The NIC MAP^® Data Service, powered by NIC MAP Vision, an affiliate of NIC, tracks occupancy, asking rents, demand, inventory, and construction data for independent living, assisted living, memory care, skilled nursing, and continuing care retirement communities (CCRCs—also referred to as life plan communities) for more than 15,000 properties across 140 metropolitan areas. NIC MAP data currently tracks 1,208 not-for-profit and for-profit entrance fee and rental CCRCs in these 140 combined markets (1,134 in the 99 combined Primary and Secondary Markets).

The following analysis examines current conditions and year-over-year changes in inventory, occupancy, and same-store asking rent growth—by care segments within CCRCs (CCRC segments) compared to non-CCRC segments in freestanding or combined communities to focus a lens on the relative performance of care segments within CCRCs.

Current CCRC Occupancy by Payment Type and Profit Status

In the first quarter of 2021, CCRC occupancy fell 1.4 percentage points from the fourth quarter to 84.3%, another new low since NIC MAP began reporting in 2006. The cumulative drop in CCRC occupancy was 7.2 percentage points year over year—3.8 percentage points higher than non-CCRCs.

Non-CCRC occupancy averaged 74.9% in 1Q 2021—a very wide 9.4 percentage points lower than CCRC occupancy (84.3%). Entrance fee CCRC occupancy (86.8%) was 6.7 percentage points higher than rental CCRCs (80.1%), and not-for-profit CCRC occupancy (86.1%) was 6.8 percentage points higher than for-profit CCRCs (79.3%).

CCRCs vs. Non-CCRCs: Care Segment Detail

The table below compares each of the care segments—independent living, assisted living, memory care, and nursing care—in the Primary and Secondary Markets. The table shows the 1Q 2021 total open units, occupancy and average monthly asking rent—and year-over-year changes for CCRCs and non-CCRCs.

The CCRC independent living care segment (which represents 55.6% of CCRC units) garnered the highest occupancy in the first quarter of 2021 (88.6%), as well as the least year-over-year drop in occupancy falling 4.3 percentage points. The current nursing care segment occupancy rate in non-CCRCs, which represents 51.5% of non-CCRC units, was much lower at 73.6%, and fell 12.7 percentage points year-over-year.

Higher occupancy at CCRCs

The CCRC independent living care segment had the highest 1Q 2021 occupancy (88.6%), followed by CCRC assisted living and memory care (82.5%, respectively), and CCRC nursing care (76.5%). Among non-CCRCs, in the same order, the independent living care segment had the highest 1Q 2021 occupancy (79.0%), followed non-CCRC assisted living (75.3%), memory care (74.3%) and nursing care (73.6%).

The difference in 1Q 2021 occupancy between CCRCs and non-CCRCs was the highest for the independent living segment (9.6 percentage points), followed by the memory care segment (8.2 percentage points), the assisted living care segment (7.2 percentage points), and the nursing care segment (2.9 percentage points).

Occupancy declined from year-earlier levels for each of the care segments. However, CCRCs had lesser declines in occupancy than non-CCRCs. Among CCRCs, independent living care segment occupancy declined the least (-4.3 percentage points), followed by memory care (-7.5 percentage points), assisted living (-8.7 percentage points), and the nursing care segment (-12.6 percentage points). Among non-CCRCs, independent living and memory care segment occupancy declined the least (-8.3 and -8.7 percentage points, respectively), followed by assisted living (-9.9 percentage points), and the nursing care segment (-12.7 percentage points).

Higher annual, same store asking rent growth at CCRCs

Among CCRCs, the highest year-over-year asking rent growth was 1.6% in the independent living and nursing care segments; among non-CCRCs it was highest in the nursing care segment (1.5%). The lowest year-over-year asking rent growth was noted for CCRCs in the assisted living care segment (1.3%); in non-CCRCs it was noted for the independent living care segment (-0.6%). Note, these figures are for asking rates and do not consider any discounting that may be occurring.

Significantly weaker inventory growth at CCRCs

Non-CCRCs had higher rates of inventory growth (year-over-year change in inventory) by segment than CCRCs. The highest rates of inventory growth were reported for non-CCRCs in the memory care and independent living care segments (4.6% and 3.6%); the lowest were reported for both CCRCs and non-CCRCs in the nursing care segment (-0.6% and -0.3%, respectively). Negative inventory growth can occur when units/beds that are temporarily or permanently taken offline, or converted to another care segment, outweigh added inventory.

