“Skilled Nursing occupancy has leveled off in the 75% range since July, according to the latest data through November 2021. This suggests the Delta variant had an impact as the labor crisis intensified, which limited the ability to accept new patient admissions.”

– Bill Kauffman

NIC MAP^® data, powered by NIC MAP Vision, released its latest Skilled Nursing Monthly Report on February 3, 2022. The report includes key monthly data points from January 2012 through November 2021.

Here are some key takeaways from the report:

Skilled nursing property occupancy was flat in the month of November, ending the month at 75.7% after increasing 28 basis points from September to October. Occupancy has been relatively flat since July, and is now 381 basis points above the low point reached in January 2021 (71.9%). It was expected that admissions to skilled nursing properties would increase at a faster pace in 2021, but the COVID-19 Delta variant over the summer months posed a challenge to operators as did staffing shortages across the industry. Most recently, staffing shortages have caused many operators to limit patient admissions because they are unable to hire additional caregivers. The Omicron variant is expected to cause additional pressure on occupancy in the winter months. Occupancy remains very low compared to February 2020 pre-pandemic levels of 86.0%.

Medicare revenue mix ended November at 20.3%, which was a 23 basis point increase from October. However, it is down from its pandemic high of 24.6% set in January 2021. The revenue mix has increased 65 basis points since September, which in part is likely a result of the increase in Medicare rates to skilled nursing properties for fiscal year 2022. That increase was implemented in October. However, since January of 2021, the longer-term downward trend in Medicare revenue mix continued as fewer COVID-19 cases in properties have resulted in less need for utilizing the 3-Day rule waiver and per day reimbursement for COVID-19 positive patients.

Managed Medicare patient day mix decreased slightly (8 basis points) from October to 7.2% in November and has oscillated in that range since June 2021. However, it is down 48 basis points from its high set in February (7.7%), which suggests lower patient admissions from managed Medicare given the increase in overall occupancy within the same timeframe. On the other hand, it has increased 214 basis points from the pandemic low of 5.1% set in May 2020 when states around the country implemented a suspension of elective surgeries, which had a direct impact on lower hospital referrals to skilled nursing properties.

Medicaid patient day mix decreased for the second month in a row, falling 51 basis points from October to end November at 66.2%. This decline, coupled with the fact that occupancy held steady in November, suggests that Medicare patient days were responsible for preventing a month-to-month decline in occupancy. However, Medicaid patient day mix has increased 245 basis points from the pandemic low of 63.7% set in January 2021. In addition, Medicaid revenue mix decreased, dropping to 50.3% from 51.6% in October.

To get more trends from the latest data, 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.

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

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

Takeaway #1: Senior Housing Occupancy Up 2.3 Percentage Points from Pandemic Low  

• Occupancy jumped one full percentage point to 81.0% in the fourth quarter due to favorable supply and demand conditions. From its low point of 78.7% in the first and second quarters of 2021, it is up 2.3 percentage points.  However, it remains 6.4 percentage points below its pre-pandemic level of 87.4%. 
• For seniors housing, inventory growth continued to slow to only 2,910 units in the fourth quarter.  This was the fewest units added to inventory since the first quarter of 2019.  For further perspective, its pre-pandemic 10-year quarterly average was 3,333 units per quarter.  
• Inventory growth has generally trended down from its high point of 6,100 units in mid-2019. It’s likely to continue to do so due in the near term to a slowdown in starts in 2020 and early 2021.  

Takeaway #2: Record High Demand Occurred in Second Half of 2021 

• The second half of 2021 will be remembered as a time of rebounding demand as it registered the strongest unit improvement of net positive absorption, as measured by the change in occupied stock, since NIC MAP began reporting the data in 2005. 
• More specifically, demand continued to strengthen in the fourth quarter, albeit at a slower pace than in the record-setting third quarter.  Indeed, net absorption continued to recover in the fourth quarter of 2021, increasing by 9,035 units in the Primary Markets, the 2nd strongest unit increase since NIC MAP Vision began reporting the data in 2005. In the third quarter, net absorption totaled 11,994 units.  For both quarters, this equaled 21,029 units.  Combined with the second quarter (3,401 units), net absorption increased by 24,430 units in the last nine months of 2021
• Notably, this is a clear reversal in trend from the loss of 42,129 units during the pandemic in the second, third and fourth quarters of 2020 and the first quarter of 2021.

