“Just under one-fifth of respondents noted that the severity of staffing shortages across their organization was severe, while two-thirds indicated the problem was moderate. Regarding tenure of newly hired, full-time employees, on average, just under one-third (29%) of organizations kept more than 80% of new staff on the job after one month, which is down from the Wave 39 survey, conducted in March 2022, when just under one-half (46%) of respondents kept more than 80% on the job after one month.

Staffing retention difficulties often lead to increased agency usage, and in turn, both often have a detrimental impact on operating expenses and NOI. Operating expenses continue to rise, with more than one-fifth (21%) of respondents reporting operating expenses that are 20% or more greater than prior to the pandemic. Among the reasons given for the increase in operating expenses are vendor pricing, food costs, overtime and third-party agency usage, utilities, and insurance. Additionally, multiple respondents explicitly underscore industry-specific compensation increases that are above the rate of inflation.”

–Ryan Brooks, Senior Principal, NIC

This Wave 45 survey includes responses from August 22 to September 18, 2022, from owners and executives of 47 small, medium, and large senior housing and skilled nursing operators across the nation, representing hundreds of buildings and thousands of units across respondents’ portfolios of properties. More 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.

In the Wave 45 survey, reflecting operator experiences in August and September 2022, the rate of operators reporting an increase in the pace of move-ins in the past 30 days fell for independent living properties (29%), assisted living properties (43%), and nursing care properties (27%), but went up for memory care properties (44%). This marks the third consecutive wave with a decline in assisted living properties reporting an increase in the pace of move-ins.

Just under one-fifth of Wave 45 respondents indicated the severity of their staffing shortages across their organizations was severe (19%), while two-thirds (67%) reported it was moderate. Over 20% of respondents report staffing shortages across the entirety of their portfolio. Approximately one-quarter report staffing shortages at up to 25% of their properties, one-third have staffing shortages at up to 50% of their properties, and one-quarter report shortages at between 50%-99% of their properties.

Regarding tenure of newly hired, full-time employees, on average, just under one-third (29%) of organizations kept more than 80% of new staff on the job after one month. This is down from the Wave 39 survey, conducted in March 2022, when just under one-half (46%) of organizations kept more than 80% on the job after one month. Looking at longer-term retention, on average, just over one-tenth (12%) of organizations retained more than 80% of new staff after one year. This metric is also down from the Wave 39 survey, conducted in March 2022, when just under one-sixth (16%) of organizations retained more than 80% of new staff at the one-year mark.

As indicated in the table below, the average share of newly hired employees that remain on staff after three months and after one year has decreased over each of the last three ESI surveys that included this question (Waves 39, 44, and 45). While the average share of newly hired employees that remain on staff after one month has remained relatively stable, long-term employee retention has become even more challenging.

With employee retention remaining a challenge to operations, agency labor utilization is often turned to as a stopgap measure. When asked about their organizations’ expectations of agency usage in the next six months, 8.5% of Wave 45 respondents anticipate an increased reliance on agency staff, while two-thirds of respondents anticipate reliance on agency staff to decrease. Most respondents – 57% – anticipate their organizations’ agency usage to remain the same as it is currently.

Staffing retention challenges and a heavy reliance on agency usage can have a substantial impact on operating expenses and in turn NOI. When asked about the change in operating expenses since the beginning of 2022, 87% reported operating expenses to be higher and 13% reported operating expenses to have remained the same. No respondents had reduced operating expenses since the beginning of this year. When asked about the change in operating expenses since before the pandemic started, one-fifth of respondents have seen operating expenses increase by 20% or more.

Reasons given for the increase in operating expenses include vendor pricing, food costs, overtime and third-party agency usage, utilities, and insurance. Multiple respondents explicitly underscore industry-specific compensation increases that are above the rate of inflation. One respondent indicated that frontline staff at their organization received an average increase of 24% in compensation. 

However, a promising sign of relief to the long-standing labor market issues may be that 12% expect staffing challenges to improve in the second half of this year. One-third believe labor markets will ease in the first half of 2023, approximately one-third believe staffing challenges will improve in the second half of 2023, and one in four anticipate it will take until 2024 or beyond before staffing challenges ease.

Wave 45 Survey Demographics

• Responses were collected between August 22 and September 18, 2022, from owners and executives of 47 senior housing and skilled nursing operators across the nation. Owners/operators with 1 to 10 properties comprise roughly two-thirds (66%) of the sample. Operators with 11 to 25 properties account for 21%, and operators with 26 properties or more make up the rest of the sample with 13%.
• One-half of respondents are exclusively for-profit providers (49%), just under one-half operate not-for-profit seniors housing and care properties (45%), and 6% operate both.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 66% of the organizations operate seniors housing properties (IL, AL, MC), 21% operate nursing care properties, and 45% operate CCRCs – also known as life plan communities.

