Just over one-quarter of respondents noted that the severity of their staffing shortages across their organizations was severe, while two-thirds indicated the problem was moderate. Of significance, one-quarter of respondents had more than 20% of full-time positions currently unfilled. Regarding tenure of full-time employees, on average, just under one-half of organizations retained more than 80% on the job after one month. However, after one year, only 17% of organizations still had over 80% remaining on the job. Staffing shortages are often due to the inability to fill nursing aide positions, but wage competition and the inability to hire nurses also factored highly. Some alternative methods that have been successful in recruiting caregiving staff include offering daily pay, engaging resident marketing departments in developing staff recruiting strategies, providing housing in the community, offering flexible schedules that use different start times to accommodate childcare and school schedules, and more. Nearly nine out of ten organizations report that rising operating expenses are among their biggest challenges. NOI has been pressured for many operators due to the impact of labor shortages and higher wages, rising insurance costs, inflation-related higher-priced materials, and the pandemic-related decline in occupancy rates. Nearly 60% indicated that their operating expenses have increased between 6% and 14% since the beginning of the pandemic, with 30% reporting that expenses have risen 15% or more.

–Lana Peck, Senior Principal, NIC

NIC’s Executive Survey of senior housing and skilled nursing operators was implemented in March 2020 to deliver real-time insights into the impact of the pandemic and the pace of recovery. In its third year, the “ESI” is transitioning away from the COVID-19 crisis to focus on other industry challenges. While some standard questions will remain for tracking purposes, in each survey “wave,” new questions will be added. To understand operators’ labor and staffing issues, many new questions were added to Wave 39.

This Wave 39 survey includes responses from March 7 to April 3, 2022, from owners and executives of 69 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 39 survey, just over one-quarter of respondents indicated the severity of their staffing shortages across their organizations was severe (27%), while two-thirds (67%) reported it was moderate. Attracting community and caregiving staff continues to be among operators’ most significant challenges. When asked about backfilling staff shortages, all of the respondents (100%) are paying overtime hours in Wave 39, and three-quarters (75%) are currently tapping agency or temp staff—down from a peak of 89% in the Wave 36 survey conducted in December 2021.

Roughly one-half of organizations reported that staffing shortages were due to the inability to fill nursing aide positions (54%). Wage competition (44%) and the inability to hire nurses (33%) were also commonly cited. Too much competition from other industries and staffing agencies was cited by roughly one-quarter of respondents (23%, respectively). Nevertheless, three-quarters of respondents (75%) are optimistic that staffing challenges will improve in the second half of 2022 or 2023.

Respondents were asked in the Wave 39 survey to share innovative methods they had found to be particularly successful in recruiting caregiving staff. Beyond generally increasing wages, offering flexible schedules, hiring and referral bonuses—all of which have been reported as effective to a greater or lesser degree—the list below includes some alternative ways to attract caregiving staff:

• • Daily pay
  • Scholarship programs/full tuition for nursing degrees
  • Personalizing sign-on rewards and benefits to individuals
  • Engaging resident sales and marketing staff in developing staff recruiting strategies
  • Perfect attendance bonuses for new hires at the end of 30, 60, and 90 days
  • Social media campaigns
  • Dramatically increased wages by 10%-15% in the last six months
  • Immediate phone follow-up after interviews
  • Housing in the community
  • Educating managers on how to manage more effectively in today’s environment
  • Offering employees access to the community wellness programs and clinic
  • Hiring in-house staff recruiters to update job ads every two days (acting as our own staffing agency)
  • Reduced new hire paperwork and utilized online document signing tool–now getting people hired
    and into communities in less than 24 hours
  • Flexible schedules that use different start times to accommodate childcare and school schedules
  • Hiring agency staffing that has worked in the community and wants to stay with us long-term

Regarding the current share of all full-time open positions across respondent organizations, significantly, one-quarter had more than 20% of positions currently unfilled. However, about one-third had 10% or less unfilled. Regarding tenure of full-time employees, on average, just under one-half of organizations kept more than 80% on the job after one month. However, after one year, only 17% of organizations still had over 80% remaining on the job.