Takeaway #3: Very Large Chains Saw Most Increase in Occupancy Rates in Fourth Quarter 

• Very large chains (operators with 25 properties or more), have consistently had lower occupancy rates than other chain groupings. Very large chains also incurred the largest occupancy drop related to the pandemic—down 10.1 percentage points. But they have also seen the largest improvement in occupancy since hitting bottom in the first quarter.  In the fourth quarter, the occupancy rate for very large chains was 78.4%, a 3.3 percentage point improvement from its nadir of 75.1% in the first quarter of 2021. 
• Large chains (10 – 24 properties) had the second-best improvement in occupancy rising from 80.3% at its pandemic-related low in the first quarter to 83.2% at year end, a gain of 2.9 percentage points.  Moreover, large chains had the highest fourth quarter occupancy of any of the groupings.
• Single properties were not far behind, however, at 83.0%. 

Takeaway #4: Occupancy Distribution Varies by Market 

• The average occupancy rate for seniors housing in the 31 Primary Markets was 80.1% in the fourth quarter while the median occupancy was 84.6%.  This large difference means that the range of occupancy rates by individual properties is broad and the distribution wide. 
• In the fourth quarter, 14.7% of the Primary Markets properties had occupancy rates above 95% and another 18.4% had occupancy rates between 90 and 95%.  But by market this varies considerably.  
• Conversely, 39.2% of properties in the data base had occupancy rates below 80%. This is better than 41.8% in the third quarter, but well above the 22.3% pre-pandemic.  This cohort includes those properties that opened during a global pandemic and those properties that have slipped in occupancy during this period. This suggests that there are still many operators dealing with properties that have very challenged occupancy rates. 
• The markets with the lowest overall occupancy rates—Houston, Cleveland, and Atlanta—not surprisingly have more than 45% of their properties with occupancy rates below 80% (Houston has 51.1%) and much smaller shares with occupancies above 90%.  Some of this occupancy performance may be due to a higher share of newly opened properties in some markets more than in others.
• San Jose, San Francisco, and Boston in contrast easily have more than one-third of their properties with occupancy rates above 90%, with Boston having 43% of its properties.  Atlanta, by contrast, has 22%.   

Key Takeaway #5:  New Construction Loan Volume Picking Up Again 

• This chart looks at closed construction loan volumes from 2016 through the second quarter of 2021 and is based on NIC’s Lending Trends Report. The full report can be found on our website. 
• The chart mimics the pickup in starts activity that began last year since capital is a requirement and prerequisite for breaking ground on new projects.  
• Indeed, on a four-quarter moving sum basis, starts have turned the corner and are picking up once again after having been on the decline in the immediate aftermath of the pandemic in 2020.    
• For independent living, starts totaled 8,204 units, on a four-quarter sum basis, the most since mid- 2020.  For assisted living, there were 9,648 units started on a four-quarter aggregate basis in the fourth quarter, equating to 2.9% as a share of inventory. For perspective, at its peak in early 2016, it was 6.0%. 
• Third quarter data on lending trends will be out in mid-February. 

Interested in learning more? 

• While the full key takeaways presentation is only available to NIC MAP clients with access to NIC MAP data, you can access the abridged version of the 4Q21 Data Release Webinar & Discussion featuring my exclusive commentary below. 
• View the Abridged Slides Presentation
• To learn more about NIC MAP data, powered by NIC MAP Vision, an affiliate of NIC, and accessing the data featured in this article, schedule a meeting with a product expert today. 

Baby boomers may not be ready for assisted care, but they may be ready for something else. But what? Do they want an active adult-type development with certain amenities? Or is it more about seeking a place that offers a sense of community and a personalized lifestyle?

