Data from the recently released 2Q2022 NIC MAP Vision Actual Rates Report showed that for the sample of Actual Rates data contributors, all three care segments (independent living, assisted living, and memory care) hit record high year over year growth of asking rates for the second quarter in a row. In the recently released report, monthly data of actual rates and leasing velocity are presented through June 2022, including data on rate discounting and move-in/move-out trends. Read on for further key takeaways from the recently released report.

Seattle was added as a newly covered metro market in the second quarter Actual Rates Report. 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 expanded metro-level 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.

A few of the key takeaways from the 2Q2022 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

• Asking rate growth accelerated in second quarter 2022. All three senior housing segment types– independent living (IL), assisted living (AL), and memory care (MC)– experienced the highest recorded growth in the time series for year-over-year asking rates in 2Q2022. Notably, IL had the largest year-over-year increase for asking rates at 9.4% in June 2022, followed by MC (8.9% in April 2022) and AL (8.7% in April 2022).
• Average initial rates for residents moving in were below asking rates for all three care segments in second quarter 2022. Of the three segments, IL segments had the most initial rate discounting of 10.5% ($388) in June 2022. This discount was equivalent to 1.3 months on an annualized basis. Initial rate discounting for IL segments has not been this strong since April 2020 when it was at 10.6% ($355). MC segments had an initial rate discounting of 8.9% ($691) in May 2022. On an annualized basis, this discount is equivalent to 1.1 months. AL segments had initial rate discounting of 7.5% ($434) in June 2022, up from a discount of 6.6% ($352) one year prior in June 2021. The June 2022 discount was equivalent to 0.9 month on an annualized basis.

• Move-ins outpaced move-outs for April, May, and June 2022 for all three care segments (IL, AL, and MC).
  • Memory care segments reached a pace of move-ins of 3.8% of inventory in June 2022. Move-outs were at 3.1% in June 2022 for MC, below the recent peak of 3.9% in January 2022 following the post-holiday spike in Omicron.

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

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 5 or more properties. Note that this monthly time series is comprised of end-of-month data for each respective month.

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^® 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.

“Given the challenges on multiple fronts for skilled nursing operators, recruiting and retaining staff is a number one priority. Operators must build a culture that supports and strengthens their staff”

– Bill Kauffman

NIC MAP Vision released its latest Skilled Nursing Monthly Report on September 1, 2022. The report includes key monthly data points from January 2012 through June 2022.

Here are some key takeaways from the report:

After four months of increases, skilled nursing occupancy declined slightly in the month of June. It decreased 9 basis points from May to end the month at 77.3%. There has been some positive momentum in occupancy as it is up 522 basis points since the low point (72.1%) reached in January 2021. However, COVID-19 cases created additional challenges in 2021 and the staffing crisis in the sector is still a significant burden on skilled nursing operators. Occupancy is down 9.0 percentage points from the pre-pandemic February 2020 level of 86.2%. As staffing and inflation pressures persist, operations for many operators will be under pressure but the long-term demand for skilled nursing services is expected to grow over time.

Managed Medicare revenue per patient day (RPPD) increased in June but is down 1.4%% from last year in June 2021. The continued decline in managed Medicare revenue per patient day poses a challenge to skilled nursing operators as the reimbursement differential between Medicare fee-for-service and managed Medicare has accelerated during the pandemic. Medicare fee-for-service RPPD ended June 2022 at $581 and managed Medicare ended at $458, representing a $123 differential. Pre-pandemic, in February of 2020, the differential was $98. As managed Medicare continues to grow, operators and investors should pay attention to this trend and adjust accordingly.

Medicare revenue mix and RPPD have increased for the second month in a row. This is seemingly due to increased cases of COVID-19 from the month of April as more cases have resulted in additional need for utilizing the 3-Day rule waiver and per day reimbursement for COVD-19 positive patients. Medicare revenue mix ended June at 21.9% but is down from its pandemic high of 24.8% set in February 2022. Medicare RPPD is down 2.0% from its pandemic peak of $593 in June 2020. Meanwhile, Managed Medicare revenue mix was down 17 basis points to 10.5% in June. However, this is 240 basis points above the pandemic low of 8.1% set in May 2020.

After increasing two months in a row, Medicaid patient day mix decreased 72 basis points ending June at 65.4%. However, it has increased 250 basis points from the pandemic low of 62.9% set in February 2022. Meanwhile, Medicaid revenue mix declined 134 basis points from the prior month, ending June at 49.6%. One element of the Medicaid revenue share of a property’s revenue is RPPD and that has declined 2.1% since the pandemic high of $254 set in October 2021.

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

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

Thinking of investing in, developing, or operating an active adult project? Here are some do’s and don’ts from experienced experts.

