Introduction. An inquiry the NIC Analytics team frequently receives is “How much senior housing inventory exists in the United States?” To answer this question, the NIC Analytics team has historically generated estimates of the United States’ national supply of senior housing and nursing care and published those estimates in the biennial editions of the NIC Investment Guide. Now, however, industry stakeholders no longer need to wait for new releases of the NIC Investment Guide for national supply estimates because NIC MAP Vision, an affiliate of NIC, offers subscribers quarterly supply estimates for the entire U.S. (with more detailed data dependent upon subscription level).

This blog explores national supply estimates published by NIC in 2020 and discusses how much senior housing and nursing care exists in the United States using data from NIC MAP Vision as of first quarter 2022.

NIC MAP Vision tracks inventory for the entire nation. NIC MAP Vision provides detailed documentation regarding how its supply estimates are calculated and tracked, including the methodology that was used to generate the supply estimates in all 50 states beyond the areas that are traditionally tracked by NIC MAP^®. NIC MAP Vision’s supply estimates beyond the NIC MAP 140 Markets are derived from Melissa Data. Melissa Data aggregates information from county planning departments across the United States, which NIC MAP Vision uses to derive supply estimates for independent living (IL), assisted living (AL), and memory care (MC).

As explained in the VisionLTC portal, because the 50 states and Washington D.C. all have different laws and regulations, there are different methods and standards for tracking and reporting data on senior housing properties. Nursing care properties, however, are federally regulated and therefore have more consistency in their data across the U.S.

NIC MAP Vision subscribers that have a NIC MAP subscription will have the NIC MAP data as the pre-set default in the VisionLTC portal for the areas tracked by NIC MAP. Users can choose to input their own supply data to be included in the portal if, for instance, they are tracking additional units that would not qualify for tracking by NIC MAP, such as subsidized senior housing units.

All NIC MAP Vision supply data are updated on a quarterly basis (both inside and outside the 140 markets tracked by NIC MAP).One important note is that the VisionLTC supply data outside of the 140 NIC MAP metropolitan markets are estimated by bed count, whereas the supply data for the IL, AL, and MC segments in the NIC MAP 140 Markets are tracked by unit count. Units of IL, AL, and MC tracked by NIC MAP may have a single bed or have multiple beds and can be either private (such as a married couple in one unit) or semi-private (two unrelated people as roommates). Readers that are familiar with other real estate product types may be familiar with the term “doors,” which are comparable to units.

How NIC estimated supply in 2020. For publication of the Sixth Edition of the NIC Investment Guide, NIC generated national supply estimates using the fourth quarter 2019 vintage of NIC MAP data and data about households age 75+ from the U.S. Census Bureau. Next, we calculated what percent of households age 75+ were in the NIC MAP 99 Primary and Secondary Markets, which was 61.3%. To make the estimation easy to understand and easy to replicate, we assumed that the proportion of U.S. senior housing in the NIC MAP 99 Primary and Secondary Markets was the same as the share of U.S. households age 75+ in the NIC MAP 99 Primary and Secondary Markets. From this assumption, we scaled the base units (open inventory plus units under construction) and grew it to represent 100% of the nation rather than 61.3% of the nation. Finally, we rounded our projections to 100s of units, in line with our other publication methods.

Importantly, we also included units under construction (3.4% of the total base for the projection) to ensure that the estimates included units that had broken ground in order to not underestimate the national size of the market.

Investment grade properties are those with a minimum of 25 units/beds (except freestanding memory care) that charge market rates and/or accept Medicaid for the housing and services offered. NIC MAP also tracks freestanding memory care that has a minimum of 16 units because the freestanding memory care model has special considerations for residents and can sometimes have smaller unit counts than other product types.

How did we do and how much supply is estimated now? With the exception of the independent living segment, the national estimates that NIC generated for the Sixth Edition of the NIC Investment Guide in 2020 were very similar to the national supply estimates from NIC MAP Vision.