Thought leaders in the fields of aging and longevity explored the question at the 2021 NIC Fall Conference in Houston during a session aptly titled: “Rethinking Community: Places that Will Attract Future Older Adults.”

For the most part, baby boomers are healthy and don’t feel old. They aren’t looking for the care-based housing model that they may have experienced vicariously through their parents. They’re not passive. Instead, they ask themselves, “How do I live my next chapter?” Baby boomers want choice, independence, and a place tailored to their preferences.

“The boomers are finally here,” said panel participant Bob Kramer, NIC co-founder & strategic advisor, and founder & fellow at Nexus Insights. “They are looking for places, activities, and programs to help them repurpose themselves to live with satisfaction and purpose.”

The discussion was led by Susan Barlow, co-founder, managing partner and COO at Blue Moon Capital Partners. Other panelists included Ryan Frederick, founder & CEO, SmartLiving 360; Jake Rothstein, founder & CEO, UpsideHōM; and Sara Zeff Geber, founder of LifeEncore.

Kicking off the session, Barlow asked: “What do baby boomers want?”

Kramer put the discussion in context, noting the huge growth in the number of baby boomers, those in the 65-84 age group. “The demographic wind is at our back,” he said. But instead of looking at demand in terms of age and income, he cited a study on rethinking demand in terms of life expectancy. While the industry mostly cares for people in the last five years of life, baby boomers are not yet customers for a care-driven product.

When rethinking demand, developers and investors should consider what consumers can afford. Baby boomers want health and longevity, but they also want to have the dollars to support themselves. They wonder if their lifespan will match their health span, and their wealth span. Kramer noted that NIC’s study on the “Forgotten Middle” shows that a large number of baby boomers will not be able to afford a traditional community.

Kramer emphasized that baby boomers want to avoid assisted living. Instead, they want experiences that make life worth living for the next, as he put it, “8,000 days.”

Panelist Geber observed that baby boomers seek a sense of community. Her work focuses on “solo agers”—those elders, mostly women, without children or those aging alone for other reasons. In fact, one in five baby boomers is childless. This group does well living alone because they’ve created a community or social network of friends and family for support. “They do not want to give that up,” said Geber.

Communities that offer opportunities to remain active and help provide a sense of purpose will attract these boomers. “Solo agers will need senior housing that appeals to the lives they live today,” she said.

Place Matters

Panelist Frederick emphasized that “active adult” is a product type, not a consumer. He authored a book titled, “Right Place, Right Time.” It looks not just at the physical dwelling space but also the individual’s neighborhood, wider community, financial security, physical and mental health, and sense of purpose. He suggested that developers and operators ask themselves: “Are you in the senior housing business, or are you in the business of creating places and services to help people thrive?”

Frederick cautioned senior living providers about the changing competitive landscape. Active adult projects for baby boomers are only a small sliver of housing options. There are multifamily, multi-generational projects. Co-housing arrangements can facilitate a sense of community. Pocket neighborhoods in walkable locations are another option.

Technology will play a role. UpsideHōM is a technology platform that connects people to housing and services that have been vetted by the company. “Technology can drive positive experiences,” said panelist Rothstein.

The UpsideHōM platform connects older adults to age-diverse apartment communities. The older adult is assigned a personal assistant or navigator to help manage day-to-day life and maintain community connections. Services are tailored to the individual. “No one size fits all,” said Rothstein. Seniors can get food delivered or transportation, but only if they want or need it. “Think about how to customize service and support,” he suggested.

What does this mean to the investor? Kramer noted that it’s crucial to understand the customer and take a wider view. The demand pool of baby boomers is broad, but thin for any particular type of development. Product categories will be highly segmented based on the personal preferences. “This is about the consumer and what they want,” said Kramer.

Moderator Barlow asked the panelists about market risks and what’s ahead.

Frederick noted that the world is more complicated, and people have more choices. “Housing for older adults will be a matter of trial and error,” he said.

