Medicare RPPD down 2.4% from the high set in June 2020.

NIC MAP^® Data Service, powered by NIC MAP Vision, released its latest Skilled Nursing Monthly Report on August 5, 2021, which includes key monthly data points from January 2012 through May 2021.

Below are some key takeaways from NIC Analytics regarding the data.

Skilled nursing property occupancy increased for a fourth consecutive month in May, albeit at a slower pace than recent monthly gains, rising 23 basis points from April to 73.4%. This placed it 211 basis points above the low point reached in January 2021. There is cautious optimism for increased occupancy through 2021, although recent news about the rapid spread of the contagious COVID-19 Delta variant is concerning. That said, the skilled nursing industry is still challenged by very low occupancy and the fact that government stimulus funds may be exhausted soon unless additional funds are provided. Hence, the question remains as to how fast the industry can increase occupancy to a sustainable level. It remains very low compared to February 2020 pre-pandemic levels of 85.5% (12.0 percentage points).

Medicaid revenue per patient day (RPPD) decreased $2 from April to end May 2021 at $241. Medicaid RPPD continued its recent decline after hitting a high of $244 in February. However, the latest monthly data in May still represents a 3.3% increase from pre-pandemic levels of February 2020 ($233). Medicaid reimbursement has increased more than usual as many states embraced measures to increase reimbursement related to the number of COVID-19 cases. On the other hand, covering the cost of care for Medicaid patients is still a major concern as reimbursement does not cover the cost in many states. In addition, nursing home wage growth is elevated relative to inflation and staffing shortages are a significant challenge in many areas of the country.

Medicare revenue per patient day (RPPD) declined slightly from April to end May 2021 at $559. In a similar trend to Medicaid, the Medicare RPPD continued to decline after hitting a high during the initial wave of COVID-19. There was support from the federal government to aid Medicare fee-for-service reimbursements for situations such as providing higher rates to help care for COVID-19 positive patients requiring isolation. RPPD has now declined, and one possible reason is lower property-level case counts. Medicare RPPD has decreased 2.4% from the high set back in June 2020.

Managed Medicare revenue mix held relatively steady from April to May at 10.8%. It has declined since its recent high of 11.2% in February but was up by 250 basis points from the pandemic low set in May 2020 of 8.3%. The increase is likely due to growth in elective surgeries from the prior year. Meanwhile, Medicare revenue mix continues to decline, falling 58 basis points from April to end May at 20.4%, a time-series low. It has been falling since January 2021 when it was 25.2%, the time of peak COVID-19 cases.   The downward trend is likely due to less utilization of the 3-Day Rule waiver, which was implemented to keep COVID-19 positive patients from having to go back to the hospital.

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

The report provides aggregate data at the national level from a sampling of skilled nursing operators with multiple properties in the United States. NIC continues to grow its database of participating operators in order to provide data at localized levels in the future. Operators who are interested in participating can complete a participation form at https://www.nic.org/skilled-nursing-data-initiative. NIC and NIC MAP Vision maintain strict confidentiality of all data they receive.

Interested in learning more about NIC MAP data? 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 Labor Department reported that nonfarm payrolls rose by a strong 943,000 in July 2021 and an upwardly revised 938,000 in June. The consensus estimates for July had been for a gain of 858,000. Nonfarm payrolls are now up by 16.7 million since April 2020 but remain down by 5.7 million or 3.7% from pre-pandemic levels of February 2020. The data show that the U.S. recovery from the pandemic remains in place and that the hindrance on hiring from labor shortages may be easing. Its noteworthy, however, that the data collection period for the July report occurred in the first half of the month, prior to growing concerns about the COVID-19 Delta variant.

Today’s report is especially important as the Federal Reserve wants to see “substantial progress” in the economy before it shifts monetary policy to a tighter regime of higher interest rates and fewer asset purchases.   The July jump in jobs along with the significant upward revisions in June and May payrolls point to an improving labor market, a key consideration for the Fed in evaluating “substantial progress”. Further, the 4.0% annual increase in average hourly earnings will fuel concerns about inflation.

Indeed, average hourly earnings for all employees on private nonfarm payrolls rose by $0.11 in July to $30.54, a gain of 4.0% from a year earlier, up from 3.7% in June. The data suggests that rising demand for labor associated with the recovery from the pandemic is putting upward pressure on wages. That said, the Labor Department warns that the pandemic has affected the ability to fully interpret the wage data due to the wide swings in employment trends. 

Notable job gains occurred in leisure and hospitality (380,000), local government (221,000), and professional and business services (60,000). Health care added 37,000 jobs in July. Job gains in ambulatory health care services (32,000) and hospitals (18,000) more than offset a loss of 13,000 jobs in nursing and residential care facilities. Health care employment is down by 502,000 since February 2020.  

