• Senior housing stabilized occupancy will soon mark its tenth quarter of positive growth, the longest period of uninterrupted gains since NIC and NIC MAP Vision began reporting the data in 2005. 
• Compared to pre-pandemic times, the year-over-year inventory growth has remained relatively modest, with rates for independent living hovering around 1.0% to 1.7% since October 2021 and for AL since June 2022. This subdued pace is partly due to fewer construction starts and extended durations of project deliveries in recent years.  

According to intra-quarterly NIC MAP® data released by NIC MAP Vision, the senior housing stabilized occupancy rate for the NIC MAP Primary Markets increased to 86.1% in the November 2023 reporting period, up 0.1 percentage points (pps) from October 2023 and 0.6pps from September 2023, on three-month rolling basis. From its pandemic record low of 80.2% in June 2021, senior housing stabilized occupancy increased by 5.9pps but remained 3.2pps below pre-pandemic March 2020 levels of 89.3%.  

By Majority Property Type. At 87.4%, the stabilized occupancy rate for majority independent living (IL) properties for the NIC MAP Primary Markets increased by 0.2pps from October 2023 and 0.5pps from September 2023, on a three-month rolling basis, but remained 3.7pps below March 2020 levels. For majority assisted living properties (AL), the stabilized occupancy rate for the NIC MAP Primary Markets was up 0.1pps to 84.8% from October 2023 and 0.7pps from September 2023 but still 2.5pps below March 2020 levels.   

Inventory Growth. From year-earlier levels, the inventory of IL in the NIC MAP Primary Markets increased by 1.4% or 5,023 units in the November 2023 reporting period, 0.3pps lower than that of AL (1.7%).  

Compared to pre-pandemic times, the year-over-year inventory growth has remained relatively modest, with rates for IL hovering around 1.0% to 1.7% since October 2021 and for AL since June 2022. This subdued pace is partly due to fewer construction starts and extended durations of project deliveries in recent years.  

Stabilized Occupancy Recovery Across Select Metropolitan Markets. The stabilized occupancy rate for majority independent living properties increased or remained stable in 24 of the 31 Primary Markets in the November 2023 reporting period compared with October 2023. At 88.7%, Portland independent living stabilized occupancy saw the largest increase, up 0.9pps from October 2023. Cincinnati independent living stabilized occupancy fell by 1.2pps in November 2023 to 86.6%, marking the largest decline from October 2023.  

In November 2023, Boston, Baltimore, Minneapolis, Pittsburgh, San Jose, and Washington, DC reported relatively higher IL stabilized occupancy rates – at or exceeding the 90.0% mark.  

For majority assisted living properties, the stabilized occupancy rate increased or remained stable in 26 of the 31 Primary Markets in November 2023. At 84.2%, Seattle assisted living stabilized occupancy saw the largest increase, up 1.0pps from October 2023. The AL stabilized occupancy rate in Chicago had the largest decline and fell 1.3pps from October 2023 to 82.4%.  

Portland and Tampa reported the highest AL stabilized occupancy rates among the Primary Markets at 90.6% and 90.0%, respectively.  

Keep track of the timely review of the sector’s market fundamentals and trends. The NIC Intra-Quarterly Snapshot monthly publication, available for complimentary download on our website, continues to provide a powerful and closely watched means to stay ahead of industry trends.  

The December 2023 Intra-Quarterly Snapshot report will be released on our website on Thursday, January 4, 2024, at 4:30 pm.    

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

This year’s Housing for America’s Older Adults report, produced by the Joint Center for Housing Studies of Harvard University and supported with funding from NIC, includes a special, independent analysis on the middle-market older adult. It underscores that the private and public sectors still have work to do to expand housing access and care choices for middle-income older adults as they age.