Rothstein believes technology will be essential to create a meaningful end-user experience. “We have to be thoughtful about using technology to drive meaningful engagement,” he said.

Solo agers want to continue their lifestyle and may consider a congregate living arrangement if it is presented to them in a way that makes them feel comfortable. Small neighborhoods make more sense for them than big high-rise buildings.

The panelists agreed that the senior living market for baby boomers will be fragmented and diverse. Innovative approaches and new ways of thinking will be needed to meet the demand. “Huge change is coming to our industry,” said Kramer.

Introduction

A growing number of senior housing operators and capital providers are expressing interest in the “Forgotten Middle,” a term coined by NIC in 2019 in its seminal research to describe the large middle-income seniors cohort by its demographic characteristics as well as its housing and healthcare needs. The middle market includes Americans who have too much wealth to qualify for government support programs such as Medicaid, but not enough financial resources to pay most private pay options for very long. Identifying the right balance of hospitality, services, and care delivery, while still maintaining a monthly rental price that can be paid for by this group, is the cornerstone to a successful middle-market strategy.

In 2014, there were 7.9 million seniors aged 75 or older who were in the middle-income cohort. By 2029, that number is projected to increase to 14.4 million. A variety of social and demographic trends are causing the size of this cohort to grow at a rapid and steady pace. Foremost is the aging of the baby boomers who are turning 75 every day (baby boomers were born between 1946 and 1964 and as this cohort ages, the middle-income senior population will nearly double). By 2029, middle-income seniors will make up 43% of all seniors. These trends will only grow over the next 20 years since the oldest baby boomer is 83 in 2029. Further, a shift away from pensions and defined benefit plans, an increasing likelihood of being unmarried, and fewer available family caregivers are other key factors influencing this cohort. More than half of this cohort are projected to not have the financial resources to pay for traditional average-priced seniors housing and care in 2029.

Looking at the health characteristics of the projected cohort of 14.4 million middle-income seniors, it becomes clear that a significant portion of this group will require care as they age that may present challenges to living at home. Roughly 8% of this group will have some form of cognitive impairment, 60% will have mobility limitations, and 20% will have high needs – defined as having three or more chronic conditions and one or more functional limitation.

Further, it is likely that the COVID-19 pandemic has increased the size of this cohort, supporting additional consumer interest in moderately-priced senior housing options. To be viable, however, operators and their capital partners need to think through a variety of considerations in formulating a middle-market strategy. What follows are some key factors to consider for operators and capital providers interested in serving the middle-market segment that NIC has gleaned from conversations in the years since the study’s publication. Please note that this is intended only to serve as the groundwork for further discussion and is not intended to be a comprehensive list of all factors affecting middle-market senior housing.

Key Factors When Considering a Middle Market Strategy

Understand Your Consumer

The most important first step to consider in providing care and housing to the “Forgotten Middle” is to understand the resident that is likely to live in the property. Focus groups have revealed that middle-market consumers are not that interested in high-end services, such as luxury amenity spaces, elegant meals, and customized services. The middle-market consumer desires value, peace of mind, and independence. This suggests a host of considerations that may differ from higher-end senior housing and care. This group does not automatically want to pay for weekly housekeeping, dining room servers, and full-time fitness instructors. This may also mean that there are fewer high-end finishes such as granite countertops and less robust food menus. This is a group of seniors who are used to parking their own cars and carrying their own bags.

Marketing and sales teams should take the approach of marketing the value proposition of senior housing. This includes safety, security, socialization, engagement, room and board, care coordination and lifestyle.

Expense Item Scrutiny and Unbundling to Offer à la Carte Services

Powerful business intelligence (BI) tools have enabled a new approach to senior living pricing. These new pricing approaches are key for middle-market operators looking to understand how frequently certain services are rendered and how delivering those services impact the time and effort of a labor force.