Nursing care comprises just under half (45.7%) of all of senior housing and care inventory in the United States as of first quarter 2022 and has the largest total number of beds of any of the four segments at an estimated 1,368,300 beds. Nursing care is tracked and estimated by bed both inside and outside of the NIC MAP 140 Markets, so our estimate of nursing care in 2020 was a national estimate of beds. Applying the growth rate from 4Q19 to 1Q22 (-1.7%) to the estimate of nursing care from 2020 (1,461,000 beds), the adjusted estimation would be equivalent to an estimate of 1,435,446 beds in first quarter 2022. By comparison, NIC MAP Vision estimates that there are 1,368,300 nursing care beds in the US in 1Q22. This difference of 67,146 beds is less than 5% of the estimated supply of nursing care beds in the U.S. from NIC MAP Vision.

The number of total operational nursing care beds has been declining over the years, so the decrease in stock is unsurprising. Recent analysis from NIC Analytics has discussed some of these declines in stock.

The second largest of the four care segments (IL, AL, MC, NC) is assisted living, which accounts for 24.8% of all senior housing and care stock. We estimated that there were 717,100 units of assisted living in the U.S. in 2020. Increasing this estimate by 3.6% (the inventory growth for AL units in the NIC MAP 140 Markets), this estimate would have grown to be 743,272 units in first quarter 2022 compared to NIC MAP Vision’s estimate of 743,500 beds. This is a difference of a mere 227, an astonishingly small number. However, there is still the issue of the difference between beds and units for the area outside of the NIC MAP 140 markets (which is discussed in further detail below).

Memory care is a newer concept in comparison to independent living and assisted living and is the youngest of the care segments as a product type. It is also more specialized and is a highly needs-driven product. As a result of these factors, there is less memory care supply than there is assisted living and memory care comprises a mere 8.5% of total senior housing and care supply in the United States as of first quarter 2022. In 2020 we estimated that there were 247,200 units of memory care. Growing this estimate by 8.7% (the inventory growth rate for MC units in the 140 Markets from 4Q19 to 1Q22), this is equivalent to 268,729 units in first quarter 2022. The NIC MAP Vision estimate of memory care in the U.S. is lower than that estimate at 255,100 beds, a difference of 13,600. This is equivalent to 5.3% of the NIC MAP Vision estimate of MC beds if we treat each unit as one bed, but this percent is higher if we make a different assumption about the relationship between beds and units.

Independent living is a larger share of the total inventory than memory care but smaller than assisted living. Independent living comprises 20.9% of the total senior housing and care inventory in the United States as of first quarter 2022. Unfortunately, our independent living estimate was not as close as our other estimates. We estimated that there were 722,600 units of independent living in 2020. After applying the growth rate for IL units from 4Q19 to 1Q22 (5.0%), these estimated 722,600 units would have grown to be 756,112 units in first quarter 2022. NIC MAP Vision estimates that there are 625,100 IL beds in the United States in first quarter 2022 (a difference of over 141,000 or 22.6% of the estimated IL beds from NIC MAP Vision if each of the projected IL units in 2020 was assumed to equal one IL bed).

With the exception of the independent living segment, the NIC estimates were close to the estimated totals of beds calculated by NIC MAP Vision.

Note that to grow the segment inventory estimates from the Sixth Edition of the NIC Investment Guide with data from fourth quarter 2019 to size estimates for the first quarter of 2022, we applied the inventory growth rate from the NIC MAP 140 Markets per segment (5.0% for IL, 3.6% for AL, 8.7% for MC, and -1.7% for NC) to the estimates from 4Q19 to grow those estimates by the same inventory growth that occurred since 4Q19 to adjust for the inventory growth over the time period. However, this is a rough approach. This assumes that the proportion of US households aged 75+ in the NIC MAP 99 Markets has remained the same since the data that was available at time of estimation for the Sixth Edition of the NIC Investment Guide, which is not the case (that proportion has increased).