• Harvard researchers revealed that only 14% of single-person households 75+ with moderate (middle) income can afford just four hours daily of in-home care, and only 13% can afford a move into an assisted living community relying on their monthly income only. Conventional wisdom that care at home is less costly than assisted living was questioned. In certain markets where homeownership and apartment rents are among the highest in the country (e.g. San Diego), assisted living is often less costly than staying in one’s home.
• When looking at the three key accessibility features of single-floor living, no-step entries and wide hallways and doors, less than 4% of homes nationally fit the bill. The majority of older adults with middle-market incomes do not qualify for home modifications or maintenance because of program income limits. This speaks to a market opportunity for senior housing and care where settings are naturally designed for the older adult.
• Two other takeaways include declining homeownership among 50-64 year-olds and rising mortgage debt among homeowners 65 and older. These findings reinforce the need for affordable housing and care options and options whereby home equity is not a requirement to cover costs.

While this study has important implications for the cost of in-home care compared to assisted living, the reality is that the aging demographic will necessitate a multitude of housing and care alternatives. The middle-market older adult cohort is severely underserved. This report can help providers, policymakers and other stakeholders better appreciate that continuing to live at home or pursuing many congregate residential care options are not financially within the reach of many. To advance choices and access for seniors, the private and public sectors must continue to work together.

The following analysis examines occupancy and year-over-year changes in inventory, and same-store asking rent growth—by care segment—within CCRCs and non-CCRCs in the 99 combined NIC MAP Primary and Secondary Markets. The analysis also explores the distribution of units in CCRCs and non-CCRCs by year of opening as well as regional occupancy rates by profit status (not-for-profit CCRCs vs. for-profit CCRCs) and payment type (entrance fee CCRCs vs. rental CCRCs) during the third quarter of 2023.

NIC MAP^®, powered by NIC MAP Vision, collects primary data on occupancy, asking rents, demand, inventory, and construction for about 16,200 independent living, assisted living, memory care, skilled nursing, and continuing care retirement communities (CCRCs—also referred to as life plan communities) across 140 U.S. metropolitan markets. The dataset includes more than 1,164 not-for-profit and for-profit entrance fee and rental CCRCs in these 140 combined markets, including 1,086 in the 99 combined Primary and Secondary Markets.

3Q 2023 Market Fundamentals by Care Segment – CCRCs vs. non-CCRCs

The exhibit below illustrates the relative market performance of CCRCs vs. non-CCRCs by care segment in the third quarter of 2023 and includes year-over-year changes in occupancy, inventory, and asking rent growth.

Occupancy. Overall, the occupancy rate for CCRCs continued to outpace that of non-CCRCs across all care segments. The difference in the third quarter 2023 occupancy rates between CCRCs and non-CCRCs was largest for the independent living segment (6.3pps) and the assisted living segment (4.4pps), and smallest for the nursing care segment (1.4pps).

The CCRC independent living segment had the highest occupancy (90.5%) in the third quarter of 2023, followed by CCRC assisted living and memory care segments (87.5% and 86.5%, respectively).

In terms of occupancy improvements from one year ago, the largest occupancy gains for both CCRCs and non-CCRCs were seen across memory care and nursing care segments, while the smallest gains were seen across independent living segments.

Asking Rent. The monthly average asking rent (aka “monthly fees”) for CCRCs remained higher across all segments compared with non-CCRCS. Asking rent for CCRCs recorded the largest annual growth in the assisted living and memory care segments (5.3% to $6,633 and 5.8% to $8,341, respectively). Similarly, the highest year-over-year asking rent growth for non-CCRCs was seen in the assisted living and memory care segments (5.7% to $6,083 and 5.6% to $7,738, respectively). Note, these figures are for asking rates and do not consider any discounting that may be occurring.

Inventory. From year-earlier levels, nursing care inventory for both CCRCs and non-CCRCs experienced the largest declines (negative 1.7% and 1.1%, respectively). The highest year-over-year inventory growth was reported for the non-CCRC independent living segments (3.4%) and memory care segments (2.0%).

Negative inventory growth can occur when units/beds are temporarily or permanently taken offline or converted to another care segment, outweighing added inventory.