• Do pick a location near restaurants and shopping.
• Don’t talk about seniors.
• Do welcome pets.
• Don’t provide transportation.
• Do create an edgy design.
• Don’t offer meals but do include a relaxing bar where residents can meet.

That’s just a sample of active adult do’s and don’ts highlighted at the 2022 NIC Spring Conference. In a fast-moving brainstorming session, participants divided into small groups to help define a playbook for the emerging active adult segment, a quickly growing property type targeting baby boomers.

The lively, well-attended session was moderated by Maria Nadelstumph of Brandywine Living, and Ben Burke of Headwaters Group. The breakout groups tackled three dimensions: people, programming, and product.

The session was so well-received that a special discussion on the active adult market is planned for the 2022 NIC Fall Conference on September 14 at the Marriott Marquis in Washington, D.C.

At the NIC Spring Conference, introductory video comments by current residents in active adult communities provided helpful context. The residents said they chose an active adult property because they wanted a sense of community. They were ready to ditch the house, but they weren’t ready for senior living with services. They were more interested in the lifestyle. After moving into an active adult community, one resident said: “I felt like I was on vacation.”

Investor interest in the segment is being driven by several factors, according to co-moderator Burke. The average age of residents is 72-74, younger than those in independent living. Active adult projects have higher rents than multifamily projects and lower expenses than independent living and longer lengths of stay. Fewer employees are required to run active adult projects, increasing the appeal in a tough staffing climate.

Facilitated by industry experts, the breakout groups discussed the three dimensions of the active adult market in 10-minute segments prompted by key questions. Observations were then shared with the entire audience. Here’s a quick recap of their do’s and don’ts.

People: What’s the best way to attract residents of the right age?

Do think like a consumer. Active adult customers want to maintain their sense of autonomy. They aren’t looking for an institutionalized setting. Senior living is more needs driven than the active adult segment which is more of a lifestyle choice.

The consumer isn’t looking for care but wants to belong to a community. Residents want to engage but seek a carefree lifestyle. They want to be free of the responsibilities of homeownership. And they don’t consider themselves old—don’t use the word “senior.”

The active adult sales cycle is longer than that of traditional senior living. Adult children are typically not involved in the decision. Location matters. Consumers want a place that is near destinations outside the building, such as restaurants and shops.

Product: What design elements are necessary? Which aren’t?

Do include parking and storage space. These customers have cars and a lot of stuff.

Don’t remind people they’re getting older with subtle cues like grab bars and prominent elevator banks.

Forget on-site salons and therapy space. In-house services will encourage much older people to stay put and not move to a more appropriate setting.

Baby boomers prefer modern designs with an edgy feel, nothing like an old folk’s home. Open concept designs are popular. Common areas need to be flexible. Do include gathering areas and bars.

Welcome pets. Dog parks and exercise areas are popular with baby boomers who have pets. “People love their dogs,” said one participant.

Program: What program elements are necessary? Which aren’t?

Do offer resident-driven programming based on their interests. Wellness programs and informal gatherings, such as happy hours, help build a sense of community.

A big part of the discussion centered on how to maintain a younger resident profile. New residents may be hard to attract if existing residents are aging in place and need a lot of assistance. Best advice: Don’t offer transportation. Don’t offer care. Don’t offer meals. “How to handle the back door is a hot topic,” said Burke. One group thought residents would naturally decide to move out because they wouldn’t feel like they fit in anymore since the programming and activities were geared for younger people.

Mark your calendar for the 2022 NIC Fall Conference session, “Rational Exuberance: Investing in the Rapidly Growing Active Adult Segment” being held September 14 at 4:15pm. Learn from current investors in Active Adult who will share candid thoughts from their experience about operations, debt flow, and investors.

To view the full Spring Conference discussion, a recording of the active adult session is available on NIC’s YouTube channel.

Rising operating expenses now surpass staffing challenges as the most frequently cited response to the question from Wave 44 which asks about “the biggest challenge facing my organization today.” Employee turnover and attracting community and caregiving staff (which have traditionally been cited as the top challenges among survey respondents) are now coming in as the 2nd and 3rd biggest challenges organizations are confronted with. That said, a promising sign of relief to the long-standing labor market issues may be that 15% of responding organizations anticipate their staffing challenges will improve in the second half of 2022 and half of respondents (47%) anticipate their staffing challenges will improve in the first half of 2023.

–Ryan Brooks, 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” has transitioned away from the COVID-19 crisis to focus on timely industry topics. While some standard questions will remain for tracking purposes, in each new survey wave, new questions are added.

This Wave 44 survey includes responses from July 25 to August 21, 2022, from owners and executives of 55 small, medium, and large senior housing and skilled nursing operators across the nation, representing hundreds of buildings and thousands of units across respondents’ portfolio 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.

