The Labor Department reported that there were 145,000 jobs added in December. This was less than the consensus estimate of 160,000 and marked the 111th consecutive month of job gains. For all of 2019, employers added 2.11 million jobs. That was a slowdown from the increase of 2.68 million in 2018 and ranked 2019 eighth for job growth in the past 10 years.

Revisions also subtracted a number of jobs to the prior two months. The change in total nonfarm payroll employment for October was revised down by 4,000 from 156,000 to 152,000 and the change for November was revised down by 10,000 from 266,000 to 256,000. Combined, 14,000 jobs were subtracted from the original estimates. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. After revisions, job gains have averaged 184,000 over the last three months, below the average monthly gain of 223,000 in 2018 (note that this will likely be revised down based on the recent preliminary benchmark revision estimate which indicates that private payrolls were over-counted by 43,000 per month in the twelve months ending in March 2019).

Health care added 28,000 jobs, and has added 388,000 jobs in 2019, similar to the increase of 359,000 in 2018.

The December unemployment was unchanged at 3.5% in December, a 50-year low. Average hourly earnings for all employees on private nonfarm payrolls rose in December by three cents to $28.32. Over the past 12 months, average hourly earnings have increased by 2.9%. For 2018, the year over year pace was 3.0% and in 2017 it was 2.6%. Reasons why wages are not growing faster include the retirement of highly paid baby boomers and relatively weak productivity growth.

The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work was unchanged at 63.2% in December, which was the highest since August 2013.

The December employment report will support the Fed’s “on hold” stance, at least for the time being. In December, the Federal Reserve left interest rates unchanged and signaled it would stay on hold through 2020, keeping the Fed and its policies on the sidelines during the election year. “Our economic outlook remains a favorable one despite global developments and ongoing risks,” Chairman Jerome Powell told a press conference in mid-December following the FOMC meeting in Washington. He continued that “As long as incoming information about the economy remains broadly consistent with this outlook, the current stance of monetary policy likely will remain appropriate.”

In October, the Federal Reserve lowered interest rates by 25 basis points to a range between 1.50% to 1.75%. This was the third cut in as many months. But Chairman Powell indicated that it may be the last cut, at least in the short term, creating the “on hold” stance viewed by many in the market.
Fed officials also released new quarterly forecasts. These showed:

• The median estimate for the fed funds rate is at 1.6% at the end of 2020, 1.9% in 2021 and 2.1% in 2022. Thirteen officials expect rates to stay on hold next year, while four see a hike as appropriate.
• The jobless rate is expected to be 3.5% by late 2020, the same as it is now. The long-run unemployment rate is seen at 4.1%, down from 4.2% in September.

In 2020, there will be an estimated 23 million Americans over the age of 75 and 8.9 million over 83, a common move-in age of a resident to seniors housing. These will be members of the Greatest Generation and the Silent Generation. And some of these older individuals—roughly 90,000—will be centenarians or older. It’s not until the end of this upcoming decade in 2029 that the oldest baby boomer will have turned 83—effectively opening the proverbial floodgates for seniors housing. 

But that doesn’t mean it’s time to sit back and just wait because there is a lot of change on the horizon for the seniors housing sector. This blog highlights just one of these changes and focuses on technology.

Age-tech, gerontechnology, assistive technology, silver-tech are all descriptors of this emerging focus of technology applications as they specifically apply to older individuals. It’s the intersection of gerontology and digitization and the applications are wide ranging as older adults and their family caregivers adopt technology that can support their shared goals of safety, longevity, independence, quality of life and connection to friends and family.

Aging 2.0 identifies “Eight Grand Challenges” for this intersection of aging and technology: (1) Engagement and Purpose, (2) Financial Wellness, (3) Mobility and Movement, (4) Daily Living and Lifestyle, (5) Caregiving, (6) Care Coordination, (7) Brain Health, and (8) End of Life.

While this commentary is too short to do justice to each these focus areas, below are a few applications being developed by a host of software and hardware entrepreneurs and businesses, including the mega-giants Amazon, Google and Apple. 4Gen estimates that revenues in the U.S. age-tech market exceeded more than $350 billion in 2018, a significant industry indeed.

Brain Health.  Technology has the potential to help with cognitive care and brain health issues related to memory, language, problem solving and other cognitive skills that affect a person’s ability to perform everyday activities.   

Caregiving, Mobility and Movement.  From a health and wellness perspective, telehealth has the potential to reduce health care costs and improve health care coverage by allowing instant connectivity via video conferencing with live doctors. Hand-held devices with medical applications, remote monitoring of residents and connected equipment can provide visibility and insights about exercise regimens, diet and vital signs as well as help with sensory functions such as vision, hearing and motor skills.

