The White House recently announced the finalization of the nursing home minimum staffing rule. This will impact all skilled nursing properties that receive federal funding through Medicare and Medicaid. The proposed staffing rule has been the topic of many industry discussions since the White House released a comprehensive nursing home reform package in 2022. After the 2022 announcement, the Centers for Medicare & Medicaid Services (CMS) hired a consulting firm to study and determine the efficacy of implementing various staffing thresholds. CMS received nearly 50,000 comments on the proposed rule ranging from those that strongly supported the rule to those expressing opposition to the new standards. 

The final rule adopted standards that are largely similar to the proposed rule. The following is a summary of the standards, which will be rolled out across multiple phases. 

The timing for meeting the interim and final standards differs for urban and rural facilities. The interim requirements must be met by May 2026 for urban facilities and May 2027 for rural facilities, while the final requirements must be met by May 2027 for urban facilities and May 2028 for rural facilities. 

Highlights of the Rule 

• Once fully implemented, nursing facilities will be required to meet minimum nurse staffing levels of 3.48 hours per resident day (HPRD), including 0.55 registered nurse (RN) and 2.45 nurse aide HPRD. 
• CMS indicated that facilities may utilize a mix of nurse staff, including RNs, LPNs/LVNs, or nurse aides, to meet this standard. 
• By May 2027, the final rule requires nursing facilities to have an RN on duty 24/7 and provide at least 3.48 HPRD of total nurse staffing hours irrespective of staff type. This initial deadline excludes the more specific RN and nurse aide requirements that will take effect once the rule is fully implemented. 
• The final rule also includes new reporting and assessment requirements as well as a detailed process by which facilities may qualify for an exemption from the minimum staffing provisions. The final rule also indicates that CMS will release additional details later this year on how the $75 million investment in a nursing home staffing campaign will be structured. 

KFF performed an analysis and estimates that only 19% of nursing facilities would meet the minimum HPRD staffing standards under full implementation of the final rule with their current staffing levels and nearly 60% of facilities would meet the interim requirement of an overall requirement of 3.48 HPRD. 

Nursing homes may qualify for exemptions under certain conditions according to CMS. For example, if the property is located in an area where the supply of RN, NA, or total nurse staff is not sufficient to meet area needs as evidenced by the applicable provider-to-population ratio for nursing workforce. 

Note that the nursing home industry is expected to challenge the ruling. The industry is currently exploring various options including legal action. Additionally, several Senators and other officials have publicly expressed their concerns with the mandate and encouraged CMS and the current administration to reconsider. 

Readers can find detailed information on the CMS Fact Sheet here. 

Key Takeaways 

• Occupied penetration rates in senior housing are changing across markets, likely due to shifts in demand dynamics and migration patterns. 
• There is a trend of demand and growth driven by the continuum of care, which could lead to improvements in occupied penetration rates for needs-based segments in the future. 
• Seven markets are reporting their highest occupied penetration rates in 2023. 

This analysis, conducted by NIC Analytics, explores the trends and variations in occupied penetration rates since 2017 across senior housing segments and markets within the 31 NIC MAP Primary Markets. It sets the foundation for an upcoming in-depth research segment within the NIC SHARK series. For purposes of this analysis, occupied penetration rates are defined as occupied senior living units relative to households aged 75+. 

Occupied penetration rates in senior housing are changing across markets, likely due to shifts in demand dynamics and migration patterns. However, the overall penetration rate at the national level, known for its stability, remains a challenging puzzle to solve. 

The exhibit below depicts the occupied penetration rates among households aged 75+ for senior housing units (independent living, assisted living, and memory care) across the 31 NIC MAP Primary Markets from 2017 to 2023. 

Notably, there was a general decrease in occupied penetration rates across all unit types in 2020. By 2023, the occupied penetration rates for independent living fell below the 2017 levels. In contrast, the rates for assisted living remained stable, matching the 2017 levels, while the rates for memory care experienced a positive increase of 0.2pps, representing a 17% improvement over the last six years, from 1.2% to 1.4%.  

In the last three years, we have observed a pattern where dynamics are shifting not only across markets but also among unit types. For instance, in terms of occupancy recovery and demand, memory care and assisted living units showed the earliest signs of recovery, despite having experienced the largest demand contraction, whereas independent living is lagging behind despite a relatively smaller demand contraction.  

This observation prompts us to consider the continuum of care and its influence. It appears that there may be a trend of demand and growth driven by the continuum of care.  

One plausible explanation for this trend could be tied to move-ins. In assisted living or memory care, residents typically fall into two categories: (1) those transitioning from independent living or assisted living, and (2) those coming from non-congregate settings. However, move-ins in independent living primarily originate from one source – non-congregate settings. 

Additionally, when considering penetration rates—a metric that generally reflects preferences among older adults—distinguishing between those who prefer aging in a community versus those who opt for aging in place, assisted living and memory care have a distinct advantage. They are both considered needs-based, and services are often required.  

The assisted living and memory care segments, being needs-based, already have a consumer pool of millions who have chosen to move to a senior housing setting and are currently part of the continuum of care. This existing consumer base is likely to contribute to improvements in occupied penetration rates for these segments in the future. 