By Region – Not-for-Profit and Entrance Fee CCRCs Outperform For-Profit and Rental CCRCs Across All Regions 

Regional Occupancy Rates – By Profit Status 

Among the 1,086 CCRCs spread across the 99 Primary and Secondary Markets tracked by NIC MAP Vision, approximately 70% are operated as not-for-profit, and 30% are operated as for-profit.  

The exhibit below shows that in the third quarter of 2023, not-for-profit CCRCs had higher occupancy rates than for-profit CCRCs across all regions except in the Pacific. The largest differences in third quarter occupancy between not-for-profit CCRCs and for-profit CCRCs were in the Mid-Atlantic (5.4pps), followed by the Northeast (4.9pps), then the Southwest and West North Central (4.0pps).  

For Not-For-Profit CCRCs. The Mid-Atlantic (92.2%), Northeast (91.5%), and Pacific (89.1%) regions had the strongest occupancy rates in the third quarter of 2023. The Southwest region had the lowest occupancy at 86.1%.   

For-Profit CCRCs. The Pacific (90.9%), Mountain (86.9%), and Mid-Atlantic (86.8%) regions had the strongest occupancy rates in the third quarter of 2023. The Southwest region had the lowest occupancy at 82.1%.  

Regional Occupancy Rates – By Payment Type
Among the 1,086 CCRCs spread across the 99 Primary and Secondary Markets tracked by NIC MAP Vision, 53% are operated as entrance fee, and 47% are operated as rentals.

In the third quarter of 2023, entrance fee CCRCs had higher occupancy rates than rental CCRCs across all regions. The most significant difference between entrance fee and rental occupancy was reported for the West North Central region, where entrance fee CCRC occupancy was 5.4pps higher than rental, followed by the Mountain (4.9pps), and the Southeast (4.8pps).

Entrance Fee CCRCs. The Mid-Atlantic, Northeast, and Pacific regions had the strongest entrance fee CCRC occupancy rates – all above 90%. The lowest entrance fee CCRC occupancy was in the Southwest region at 86.0%.

Rental CCRCs. The Mid-Atlantic, Northeast, and Pacific regions had the highest occupancy rates, ranging from 87.4% to 88.7%, whereas the Southeast region had the lowest occupancy rate of 82.6%.

Looking ahead. The strong market fundamentals – characterized by strong demand and limited new supply – will likely continue through 2024. However, this must be viewed within the context of a “higher-for-longer” interest rate environment, which may present both challenges and opportunities for the sector. Operators who can effectively assess and embrace these changing trends, adapt with agility, and drive innovation will undoubtedly experience remarkable growth and success in the future.

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 Vision data, and about accessing the data featured in this article, schedule a meeting with a product expert today.  

This article originally appeared in Ziegler’s Senior Living Finance Z-News. 

Well, what if you didn’t have to choose? For 40 years and counting, senior housing owners and operators have prepared for and responded to the housing needs of aging adults. This market, which includes assisted living and independent living as well as memory care and nursing homes, has seen immense growth. But two problems remain: affordability and integration with comprehensive health services. These issues will persist for future generations if we don’t start solving them today—to allow our grandparents, parents, and eventually ourselves to live in the settings we choose with the appropriate set of health care services we need to age with dignity. 

As of 2021, there were nearly 56 million seniors in the United States. By 2034, this population is expected to outnumber the 18-and-under population for the first time in U.S. history, indicating many millions will need to decide where to live as they age. Foreshadowing my own personal decision, I will have to consider which setting supports my holistic health needs including my physical, mental, and financial health, as well as my social support needs. 

Housing and health care shouldn’t be an either/or — it needs to be both. 

For the past few years, NORC’s Health Care Strategy team (HCS) has produced ground-breaking research supported by The National Investment Center for Seniors Housing & Care (NIC) and The SCAN Foundation. We are currently engaged in a multi-year research portfolio with NIC to understand the individual health events precipitating a move into congregate living. Our research will also highlight the potential value of senior housing as it relates to the longevity and health of older adults. What we’ve found thus far is that in the year prior to moving into a senior housing property, people experience an escalation of adverse events and conditions that increase their level of medical complexity, often referred to as “frailty,” as defined by the Harvard claims-based frailty index. Hospitalizations, trips to the ER, accelerated cognitive decline, exacerbations of chronic conditions like diabetes or kidney diseases, combined with the loss of a spouse or partner increase a person’s likelihood of experiencing further deterioration in health and independence. 

