As the pandemic eases and occupancy recovery in senior housing progresses, rising operating expenses may limit the degree to which operating margins will grow in the next six months. In the Wave 38 survey, three-quarters of respondents expect margins to increase; the majority anticipate the increase will be between 1% and 5%. Nearly three-quarters of respondents are optimistic that labor and staffing challenges will begin to ease in the second half of 2022 or 2023. Currently, all respondents are paying staff overtime hours and four out of five rely on agency or temp staff to fill in the gaps. About one-half do not expect their reliance on agency or temp staff to change in 2022; however, 40% anticipate it will decrease. (Note that nine out of ten respondents to the Wave 38 survey lend their support for a federal investigation of anticompetitive practices by nursing and other direct care staffing agencies.) The pace of move-ins remained strong for assisted living and improved in the nursing care segment but slowed for independent living and memory care. Reasons cited by respondents that observed a deceleration in the pace of move-ins included “normal movements,” “Omicron,” “lack of available staff,” and the “slowdown of hospital admissions.” Smaller operators are less likely to have achieved pre-pandemic lead volumes than larger organizations. In Wave 38, more than half of the survey’s largest organizations have reached pre-pandemic lead levels compared to only 15% of single-site operators.

–Lana Peck, Senior Principal, NIC

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

This Wave 38 survey includes responses from February 7 to March 6, 2022, from owners and executives of 67 small, medium, and large senior housing and skilled nursing operators from across the nation, representing hundreds of buildings and thousands of units across respondents’ portfolios of properties. More detailed reports for each “wave” of the survey and a PDF of the report charts can be found on the NIC COVID-19 Resource Center webpage under Executive Survey Insights.

Across 38 Waves of the ESI, the pace of move-ins has closely corresponded with the broad incidence of COVID-19 infection cases in the United States. This is demonstrated in the timeline below that shows the share of organizations reporting an increase in the pace of move-ins during the prior 30-days. Data from the Wave 38 survey, which was conducted during the month of February, reflects an increase in the share of operators reporting acceleration in the pace of move-ins as the Omicron variant peaked and cases began to decline in the U.S. in the middle of January.

Since the Wave 36 survey (reflecting operator experiences in November), one-half of organizations with assisted living units reported acceleration in the pace of move-ins. By contrast, the pace of independent living and memory care move-ins slowed. Likely, in part due to seasonality, Omicron, and residents moving to higher levels of care, one-quarter (27%) of organizations with independent living units reported a deceleration in the pace of move-ins since the previous survey (27% vs. 13%), and roughly equal shares of organizations with independent living units reported acceleration in the pace of move-outs since the prior survey (27% vs. 15%). The pace of move-ins in the nursing care segment reversed its slowdown trend in Wave 38. However, notably fewer organizations with memory care units reported an increase in the pace of move-ins since the Wave 36 survey. Reasons cited by respondents that observed deceleration in the pace of move-ins included “normal movements,” “Omicron,” “lack of available staff,” and the “slowdown of hospital admissions.” Regarding reasons for acceleration in the pace of move-outs, one-half (53%) of organizations cited residents moving to higher levels of care.

Smaller operators are less likely to have achieved pre-pandemic lead volumes than larger organizations in Wave 38. Given pent-up demand coming out of the pandemic and questions about the sustainability of historic and near-historic absorption rates during the third and fourth quarters of 2021 per NIC MAP Vision data, this measure in the ESI may be a leading indicator to watch with regards to occupancy recovery. As shown below, more than one-half (56%) of the survey’s largest organizations have reached pre-pandemic lead levels compared to only 15% of single-site operators. Potential reasons for this wide disparity in favor of larger organizations may include sizable sales teams and marketing budgets, sophisticated online and digital marketing capabilities, and geographic, demographic, and economic market diversity—all of which comes with scale.

Staffing continues to be operators’ most significant challenge, but nearly three-quarters of respondents are optimistic that improvements are on the horizon. Since last July, nearly all operators (97% – 100%) responding to NIC’s Executive Survey Insights have reported staff shortages. Attracting community/caregiving staff and employee turnover remain the most significant challenges for survey respondents (86% and 60%, respectively). When asked about backfilling staff shortages, all respondents (100%) reported paying overtime hours in Wave 38, and four out of five respondents are currently tapping agency or temp staff (81%). Of those organizations, about one-half (49%) do not expect their reliance on agency or temp staff to change in 2022; however, 40% anticipate it will decrease. As shown below, just under one-third (29%) expect staffing challenges to improve in the second half of this year, while 43% believe labor markets will ease sometime next year.

Nine out of ten respondents to the Wave 38 survey (90%) lend their support for a federal investigation of anticompetitive practices by nursing and other direct care staffing agencies. At the end of January, the American Health Care Association and National Center for Assisted Living (AHCA/NCAL) with the American Hospital Association (AHA), sent a joint letter to the White House’s COVID-19 Response Team Coordinator, requesting assistance due to reports of anticompetitive practices by nursing and other direct care staffing agencies. AHCA/NCAL asked that the White House “urgently devote” the federal government’s attention to these practices. (Both organizations are still waiting on a response from the Federal Trade Commission after writing to the agency to investigate the matter last October.)