For example, for communities that are positioned within walking distance to shops and restaurants, or near public transportation, it may not make financial sense to continue operating a shuttle that gets little use. The cost of gas, vehicle maintenance, insurance, and the driver’s time may be more effectively used elsewhere, or even to simply reduce the monthly rent. Moreover, the common and easy use of Uber or other on-demand transportation services may make transportation less necessary.

More broadly, à la carte services in general are likely more appealing to the middle-income cohort, where they can choose the frequency or apartment cleaning, meal plans and other services.

Maintain a Universal Workforce & Utilize Volunteers

The single biggest line-item expense for senior housing operators is labor, and it is also most often the real cost that drives up monthly fees for consumers. Unfortunately, the COVID-19 pandemic only exacerbated the labor challenge and brought with it a wave of higher labor costs.

For middle-market operators in particular, labor cost management is a crucial tenet to maintaining affordability. Some operators may find success by not having workers focus on one singular task or rather use the so-called universal worker. The workforce potentially needs to be managed in such a way that allows them to shift to where the needs are greatest. Gone are the days of a dedicated front desk or reception area employee. No longer can employees be dedicated as drivers only.

The labor force for middle-market operators needs to be agile, flexible, and able to repurpose themselves to where the demands are – whether that be making rounds, answering phones, delivering meals, or leading a class. Workers need to be cross-trained to perform multiple duties.

Volunteerism is another concept for middle-market operators to embrace. Some operators have found success in reducing staffing and overhead costs by having residents volunteer as a requirement of residence. Volunteering can be a way for residents to maintain engagement. Oftentimes, residents will be able to volunteer doing something that they love – assisting in the library, running the book clubs, or tending to the gardens and landscaping. Not only does resident volunteerism reduce the operating costs, but it provides residents another avenue for both purpose and socialization. In fact, volunteer requirements in some communities can even be seen as an attraction to residents.

Utilize Partnerships for Low-Cost Support Services

Location and proximity to restaurants, cafes, shopping, theatres, and entertainment can create a range of no-cost support services for the middle-market consumer, ranging from dining to socialization. Partnerships with dining establishments can serve as a win-win situation for both restauranteurs and operators alike. If operators can guarantee a minimum, predetermined order amount, restaurant owners may be willing to offer discounted meals to residents. A partnership in this sense, at the very least, reduces the need for cafeteria labor and potentially the build-out of a full commercial kitchen. With the right dining partnerships, perhaps the need for an on-premises dining option is eliminated altogether.

When it comes to delivering home care services, middle-market operators can work closely with a home care agency which can assign a few dedicated staff persons who can share care responsibilities among many different residents. In this way, care can be delivered to residents where they reside, and it can be affordable to residents because they are only paying for the services that they need. These services do not have to be paid for or subsidized by the operator, which would thereby lower operating costs. But an operator can ensure that a resident gets care by partnering with a home care agency who specializes in best-in-class care provision.

There are also acuity limitations that need to be considered when filling a unit. Consider some of the frailer or less healthy middle-income seniors. When thinking about what a higher-acuity, middle-income senior is going to require, it becomes clear that a community cannot provide all the supports and services that are needed and continue to remain affordable. As such, clear guidelines may be needed to set limits on what type of resident can be served in the community. Residents with multiple comorbidities, ambulatory challenges, or those requiring assistance with one or more activities of daily living (ADL) may not appropriate for middle-market property needing to maintain costs at an affordable level.

New Development, Repurposed Building, or Distressed Asset Acquisition?

It may not be possible to build new construction and still meet the needed price-point for the middle-market given the costs of entitlement, land values and pandemic-related surge in materials and soft costs. Keeping acquisition or development costs and related debt low is key to achieving success in the middle-market arena. Purchasing distressed assets – senior housing properties facing bankruptcy due to low occupancy rates or alternative property types such as motels, shopping centers, and offices could potentially reduce the cost basis.

For situations where development may pencil out, a strategy of developing multiple sites and replicating a building model and design that has been shown to work may be cost-effective. Incorporating middle-market buildings into existing communities can be done by converting existing, often older, units to more affordable options. Moderately priced buildings may need to be designed or retrofitted differently and not include elaborate common spaces. Providing smaller units or having double occupancy with higher density may also lower the price-point for middle-market seniors.