Nearly nine out of ten organizations say that rising operating expenses are among their most significant challenges. Almost 60% indicated that their operating expenses have increased between 6% and 14%, with 30% reporting that expenses have risen 15% or more. Single-site organizations generally had lower increases in operating expenses than larger organizations with more properties in their portfolios.

Due to the pandemic, senior housing and care operators found it necessary to make greater use of technology for telehealth, resident and family communications, staff scheduling, and virtual and digital marketing. In 2022, more than half (55%) indicated that IT capital expenditures were between 5% and 10% of their total operating expenses. One-third (34%) reported that they were between 0% and 4%.

Across 39 waves of the ESI, the pace of move-ins has closely corresponded with the overall incidence of COVID-19 infection cases in the United States. This is demonstrated in the timeline below that shows the share of organizations reporting an increase in the pace of move-ins during the prior 30-days. Data from the Wave 39 survey, which was conducted in March, reflects an increase in the share of operators reporting acceleration in the pace of move-ins after the Omicron variant peaked and cases declined sharply in the U.S.

In the Wave 39 survey (reflecting operator experiences in March), between roughly 45% and 60% of organizations with independent living residences, assisted living residences, memory care residences, and nursing care beds reported an acceleration in the pace of move-ins. The largest increases were in higher acuity settings such as memory care and nursing care, but substantial increases were noted for assisted living and independent living, as well.

Most respondents reported no change in the pace of move-outs, which may support occupancy stability or increases in the coming months. While few organizations observed an acceleration in the pace of move-outs, of those that did, nearly three-quarters reported residents moving to higher levels of care (73%)—higher than in the Wave 38 survey (53%). This appears to be reflected in the large increases in the pace of move-ins in care segments serving residents with activities of daily living (ADL) needs.

Roughly 40% of respondents to the Wave 39 survey reported lead volumes above pre-pandemic levels in March—an increase from the prior survey (33%) reflecting results in February. Smaller operators are still less likely to have achieved lead volumes above pre-pandemic levels than larger organizations (as was noted in Wave 38), but single-site organizations saw the most significant gains. Single-site operators with lead volume above pre-pandemic levels rose from 15% to 40% in Wave 39. Given pent-up demand coming out of the pandemic and questions about the sustainability of record-high absorption rates in the last half of 2021 per NIC MAP Vision data, this measure in the ESI may be a leading indicator to watch with regards to occupancy recovery.

Wave 39 Survey Demographics

• Responses were collected between March 7 and April 3, 2022, from owners and executives of 69 senior housing and skilled nursing operators from across the nation. Owner/operators with 1 to 10 properties comprise roughly one-half (58%) of the sample. Operators with 11 to 25 and 26 properties or more make up the rest of the sample (1% and 25%, respectively).
• Just over one-half of respondents are exclusively for-profit providers (54%), about one-third operate not-for-profit seniors housing and care organizations (35%), and 11% operate both.
• 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), 22% operate nursing care properties, and 40% operate CCRCs (aka life plan communities).

Owners and C-suite executives of senior housing and care properties, please help us tell an accurate story about our industry’s performance. 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 Lana Peck at lpeck@nic.org to be added to the list of recipients.

NIC wishes to thank 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. This is your survey! Please take the Wave 40 survey and suggest new questions for Wave 41.

As the economy continues to move back toward normalcy and away from the pandemic, the Labor Department reported that nonfarm payrolls rose by 431,000 in March 2022. The data suggest that the war in Ukraine and the surge in oil prices has not dampened hiring activity.

Overall job growth averaged 562,000 per month in the first quarter of 2022, the same as the average monthly gain for 2021. Revisions added 95,000 to total payrolls in the previous two months. Nevertheless, nonfarm payrolls were still down by 1.6 million or 1.0% from their pre-pandemic level in February 2020. The March increase in jobs was a bit weaker than market expectations of an increase of 490,000.

“In periods when increased cases of COVID-19 occur at properties around the country, residents require isolation and higher skilled care, allowing operators to bill at the Medicare rate instead of Medicaid. As cases decline, you will see the mix revert back.”