Rising operating expenses may limit the degree to which margins will grow in the next six months. As occupancy recovery progresses as the pandemic eases, operators’ margins may improve. In the Wave 38 survey, only 5% of respondents anticipate their margins will decrease over the next six months, while 75% expect margins to increase. The majority (55%) anticipate the increase will be between 1% and 5%.

Wave 38 Survey Demographics

• Responses were collected between February 7 and March 6, 2022, from owners and executives of 67 seniors housing and skilled nursing operators from across the nation. Owner/operators with 1 to 10 properties comprise roughly one-half (54%) of the sample. Operators with 11 to 25 and 26 properties or more make up the other half of the sample (18% and 28%, respectively).
• Just over one-half of respondents are exclusively for-profit providers (54%), about one-third operate not-for-profit seniors housing and care organizations (31%), and 15% operate both.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 72% of the organizations operate seniors housing properties (IL, AL, MC), 25% 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. 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 get in touch with Lana Peck at lpeck@nic.org to be added to the list of recipients.

NIC wishes to thank respondents for their valuable input and continuing support for this effort to provide the broader market with a sense of the evolving landscape as we recover from the pandemic. This is your survey! Please take the Wave 39 survey and suggest new questions for Wave 40.

In the years ahead, millions of aging middle-income Americans will need a reasonably priced housing and care option. But innovative ideas are vital to solve the issue of affordability.

Cutting-edge strategies for the senior housing middle market will be shared by the industry’s top leaders and stakeholders at a session during the 2022 NIC Spring Conference in Dallas (March 23-25.)

“The middle market represents a huge opportunity” said NIC Senior Principal Ryan Brooks. He will be a co-speaker at the session, “The Forgotten Middle Market: Vision to Execution.”

A presentation by Brooks during a panel discussion with industry experts will be followed by attendees participating in facilitated breakout group discussions— to take a deep dive into topics addressed by the panel, and strategies to apply these ideas to their business models.

To preview what attendees can expect to learn at the session, Brooks recently spoke with session moderator Diane Burfeindt, managing partner at Trilogy Connect; and co-facilitator Jim Thompson, senior vice president and director of senior housing investments, BOK Financial.

The theme of opportunity will be explored at the session. The need is growing for the product, first identified by NIC in its study “The Forgotten Middle.” It shows that millions of seniors will not be able to afford most of today’s private-pay senior housing communities. These seniors don’t qualify for Medicaid or other government assistance either. So, what’s the best approach?

Repurposing properties is emerging as a key strategy and will be discussed at the session. The high cost of new construction makes it difficult to provide an affordable middle-market property, according to Thompson. However, the pandemic may have provided a “window of opportunity” for developers and investors to acquire older properties at a discounted price. “Repurposing properties can provide an affordable real estate component,” said Thompson.

Other creative real estate strategies will be explored. These include partnering with affordable housing developers or designing new types of developments that combine affordable senior living with retail or multi-generational apartment properties.

“Affordable care is a big issue,” said Burfeindt. She added that it depends on how “care” is defined. Is it medical care? Service coordination? “What should a middle-market product provide?” she asked. Instead of a community that offers everything for the resident, the middle-market product could create an environment where residents can do things for themselves or link them to outside services.

Panelists will discuss creative care solutions, such as partnering with Medicare Advantage programs to help defray assisted living costs. Residents could be tapped as volunteers for some duties along with volunteers from the wider community. Funding may also be available from local social service groups. “What we’re finding is that organizations are developing strategies that are not one-size-fits-all. They are identifying the targeted income in their community and working towards partnerships and solutions that bring existing tools together in a new way that is ultimately less resource-intensive,” Burfeindt remarked.

Session attendees will hear how investors view the middle market. The sheer size of the market is of interest to investors, according to Thompson. A high, stable census and dependable cash flow will be a characteristic of the middle market for years to come, he said. He added that though returns could be lower than traditional private-pay senior housing, multifamily investors may see a middle market senior living product as a way to diversify their portfolio’s cash flow.

Middle-market staffing strategies will also be addressed during the session. Attendees will learn how technology and other innovations will help improve affordability and ease staffing pressures. “Staffing in the middle-market will look very different than we’re accustomed to seeing in other senior housing and care settings,” said Thompson.

Mark your calendar for this can’t-miss session at the 2022 NIC Spring Conference:

“The Forgotten Middle Market: Vision to Execution”
Thursday, March 24, 1:30-3:15, Level 3, Trinity Ballroom

The Labor Department reported that nonfarm payrolls rose by 678,000 in February 2022. This was stronger than market expectations of an increase of 423,000 and occurred despite the impact of omicron on the economy. Revisions added 92,000 to total payrolls in the previous two months. Nevertheless, nonfarm payrolls were still down by 2.1 million or 1.4% from their pre-pandemic level in February 2020.