Indeed, the concept of roommates sharing quarters in senior housing had been trending in the years leading up to the COVID-19 pandemic. This trend allowed for more affordable senior living through cost sharing. Unfortunately, the practicality of offering housing in such a way could now be more problematic, with the emphasis on infection control and contagion prevention.

Operators and capital providers will also want to pay close attention to market demographics when choosing to develop a middle-market property. Areas with a high concentration of seniors with annual incomes of less than $75,000 a year may generate the most demand. It is also important to remember, however, that incomes can vary widely between different market areas and as such, so too should rental rates that target middle-market seniors.

When looking to identify the most appropriate market, another factor to consider may also be Medicaid assisted living waivers that are available in select states. According to the Medicaid and CHIP Payment and Access Commission, 29 states use Medicaid Home- and Community-Based (HCBS) waivers to cover services in residential care settings. In some states, assisted living is specifically identified as being covered by Medicaid, while in others assisted living services are only covered for individuals with certain health conditions, such as Alzheimer’s Disease or related dementia.

Conclusion

Because of the increasing demand, targeting the middle-market can be a successful strategy for senior housing operators and investors. But when beginning the middle-market journey, it is vital to remember that throughout each stage, the goal is to make the project more economical to build and operate. This process begins with design and construction but must remain consistent through the planning of amenities and services as well. There are of course other aspects to consider – like how to effectively finance these developments – but this article is intended to serve as a starting point for discussion on how to move from theory to reality in the middle-market senior housing sector, by outlining the key considerations that have been identified through our ongoing conversations related to the “Forgotten Middle.”

Available Resources:

• The Forgotten Middle: Many Middle-Income Seniors Will Have Insufficient Resources for Housing and Health Care
• LeadingAge Virginia’s Middle Market Playbook
• International Council on Active Aging (ICAA) Forum: Wellness Attracts the Middle-Income Market
• Genworth Financial 2020 Cost of Care Survey
• LeadingAge White Paper – Addressing the Gap in Senior Housing Today: Creating Opportunities in the Mid-Market

Weekly virus cases among residents and staff within skilled nursing facilities (SNFs) had been somewhat steady since the vaccine rollout in December 2020. However, the fast-spreading omicron variant has changed the narrative once again and prompted worries around worsening staffing shortages. SNFs are once again faced with rising COVID-19 cases among both residents and staff on top of a reportedly bad flu season compared with 2020.

Weekly Cases Within SNFs Rising at Fastest Rate Ever. Fatalities Remain Relatively Low.

SNFs – NIC’s Skilled Nursing COVID-19 Tracker featuring CMS data as of January 2, 2022, shows that weekly COVID-19 cases within SNFs are rising steeply. Virus cases among staff jumped 475%, from about 5,800 on December 19, 2021, to over 33,400 new cases on January 2, 2022, the highest rate since CMS began reporting data in June 2020. The CDC Nursing Home COVID-19 Dashboard shows that weekly COVID-19 cases among staff set a new record for the week ending January 9, 2022 with over 57,000 new cases, double the peak of fall 2020 cases for COVID-19 (roughly 29,000 reported cases on December 13, 2020).

Over the same period, weekly cases among residents increased dramatically by 240%, from over 4,200 on December 19, 2020, to about 14,400 new cases on January 2, 2022. At the same time, the per-resident rate of new COVID-19 infections rose to 1.33% (133 in 10,000 residents tested positive on January 2) and surpassed levels seen at the height of the Delta variant in September 2021 (0.47%). Per resident rate of new COVID-19 infections is now at levels seen one year ago (1.55% of residents tested positive on January 24, 2021). Newly confirmed cases among residents continued to climb higher through the week ending January 9, 2022, with over 32,000 reported cases.