But we found improvement—even a potential reversal of sorts. In 2019, about 97,000 people moved into senior housing properties tracked in the NIC MAP Vision database. In the year after move-in, frailty levels of residents improved—there was a 10 percent decline in frailty relative to peak levels. While we might be inclined to attribute that health improvement to their move into a senior housing property, we know that correlation is not causation. Today, HCS is digging into the reasons for this marked improvement in a comprehensive health measure like frailty. Over the next few months and into 2024, HCS will produce research that analyzes longevity and health outcomes for residents of senior housing. We aim to better understand the correlation between senior housing and health outcomes. 

This research portfolio will provide invaluable insights for myriad audiences and stakeholders including our loved ones, and ourselves, who will soon make decisions about where to spend our golden years. Likewise, other stakeholders, like payers and health plans, and increasingly providers, will need a plethora of solutions to manage risk. Senior housing needs a seat at the health care table, aligned incentives, and payer/provider partnerships.

Housing and health care shouldn’t be an either/or—it needs to be both. A comprehensive solution allowing comfort, care, and dignity to seniors needs to be readily available and affordable so that more people aren’t forced to choose if they’d rather have housing or health care.

—

This commentary originally appeared in NORC Views, a health care strategy newsletter published by NORC at the University of Chicago.

Looking for ways to reduce time loss, and increase profitability and efficiency? It all starts with an effective HR strategy. NIC Senior Principal Ryan Brooks recently talked with Melissa Bollinger, Senior Enterprise Business Consultant at Paychex about the tangible benefits organizations can realize through strategic HR partnerships with Professional Employer Organizations (PEO). Here is a recap of their conversation with key insights on fostering growth, improving retention plans, and keeping employees happy and healthy in the senior care industry. 

Brooks: A lot of people see the name Paychex and might think your offerings are limited to payroll, but there’s a lot more to the organization than just payroll processing. So, to kick us off, can you tell me a little bit more about Paychex and the resources that are offered?  

Bollinger: Paychex offers a wide variety of solutions and services for all sizes of organizations. Whether your business is looking for basic payroll services, or your organization is growing and has more comprehensive HR needs like employee benefits or PEO, Paychex has a suite of services for you. I serve as a Strategic Business Consultant in our PEO division.  

Brooks: You mentioned PEO – Professional Employer Organization – as a resource that Paychex offers. Seeing as that might be a new term for our audience, could you tell me what a PEO is and what they do to support owners and operators in this space? 

Bollinger: Absolutely. A Professional Employer Organization allows business owners to engage in a co-employment relationship, to mitigate the liability and risk of employment to the experts in Human Resources (that’s us). 

Brooks: What separates Paychex’s Senior Living PEO from other PEOs? 

Bollinger: Experience. Over the last 10 years, Paychex has made a number of strategic acquisitions in the PEO space. Those acquisitions came with talent that is exclusively focused on respective industry verticals, such as senior living. When a business decides to join the Paychex Senior Living PEO, they can be assured that all of their designated resources have senior living experience. Our specialists are experienced with senior living payrolls, shift differentials, and comprehensively understand applicable laws and policies impacting senior living staff. Our human resource business partners are experienced with senior living operations and procedures. The suite of designated services is tailored to the senior living experience.  

Brooks: What are some of the common problems that organizations approach you with? 

Bollinger: I call them “the big three.” Staffing Issues. Growing Pains. Administrative Burdens. As a former operator and early adopter of PEO in the post-acute care space, these three issues are the hat trick of time loss, profitability, and efficiency.   

Brooks: What kind of savings can organizations realize when partnering with a PEO? 