Occupied Penetration Rates in 2023: Market Trends and Variations 

The exhibit below shows the 2023 senior housing occupied penetration rates and the change in percentage points from 2017 levels across all 31 NIC MAP Primary Markets. 

There are notable variations in terms of these rates, with seven markets reporting the highest occupied penetration rates in 2023 since 2017. These markets include Minneapolis (21.6%), Kansas City (14.4%), Phoenix (12.1%), Washington, DC (11.1%), Detroit (10.1%), Cleveland (10.1%), and New York (4.3%). 

Among the biggest gainers from 2017 to 2023 are Minneapolis, Kansas City, and Phoenix. Conversely, markets such as Portland, OR, Seattle, Baltimore, and San Jose experienced declines in occupied penetration rates between one and two percentage points.  

The top markets with 2023 occupied penetration rates above the Primary Markets’ average of 9.3% include Minneapolis (21.6%), Portland (19.2%), Seattle (14.6%), Kansas City (14.4%), Denver (13.5%), and Dallas (13.3%). On the other hand, 10 markets fall below the Primary Markets’ average, with New York (4.3%) and Las Vegas (4.2%) ranking at the bottom. 

These variations in occupied penetration rates may result from a variety of factors, including specific cultural differences in certain markets i.e., cultural views and financial support towards aging in place vs. aging in a community, which could be challenging to influence, or they could be tied to factors that are easier to impact. The upcoming research segment report will explore a multitude of factors and dive into the underlying drivers of high versus low senior housing occupied penetration rates in order to uncover hidden patterns and correlations at the market level and answer questions like: 

• Why has the overall occupied penetration rate not shown notable changes over time?  
• What factors contribute to higher occupied penetration rates in some markets and lower rates in others? 
• Are there specific strategies that the senior housing sector can employ to positively impact occupied penetration rates? 

Volunteering with NIC provides the opportunity to give back to the senior housing and care industry, network and collaborate with other subject matter experts, and partner with NIC staff to accomplish our strategic objectives. In late 2023, the NIC Board of Directors approved a new governance structure. NIC now has over 200 volunteer leadership roles on our Board and Standing Committees, and opportunities to create and deliver thought leadership content in support of our core business and focus areas. I asked two of NIC’s passionate volunteers why they got involved, and what keeps them engaged.  

Bre Grubbs – Partner & Chief Strategy Officer, Leisure Care: “I first became involved with NIC when I joined the Future Leaders Council (FLC) in 2011. I had been a NIC MAP user prior to that, but the FLC experience demonstrated the power and value of the relationships that being a volunteer leader for NIC fosters. Since then, I’ve continued to volunteer through the Spring and Fall Conference Program Committees, as a member of the FLC Advisory Committee, and most recently by joining the NIC Board of Directors.  

Volunteering with NIC is rewarding, it’s fun, and gives me the opportunity to meaningfully contribute to the content of our conferences and to the continued evolution of our industry. I appreciate that there are so many ways to get involved, no matter your role in the industry or how much time you have to give.” 

Azhar Jameeli – Managing Director, IRA Capital: “My decision to join the Data and Analytics Conference Program Committee last year stemmed from a desire to bridge the gap between my vocation and avocation. Having dedicated the better part of two decades to the senior housing industry, I’ve witnessed firsthand the disparity in data and analytics compared to adjacent sectors. This discrepancy not only hinders our industry’s growth but also perpetuates the misconception of senior housing as less institutional and sophisticated. 

By actively participating in the work of the Committee, I’ve experienced firsthand the transformative power of collaboration and innovation. The opportunity to contribute my expertise and insights alongside fellow industry leaders has been incredibly rewarding. Together, we are driving meaningful change and shaping the future of senior housing. In joining this committee, I’ve found a platform to channel my passion for senior housing into tangible progress. It’s not just about advancing the industry; it’s about realizing its full potential and ensuring it remains a cornerstone of care and community.”  

Many thanks to all NIC volunteers for their efforts to inform and advance the senior housing and care industry. Learn more about volunteering with NIC: NIC Volunteer Opportunities. 

What do Amazon, Kroger, Walmart, and Best Buy have in common besides being big retailers? The somewhat surprising answer is that they are all jumping into the healthcare business joining other retailers such as Walgreens and CVS that have a more obvious connection to the space.  

Why does it matter? The move into healthcare is likely to open collaboration opportunities with senior housing and care providers that house many of the retailers’ customers. Senior housing communities can act as a valuable hub for health services and deliver on the promise to focus on the health and longevity of residents.  

“The senior housing industry needs to get creative about what the future could look like,” said Anne Tumlison, who moderated a panel discussion on the implications of retail healthcare strategies at the 2024 NIC Spring Conference.  

Providing context, Tumlinson, founder and CEO at ATI Advisory, noted that annual Medicare expenditures exceeded $1 trillion for the first time in 2023. Over half of that total went to private health insurance companies primarily focused on value-based care models meant to keep people healthy and reduce costs. “Food, housing, and special support services are becoming part of what we think of as medical care,” said Tumlinson.  