Regionally – SNFs in the Northeast region reported the highest per-resident rate of new COVID-19 infections at 1.64%, followed by the South (1.43%), the Midwest (1.39%), then the West (0.49%), according to CMS data as of January 2, 2022, compiled by NIC’s Skilled Nursing COVID-19 Tracker. Further, 24% of U.S. SNFs reported newly confirmed cases among residents for the week ending January 2, 2022, nearly three times the share of facilities recorded on December 19, 2021, of 9%.

U.S. – Similarly, weekly cases among the general population rose by 221%, from 968,000 on December 19, 2021, to over 3.1 million cases on January 2, 2022. Weekly cases among the general population continued to rise higher through the week ending January 9 to set new records with 4.9 million cases, averaging about 700,000 new cases daily and nearly triple the peak of January 2021 (U.S. COVID-19 cases topped 1.7 million for the week ending January 10, 2021), according to CDC data compiled by NIC’s Skilled Nursing COVID-19 Tracker.

Fatalities (SNFs) – While the spread of the omicron variant pushed cases off the charts, fatalities among SNF resident remain relatively low. Notably, the per-resident rate of new COVID-19 fatalities averaged about 0.03% weekly since March of 2021 (3 in 10,000 residents died from COVID-19 weekly since March 2021) when most residents and staff in SNFs were vaccinated. For the week ending January 2, 2022, fatalities as percent of residents stood at 0.04%, 50 basis points below the highest level recorded on December 20, 2021 (0.54%).

Other Countries – Interestingly, COVID-19 data from other countries where Omicron has reached its peak, such as the U.K., show that fatalities associated with the Omicron variant are five times fewer than during the Fall 2020 wave. The big disconnect between infections and fatalities in the U.K. reveal an optimistic signal for the U.S. that the Omicron variant may not be as fatal.

Prior Waves – Exhibit 1 below shows that during the fall 2020 wave prior to widespread vaccinations, infections in the country and within SNFs peaked and then fell at the same pace. In other words, it took approximately 12 weeks for recorded cases to peak and a subsequent 12 weeks to decline. Similarly, the Delta variant surge took about eight weeks to peak and eight weeks to decline. The Omicron wave in the U.S. has thus far had a duration of about five weeks, but the data do not yet reveal a trend reversal indicator. However, infections in the U.S. and within SNFs will likely follow the same trajectory as the U.K. and fall at the same pace from which they peaked. In fact, COVID-19 cases in the U.K. are falling very fast and at the same pace in which they peaked.

Since December 2020, vaccinations have made a significant contribution to mitigate the risk of severe illness and fatalities among skilled nursing residents, even during the Delta variant surge in recent months. However, it is still important to realize that skilled nursing facilities need vaccinations in combination with other interventions, including more frequent testing, physical distancing, and adherence to masking guidelines. These interventions continue to be an effective and vital tool to limit the spread of both current Omicron variant and flu cases among residents and staff until cases in the country decline and return to lower levels and until booster shots are more widely distributed.

Exhibit 1 – Weekly COVID-19 Cases (SNFs vs. U.S.) and Fatalities Among SNF Residents

Vaccinations and Boosters (SNFs vs. U.S.)

Exhibit 2 below shows that as of January 2, 2022, 87.0% of residents within SNFs have been fully vaccinated, 54% of residents received a COVID-19 vaccine booster and 1.5% have been partially vaccinated, according to CMS data compiled by NIC’s Skilled Nursing COVID-19 Tracker.

For staff, 81.6% have been fully vaccinated. Unfortunately, staff booster shots are lagging behind, with only 22.6% of staff having received a COVID-19 vaccine booster, 31 percentage points below the rate of residents (54%) who received a vaccine booster. Additionally, 3.5% of staff are partially vaccinated.

More broadly, at the national level, only 62.8% of Americans have been fully vaccinated, 37.5% of fully vaccinated Americans received a booster shot, and 11.9% are partially vaccinated, as of January 13, 2022, according to CDC data.

Exhibit 2 – Vaccination Coverage (SNFs vs. U.S.)