This is your survey! Owners and C-suite executives of seniors housing and care properties, please help us tell an accurate story about our industry’s performance. The ESI 2022 questionnaire has been shortened from prior surveys. While some standard questions will remain for tracking purposes, in each new survey wave, new questions can be added based on respondents’ suggestions.

Wave 46 of the ESI is now live. The current survey is available and takes ten minutes to complete. If you are an owner or C-suite executive of senior housing and care and have not received an email invitation to take the survey, please contact Ryan Brooks at rbrooks@nic.org to be added to the list of recipients.

NIC wishes to thank survey respondents for their valuable input and continuing support for this effort to provide the broader market with a sense of the evolving landscape as we recover from the pandemic.

An inaugural Women’s Networking Meetup was held last week at the 2022 NIC Fall Conference in Washington, D.C., co-sponsored by ASHA, Argentum’s Women in Leadership, the Senior Housing Women’s Initiative, and NIC. The gathering was designed to support women who remain underrepresented in senior living and allow them to get to know and support each other.

Beth Mace, NIC’s Chief Economist, welcomed meetup attendees and shared some guiding principles and career advice from her own life. Mace’s remarks are shared below. 

“For those of you who don’t know me, my name is Beth Burnham Mace and I am the Chief Economist for NIC and have been in this role for the past eight years. I have been a practicing economist for my entire career in a range of industries from an electric utility to a bank to a think tank to a private equity group to working on Capitol Hill. About 25 years ago, while at AEW Capital Management, I became involved in senior housing and it totally hooked me and have been thrilled ever since to be involved in an industry that cares passionately for older adults.

I am a mother of two sons, and have been married for many, many years. Like most of us, I have also faced a number of challenges along the way as well as a number of incredible opportunities and experiences. Being a woman and being the industry’s first chief economist is among them.

I have also been able to witness first-hand the changing role of women in society and professionally and I can say that while we have a lot of room to go forward, we’ve also come a long way baby as the phrase goes. For example, when I adopted my two sons, no maternity leave was offered since I was not physically pregnant. Today, many business offices provide lactation rooms.

As professionals, we wear many hats. Some of us are mothers, grandmothers, stepmothers, godmothers, wives, singles, widows, aunts, sisters, and cousins. Collectively, we support each other from a distance and from close proximity. Today, we hope to nurture more of those relationships as we support one another.

In preparation for today’s gathering, I thought I might provide you with some of the lessons I have learned along the way of life, with the hope that one of these observations may provide you with some insight, encouragement, or a bit of wisdom.

1. HEALTH: It’s true what they say: if you have your health, you have everything. Indeed, as a multiple-time cancer survivor, I know personally that health is precious—mind your health.
2. BALANCE: Balance is key, prioritization is key, saying no to certain things is okay, even good to do! You can’t do it all well, we need to compromise on some matters; know what’s important to you and make that your priority; and carry no guilt (easier said than done) regarding your family, work, or friends.
3. LIFE IS NOT A DRESS REHEARSAL: Be the best version of yourself; life is not a dress rehearsal; find out what motivates you; do not let fear get in the way of anything.
4. FLEXIBILITY: Be prepared for the shock waves that life sends to you; despite the best laid plans, life may have an alternative view; be flexible and roll with the punches.
5. BE OPEN TO CHANGE: Be open to opportunity, challenge, and change.
6. ATTITUDE: Attitude and narrative matter! You tell your story to the world, make it count and make it be the narrative you want. Look at the world as half full, not half empty: be an optimist.
7. SELF CONFIDENCE: Have confidence in the choices you make and know that you are making the best decision you can at that moment in time with the information that you had at that moment.
8. CARRY NO CHIPS ON YOUR SHOULDER: Try not to have regrets; learn to let go of things; don’t hang on to past angers and grudges; don’t have a chip on your shoulder (as my mother always said) or hold a grudge.
9. PASSION: Find a job/career that energizes you and doesn’t deplete you; follow your passion if you are able.
10. FOCUS: Make your professional hours professional; use them wisely and efficiently; stay focused; don’t hang around at the proverbial water cooler.
11. LEARN: Be a student of life; keep educating yourself, engage with stimulating persons and put yourself in stimulating situations.
12. IT TAKES A VILLAGE: It takes a village, no woman gets there alone. ASK for help and HELP each other personally and professionally. We pave the path for our daughters and next generation of women; help them, don’t add new obstacles for them (or make it tough on them because it was tough on you). Be around friends and family members that support and nurture you; surround yourself with positive role models and mentors, elders, and friends. Reach out to someone to be your mentor/coach.
13. SELF-CARE/DESTRESS: Learn how to destress. Don’t burn out: take time for yourself, engage in self-care in whatever way you need or define it—diet, exercise, journaling, prayer, social activities, clubs, parenting activities, meditation, spirituality, dancing, laughing; find something that fulfills your heart, soul and essence.
14. BEAUTY: Find beauty in your life because it will renew your spirit.
15. FUN: Have fun! Laugh, engage, and party!