Separately and from a different survey, the Labor Department reported that the unemployment rate fell by 0.5 percentage point to 5.4% in July and the number of unemployed persons fell by 782,000 to 8.7 million. The jobless rate is now 1.6 percentage points above the pre-pandemic level of 3.5% seen in February 2020, but well below the 14.7% peak seen in April 2020. The underemployment rate or the U-6 jobless rate was 9.2% down from 9.8% in June 2021. This figure includes those who have quit looking for a job because they are discouraged about their prospects and people working part-time but desiring a full work week.  

The number of long-term unemployed (those jobless for 27 weeks or more) decreased by 560,000 to 3.4 million but is 2.3 million higher than in February 2020, suggesting that this continues to be a very challenging time for many Americans. Long-term unemployed persons account for 39.3% of the total number of unemployed persons.

The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work was steady at 61.7% in July and has remained within a narrow range of 61.4% to 61.7% since June 2020. The participation rate is 1.6 percentage points lower than in February 2020. Many workers have dropped out of the labor force since the pandemic began to take care of family members or out of fear of working and catching the virus.  

The change in total nonfarm payroll employment for May was revised up by 31,000 from a gain of 583,000 to 614,000 and the change for June was revised up by 88,000 from 850,000 to 938,000. With these revisions, employment in May and June combined is 119,000 higher than previously reported. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. 

The rapid growth of the older population is a bright spot for growth in senior living. But will quality keep pace with this demographic growth?

“The workforce is the key to the future,” said Fee Stubblefield, founder and CEO at The Springs Living. Based in McMinnville, Oregon, the company owns and operates 18 senior living communities in the Northwest. Two new developments are underway. “Solving the workforce challenge is the number one issue impacting the quality of senior housing,” he added.

Like many industries, senior housing and care is currently struggling with a labor shortage. Competition for workers is fierce.

The uneven course of the pandemic has many of the unemployed with young children waiting to seek work until schools fully reopen. Other workers are taking time to reevaluate their job options. Some may be waiting until their personal savings run out as unemployment and federal relief payments end.

“Solving the workforce challenge is the number one issue impacting the quality of senior housing,”

Though the worker logjam may be temporary, now is the time to address the workforce issues facing the senior living industry, according to Stubblefield. “We need to think deeply about the challenge.”

Stubblefield is among the thought leaders attending the 2021 NIC Fall Conference in Houston. The Conference is NIC’s first in-person convening of leaders in senior housing and care since the pandemic began. Many industry leaders will seize the chance to share ideas with others weathering the same challenges, while simultaneously building the relationships that will help them succeed in the future.

The biggest workforce challenge is retention, according to Stubblefield. His company is able to hire people to be fully staffed. “But the industry has to figure out how to retain folks. At the end of the day, we don’t have enough job candidates,” he said.

Employee turnover adds to operating costs. More importantly, turnover affects the quality of care. “Nothing impacts resident satisfaction more directly than when a trusted caregiver leaves the job,” said Stubblefield.

Mandating higher minimum wages isn’t the answer. Instead, Stubblefield thinks more resources should be dedicated for worker benefits and career training. Those are the strategies that help retain workers. “If workers stay with us for a year, they tend to stay with us,” said Stubblefield. He added that public policies play a role in creating good jobs.

Lessons Learned
The pandemic has tested the workforce, and retention issues, like at no other time. At the outset, The Springs Living quickly pivoted operations, relying on its core value to embrace change. The number one focus was to keep people safe, both residents and workers. New infection protocols were immediately put in place and have been so successful that they will be kept going forward.

Assets were redirected to keep the staff safe, such as quickly securing personal protective equipment. “We advocate for our employees,” said Stubblefield. “That is the role of leadership.”

The company has ongoing initiatives to help retain workers. All staff are trained for their role and responsibilities. Continual education courses are provided to keep staff up-to-date and current. A leadership training program provides opportunities for front-line staff to develop the soft skills needed to grow their careers.

Mental health benefits were added to the employee insurance plan this year, and the company absorbed cost increases for employees’ health insurance. The Springs Living also offers a scholarship program for employees and immediate family members of employees.

Stubblefield’s best advice: create a supportive culture and don’t stop innovating. “We’re passionate about having an organization that people are proud to be a part of,” he said. “Happy employees mean happy residents.”

The recently released NIC MAP^® Data, powered by NIC MAP Vision, show that the seniors housing occupancy rate remained unchanged for the aggregated 31 NIC MAP Primary Markets in the second quarter of 2021. However, a recent analysis by NIC Analytics digs further and finds a substantial rise in the share of properties with increasing occupancy rates in 2Q2021.

