing value-based care. When an organization understands the benefits of value-based care and takes an interest in working with a partner downstream, they are likely to find SNFs willing to work with them.

Cloch went on to explain that, in such a partnership, he hopes to gain referrals that might otherwise have gone to other facilities, such as ERFs or LTACs. Part of his strategy is to capture that portion of the market. “We scratch our heads and wonder ‘how does that happen?’ I get paid $600 a day, they get paid $3,000 a day or $2,800 a day. Why would somebody pay $1,800 a day more for the same care? That’s the target that we’re after.”

Not everyone on the panel is looking to partner in a joint venture. Dafilou pointed out that patients value choice, and that geographic considerations are important, and that in his area of the country, with a very high population density, there are many facilities nearby. He is looking at other ways to align with SNFs, such as putting healthcare providers within a facility, for example. In return for working with his organization, the SNF should be able to expect a greater volume of referrals. Capital Health recently reduced their preferred provider network down from 12 facilities to eight. He hopes that will enable a boost in referrals to each remaining SNF in his network.

Asked where he sees SNFs heading in the near future, Cloch said, “I think we’re going to be okay.” He pointed out that quality SNFs boast a very low hospital readmittance rate. When compared to higher readmittance rates in home health, in his view, SNFs may compare very favorably, in terms of total cost of care.

Facilitating new connections is a part of NIC’s mission. For many, that means networking at NIC events, such as the upcoming 2021 NIC Fall Conference, or engaging in one of NIC’s many virtual events, such as the highly popular NIC Leadership Huddle series, for live online discussions. For NIC Co-founder & Strategic Advisor Bob Kramer, it’s bigger than that. “When I stepped down as NIC CEO a few years ago, part of my new role, in addition to advising NIC, was to become a scout and an ambassador, identifying and reaching out to potential new partners for seniors housing and care,” Kramer explained. “I was tasked with educating and inspiring prospective new partners and collaborators to understand the potential of working with seniors housing and care – and to help our traditional audiences prepare and plan for the near future.”

Since that time, Kramer has been speaking to leaders beyond the senior living sector, educating them on the industry, and sharing his insights on what opportunities and challenges the future may hold. In addition to numerous boards and business groups, he has addressed some of the most important and influential organizations in healthcare, academia, technology, and regulatory policy. In recent months, Kramer has spoken at meetings hosted by the Milken Institute’s Center for the Future of Aging, the Urban Institute, the Brookings Institution, the Milbank Memorial Fund, the AARP Public Policy Institute, the National Academies of Sciences, Engineering, Medicine, and many more.

According to Kramer–and now to many of the new audiences he’s been engaging with–senior living, in its many forms, must adapt to a series of new market realities in order to survive and prosper. That’s where the need to make new connections arises. Kramer said, “Senior living will need to interact with healthcare partners and payers, policy makers, technology providers, academics, and others, in order to adapt and provide the products and services that both consumers and payers have already begun to demand.” But to do so will require a greater level of understanding of seniors housing and care, particularly amongst those not already familiar with the industry.

Read the full-length article in this month’s NIC Insider.

You may already know Bob Kramer for his long history of thought-leadership in seniors housing and care. But did you know he attended some of the last concerts of several legendary musicians? Learn more as Beth Mace speaks with Bob in the new NIC Chats podcast.

NIC’s recent acquisition of VisionLTC and creation of NIC MAP Vision integrates the market-leading NIC MAP^® Data Service with VisionLTC’s best-in-class data for investors, owners, and operators to provide significantly deeper and broader data for industry stakeholders.

Key Takeaway: NIC MAP has long been the industry leader in facilitating data transparency in the seniors housing and care sector. NIC MAP Vision combines both supply-side time series data for 140 U.S. metropolitan markets and demand-side data for properties all across the country, significantly increasing an analyst’s ability to identify all of the comparable and competitive properties in a market area.