Bollinger: Every organization is different, but one of the most valuable functions of a PEO is the ability to pool resources and stabilize long-term costs such as Worker’s Compensation, EPLI, and Major Medical. Organizations often save both money and time with some of our included services such as end-of-year WOTC, or ERTC programs, not to mention the endless discounts and special programs offered to all employees of the PEO.  

Brooks: The senior housing and care sector is comprised of both property companies (PropCos), which own the real estate, and operating companies (OpCos), which manage the operations that take place on-site. How does that divide impact the attention that human resources receives? 

Bollinger: Great question! Operating companies often have very lean management strategies, and property companies are very rarely involved in the day-to-day operations. As you can imagine, HR has a ton of administrative burdens associated with it such as onboarding, unemployment claims, benefits, and taxes. Those duties and responsibilities often fall on an executive director or business office manager in each community. Neither of those folks are likely to have extensive formal training or experience in human resources or employment. It raises the question: Who’s managing the management? Outsourcing HR to a PEO allows the rapid deployment of resources and trained professionals to not only develop systems and policies and procedures that assist, but also allow for extra hands on deck when there is a crisis or employment issue.  

Brooks: Staffing has always been a hot topic for the senior housing and care industry, but even more so in recent years given how the COVID-19 pandemic exacerbated labor shortages. In what ways does Paychex help address these challenges? Employee recruitment? Retention? 

Bollinger: I don’t know of an organization that hasn’t been permanently impacted by the changes we have seen inside of the workforce since COVID. The most proactive and beneficial thing any community can do is to develop and deploy a recruiting plan. Our Senior Living HR Business Professionals at Paychex, work side-by-side with our clients to help develop those plans, make market adjustments in a timely manner, and deploy recruiting techniques to help our clients make better hires. According to the National Association of Professional Employer Organizations, employers working with a PEO see a 20% average decrease in turnover and an immediate increase in existing retention rates.  

Brooks: How has the performance management changed in a post-pandemic operating environment? 

Bollinger: I think organizations have begun to value the contributions of their employees differently. We are seeing a lot of proactive policy changes, increased flexibility, permanent remote work environments, and the use of software and automated processes to help manage overall performance.  

Brooks: What about when it comes time to have a difficult conversation with an employee, whether that be for a job performance issue, employee disengagement, or time and attendance? These conversations can often make people uncomfortable, but not addressing these issues can lead to greater problems. What are the most important considerations when planning a difficult conversation? 

Bollinger: The biggest mistake any organization can make is to avoid difficult or uncomfortable conversations. This is my favorite question because it allows me to talk about one of my favorite books. A long time ago I read the book Fierce Conversations by Susan Scott. In it, Susan illustrates a concept of C=R. Plainly, The Conversation = The Relationship. Relationships are at the heart of everything, especially in senior living. Communities have relationships with their markets. Staff have relationships with residents. Leadership has a relationship with the front line. Property companies and management companies have relationships, and all of those relationships are made up of conversations. Not unlike recruiting, you need a plan.   

Brooks: What is the role of HR in these conversations? How can the approach be structured in a way that these conversations will be productive and achieve the desired goals? 

Bollinger: Evaluating your human resources strategy is the first step to deciding which conversations might be missing in your organization. Having access to a designated and experienced human resource business professional allows you to plan these conversations, examine the intent behind them, and focus on language and messaging in advance. Often, simply discussing and deciding upon a desired outcome in advance, can steer the conversation in a mutually beneficial direction.  

Brooks: How do you gauge the long-term success/effectiveness of difficult conversations when they occur? 

Bollinger: You can judge your conversations by your relationships, and vice versa. Are your relationships stronger and more meaningful because of the conversation? Has there been a change in behavior after the conversation? Are all parties more mindful of the desired goal? A successful conversation should lead you to an enriched relationship. An effective conversation should result in meaningful change.  

Brooks: Is there anything else you’d like our audience to know? 

Bollinger: There is always an extraordinary amount of room for growth and improvement. Taking a look at human resource strategy, the relationships your employees have, and the additional steps we can take to keep employees happy and healthy will be the differentiator in every single market in 2024.