Occupancy rates vary by region and payment type

In the first quarter of 2021, the Mid-Atlantic, Pacific and Northeast regions have the strongest CCRC and non-CCRC occupancy rates ranging from 86.4% to 86.1% (CCRC) and 77.7% to 75.1% (non-CCRC). The weakest CCRC and non-CCRC occupancy is in the Southwest region at 78.6% and 68.3%, respectively. That said, the greatest difference in CCRC and non-CCRC occupancy was in the Mid-Atlantic region—an 11.3 percentage point difference.

Considering payment type, entrance fee occupancy was highest in the Pacific, Mid-Atlantic, East North Central, and Northeast regions (88.6% to 88.0%), whereas rental occupancy was the highest in the Pacific region (82.2%). The largest difference between entrance fee and rental occupancy was reported for the Mid-Atlantic and East North Central regions (8.2 and 8.1 percentage points, respectively).

Looking specifically at the independent living care segment, the highest CCRC occupancy was in the Mid-Atlantic, Northeast and Pacific regions (90.7% to 90.2%), but the largest difference between CCRCs and non-CCRCs was in the Mid-Atlantic region (14.0 percentage points).

Considering payment type, entrance fee occupancy was highest in the Pacific region (92.1%), whereas rental occupancy was the highest in the Northeast region (87.9%). The largest difference between entrance fee and rental occupancy was reported for the Pacific region (6.1 percentage points).

Look for future blog posts from NIC to delve deep into the performance of CCRCs.

Interested in learning more?

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.

*This blog was originally published in Ziegler Investment Banking, Senior Living Finance Z-News.

Seniors housing investors are re-examining their portfolios—as well as their strategies for new transactions in 2021. Attendees of the latest NIC Leadership Huddle, titled, “Seniors Housing Equity Players Talk Investment Strategy” heard how three equity capital providers are viewing seniors housing as an investment opportunity today. The discussion included real-life examples of recent acquisitions and dispositions, as well as go-forward investment strategies in a post-pandemic world.

Despite seeing lower occupancies through the pandemic, the investors are seeing some light at the end of the tunnel. “It’s been very refreshing to see some very promising trends in our portfolio,” said Dustin Warner, Director, Harrison Street. He continued, “With the onset of the vaccine rollout, we’ve seen COVID cases down to just a handful of residents in late first quarter of this year.” Leads have increased, too. “They’re at the highest level since the onset of the pandemic,” Warner said. He also is seeing higher move ins, nearly at pre-COVID first quarter of 2020 levels.

The discussion facilitator, Jerry Taylor, Vice President of Operations, National Health Investors, Inc., pointed out that there is a need for strong operators, particularly in a post-pandemic world. He asked whether there was anything to look for when looking for a quality operator partner. Blake Peeper, Partner/Co-Chief Investment Officer, Bridge Seniors Housing Fund Manager LLC, described how the pandemic drove customer behaviors to change. Prospects were shopping online more, forcing sales departments to adjust and adapt at the corporate level. He looks for larger operators who have the resources and infrastructure it takes to quickly and effectively adapt to new customer behaviors – and to innovate to meet new demands.

Asked whether the pandemic will soon be in the rearview mirror, both panelists expressed cautious optimism. Warner is seeing positive movement in the market – but also pointed out that he feels his operators are now better prepared to handle whatever might come next. He also pointed to a new supply and demand picture. With historically low new construction starts, which he expects to stay low at least in the short term, “You’ve got somewhat of a runway here to work with. You combine that with what we perceive as a pent-up demand, a year of residents that want a place to live, and its kind of a nice, optimistic landscape for the future, in my opinion.”

Peeper shared the optimism. “We’ve observed that the value proposition of seniors housing has really been validated,” he said. “The sharp recovery that we saw in March is indicative of that…it’s a really interesting time in the cycle, whereby we’ve had a real hit to occupancy, yet the medium and long-term outlook from a fundamental perspective is really quite strong. We’re generally bullish.”