Possible factors contributing to the independent living difference. The difference in the independent living estimates could be driven by a couple of factors. First, it could be that since independent living is a more lifestyle-based product than assisted living or memory care, there is less of a case to build independent living in less populated areas outside of the 140 Markets tracked by NIC MAP than there is for assisted living or memory care. There could also be some unseen factor related to inconsistencies in state regulations of tracking independent living compared to tracking of AL or MC. While nursing care has the highest level of uniformity for reporting as discussed earlier, independent living has the least requirements for reporting to both states and federal sources. Maybe lowered requirements for reporting could also result in a higher likelihood of not being captured by the methods of tracking that Melissa Data uses.

Beds versus units. Another aspect that makes this comparison less precise for the IL, AL, and MC segments is the difference between beds and units mentioned above. NIC MAP tracks nursing care by bed so looking at that comparison between estimates is easier (after factoring in inventory growth since fourth quarter 2019, our estimates varied from NIC MAP data by less than 5 percent). However, the NIC MAP 140 Markets track IL, AL, and MC by units whereas the areas outside of the 140 Markets have estimated beds as inventory. As a result, the national supply estimates from the first quarter 2022 NIC MAP Vision data are a blend of units for the 140 Markets and beds for the other areas. Splitting this inventory by the 140 NIC MAP markets vs the area outside of NIC MAP coverage, 29.2% of the senior housing (IL, AL, MC) inventory tracked by NIC MAP Vision is outside of the 140 Markets and is estimated by bed.

Conclusions. NIC MAP Vision offers subscribers estimates of the supply of senior housing and care that are updated on a quarterly basis and provides timely insight as to how much supply exists both in local geographies and on a broader scale. As of first quarter 2022 nearly three million beds of senior housing and care inventory were tracked by NIC MAP Vision in the United States. Going forward, inventory will continue to expand, although at a reduced pace in the near term because of the effects of the pandemic on supply pipelines. During the first several months of the pandemic, banks slowed their lending activity due to great uncertainty which in turn reduced the number of projects that broke ground and units started. This has had the effect of slowing inventory growth today, two years later. Further, supply constraints, rising materials prices, higher interest rates and shortages of workers in the building industry has limited recent development as many projects increasingly do not pencil out for reasonable returns.

Note that the data presented are believed to be accurate, but not guaranteed, and are subject to future revision. 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.

The skilled nursing industry is currently facing numerous challenges, but many operators do see long-term opportunities as the growth of the senior population accelerates and skilled nursing properties will be the only option for many higher acuity patients given the current long-term care infrastructure in the country.

Doubtless, the industry faces headwinds including Medicare reimbursement cuts, low occupancy rates, chronic underfunding of Medicaid reimbursement in many states, a staffing crisis, and ongoing elevated inflation including wage rate growth. In addition, Medicare Advantage continues to grow as enrollment in these insurance programs expands for seniors throughout the country and value-based care continues to progress, which requires the industry to continue to adapt at a time when revenues are relatively low, and expenses are growing at a rapid pace.

The government provided relief during the pandemic such as the Provider Relief Fund and the 3-Day Rule waiver, which was implemented by the Centers for Medicare and Medicaid Services (CMS) to eliminate the need to transfer positive COVID-19 patients back to the hospital to qualify for a Medicare paid skilled nursing stay, hence increasing the Medicare census at properties and therefore higher reimbursement.

No Easy Answers

However, going forward there are no easy answers, especially to resolving the escalating, enduring staffing crisis and inflationary pressures that operators are facing. Some potential solutions the industry has discussed to help manage the staffing crisis include increased pay, better reimbursement, creating flexible schedules for current staff, hiring workers from overseas, and reining in staffing agency costs.