The timeline below, demonstrating the share of organizations reporting an increase in the pace of move-ins during the prior 30-days, shows that the share of organizations reporting an increase has remained close to 40% since Wave 42 conducted in June 2022.

Rising operator expenses are now the top-cited challenge of survey respondents. Eighty-six percent of respondents cite rising operating expenses as the biggest challenge currently facing their organization. This is an increase from the Wave 41 survey, conducted in May 2022, where 80% of responding organizations claimed rising operating expenses as the biggest challenge.

Staffing challenges – turnover and attracting community and caregiving staff – remain among operators’ most significant challenges, but nearly three-quarters of respondents are optimistic that improvements are on the horizon. Since July 2021, nearly all operators (96% – 100%) responding to NIC’s Executive Survey Insights have reported staff shortages. Although no longer the top-cited challenge, employee turnover and attracting community and caregiving staff remain as significant challenges for survey respondents (80%).
When asked about backfilling staff shortages, nearly all respondents (96%) reported paying overtime hours in Wave 44, and three out of four respondents are currently tapping agency or temp staff (74%). Of those organizations, about one-half (55%) do not expect their reliance on agency or temp staff to change in the remaining months of 2022; however, 37% anticipate it will decrease.

A promising sign of relief to the long-standing labor market challenges may be that 14% expect staffing challenges to improve in the second half of this year. Approximately one-half believe labor markets will ease in the first half of 2023, 16% believe staffing challenges will improve in the second half of 2023, and one in four anticipate it will take until 2024 or beyond before staffing challenges ease.

Wave 44 Survey Demographics

• Responses were collected between July 25 and August 21, 2022, from owners and executives of 55 senior housing and skilled nursing operators across the nation. Owners/operators with 1 to 10 properties comprise roughly two-thirds (62%) of the sample. Operators with 11 to 25 properties account for 25%, and operators with 26 properties or more make up the rest of the sample with 13%.
• Three-fifths of respondents are exclusively for-profit providers (58%), approximately one-third operate not-for-profit seniors housing and care properties (36%), and 5% operate both.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 76% of the organizations operate seniors housing properties (IL, AL, MC), 33% operate nursing care properties, and 27% operate CCRCs – also known as 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 contact Ryan Brooks at rbrooks@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 45 survey and suggest new questions for Wave 46.

A New Customer Arrives

NIC Co-Founder and Strategic Advisor Robert Kramer has identified “Six Key Drivers” that will shape the senior living industry over the next 10 years. Kramer is also Founder & Fellow at Nexus Insights, a think tank to advance the well-being of older adults through innovative models of housing, community and healthcare. NIC Notes is publishing a bi-weekly series detailing each key driver. What follows is an analysis of the third key driver: a new customer.

Over the next 10 years, it is essential to our industry’s success to recognize that a new senior living customer is arriving with a different take on longevity. This means we must rethink our approach to the next generation of senior living residents.

We need to do more than just reinvigorate or even recast our product for this new customer. Rather, the challenge and the opportunity for us is to fundamentally reframe our expectations around aging itself. We must offer a vision to the new senior living customer of what it means to age well. We must adopt an aspirational model and language focused on personal growth and engagement. That is our challenge for the next decade.

Our new customers are the first generation in history to have witnessed their parents living longer than anyone had anticipated. They have also witnessed how society reacted to and provided for their elders. That experience has profoundly shaped what these customers want for themselves, which stands in stark contrast to what was offered their parents.

The first generation of private pay senior living customers, the residents we’ve served for the last several decades, experienced what I call accidental longevity. They never expected to live as long as they did. They were grateful to survive and took whatever society provided for them during their unexpected old age.

Take, for example, my father-in-law, Sam. He was a World War II U.S. Army veteran and New York school teacher who retired after a heart attack at age 62. He died 31 years later at 93. When he was 89, he said to me, “Bob, can you believe I’m still alive? Isn’t it amazing?”

Sam represents a group, our current customers, who have experienced accidental longevity. But what they were offered and accepted was a declinist view of aging. What do I mean? It means that your experience of aging and retirement is defined and shaped by inexorably ever-increasing deficits, by continually losing what makes life worth living.

When you retire, you disengage and disconnect from your office or work, and colleagues. That starts an inevitable period of decline as you gradually disappear from life, people, and importance with the ultimate disappearance being death. It’s not a cheery, optimistic hopeful view but a declinist view.

The medical doctor and bioethicist Zeke Emanuel wrote at age 57 an article, “Why I Hope to Die at 75,” for The Atlantic. His argument was that society, families and the older adult would be better off if nature took its course swiftly and promptly. He says he’ll be finished then, and better off leaving society because he can no longer make a positive contribution. His unsentimental argument attracted wide attention.