On dispositions, and when the market will return to normal, with transaction volumes similar to 2018, the panelists both agreed that it is still too early to tell. Peeper said, “When we get to a point whereby the gap between where we are today and stabilized value shrinks some and shrinks to a point where those types of deals are financeable in a reasonable manner, I think then you really open the market back up.” Peeper said he views occupancy outlook as a key driver, but owners will eventually become sellers, even if they do so a little earlier than they’d like.

Taylor raised the fact there is plenty of capital, with somewhere from $9 billion to $12 billion in liquid assets, or ‘dry powder’ waiting to invest in the sector. For Warner, the acquisition pipeline, which had dried up by late March of 2020, began to see new life as debt markets opened up. “We ended the year with over $1.6 billion in new senior housing investments across development and acquisitions,” he said. Having strong relationships, established long before COVID hit, was a major factor in getting deals done.

New opportunities are also coming from old relationships. “We’ve got 22 different operators across the country,” said Warner. “They’re very intimately involved in their submarkets.” Well established relationships with large institutional players have also yielded some new opportunities for Warner.

Taylor asked whether the panelists were seeing value-add opportunities, given the stresses of the pandemic. “Not every value-add deal is distressed, but, of those that are, there are really two different types of distress that we’ve seen,” Warner said. He described properties that were “truly” distressed due to fundamental issues, such as functional obsolescence, or they might be located in over-saturated markets, or have poorly suited debt structures. Many of these, according to Warner, were, “likely on their way to being distressed prior to COVID.” The other type of distress is less severe and can occur even in quality properties in good markets. He explained that these owners, many of whom are relatively new to the sector, now wish to exit. “They were very slowly leasing up pre-COVID, COVID set them back quite a bit…they just want to get out of their basis.” Those are opportunities worth pursuing.

This and other past NIC Leadership Huddles can be viewed here.

Managed Medicare Patient Day Mix Continues Increase

NIC MAP^® Data Service, powered by NIC MAP Vision, an affiliate of NIC, released its latest Skilled Nursing Monthly Report on May 6, 2021, which includes key monthly data points from January 2012 through February 2021.

Here are some key takeaways from the report.

The occupancy rate for skilled nursing increased by 42 basis points in February 2021, edging up to 71.2% from its all-time low of 70.7% in January. This brought the occupancy rate back to its December 2020 level. Despite the February improvement, occupancy remains 13.7 percentage points below its year-earlier level. There have been only three monthly-increases since the pandemic started and the February increase was the largest among them. The other two increases were short-lived in September and October of 2020 due to the Fall/Winter surge of COVID-19 cases across the country. There is cautious optimism that occupancy will continue to inch higher and stabilize in 2021 but questions remain of how consistent and how fast these month-to-month improvements will be.

Medicare patient day mix decreased in February, ending the month at 13.4%. This represents a 142-basis point decrease from January and a 175-basis point drop from December 2020. On the other hand, managed Medicare patient mix increased from January and ended February at 7.9%, up 107 basis points since December and up 255 basis points from the 2020 low set in May last year. It is possible that managed Medicare patient days are starting to increase after significant declines due to elective surgery delays and home health competition during the pandemic.

Managed Medicare revenue mix increased by 48 basis points from January to 11.1% in February. The revenue mix trends provide further evidence that managed Medicare admissions may be increasing as they are up 275 basis points from the 2020 low set in May last year. In addition and in a similar trend to patient day mix, Medicare revenue mix decreased 171 basis points from January to end February at 23.4%. This suggests there was less need to convert Medicaid patients to Medicare as resident cases of COVID-19 declined in February.

Medicaid patient day mix increased in February after hitting a multi-year low of 64.8% in January. It increased 110 basis points from January but is still down 119 basis points from February 2020. In addition, Medicaid revenue mix increased from January, ending February at 48.6%. However, it has decreased 6.4 percentage points from February 2020 suggesting Medicaid patient days have dramatically decreased from one year ago, due to lower overall admissions and some Medicaid patients who may have converted to Medicare due to the waiver of the 3-Day Rule during this crisis period.

To get more trends from the latest data you can download the Skilled Nursing Monthly Report here. 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 in order to provide data at localized levels in the future. Operators who are interested in participating can complete a participation form here. All data is maintained with strict confidentiality.