Notably, 47.1% of seniors housing properties within the NIC MAP Primary markets reported an increase in occupancy rates in 2Q2021 compared with 1Q2021, a relatively higher proportion compared with levels seen during the pandemic and the most since 2Q2019 (pre-pandemic levels). This shows that positive demand is returning, consumer confidence is building, and suggests that the outlook for seniors housing occupancy remains optimistic.

In this blog, we examine occupancy change at the most granular level within the NIC MAP Primary Markets aggregate and across select metropolitan markets to assess seniors housing properties’ performance and occupancy growth.

Top Findings:

• In 4Q2020 and 1Q2021, about one-third of seniors housing properties within the 31 Primary Markets reported an increase in occupancy rates. This shows that these properties have been able to attract new residents and have been generally resilient.
• A bit more than 47% of seniors housing properties within the NIC MAP Primary markets reported an increase in occupancy rates in 2Q2021, a relatively higher share compared with levels seen during the pandemic and the most since 2Q2019 (pre-pandemic levels).
• Of the 31 Primary Markets, all but one saw improvements in the share of properties reporting an increase in occupancy rates in 2Q2021. Nonetheless, new inventory and dispersion in demand growth between properties continued to put downward pressure on occupancy rates across eight of the 31 Primary Markets.
• Both inventory and the total number of occupied units for the NIC MAP Primary Markets grew by about 0.7% from 1Q2021 levels leaving the seniors housing occupancy rate for the NIC MAP Primary Markets unchanged at 78.7%. However, many individual properties experienced improved occupancy.
• Occupancy improvement will be shaped by local patterns of inventory growth and demand, and will be influenced by the broad economy, consumer confidence, ease of development, the pandemic and vaccination rates.
• The 68 NIC MAP Secondary Markets share of properties reporting improvements in occupancy rates increased substantially and was 50.8% in 2Q2021.
• Detroit and Atlanta had the largest share of properties reporting an increase in occupancy rates at about 55% in the second quarter of 2021, while Baltimore had one of the smallest shares at 34.8%.
• San Jose had a noteworthy improvement in the share of properties reporting increasing occupancy rates at 46.9% in 2Q2021, but occupancy remains very low by historic standards.

Following the onset of the pandemic in March 2020, the share of seniors housing properties reporting an increase in occupancy rates was 22.5% in 2Q2020, down from 38% in the pre-covid 1Q2020 and the lowest share since NIC began reporting data in 2005. On the other hand, 58.1% of properties reported a decrease in occupancy, the highest share since NIC began reporting data.

As the pandemic continued to evolve, the share of properties reporting an increase in occupancy rates began to gradually improve in 3Q2020 and 4Q2020. Conversely, the share of properties reporting a decrease in occupancy began to gradually decrease over the same period. In fact, based on this occupancy measure, about one-third of seniors housing properties within the 31 Primary Markets have been “pandemic-resilient” in the fourth quarter of 2020 and the first quarter of 2021.

Aggregate Market Performance. Exhibit 1 below shows that seniors housing properties began to see promising signs of rebound in 2Q2021. This has translated to improvements in occupancy rates within 47.1% of seniors housing properties within the aggregated 31 NIC MAP Primary Markets average and across twenty of the 31 Primary Markets.

Notably, the share of properties reporting an increase in occupancy rate improved across 30 of the 31 Primary Markets in the second quarter of 2021, although aggregated occupancy for seniors housing in the Primary Markets was unchanged at 78.7%. This is largely due to new inventory and dispersion in demand growth between properties. Both inventory and the total number of occupied units for the 31 Primary Markets grew by about 0.7% from 1Q2021 levels.

At the market level, 8 of the 31 Primary Markets saw continued downward pressure on occupancy rates. New inventory is an important factor driving occupancy growth. As positive demand continues to build momentum and net absorptions exceeds inventory growth, the NIC MAP Primary Markets aggregate should begin to see an improvement in occupancy, but the recovery is likely to vary by market according to variations in local supply and demand conditions.

Exhibit 1 – Share of seniors housing properties by occupancy change within the NIC MAP Primary Markets.

Market-Specific Performance. From 1Q2020 to 1Q2021, about 18% of properties within the 31 Primary Markets and 18% of properties within the 68 Secondary Markets aggregates reported an increase in occupancy rates. In 2Q2021, the shares of properties reporting improvements in occupancy rates from 1Q2021 for the 31 Primary Markets and 68 Secondary Markets increased substantially and was 47.1% and 50.8%, respectively.

Drilling deeper into select metropolitan markets within the NIC MAP Primary Markets, Detroit and Atlanta had the largest share of properties reporting an increase in occupancy rates at about 55% in the second quarter of 2021, while Baltimore had one of the smallest shares at 34.8%. In fact, occupancy in Baltimore continued to slip further from 81.1% in 1Q2021 to 79.6% in 2Q2021. The occupancy drop in Baltimore was largely due to negative absorption.