Regarding reimbursement, one of the current main concerns is the proposal to claw-back Medicare reimbursement as it relates to the Patient Driven Payment Model (PDPM), which became effective on October 1, 2019. This PDPM recalibration is a surprise to many given the current state of the industry as operations and financial performance have been unclear due to COVID-19. Isolating the impact of PDPM on skilled nursing government spending is difficult and pointing to the reimbursement change as the sole driver of spending growth when COVID-19 was impacting the industry is a difficult analysis. However, CMS is proposing to incorporate a 4.6% rate cut to skilled nursing rates. CMS’s analysis suggests that spending on skilled nursing rose approximately 5% in fiscal year 2020 after the implementation of PDPM. Since the PDPM rule was supposed to be “budget-neutral,” the agency is looking to adjust payments to bring spending back to parity.

The Need Remains

There is, however, some positive news as occupancy has increased since the lows of the pandemic and operational beds continue to decline, which bodes well for the long-term supply/demand dynamic. Many operators have stated that current occupancy challenges are more of a staffing problem rather than a demand problem. Hence, the need to resolve the staffing crisis as noted above. Freestanding skilled nursing occupancy has climbed 380 basis points from its pandemic low (73.5% in 1Q 2021) to 77.6% in 1Q 2022 within the 31 NIC MAP® Primary Markets. Although still low, occupancy has now increased four quarters in a row.

As home health and home care are growing their businesses within post-acute care, the need for skilled nursing is expected to continue as well. The growing need to care for the very frail older adult population that has multiple illnesses, and needs 24-hour care, is where skilled nursing properties must be a solution for years to come. The question is, will the country ensure this need is met with improved staffing, innovation, and operational infrastructure.

For further information and insights on skilled nursing occupancy improvement, please see these recent NIC Notes blogs:

• Skilled Nursing – Keeping the Occupancy Recovery on Track
• Skilled Nursing Occupancy Continues Slow Increase

“It’s a very exciting time in the senior housing industry, as the sector continues to mature and product offerings become increasingly differentiated,” said Beth Mace, chief economist and director of outreach at NIC, kicking off the third Leadership Huddle of 2022. Mace was joined by Melissa Andrews, president & CEO of LeadingAge Virginia; Tom Gaston, EVP of acquisitions and development at Maplewood Senior Living; and Ashley Fitzgerald, principal of Carlyle, to explore the state and future of segmentation in the senior housing industry – and what it means for aging adults.

“For us, this is something that’s personal. We all have family members who fall into the category,” Andrews said of the emerging middle market segment. As the largest cohort of the aging Baby Boomer generation, middle income seniors – those who do not qualify for federal subsidies but do not have the savings to afford private pay options – need affordable housing options. “Your data shows there’s a huge opportunity nationally,” Andrews said, citing NIC’s 2019 The Forgotten Middle study.

Data from the recently released 1Q2022 NIC MAP Vision Actual Rates Report shows that all three care segments (independent living, assisted living, and memory care) hit the recorded highs in the time series to date for year-over-year growth of asking rates in the first quarter 2022. The report includes monthly data of actual rates and leasing velocity through March 2022, including data on rate discounting and move-in/move-out trends. Read on for further key takeaways from the report produced by NIC MAP^® Data Service, powered by NIC MAP Vision.

The first quarter 2022 Actual Rates Report includes segment type data for many more metropolitan markets than were included in previous reports. Prior reports included Atlanta, Philadelphia, and Phoenix, and new metros available in the first quarter 2022 report include Boston, Chicago, and San Diego, among others. NIC MAP Vision continues to work to onboard new data contributors and is dedicated to reporting more metros. It is only with the support of Actual Rates data contributors and officially certified Actual Rates software partners that this expanded reporting is now available. For more information on which metropolitan markets are now available to NIC MAP Vision subscribers, please contact a product expert at NIC MAP Vision today.

Key takeaways from the 1Q2022 NIC MAP Vision Seniors Housing Actual Rates Report are listed below. These key takeaways are from the Segment Type report. Care segments refer to the levels of care and services provided to a resident living in an assisted living, memory care, or independent living unit.