I hope you find this meetup beneficial and I hope that you seed a few new female relationships. I, for one, know the benefits of women friends and know that there is nothing better.

As the years go by, I hope the seeds of these relationships will blossom into life-time connections with other women in our profession who carry the same torch you hold for caring for our seniors and older adults. And remember, let’s support each other today and as we move forward!”

Understanding the healthcare needs of residents of senior housing communities and nursing homes is imperative to best serve the population. In order to garner a better understanding of these healthcare needs and associated spending, NORC at the University of Chicago on behalf of NIC conducted a landmark study. Many residents use high-cost healthcare services including emergency rooms, acute inpatient hospitalization, and post-acute care, and across nearly every dimension analyzed, the data indicates frail and high healthcare cost residents. These factors all highlight an opportunity for value-based care organizations to partner with senior housing and skilled nursing operators.

The study cohort of Medicare fee-for-service beneficiaries includes more than 250,000 senior housing residents and more than 325,000 nursing home residents. The study’s findings indicate that residents of senior housing and nursing homes average over a dozen chronic conditions and that behavioral health conditions are common.

Senior housing residents have annual healthcare spending between ~$20,000 and $30,000, with between $3,000 and $4,000 out-of-pocket resident spending. Inpatient hospital and other institutional spending account for between 62% and 76% of a resident’s healthcare spend. By comparison, the average U.S. Medicare beneficiary incurs about $16,000 in annual healthcare costs. As such, reducing avoidable high-cost services is often a key focus of Medicare Advantage (MA) plans and other risk-bearing organizations.

Spending on inpatient hospital care, including long-term care and rehabilitation, also suggests an opportunity for operators to build programs aimed at reducing hospitalizations.

Additionally, senior housing residents have considerable hospice and home health spending. Home health services are predominantly for restorative therapy but may also involve skilled nursing and medication management. Medicare spending for both physician-administered and self-administered drugs also presents an opportunity to focus on medication therapy management and polypharmacy.

The methodology for the study utilizes an academically-designed data linkage approach which links property information from the NIC MAP® Data Service, powered by NIC MAP Vision, with Medicare Current Beneficiary Survey (MCBS) data and comprehensive administrative and claims data. With few data sources available to analyze the health needs of senior housing residents, this nationally representative survey allows senior housing and care stakeholders to better understand the health conditions that are most prevalent among their residents. With this understanding, proactive healthcare delivery strategies can be designed for the residents of senior housing communities and nursing homes.

To view the complete slide deck of findings, including methodology, inclusion criteria, age distribution, and service usage, download the slides below

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A Conversation with Paychex Executives

Amid a workforce shortage, companies are looking for effective strategies to recruit and retain the best workers. Solutions start with the recognition that the workforce itself is changing.

NIC COO Chuck Harry recently talked with two executives at Paychex about how senior living providers can address staffing challenges based on an understanding of what today’s workers want and expect. Here is a recap of his conversation with Paychex’s Kate Risa, strategic accounts consultant, and Brittany Riese, HR business partner.

Harry: For those who may not be familiar with Paychex, please share with us an overview of the company and your offerings for stakeholders in senior living.

Risa: Paychex is a huge organization. We pay one in every 12 private sector employees. We are also well integrated into the small and medium business arena. We have a dedicated senior living team that’s been around for 10 years, working exclusively with the industry. We work with more than 1,200 owner operators, management groups and developers across the country on a variety of HR functions and processes. We are more than a payroll company. We can manage HR functions to allow managers to devote more time to their staff and their residents. Some of our services include employee onboarding, industry compliance, salary analysis, brand building, employee motivation and engagement strategies, and other HR functions. Our team knows the industry. They understand what AL means. They understand what it means when regulators walk through the door. Our senior living HR team is integrated into the operations of the community. For example, we might help the executive director with an employee issue, or work with the regional team or CEO to analyze worker data to spot new trends.

Harry: Considering the prevalence of the current workforce challenges, what do you identify as some of the biggest hurdles for workers and employers?