Engagement, Purpose and Socialization.  Socialization, engagement and purpose are important considerations in aging.  Studies have found that social isolation and loneliness among seniors has the same impact on health as smoking 15 cigarettes a day, while a strong purpose in life can add five or more years of life span to older adults. Smart phones and appliances, remote sensors, mobile personalized connectivity applications and software systems have the potential to better allow aging in place, independence and virtual socialization.

Daily Living, Lifestyle and Care Coordination.  Robots, virtual assistants, smart phone apps, iPads and other devices can help with medication management, emergency response services, fall detection, vital signs tracking, transportation, finance, sensory aids and mobility aids. The on-demand economy can also help address these issues. Japan, whose society is aging more rapidly than the U.S., and which has a more vexing labor shortage challenge than does the U.S., is a good place to look at advancements in this realm.

As these technologies get tested and winners and losers emerge, the operations, real estate, social and medical aspects of the sector will be forever changed.

As we embark on a new year, it’s time to look back for a moment and review the milestones of 2019, which, in addition to our most popular posts, includes the relaunch of this blog platform over the July 4^th weekend. It’s now easier to search for articles by topic and keyword and easier to read on your phone or other device. We also installed better tracking software, enabling us to better understand which posts are most valued by our readers. As explained in our “Welcome to NIC Notes” post, NIC took the opportunity to change the blog’s name, too, in an effort to reduce the potential for confusion around our mission and focus, particularly for new readers from the healthcare space. Hence, “NIC CARES” has become “NIC Notes.”

A review of the new blog’s traffic reveals that it remains popular, and continues to steadily grow, both in terms of overall views and new subscribers. The most popular posts on NIC Notes remain those focused on trends and analysis, although a perspective piece (Bob Kramer’s views on the “Silver Tsunami”) ranks in the top five for the year. In case you missed any of these, here are the top posts for 2019, dating back to the re-launch of NIC Notes.

CCRC Market Trends: 3Q 2019

When measured both by unique page views and time-on-page, NIC Senior Principal Lana Peck’s “CCRC Market Trends: 3Q 2019” post was the most popular in 2019. Clearly, readers found this post interesting enough to rack up an average time-on-page of almost five minutes – a substantial commitment in a world of momentary quick-scans and high bounce rates. Our analytics indicate that many readers spent much more time with the post. As the post provides a substantive, well-considered narrative on the state of CCRCs, supported by the latest NIC data, and illustrated with original graphs, this is hardly surprising. While Peck refrains from stating any opinions, readers likely value her insights as they work to support their own analysis.

Five Key Takeaways from NIC’s Second Quarter 2019 Seniors Housing Data Release

When NIC MAP releases new data each quarter, and accompanies it with a webinar, hundreds of NIC MAP clients pay close attention. But you don’t have to be a client to gain real insights from the latest NIC MAP data. Blog subscribers know that NIC Notes features a breakdown of the key takeaways, complete with key graphs and some of the insights that are shared in the webinar. Perhaps this is why our quarterly “Five Key Takeaways” posts on seniors housing data rate so many readers. This year is no different, with the second quarter post drawing the most pageviews for the year.

Looking into the Future:  How Much Seniors Housing Will Be Needed?

Another big driver of pageviews is NIC Chief Economist, Beth Burnham Mace. When she co-authored a post with NIC Research Statistician, Anne Standish, titled “Looking into the Future:  How Much Seniors Housing Will Be Needed?” the blog saw a spike in traffic. Their analysis of several scenarios projecting future seniors housing needs at different penetration rates concludes that significantly more housing will be needed by 2040. The post includes their base case results, scenario analysis, and conclusions, along with an explanation of their methods and supporting graphs.

Why ‘Silver Tsunami’ is an Ageist Term

Not every top post this year is supported with graphs and statistical analysis. Many readers found NIC Founder and Strategic Advisor Bob Kramer’s post, “Why ‘Silver Tsunami’ is an Ageist Term” worth reading for another form of insight. He uses the blog to draw attention to his view that “Rather than thinking about a catastrophic ‘Silver Tsunami’ we need to be thinking about the potential benefits of a ‘Silver Stimulus.’” The post links to a more in-depth piece published in the NIC Insider, in which Kramer delves into the potential opportunities that a wave of aging baby boomers will open up for the seniors housing sector.