– Bill Kauffman

NIC MAP^® data, powered by NIC MAP Vision, released its latest Skilled Nursing Monthly Report on March 31, 2022. The report includes key monthly data points from January 2012 through January 2022.

Here are some key takeaways from the report:

Occupancy

After reaching a 19-month high level of 76.1% in December 2021, skilled nursing property occupancy fell 27 basis points to start the 2022 new year at 75.8%. The Omicron variant caused COVID-19 cases around the country to spike at the beginning of the year, which seemingly stalled the occupancy recovery. Occupancy had been relatively flat since July 2021 but the January reversal pushed occupancy to being only 383 basis points above the low point reached in January 2021 (72.0%) and it remains low compared to the February 2020 pre-pandemic level of 86.1%. The COVID-19 delta variant over the summer months and more recently the Omicron variant posed challenges to growing occupancy further. In many instances heightened absenteeism associated with sickness related to Omicron and restrictions on when staff could return to work safely caused many operators to limit patient admissions because they were unable to have sufficient numbers of staff to care for patients. With a national unemployment rate of 3.8% in February 2022 and the number of skilled nursing workers at the national level remaining 15% below pre-pandemic levels, the labor crisis is unlikely to abate anytime soon.

Medicare

Medicare revenue per patient day (RPPD) increased slightly from December 2021 to end January 2022 at $585. This was an increase from $580 in December and its highest level since June 2020. The January increase was likely due to the need for more skilled care as some residents contracted the Omicron variant. The federal government implemented many initiatives to aid operators of properties for cases of COVID-19, including increases in Medicare fee-for-service reimbursements to help care for COVID-19 positive patients requiring additional care. Meanwhile, Medicare revenue mix also trended up in the month of January, increasing 411 basis points from 21.1% to reach a pandemic high of 25.2%. Given the elevated number of COVID-19 cases in January, this suggests there was a significant uptick in the utilization of the 3-Day Rule waiver as COVID-19 cases increased in the month of January. The 3-Day Rule waiver was implemented by Centers for Medicare and Medicaid Services (CMS) to eliminate the need to transfer positive COVID-19 patients back to the hospital to qualify for a Medicare paid skilled nursing stay, hence increasing the Medicare census at properties. As the cases decline, the Medicare revenue share is likely to decline as well.

Managed Care

Managed Medicare revenue mix increased 54 basis points from December to end January at 10.5%. This was up 258 basis points from pandemic low set in May 2020 of 8.0%, but 57 basis points below the most recent highwater mark of 11.1% prior to the pandemic. The increase is likely due to growth in elective surgeries from the early days of pandemic, which typically creates additional referrals to skilled nursing properties. Meanwhile, Managed Medicare revenue per patient day (RPPD) inched up from $453 to $454 in January and has fluctuated around this value since August. Compared to its year-earlier value of $468, it is down 2.9%, however and it is down $106 (19%) from January 2012. It continues to create pressure on operators’ revenue as managed Medicare enrollment continues to expand its reach and coverage around the country. The persistent decline in managed Medicare revenue per patient day continues to result in an expanded reimbursement differential between Medicare fee-for-service and managed Medicare, which has accelerated during the pandemic. Medicare fee-for-service RPPD ended January 2022 at $585, representing a $130 difference. Pre-pandemic, in February of 2020, the differential was $99.

Medicaid

As Omicron cases spiked in January, Medicaid patient day mix decreased 269 basis points to 63.7%. It has decreased 313 basis points from the most recent high set in in September 2021. In a similar trend, Medicaid revenue mix deceased in January, declining 258 basis points to 47.5%. As mentioned above, this was likely due to the spike in Omicron cases in January as operators moved residents from Medicaid to Medicare days as they required isolation and higher skilled care. Meanwhile, Medicaid revenue per patient day (RPPD) decreased 1.6% from December 2021 to end January 2022 at $245. After hitting a high of $249 in October 2021, it is now at a level last seen in May of 2021. However, Medicaid reimbursement has increased more than usual as many states embraced measures to increase reimbursement related to the number of COVID-19 cases. Medicaid has increased 3.4% since February 2020. On the other hand, covering the cost of care for Medicaid patients is still a major concern as reimbursement does not cover the cost of care in many states. In addition, nursing home wage growth is elevated along with overall inflation, and staffing shortages are a significant challenge in many areas of the country.