Key Takeaways

• During the first quarter 2022, all three senior housing segment types—independent living (IL), assisted living (AL), and memory care (MC)—experienced the highest recorded growth in year-over-year asking rates since NIC MAP began reporting the data in 2017. Notably, IL had the largest year-over-year increase for asking rates at 8.5% in March 2022, followed by AL (8.3% in January 2022) and MC (8.3% in March 2022).
• Average initial rates for residents moving in were below asking rates for all three care segments in first quarter 2022. Of the three segments, MC had the largest initial rate discounting for a single month of 10.1% ($776) in January 2022. On an annualized basis, this discount is equivalent to 1.2 months. AL segments had the weakest discounting for initial rates of the three segments with a 5.1% ($292) discount in March 2022. Discounting for AL initial rates hasn’t been this weak since November 2020 (5.1% as well). IL segments had an initial rate discount of 8.7% ($314) in March 2022. This was the highest initial rate discount for IL segments since May 2020 (9.9%, $328).

• Move-ins outpaced move-outs in February and March 2022 for all three care segments (IL, AL, and MC). However, move-outs outpaced or equaled move-ins for all three segments in January 2022 (January had a post-holiday Omicron-related spike in COVID infections which may have been a contributing factor to move-outs.)
  • The MC segment had the highest pace of move-ins of the three care segments in the first quarter, with 4.2% of inventory in March 2022. Memory care move-ins have not been this high since June 2021 when it was 4.3% of inventory.

Additional key takeaways are available to NIC MAP Vision subscribers in the full report.

Acknowledging the NIC MAP Vision team. The Actual Rates Data Initiative has been supported by many players behind the scenes over the years, all of whom deserve recognition for their hard work in bringing these data to market. NIC would like to acknowledge and thank Robb Tufts, Dan Mandeville, Raheem Thomas, Aisha Jones, Justin Cassell, Brian Connolly, Rosemary Asquino, Wendy Lazo, Molly McCarter, Leighann Garcia, and Dan Raney of the NIC MAP Vision team for all of their hard work collecting, processing, and reporting the data over the years to achieve this goal of expanding the metro coverage of Actual Rates reporting. Without their continued effort and dedication this increased transparency would not be available to NIC MAP clients.

Arick Morton on the Importance of Actual Rates Data Initiative. Arick Morton, CEO of NIC MAP Vision, discusses the importance of the actual rates data initiative for the company and the senior housing industry at large. Operators can learn more about actual rates by visiting the actual rates page.

About the Report

The NIC MAP Vision Seniors Housing Actual Rates Report provides aggregate national data from approximately 300,000 units within more than 2,600 properties across the U.S. operated by 25 to 30 senior housing providers. The operators included in the current sample tend to be larger, professionally managed, and investment-grade operators as we currently require participating operators to manage five or more properties. Note that this monthly time series is comprised of end-of-month data for each respective month.

While these trends are certainly interesting aggregated across the states, actual rates data are even more useful at the metro level. NIC MAP Vision is continuing to work towards reporting more markets.

Interested in Participating?

The Actual Rates Data Initiative is an effort to expand senior housing data and we are looking for operators who have five or more properties to participate. We have expertise in extracting data from industry leading software systems, such as Yardi, PointClickCare, Alis, MatrixCare, Glennis Solutions, and Eldermark and can facilitate the process for you.

Operators contributing data to the NIC MAP Vision Seniors Housing Actual Rates Report receive a complimentary report which allows them to compare their own data against national, and metropolitan market benchmarks.

In addition to receiving a complimentary report, your organization benefits through:

• More informed benchmarking, strategic planning, and day-to-day business operations,
• Increased transparency, aligning with other commercial real estate assets in terms of data availability,
• Saved time, Actual Rates data is collected electronically directly from operators’ corporate offices, removing the need for telephone calls to individual properties, and
• Enhanced investment and efficiency across the sector.