The panelists included representatives of big retailers who discussed their strategies during the well-attended main stage session.   

In 2003, Amazon acquired One Medical for $3.9 billion. One Medical is a membership-based primary care practice with 250 offices in 24 markets. 

“Amazon is customer obsessed,” said panelist Lindsay Botsford, M.D., market medical director at One Medical. “It’s a good cultural fit.” She emphasized the importance of easy access to care and the patient experience—goals similar to those of senior housing providers.  

The Kroger grocery chain entered the pharmacy business 45 years ago to provide convenience to shoppers. The evolution of that strategy has continued, and Kroger now operates 2,200 in-store pharmacies, along with 225 clinics that offer primary care. Registered dieticians are also available to help customers plan nutritious meals to combat chronic diseases such as diabetes and obesity. “Food as medicine can help,” said Marc Watkins, M.D., chief medical officer, Kroger Health. “Healthy communities are good for business.” 

Panelist Chip Gabriel believes that senior living has to change. He is a partner at Senior Living Transformation Company (“SLTC”). SLTC has a 113-unit assisted living and memory care community in Tennessee that acts as an innovation center for technology and data solutions for the industry.  

A goal is to track resident health and outcomes to show that senior housing is a critical link in the healthcare continuum, “We are part of the system,” said Gabriel. “But we don’t get credit for the money we save the health plans.” 

Geriatrician Carla Perissinotto, M.D., noted that the existing healthcare system does not work well for older adults since it is overly focused on treating illnesses. She instead advocates for person-centered care that includes conversations about aging. “Talk to residents,” said Perissinotto, a professor at the University of California San Francisco (UCSF). “Ask what is important to them.” She worked at UCSF Care at Home for more than 10 years. It provides medical care to home bound older adults.  

The conversation turned to risk management. Tumlinson noted that senior housing offers an environment with “eyes on the resident” around the clock. Senior housing providers can intervene before a health condition becomes critical and requires a trip to the hospital. She suggested that technology could be used to unlock that value for operators.  

One Medical uses technology and a team approach to manage risk and deliver a better patient experience. Instead of episodic visits with multiple doctors, patients have an established relationship with care providers. Support staff are part of the team, reporting patient changes they notice such as forgetting appointments. “We pick up on cues of rising risks,” said Botsford.   

More data does not necessarily mean better care, according to Perissinotto. While remote patient monitoring is a huge opportunity, she is concerned about relying too much on the technology. “The senior living staff knows the residents,” she said, adding that sometimes it’s better to wait and watch the resident before taking more drastic steps such as a trip to the hospital. “Slow down.” 

As the session wrapped up, Tumlison challenged attendees to work toward aligning incentives between health plans, senior living providers and retailers that are growing their footprints to facilitate accessible care. “The solution to problems with healthcare is to move more aggressively and faster,” she said. 

The NIC Analytics team presented findings during a webinar with NIC MAP Vision clients on April 11 to review key senior housing data trends during the first quarter of 2024.  

NIC Analytics utilized a relatively new webinar format in which the second half featured a deep dive on a special topic. In April’s webinar, David Fasano, Managing Director with Berkadia, discussed the transaction and capital markets environment in senior housing with Lisa McCracken, NIC’s Head of Research & Analytics. NIC hopes attendees enjoyed the new webinar format and welcomes any comments or suggestions.  

 Key takeaways from the first quarter data included the following:  

 Takeaway #1: Occupancy Increased for the 11th Consecutive Quarter  

• The occupancy rate for the 31 NIC MAP Primary Markets rose 0.5 percentage points to 85.6% in the first quarter. This marked the eleventh consecutive quarter of occupancy gains.   
• Occupancy is only 1.5 percentage points below its prior peak of 87.1% in the first quarter of 2020.    
• Robust demand coupled with moderate levels of new supply have driven occupancy gains, and at this current pace, senior housing occupancy rates are on track to recover to pre-pandemic levels in the second half of 2024. 

Takeaway #2: Occupied Units Continue Climbing to Record Highs  

• The total number of occupied senior housing units in the Primary Markets set another high in the first quarter, rising to more than 603,000 units. This was 34,400 units higher than the pre-pandemic first quarter of 2020 level. 
• This trend is similar for the Secondary Markets and shows that today more older adults than ever before are residents in senior housing properties.  

Takeaway #3: Annual Inventory Growth Rate Remained Low  

• Inventory growth rates were steady compared to the fourth quarter of 2023, with assisted living at 1.4% and independent living at 1.2% year-over-year. 
• Overall, inventory growth has trended down from 2019 rates. 

Takeaway #4: Senior Housing Units Under Construction Least Since 2015   

• The number of senior housing units under construction in the Primary Markets continued to decline and stood at less than 30,000 units in the first quarter of 2024, which was the lowest level in nearly 10 years.  
• By property type, majority independent living properties and majority assisted living properties each comprised roughly half of the construction under way. 
• As a share of existing assisted living inventory, units under construction totaled 4.4%, well below its peak of 10.2% in 2017.  
• For independent living, units under construction totaled 4.0% of existing inventory, down from its peak of 6.6% in mid-2019.