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 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.

New to NIC’s professional development offerings, the Skilled Nursing Boot Camp: Evaluating the Investment Landscape course offers participants an in-depth perspective on how value is created in skilled nursing.

The course is designed for those new to the industry as well as those who wish to stay current on underwriting skilled nursing properties. It will orient participants to the nuances of skilled nursing. Participants will be able to understand the unique risks associated with skilled nursing and how they may be mitigated.

NIC will host a virtual Skilled Nursing Boot Camp: Evaluating the Investment Landscape course next month. The course will open on Thursday, April 28, with a live virtual class taking place on Thursday, May 5, from 3:00 pm to 5:00 pm EST.

Developed in conjunction with the NIC Future Leaders Council, the event is structured around a case study grounded in today’s reality that will expound on options from a property owner’s perspective. Participants will hear mock offers and pitches for consideration to determine if they should sell the property, hold the property, and/or retain a new operator.

Prior to and during the course, participants will receive an overview outlining skilled nursing industry trends, from both operators and investors, who will outline key factors for consideration. During the engaging 4-hour course itself, experts will detail approaches on how to analyze the decision.

Topics include:

• • Industry Overview
  • History of Growth in Skilled Nursing
  • Investment Considerations
  • Operational Considerations
  • Capital Market Structure

Course participants will work together in small virtual groups to discuss their prospective options and then collectively decide whether to sell, hold, and/or retain a new operator. Before the course concludes, the small groups will share their respective decisions and rationale with the other groups to gain additional perspectives.

The Skilled Nursing Boot Camp is currently open for registration.

The pandemic disruption in all its forms continues to test and challenge the senior housing sector. But the level of agility, preparedness and responsiveness among senior housing operators has never been higher and remains a tailwind for senior housing demand, as measured by the change in occupied stock. In this analysis, we examine the drop and subsequent recovery in the level of occupied units by majority property type since the pandemic began to influence the senior housing sector, over the period from 1Q 2020 to 4Q 2021, and across the 31 NIC MAP Primary Markets and the 68 NIC MAP Secondary Markets Aggregates.

Note that this analysis looks at demand only and does not take into account inventory growth and properties under development.

Senior Housing Demand Contraction. The first quarter of 2021 marked the lowest level of occupied units since 2017. In the early months of the pandemic (1Q 2020 to 1Q 2021), about 42,100 units were placed back in the market on a net basis or “vacated” on a net basis for the 31 NIC MAP Primary Markets aggregate while 22,100 units were vacated for the 68 NIC MAP Secondary Markets, equivalent to a 7.4% and 7.2% decrease in occupied stock, respectively. At its low point, senior housing occupied units for both market aggregate concepts stood at their 1Q 2017 level.

Drilling down by Majority Property Type. The impact of the pandemic weighed heavily on majority assisted living (AL) properties across both the NIC MAP 31 Primary Markets and the 68 NIC MAP Secondary Markets aggregates with 8.4% and 9.0% declines in occupied units between 1Q 2020 and 1Q 2021, respectively. Demand contraction across majority independent living properties (IL) was relatively smaller at 6.6% for the NIC MAP Primary Markets (1.8 percentage points less than AL) and 5.6% for the NIC MAP Secondary Markets (3.4 percentage points less than AL).

The disparity in the degree of demand contraction during the first year of the pandemic may to be linked to the level of care and the relatively higher acuity levels and often greater frailty seen among residents in majority assisted living properties (defined as properties where assisted living units and/or memory care units comprised the largest share of inventory) than in majority independent living properties. In fact, findings from the 2020 study from NIC and NORC at the University of Chicago showed that the average mortality rate was the least in independent living and comparable to its corresponding county’s mortality rate, while average mortality rate for assisted living was slightly higher but notably not as high as for memory care or nursing care.