Interestingly, San Jose, one of the hardest-hit markets during the pandemic, had a noteworthy improvement in the share of properties reporting increasing occupancy rates in 2Q2021. The average occupancy rate in San Jose improved by 0.4pps from 83.3% in 1Q2021 to 83.7% in 2Q2021 but remains 11.1pps below March 2020 levels and very low by historic standards. The slight improvement in occupancy rates in San Jose was mainly driven by negative inventory growth associated with units being pulled off the market.

Exhibit 2 – Share of seniors housing properties by occupancy change within the NIC MAP aggregates and select metropolitan markets.

The path of future occupancy patterns is going to be shaped by supply-demand balances, and the full recovery depends on the course of the pandemic, vaccination rates, economic growth, ease of development and a restoration of consumer confidence.

To learn more about which of the NIC MAP Primary Markets performed better at the property level during the pandemic and to learn more about NIC MAP Data, powered by NIC MAP Vision, and the additional underlying data only available to NIC MAP clients, schedule a meeting with a product expert today.

The following analysis examines current conditions and year-over-year changes in inventory, occupancy, and same-store asking rent growth—by care segments within CCRCs (CCRC segments) compared to non-CCRC segments in freestanding or combined communities to focus a lens on the relative performance of care segments within CCRCs during the second quarter of 2021.

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

Current CCRC Occupancy by Payment Type and Profit Status

From 2Q 2020 to 2Q 2021, the cumulative drop in CCRC occupancy was 4.8 percentage points from 89.1% to 84.4%. For context, CCRC occupancy in the second quarter fell 7.1 percentage points from pre-pandemic levels (1Q 2020). Non-CCRC occupancy averaged 75.4% in 2Q 2021—a very wide 9.0 percentage points lower than CCRC occupancy. On a year-over-year basis, entrance fee CCRC occupancy (87.3%) was 7.8 percentage points higher than rental CCRCs (79.5%), and not-for-profit CCRC occupancy (86.1%) was 6.5 percentage points higher than for-profit CCRCs (79.6%).

CCRCs vs. Non-CCRCs: Care Segment Detail

The table below compares each of the care segments—independent living, assisted living, memory care and nursing care—in the Primary and Secondary Markets. The table shows the 2Q 2021 total open units, occupancy and average monthly asking rent—and year-over-year changes for CCRCs and non-CCRCs.

[click to enlarge]

Independent living occupancy nearly 10 percentage points higher than non-CCRC

The CCRC independent living care segment had the highest 2Q 2021 occupancy (88.4%), followed by CCRC assisted living and memory care (82.7%, respectively). The difference in 2Q 2021 occupancy between CCRCs and non-CCRCs was the highest for the independent living segment (9.6 percentage points), and the lowest for the nursing care segment (2.8 percentage points).

While overall occupancy declined from year-earlier levels for each of the care segments, CCRCs had lesser declines in overall occupancy than non-CCRCs. The differences are in part due to the relative influence of the majority inventory mix. The CCRC independent living care segment (which represents 55.5% of CCRC units) garnered the highest occupancy in the second quarter of 2021 (88.4%), as well as the smallest year-over-year drop in occupancy, falling 3.4 percentage points. The current nursing care segment occupancy rate in non-CCRCs, which represents 51.2% of non-CCRC units, was much lower at 74.4%, and fell 5.5 percentage points year-over-year.

The highest year-over-year asking rent growth was in the CCRC nursing care and memory care segments (2.1% and 2.0, respectively). The lowest was noted for non-CCRCs in the independent living care segment (0.0%). Note, these figures are for asking rates and do not consider any discounting that may be occurring.

A long-term phenomenon, CCRCs had lower rates of inventory growth (year-over-year change in inventory) by segment than non-CCRCs. Negative inventory growth was reported for CCRCs in the nursing care segment (-1.0%). Negative inventory growth can occur when units/beds that are temporarily or permanently taken offline or converted to another care segment outweigh added inventory.

Wide disparity in regional CCRC median occupancy performance

For benchmarking purposes, some investors and operators prefer to measure themselves against the median occupancy rate, assuming that the properties that support a higher median rate are of higher institutional quality. The table below illustrates the median occupancy rates in each region.

In the second quarter of 2021, three out of eight regions had median CCRC occupancy higher than the national median rate (Mid-Atlantic, Northeast and Pacific).

The strongest CCRC median occupancy rate is in the Mid-Atlantic region and the weakest is in the Southwest region. It is notable that the difference between the Southwest’s CCRC median occupancy rate (80.1%) and the Mid-Atlantic’s CCRC median occupancy rate (87.9%) is nearly eight percentage points underscoring the wide disparity in CCRC occupancy performance.

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

Interested in learning more?

To learn more about NIC MAP data, powered by NIC MAP Vision, and about accessing the data featured in this article, schedule a meeting with a product expert today.

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