I once gave a talk to students and brought birthday cards designed for people at age 40, 50, 60, and 75. In this talk, I showed them the cards, which are funny, but highlight the progression of the declinist view of life. The card for the person at age 40 featured black balloons and black crepe. The message: You’re starting to lose it. After age 40, it’s all downhill from here. You’re losing the qualities that made life fun and worth living. Each card was more depressing than the last. This attitude is part of the basic notions of our culture, nowhere better seen than in Hallmark birthday cards for people as they reach successive milestones.

Our society is, frankly, built for people to retire and die in their 60s and 70s.

Our norms and expectations around retirement and aging, not to mention our social insurance system, are not designed for the longevity reality that we’re facing today as a society.

What Do Baby Boomers Want?

The declinist view stands in contrast to what our new customer wants, expects, and will demand. This new customer is among the first generation ever to experience purposeful longevity, not accidental longevity. They know they’re likely to live a long time, but they’re not going to approach longevity the way their parents did. My wife and I are great examples. Having gone through this process with our parents, we’re asking all the questions now about the next steps around where and how we want to live.

Purposeful longevity means our new customers are determined to thrive. They are looking for community and a sense of connection. I call it the “engagement” concept of retirement and aging which focusses on purpose, experience, and enjoyment. Paraphrasing a report by the McKinsey Health Institute, which I’ll reference again later, our customers aren’t just looking to add years to their lives but add life to their years.

Joe Coughlin at MIT’s AgeLab asks: What will I do with the next 8,000 days of my life? The average American at age 65 has nearly two decades to live (82 for men and nearly 85 for women). Those with a college education are likely to have 22 or more years (nearly 87 for men and 89 for women). That’s 8,000 days. What are you going to do with those days?

Baby boomers want to know how what you’re offering is not just going to enable them to age longer but to age better.

Our new customers want “next stage” living, not “end stage” living. “Next stage” living is about possibility. It’s about growth. It’s about the opportunity presented by living longer. In contrast, “end stage” living means being put in a place by society that takes care of me and keeps me safe because I’ve lived longer than I was supposed to.

That won’t cut it with the baby boomers. They want their health span to, as nearly as possible, match their lifespan, or as Lynne Katzmann at Juniper Communities describes it, they want “wellspan.”

I participated on a panel on aging at my Harvard 50th reunion. As part of the planning group and in response to the panel, we’ve had fascinating discussions. Almost all of the people have graduate degrees, and some said if they have to go through the experience of their parents, they’d rather not live that long. It’s staggering and it’s not about money. They have plenty of money. It’s rather about their life expectations and what that life looks like ahead of them.

If you’re interested in some of the research on this dynamic, I would refer you to the “New Map of Life,” a report by the Stanford Center on Longevity on planning for the 100-year life.

Another resource is the newly launched McKinsey Health Institute, which I mentioned previously. Their first study is titled, “Adding Years to Life and Life to Years.” What’s insightful is that their target audience is Gen Z because they will live the longest, and could otherwise be condemned to functional irrelevance, if attitudes don’t change.

Yale psychologist Dr. Becca Levy recently released a book, Breaking the Age Code: How Your Beliefs About Aging Determine How Long and Well You Live. It spotlights a revolutionary paradigm shift in how we think about aging. She has pioneered research that reveals how our mindset and beliefs shape our behaviors, our ability to heal, and our lifespan, in invisible but powerful ways.

This new mindset speaks to our new customers who have a different take on longevity. Our current value proposition has been that we have the care you need when you absolutely can’t live any longer without our help. There will always be a market for that.

However, the vast majority of baby boomers won’t be needing care-dominated senior living properties until their late 80s.

To borrow a phrase from Marc Freedman, the founder of Encore.org, which helps people 50+ find meaning in new careers, retirement for boomers will be one part purpose, one part passion, and one part paycheck, in varying combinations, depending on their position in life.

Some boomers will have to work because a paycheck will be a necessity. Others will seek a sense of purpose, perhaps to make a difference in people’s lives by volunteering. For others, they will be driven by passion as they explore new or delayed interests, such as learning to play a musical instrument.

We must change our value proposition. The options for our products are as varied as the interests and affinities that will attract new customers. But we need to ask ourselves: What personalized experiences that are metaphors for being alive or make life worth living will we offer our customers? That is our challenge for the next decade as a new customer arrives.

Next Up—Key Driver #4: Reframing Health and Healthcare. The focus will be on well care, not sick care. Senior living, healthcare providers and insurers will partner to proactively keep our residents out of the expensive acute care system.