Riese: It’s helpful to first look at the data. The U.S. Census Bureau says that the number of seniors, those 65 and older, is projected to double by 2030. The challenge for senior living providers will be to keep up with the demand. The U.S. Bureau of Labor Statistics estimated a few years ago that the demand for caregivers would increase 36% in a 10-year span, which equates to 7.8 million new jobs. Those are huge numbers. How can senior living providers recruit and retain good workers? Wages are an issue. Companies like Amazon and Walmart have raised their minimum wage to $15 an hour, but the minimum senior living wage sits below that figure. That makes senior living a hard sell. Continuing to think you can be competitive and thrive in this environment without making any changes will hold your organization back. We need to shift our thinking and listen to what employees want.

Risa: A new workforce has arrived. The days when people stayed at the same company for 30 years are gone. Gen Z and millennials move from job to job. Just as quickly as they come to work for you for another dollar, they’ll leave for a dollar more somewhere else. We have to think outside our comfort zone. In the past, a pay raise might have been enough to keep workers. But the new healthcare worker values experiences. They want to be engaged and entertained. We have to figure out how to incorporate those elements into the culture at our communities.

Riese: We’re accustomed to candidates with the education and skills to jump right into the job. But providers may have to cast a wider recruiting net. Look at your hiring criteria. If you’re only including those with prior senior living experience, you could be missing out on good candidates. Also, things are changing quickly. It’s important to give your workers the tools and training they need to succeed.

Harry: Given the attention on corporate culture and employee engagement, why is creating the right employee experience so important for today’s employees?

Riese: We’re accustomed to a worker who wants to do their job, get paid, and go home. But we’re seeing a generational shift. The average job tenure for a millennial is four years. Gen Z stays about 3 years. If they aren’t getting the experience they want and engagement, they are moving somewhere else.

Risa: When you think about the employee experience, it’s really about how they feel. In times of crisis like we’ve just been through with COVID it’s even more important to be engaged and in tune with employees. Maybe they’re struggling at home with day care issues or struggling to pay their bills. We need to understand those issues because they spill over into the workplace. We need to be able to serve the residents in the way they deserve and also help the employees. An employee engagement program is critical. We need to help our senior living managers understand what it means to be present with employees.

Harry: What do senior living leaders need to do to create a good employee experience?

Riese: How do we create an experience where employees are excited to come to work every day? It’s about company culture. Not just what’s written in your handbook. But how you include your team members in that mission every day while keeping in mind these new workers want to feel their work is meaningful. We have to listen to them and include them to engage them. They want transparent communication. They want to play an active role in decision making. They want to be heard on new processes, services, products. Companies might consider conducting employee interviews or pulse surveys. We have to give them the opportunity to have a voice. We also need to value their contributions. We can’t wait for annual appreciation events. It has to be real time, intentional and built into everyday interactions. Celebrating anniversaries and birthdays is not a new concept but there’s a way to do it well. Being intentional can make a big difference.

Risa: The new generation of healthcare worker is not going to be the burnout generation. They don’t want to work overtime. They want flexibility and work-life balance.

Riese: Consider the physical environment. We focus on resident space. But healthcare workers have a high stress job. Do we have an adequate break room, a place to unwind and take time out? This is especially important if the worker is dealing with a resident with dementia, who may be combative. An employee needs time after an interaction like that to decompress. Then the employee can go back to work and provide the next resident with a positive experience.

Harry: From your perspective, how has the nature of work evolved within senior living?

Risa: There’s been a shift in the labor market. Employers that require employees to be at work 8-10 hours a day, 5-6 days a week will not be able to hire and retain their pick of employees. Senior living has been a traditional industry. But that has created a situation where we’ve been left behind and we’re out of touch with what today’s healthcare worker needs and wants. These employees want a career path. And they may want a variety of assignments to have different experiences every day.

Harry: What is the difference with respect to the future of work versus how we work today?

Risa: The future of work must be more creative. We’re still here to care for residents and give them a positive experience. We need a workforce that has the passion and heart for senior living.

Riese: We need to focus on what makes an individual an individual. What are their hobbies and interests? Maybe an employee is a great violin player. Why not integrate that into their work and give them the opportunity to play for residents. One community I work with had an employee talent show and lip sync contest. Employees were so engaged. The residents loved it. That’s the kind of things we need to do to make it fun for everyone.

Harry: What are your thoughts on how technology shapes the way we create the workplace?

Risa: Technology can help take away some of the transactional duties from workers so they can focus on the important work of building relationships with each other and the residents. Technology can also help build experiences that create a fun place to work which translates into a vibrant community with a great resident experience.

Riese: Technology needs to empower employees, support them in how they do their work and keep them connected in the organization. We cannot hide behind technology. It’s not a magic answer. Also, the younger generations are tech savvy. As they come into the workforce, they expect technology to be in place to support their work. They can be turned off if they see antiquated processes. Senior living providers need digital charting, scheduling technology, and online programs for onboarding and training. Regular online communications are another way to keep them engaged.

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.