Senior Housing Demand Recovery. Due to unprecedented demand momentum in the last three quarters of 2021 (2Q 2021, 3Q 2021, 4Q 2021), senior housing occupied units grew by 4.6% for the 31 NIC MAP Primary Markets, equivalent to over 24,400 units absorbed on a net basis. Over the same period, occupied units within the 68 NIC MAP Secondary Markets increased by 5.1%, equivalent to 14,500 units absorbed on a net basis and 0.5 percentage points higher than the NIC MAP Primary Markets.

Although senior housing demand for both market aggregates have had three consecutive quarters of real momentum and consistency, the 4Q 2021 occupied stock for the 31 NIC MAP Primary Markets was still 3.1% below pre-pandemic 1Q 2020 levels, equivalent to 17,700 units vs. negative 2.5% for the 68 NIC MAP Secondary Markets, equivalent to over 7,500 units.

Drilling down by Majority Property Type. Like the sector’s demand contraction, its demand recovery has proven to also be uneven across different types of properties. While the demand contraction was relatively larger for AL properties, the demand recovery across AL properties has similarly outpaced that of IL properties. Since 1Q 2021, occupied units for AL properties for the NIC MAP Primary Markets increased by 6.1%, nearly two-fold that of IL (3.3%). The same pattern holds true for the 68 NIC MAP Primary Markets with 6.6% for AL, 2.8 percentage points higher than IL properties (3.8%).

This uneven recovery across different types of properties could be linked to several factors. One plausible explanation could be tied to the move-ins. In majority assisted living properties, there are at least two different types of residents, (1) residents from independent living properties following the continuum of care, and (2) new residents from outside congregate settings. Move-ins in independent living properties generally come from one source–outside congregate settings.

It could also reflect a stronger “pent-up demand” for assisted living, since AL is considered a more need-based property type and services are often required. Independent living is frequently considered more choice-based and the urgency to move into an independent living property may not be as strong.

Notably, not all operators are experiencing the same trends, however. Based on anecdotes from conversations, some operators are finding very strong demand for independent living properties, and sometimes stronger than assisted living. Conversations suggest that the socialization aspects of independent living are drawing potential new residents as the isolation associated with the pandemic has simply been overwhelming and the idea of living with others in a congregate setting has become quite compelling.

This dive into recent trends is based solely on senior housing demand patterns. The concept of aggregate demand or the number of occupied units is important to evaluate senior housing markets’ recoveries. Further, the strong demand recovery patterns across markets and properties show that senior housing demand was not lost, but rather, for many residents, it was largely deferred due to the pandemic.

These demand statistics indicate once again that the recovery differs across markets and by property type. Additionally, individual property performance has been affected by COVID exposure, infection control protocols, acuity levels of residents, move-in and move-out velocity, operator access to capital, pressured operating margins due to low occupancy rates, and staffing challenges. Many of these factors have not gone away and will continue to exert influence over operator, property and metro area performance in 2022. However, as demand more fully recovers toward pre-pandemic levels, the market should begin to balance out.

Senior Housing Demand Pulse Metric– By Majority Property Type

Other related analyses: Senior Housing Demand – Deep Dive & Outlook

NIC MAP clients can access the full analysis on senior housing demand patterns by property type, region, individual markets, property age, profit status, operator chain size, and other NIC MAP data dimensions.

While this analysis looks at demand only and does not take into account inventory growth and properties under development, recent analysis featuring NIC MAP Intra-Quarterly Data shows that senior housing stabilized occupancy for the NIC MAP^® Primary Markets held its ground in February 2022 despite the growth in inventory and the headwinds created by the Omicron surge and the consequential staffing crisis. This was also the case in September 2021 when occupancy withstood the Delta surge and was unchanged from August 2021.

Interested in learning more about NIC MAP Intra-Quarterly data? To learn more about NIC MAP data, powered by NIC MAP Vision, schedule a meeting with a product expert today.