Learn more

A recent NIC Notes blog titled “Market Fundamentals Amid Challenging Time for Skilled Nursing” published by NIC Analytics, evaluated supply and demand dynamics for freestanding skilled nursing properties within the 31 NIC MAP Primary Markets (Primary Markets) aggregate since 2017, and examined property-level occupancy distribution to get a better understanding of how widespread the effects of the pandemic have been.

This analysis digs further and reviews how select individual skilled nursing markets are faring after two years of the pandemic.

Occupancy Loss and Recovery Varied by Market. During the height of the pandemic, the occupancy loss for freestanding skilled nursing properties across all the Primary Markets was mainly a function of a demand contraction. In fact, inventory across most of the Primary Markets remained somewhat stable over the period from 1Q 2020 to 1Q 2021.

Drilling down into metropolitan markets, Boston’s occupancy fell 17.8 percentage points (pps) from 88.7% in first quarter 2020 to 70.9% in third quarter 2020. As a result, occupied units in Boston fell by nearly 21% in the span of two quarters. This was the largest demand contraction and occupancy loss a market experienced in the first two quarters of the pandemic. New York also experienced a large drop in occupancy. In the early months of the pandemic, New York’s occupancy rate fell 13.4pps from 92.0% in the first quarter of 2020 to 78.6% in the third quarter of 2020.

Notably, all the Primary Markets experienced double-digit occupancy declines, except Dallas (negative 9.6pps) and Kansas City (negative 7.7pps). Additionally, none of the skilled nursing Primary Markets experienced significant inventory growth during the height of the pandemic. Therefore, the skilled nursing occupancy declines were mainly a function of demand contraction whereas the occupancy loss for the private pay senior housing sector was a function of both an increase in supply and a decrease in demand.

On the other hand, the occupancy recovery paths and timelines are also proving to be uneven across markets with select Primary Markets improving more rapidly than others. For example, Orlando is a market that experienced a relatively smaller drop in occupancy during the first year of the pandemic of 10.7pps, from 89.7% in the first quarter of 2020 to 79.0% in the first quarter of 2021. However, Orlando’s occupancy increased by 6.8pps during the second year of the pandemic and stood at 85.9% in the first quarter of 2022. This helped the market recover 64% of the occupancy loss in percentage points and pushed its occupancy ranking from thirteenth to first among the Primary Markets.

The exhibit below shows that occupancy across several markets is recovering relatively fast. These markets include Orlando, Phoenix, New York, and Boston. Notably, 17 of the 31 Primary Markets have recovered at least 30% of the occupancy loss in percentage points, although occupancy across some of these markets is still far below pre-pandemic levels.

While the occupancy improvements across most Primary Markets depict a very welcome positive trend and indicate light on the horizon, the uncertainty bands remain wide in terms of when occupancy rates for skilled nursing properties will return to pre-pandemic levels. A key question is whether obtaining a sustainable level of occupancy and revenue growth will be sufficient to grow NOI and recoup some of the losses associated with the severe downturn in occupancy rates, higher expenses associated with agency staffing, PPE and other costs, Medicare funding cuts, and underfunding of Medicaid reimbursement in many states. Other headwinds for NOI growth include staffing shortages that are effectively restricting admissions of residents into some skilled nursing properties, and broader inflationary effects associated with the pandemic.

For example, a few markets experienced prolonged occupancy pullbacks and the recovery has thus far been elusive. This is the case of Tampa where 1Q 2022 occupancy remained 14.3pps below pre-pandemic 1Q 2020 levels and shifted the market’s ranking among the Primary Markets from fifth to sixteenth. Similarly, Washington and Atlanta are markets that experienced prolonged occupancy declines and remained far below pre-pandemic levels.

We cannot yet know how pandemic-derived challenges will unfold in future months, or when they will be fully behind us, but the skilled nursing industry has weathered this extremely difficult period and begun the path to recovery.

This analysis examined approximately 4,000 freestanding skilled nursing properties within the Primary Markets. Note that combined properties offering at least two types of service and life plan communities (LPCs)/continuing care retirement communities (CCRCs) were excluded from this analysis.

—

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.