About NIC MAP Vision:

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

“Are we beginning to see signs of an upward inflection point in occupancy? The market fundamentals data continue trending positively as seen in the most recent ESI results. Between 40% and 57% of organizations reported upward changes in occupancy depending on care segment. This is especially the case for nursing care. The survey shows a clear trend of 50% or more organizations with nursing care beds reporting occupancy rate increases for six consecutive waves of survey data (collected between February 8 and May 2), without notable increases in the pace of move-outs.  Moreover, data compiled in NIC’s Skilled Nursing COVID-19 Tracker clearly shows that COVID-19 cases in skilled nursing communities have fallen dramatically and at a faster pace than the broader population since the launch dates of the Pfizer and Moderna vaccines in long-term care settings in late December. These results are further substantiated by an increase, albeit modest, in February skilled nursing occupancy statistics as reported in NIC’s May Skilled Nursing Data Report.”

–Lana Peck, Senior Principal, NIC

NIC’s Executive Survey of operators in seniors housing and skilled nursing is designed to deliver transparency into market fundamentals in the seniors housing and care space as market conditions continue to change. This Wave 27 survey includes responses collected April 19 to May 2, 2021 from owners and executives of 77 small, medium, and large seniors housing and skilled nursing operators from across the nation, representing hundreds of buildings and thousands of units across respondents’ portfolios of properties.

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

Wave 27 Summary of Insights and Findings

• As in the Wave 23 survey (conducted in late February) respondents to the Wave 27 survey were asked to list one of the things that their organization plans to keep doing, stop doing, bring back and further develop. Necessity bred innovation during the worst days of the pandemic. Now, due to widespread penetration of the COVID-19 vaccine among seniors housing and care residents, many organizations are restoring the value proposition of living in seniors housing. With visitation and social distancing restrictions cautiously abating, parties and social gatherings, communal dining, group activities and events, off campus outings—and safely hosting visitors in-house—are starting anew.
• In the Wave 27 survey, organizations remain dedicated to continuing ongoing infection mitigation, health screenings of residents and visitors, and many respondents say their organizations are committed to further developing their use of technology including platforms for facilitating resident/family communications, remote work and employee training, comprehensive company-wide reporting, digital marketing including search engine optimization (SEO) lead generation, and telehealth/telemedicine. Others will continue developing niche services and healthcare partnerships. Some plan to cut back on COVID-19-related staff wages, and the cohorting of staff, meal delivery/take-out only dining, but continue to limit especially large or crowded group gatherings. Buffet-style dining may well be a relic of the pre-pandemic era.

• In the current and prior waves of the survey, respondents were asked if their organizations had seen an increase in resident lead volume since the beginning of the year—and if they had—is lead volume above pre-pandemic levels? As shown in the chart below, roughly nine out of ten organizations reported an increase in lead volume (89%); one-quarter reported lead volume currently above pre-pandemic levels (26%).
  

• Between two-thirds and one-half of respondents note that the pace of move-ins accelerated in the past 30-days. The shares of organizations reporting acceleration in the pace of move-ins remained at or above 50% with the highest share noted for the assisted living care segment (64%) and the lowest for the nursing care segment (50%). The independent living care segment saw the largest share of organizations reporting acceleration in move-ins (57%) since the beginning of the survey in March 2020.

• The Wave 27 survey data continue to show a trend in the shares of organizations reporting higher occupancy for the independent living, assisted living and memory care segments, and each of the care segments (except nursing care) set new peaks in the time series. Between 40% and 57% of organizations reported upward changes in occupancy depending on care segment.
• Given that the survey shows a clear trend of 50% or more organizations with nursing care beds have reported occupancy rate increases for six consecutive waves of survey data (collected between February 8 and May 2), without notable increases in the pace of move outs—and further supported by an increase in occupancy reported in NIC’s May Skilled Nursing Data Report—nursing care occupancy may have reached an inflection point.

• The degrees of occupancy change vary. As referenced and shown in the chart above, occupancy increases in organizations with memory care residences peaked in the Wave 27 survey. As shown in the chart below, about one-quarter with memory care units reported no change in occupancy (27%), but about one-third reported increases of five percentage points or more (30%).