Some Context: A few years before I joined NIC in 2016, I had a potential client who wanted a compilation of all the seniors housing and skilled nursing properties in the state of Virginia not covered by NIC, listed by address, ownership/management, number of units, unit mix, and monthly rent rates for each type of unit because they were planning to use the information to seek underserved areas for development. In scoping the project, it was determined that to accomplish the task, a researcher would at least need a map and good internet search skills—but they would also need a tremendous amount of tenacity and patience to locate and reach the right state and local licensing/regulatory agencies (for lists of those properties with licenses), the ability to search the internet for unlicensed properties, and to reach out to the right people “in the know” at local planning and zoning boards to discover properties in the development pipeline that may or may not be announced (often easier said than done). Additionally, adding to the analyst’s effort to compile all the salient information, some states only disclose that a property provides a specific service or level of care but does not identify how many beds are licensed for each type—or only licenses the whole property. In the end, many variables from disparate places needed to be gathered and judiciously classified, and it was deemed to be a very time-consuming project that would require resources beyond which was reasonable.

This affiliation is truly a game-changer. On one hand, NIC MAP^® data, powered by NIC MAP Vision, continues to provide the same high-quality, supply-side data it has since 2005. The time series data of 140 metropolitan markets remains the gold standard for identifying historic patterns and trends and analyzing cycles in the seniors housing and care market fundamentals.

VisionLTC data, powered by NIC MAP Vision, goes beyond, and expands on the demand-side data with additional inventory including assisted living, memory care and nursing care licensed beds, and independent living units. With VisionLTC data and a few clicks of the mouse, an analyst now has the ability to go into any market area, no matter how small—or rural—and view details on local competitors to compile key property data.

Apples or oranges? It is of chief import when analyzing a market for senior living housing and services to designate properties as comparable or competitive. Doing so increases the accuracy of demand analyses. In most market studies, before an analyst drills down into a competitive set of properties, they need to have broad knowledge of all of the comparable seniors housing and care properties in a market area that could capture any prospective resident from the total demand pool.

• Properties that are designated “comparable” offer similar levels of care (e.g., independent living, assisted living, memory care, nursing care), and similar levels of programming and services included in the monthly fee (e.g., one meal a day, housekeeping twice a month, basic utilities, etc.).
• Once a listing of all seniors housing and care properties is created for a specific market area of interest, the analyst then categorizes them into one or more competitive sets. Communities that are designated “competitive” are further defined as offering similar levels of care, programming and services included in the monthly fee—and have comparable unit size; pricing; amenities; quality of design, fit and finish; age of physical plant; and they target the same age- and income-qualified consumer.

Comparable and competitive properties (and their respective units within) are important to differentiate, especially when conducting a study of market depth for a particular property or development project. Comparable properties must be included in the mix because they are possible selections based on care level and services offered. Competitive properties, however, may require more thoughtful consideration from the analyst to identify features that appeal to households with a particular income, affinity group, or expectations for attractiveness and features.

NIC MAP Vision powers up the process. It’s a science…and an art. In developing a competitive set for a seniors housing market study, regardless of whether it entails review of an entire county or a small neighborhood, it requires objective data (the science part) and subjective observations (the art part). Through the VisionLTC client portal, a vast variety of objective seniors housing data can be accessed and compared to put a fine point on the big picture including, but not limited to:

• • PMA (site data): target market household demographics and associated growth rates, net worth, home values, home ownership rates, total and projected supply competitive supply
  • Competition data: owner/operator, property type, payment type, unit mix, assessed property value, property sale price, mortgage amount, lot acreage and total building square footage, average online consumer review star ratings, origin of resident data
  • Assisted living rate data: minimum and maximum rent data by unit type
  • Medicare data: total Medicare spend per beneficiary, 30 and 90-day readmission rates, percent attributed to a Medicare ACO
  • Development pipeline data: address, new or renovation, stage in development, hard costs, number of units, owner contact information and detailed notes about the project
  • Labor data: position, total employment, percent labor availability by position type, FTE per licensed bed, hourly wages
  • Survey performance data: number of surveys, total citations, quality of care ratings, complaints, fines
  • Construction cost data: various building components and total cost per square foot
• Many additional factors can be considered to build the objective picture in a market study through the  VisionLTC client portal. The analyst can drill down in a marketplace to age of units, competitive and comparable care segment 5-year supply growth rates, senior disability rates including activities of daily living (ADLs), instrumental activities of daily living (IADLs), and cognitive impairment rates.

About NIC MAP Vision:

NIC MAP Vision, an affiliate of NIC, is a leading provider of comprehensive market data for the seniors housing and care sector. NIC MAP Vision brings together two strong, well-respected, and complementary teams and platforms – the market-leading NIC MAP^® Data Service (NIC MAP) and VisionLTC’s best-in-class market research analysis platform. For more information, visit www.nicmapvision.com.

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