Staffing Shortages Could Get Much Worse and Impact the Near-term Outlook

The impact of staffing shortages on limiting admissions has become evident in recent months, with anecdotal stories of more and more facilities reportedly being concerned about having to limit admissions or temporarily close due to workforce challenges. These labor supply constraints will further challenge the sector’s demand recovery and may impact the near-term outlook for occupancy.

Exhibit 3 below depicts the share of SNFs reporting staffing shortages. For the week ending January 2, 2022, 24.5% of SNFs reported shortages of aides, 22.8% reported shortages of nursing staff, and 13.7% reported shortages of other staff, according to CMS data compiled by NIC’s Skilled Nursing COVID-19 Tracker.

Additionally, the charts below show that high infection rates among staff are driving staffing shortages up within skilled nursing facilities. For example, the largest shares of facilities reporting staffing shortages among hands-on essential workers (aides and nursing staff) are among facilities with high staff infection rates (5%+). Among this cohort, 26.9% of facilities reported shortages of aides and 25.2% reported shortages of nursing staff. Facilities with low infection rates among staff (0-1%) are reporting relatively smaller shares with 23.6% of facilities reporting shortages of aides and 22.0% reporting shortages of nursing staff. The same pattern holds for other staff (15.8% vs. 12.9%).

Drilling deeper into the data by property size, the largest shares of skilled nursing facilities reporting staffing shortages were among small facilities (less than 50 units) with 30.7% reporting shortages of aides, 27.6% reporting shortages of nursing staff, and 17.8% reporting shortages of other staff, while large facilities (100+ units) were reporting the smallest share of facilities experiencing staffing shortages among aides (21.7%), nursing staff (20.7%) and other staff (12.1%). This suggests that small facilities may be facing heightened recruiting and retention challenges than large facilities.

Exhibit 3 – Share of SNFs Reporting Staffing Shortages – By Staff Infection Rates and Property Size

Staffing shortages will likely persist in 2022 and attrition rates may get worse in the near term due to rising infections. The prolonged levels of anxiety and grief that workers have experienced during the pandemic, must be influencing workers’ decisions on staying in place at their current jobs. Nationally, the quit rate among all workers is at a record high, according to the November 2021 JOLTS survey conducted by the BLS.

Improving workers’ experience and building strong staff-resident relationships will be critically important in 2022. Further, maintaining consistency with nursing staff and aides is crucial for the well-being of both residents and staff. High tenure workers tend to have strong relationships with residents and patients, which in turn leads to excellent health and custodial care services for the patient and better job satisfaction for workers.

The staff-resident relationship within the skilled nursing sector is much stronger than the staff-patient rapport in hospitals, simply because the SNFs residents’ length of stay is much longer. This nurse-resident relationship is unparalleled and could serve as a competitive edge to attract and retain workers in skilled nursing facilities.

Staff-to-Resident Ratio vs. Occupancy (CMS)

Exhibit 4 below shows that since June 2021, occupancy (based on CMS data) has been steadily improving. Notably, occupancy increased by 1.8 percentage points, from 70.6% on June 13, 2021, to 72.4% on December 19, 2021. The staff-to-resident ratio has also increased from 1.51 on June 13 to 1.58 on November 28.

However, in the past two weeks following the surge in cases within SNFs, occupancy fell by 0.6 percentage points, from 72.4% on December 19 to 71.8% on January 2, 2022. The staff-to-resident ratio took a downward trend and is now at 1.55.

The staff-to-resident ratio and occupancy will likely continue to fall in the next few weeks due to rising cases further exacerbating staffing challenges and limiting new admissions. However, as Omicron fades away and cases move back to normal levels, these metrics should begin to balance out.

Exhibit 4 – Staff-to-Resident Ratio vs. Occupancy (CMS Data)

To gain in-depth insights and track vaccination coverage, U.S. weekly cases, and the week-over-week change rate for new resident cases and fatalities of COVID-19 within skilled nursing facilities at the state and county levels, visit NIC.org.