• In the face of historically low occupancy rates according to NIC MAP® data, powered by NIC MAP Vision, in the first quarter of 2021 (all-time low of 78.8% seniors housing occupancy rate), on average, about 50% of respondents to the survey since July 20 indicated their organization was offering rent concessions. As of Wave 27, two thirds (65%) of organizations with three or more properties in their portfolios are offering rent concessions to more than half (54%) or all of their properties (11%).
• Three-quarters of respondent organizations are offering discounts on rent (78%), like the Wave 26 survey, but one-half (53%) are offering free rent for a specified time (down from 65% in Wave 26). Non-monetary benefits and “something else” include community fee discounts, waiving second person fees, moving allowances, and locking in rent freezes.

• Fifteen months into the pandemic, the share of organizations that report staffing shortages has grown to nine out of ten (90%)—up from two out of three (68%) in the Wave 25 survey conducted in late-March to early-April. One-third (34%) of organizations with more than three properties in their portfolios are experiencing staffing shortages in all their properties—up from one-quarter (24%) in the prior survey.

• To attract community staff, 83% of respondent organizations are increasing wages, 79% are offering referral bonuses, 65% are offering hiring/sign-on bonuses and/or flexible schedules. Roughly 35% are doing student outreach, 33% enhancing benefits, and 20% are offering apprenticeship programs.

• According to Wave 27 seniors housing and care survey respondents, on average, nine out of ten residents (92%) of their respective properties—including all care segments across their portfolios—have been fully vaccinated for COVID-19. Having residents vaccinated has made a significant impact in opening communities. Staff uptake of the vaccine, however, leveled off between Waves 25 and 27 (63% to 66%, respectively).

• In the past five waves of the survey (Waves 23 through 27), there has been consistency in the share of organizations that definitely/probably will mandate the vaccine for staff, ranging from 20% in Wave 24 to 27% in Wave 25. Currently, one-quarter of respondent organizations indicate they will likely mandate a vaccine policy for employment.

Wave 27 Survey Demographics

• Responses were collected between April 19 and May 2, 2021, from owners and executives of 77 seniors housing and skilled nursing operators from across the nation. Owner/operators with 1 to 10 properties comprise 57% of the sample. Operators with 11 to 25, and 26 properties or more, make up 43% of the sample (22% and 21%, respectively).
• Roughly one-half of respondents are exclusively for-profit providers (55%), 33% are nonprofit providers, and 12% operate both for-profit and nonprofit seniors housing and care organizations.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 71% of the organizations operate seniors housing properties (IL, AL, MC), 24% operate nursing care properties, and 35% operate CCRCs (aka Life Plan Communities).

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

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

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

On Monday, the U.S. Department of Treasury announced the launch of the Coronavirus State and Local Fiscal Recovery Funds, established by the passing of the American Rescue Plan in March. The recovery funds provide $350 billion in emergency funding for eligible state and local governments and provide substantial flexibility for each jurisdiction to meet local needs—including support for households, small businesses, impacted industries, essential workers, and the communities hardest-hit by the crisis.

This Treasury Department Fact Sheet outlines generalized categories of eligible uses for the funds, including support for public health expenditures, addressing negative economic impacts caused by the public health emergency, and providing premium pay for essential workers. It is also stated that “recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities.”

Suggested uses to support the public health response include vaccination programs, medical expenses, testing, contact tracing, PPE purchases, support for vulnerable populations to access medical or public health services, and ventilation improvements in key settings like healthcare facilities. In a March 2021 letter to the Department of Treasury, Argentum emphasized that “over the past year, senior living providers in the United States have incurred more than $15 million in COVID-related expenses for procuring PPE, infection control supplies, hero pay, and additional staff costs,” while also noting that “more than 85% of these communities in the United States do not receive state or federal funding…This means these communities have not had the same access to federal relief as other providers.”

Argentum President and CEO James Balda said the Association and its state partners have been meeting with governors and state legislators to request prioritized funding. “We are extremely pleased that additional resources may soon be on their way to help these communities – many of whom are still struggling from the steep costs and lost revenue due to COVID-19,” Balda said.

With respect to providing premium pay for essential workers, the announcement highlights that “Since the start of the public health emergency, essential workers have put their physical well-being at risk to meet the daily needs of their communities and to provide care for others. Many of these essential workers have not received compensation for the heightened risks they have faced and continue to face.” Although it is made clear that there is a broad range of essential workers, i.e., anyone who must be physically present at their job, skilled nursing staff are the first group to be listed specifically.

Funding is expected to be distributed beginning this month, and states and entities will have until the end of 2024 to spend the funds.