Concerns about rising wage costs and inflation are further supported by this report. While average hourly earnings for all employees on private nonfarm payrolls rose by a mere $0.01 in February to $31.58, this was still a gain of 5.1% from year-earlier levels. This was less than the 5.7% rise seen in January, however.

February’s stellar job growth along with the year-over-year increase in wages will support the Federal Reserve’s intention of raising interest rates at its upcoming March meeting. Chair (pro tempore) Jerome Powell indicated in his congressional testimony this week that, with Russia’s attacks on Ukraine roiling markets and creating additional uncertainty, he was inclined to support a 25-basis point hike later this month and that the Fed should “proceed cautiously” with plans to tighten policy this year.

“The Omicron variant has challenged the skilled nursing recovery given the staffing shortages around the country as skilled nursing properties are unable to hire enough staff to admit more residents.”

– Bill Kauffman

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

Here are some key takeaways from the report:

Occupancy

Skilled nursing property occupancy increased 24 basis points in the month of December, ending the month at 76.0%. This was the highest occupancy level since May 2020. After not changing from October to November, occupancy continued its slow recovery, which was challenged by the Delta variant and, more recently, the Omicron COVID-19 variant. Occupancy has increased 411 basis points from the low of 71.8% set in January 2021. The fact that occupancy held steady through the Delta variant and the early stage of Omicron suggests that the demand for skilled nursing properties remains, but a significant challenge for many skilled nursing operators around the country has been the staffing shortages that limit the ability to admit new residents. The already difficult labor shortage has grown increasingly worse as staff infected with Omicron have been forced to quarantine.

Managed Medicare

Managed Medicare revenue mix increased 20 basis points from November to end December at 9.9%, reversing the 20-basis point decline that occurred from October to November. It remains well below its 2021 high of 10.8% seen in February 2021 but was up by 204 basis points from the pandemic low set in May 2020 of 7.9%. The increase from the pandemic low is likely due to growth in elective surgeries from 2020, which typically creates additional referrals to skilled nursing properties. Meanwhile, Managed Medicare revenue per patient day (RPPD) decreased again, albeit slightly, ending December at $451. In addition, it is down 3.4% from December 2020. It has decreased $107 (19.2%) from January 2012 when the data series began to be reported as managed Medicare enrollment continues to grow across the country.

Medicare

Medicare revenue per patient day (RPPD) increased slightly from November to end December 2021 at $580. It has decreased 1.0% from $585 in June 2020 when severe cases in skilled nursing properties were increasing significantly during the early stages of the pandemic. The federal government implemented many initiatives to aid properties for cases of COVID-19, including increases in Medicare fee-for-service reimbursements to help care for COVID-19 positive patients requiring isolation. Meanwhile, Medicare revenue mix also trended higher in December, increasing 57 basis points ending December at 20.7%. However, it has been falling since January 2021 when it was 24.5%.

Medicaid

Medicaid revenue per patient day (RPPD) was relatively flat from November to end December 2021 at $248. Medicaid RPPD declined 1.1% from February of 2021 to September 2021 but has since increased 1.6% from September to December. This increase is likely due to some states adjusting their Medicaid budgets and increasing reimbursement for the 2022-2023 fiscal year. Medicaid RPPD increased 0.90% from a year ago in December 2020 and has increased 5.0% from pre-pandemic levels of February 2020 ($236). Medicaid reimbursement has increased more than usual as many states embraced measures to increase reimbursement related to the number of COVID-19 cases to support skilled nursing properties.

To get more trends from the latest data you can download the Skilled Nursing Monthly Report. There is no charge for this report.

The report provides aggregate data at the national level from a sampling of skilled nursing operators with multiple properties in the United States. NIC continues to grow its database of participating operators to provide data at localized levels in the future. Operators who are interested in participating can complete a participation form. NIC maintains strict confidentiality of all data it receives.

Relationships are the heart of the senior housing and care industry and are key to future success. Expertly designed to foster collaboration, the NIC Spring Conference features a myriad of innovative networking opportunities throughout the three-day event. In addition to scheduled events like our networking lounges and receptions, the popular Braindate™ platform is also returning this year, which offers intimate, curated discussions tailored to attendees’ interests. 

Beginning March 1, attendees can post topics they’re interested in discussing on the Braindate platform’s Topic Market. In these one-on-one or group discussions, participants can tap into the experiences and expertise of operators, capital providers, and other care partners through deep, knowledge sharing conversations.  

One-on-one Braindates are 30-minute conversations that you book with another attendee. You can either post a topic or request a meeting with a topic author and meet in the Braindate Lounge onsite at the conference.  

Group Braindates are 45-minute collaborative conversations with up to five people. The group will meet at the Braindate Lounge and the topic author will serve as the moderator to ensure that all participants can share their unique perspectives.  

All attendees have insights and experiences that can benefit others and anyone can post a topic or join a Braindate. We highly recommend taking advantage of this opportunity to engage in meaningful conversation (not sales pitches) while making connections and building new relationships. 

For more information about Braindates, visit the 2022 NIC Spring Conference website. 

The 2022 NIC Spring Conference will be held March 23-25 in Dallas, TX, at the Omni Dallas. Register today.

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