Current Occupancy Performance Patterns of Older Seniors Housing Markets May Surprise You

Rounding out our list of top NIC Notes posts for 2019 (since July 4), is another post from Lana Peck. Titled “Current Occupancy Performance Patterns of Older Seniors Housing Markets May Surprise You” the piece delves into the latest NIC MAP data to raise some interesting insights – and questions – around an aging supply of properties. The piece is brimming with data points, graphical illustrations, and the observations of a senior professional analyst who spends her time focused on the sector.  

As we look forward to a great 2020, NIC Notes resolves to remain as relevant, useful, and interesting as ever. The blog will continue to post detailed analysis based on the latest NIC MAP data, as well as expert insights on market trends, and the occasional perspective on the seniors housing and care industry. Subscribing is simple – and ensures you will receive a single weekly recap email, linking you to the latest posts, many of which will be read and studied across the sector.

The skilled care delivery and payments system is going through a significant transitional period and it is increasingly difficult to be financially successful without meeting quality standards.

“Financial success is being tied to quality,” said Marc Zimmet, president and CEO of Zimmet Healthcare Services Group, a New Jersey-based consulting firm. “A much more complex system has emerged with so many players, payors and vested interests, but meeting increasingly stringent value targets often results in counterproductive strategies that may improve one revenue source but hurt another. It’s all connected, or said another way, it’s our “Theory of Reimbursementivity.”

Zimmet’s firm advises skilled nursing facilities and other stakeholders on all aspects of what he calls the reimbursement-compliance ecosystem. His firm works with more than 3,000 providers and related stakeholders nationwide.

Based on his broad experience, Zimmet noted the difficulty for a skilled facility to be financially successful today without meeting the quality standards demanded by payors and provider partners. “Rewarding quality is the right thing to do,” he added, cautioning that quality measures can vary. “The issue is that everyone measures quality and rewards quality differently.” The process includes understanding the nuances of bundled payments and the new patient driven payment model (PDPM). “Many operators struggle to manage all these moving parts, and the result is lost reimbursement,” said Zimmet. “Things [] fall through the cracks; we try to make sure that doesn’t happen.”

Another important factor is the growth of Medicare Advantage plans. About 65% of new Medicare recipients are opting for Advantage plans, which push down episodic treatment revenue from fee-for-service Medicare.

Some skilled operators may benefit by joining an institutional special needs plan, or I-SNP, according to Zimmet. The goal of the I-SNP is to treat residents in place. A skilled nursing facility may be able to share in the savings generated by not sending residents to the hospital.

But Zimmet warned, “An I-SNP may be a balancing act for the facility. It has to consider how all the pieces fit together, including the dynamics of contracted services, such as physical therapy, the impact of capitated payments, and the new Patient Driven Payment Model (PDPM). It’s all connected.” An operator that brings down costs in one area may be raising them in another. Also, facilities in states with higher Medicaid rates may be better positioned to benefit from an I-SNP.

Another challenge: In a complex environment, operators can run afoul of regulations, particularly regarding Medicare coverage rules which can be impacted by whether or not the resident is enrolled in the I-SNP or traditional fee-for-service. “Compliance is a big issue that often gets overlooked—facilities must have consistent policies,” he advised.

See an extended interview with Zimmet, including his thoughts on positioning a facility and his outlook for the sector, in the December issue of the NIC Insider newsletter.

As the leading data provider for the seniors housing and care industry, the NIC MAP Data Service® 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® currently tracks 1,196 nonprofit and for-profit entrance fee and rental CCRCs in these 140 combined markets (1,125 in the 99 combined Primary and Secondary Markets).

CCRCs offer multiple care segments (at a minimum independent living and nursing care) typically by a single provider on one campus. This analysis breaks the care segment types apart from the CCRC community type that NIC includes under the main category of Seniors Housing. Care segment type refers to each part or section of a property that provides a specific level of service, i.e., independent living, assisted living, memory care or nursing care.

Expanding on a recent NIC blog post that detailed 3Q 2019 CCRC market fundamentals data and trends in the 99 combined Primary and Secondary markets, which represent the aggregate of the data collected from 99 of the nation’s largest core-based statistical areas (CBSAs), the following analysis examines current inventory, occupancy, year-over-year same store asking rent growth—and average occupancy growth, average annual same store asking rent growth, and average change in inventory for the past three years—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.

Key Findings:

CCRCs reported higher occupancy and rent growth than non-CCRCs, which had significantly higher levels of inventory growth. Higher inventory growth at non-CCRCs, lower turnover at CCRCs, CCRC customer characteristics (e.g., “planners who are attracted to lifestyle-enriched amenities and services with the security of knowing future healthcare needs will be met) and the relative performance of the majority unit mix may explain potential reasons for these stronger rates of occupancy in CCRCs.

• As of 3Q 2019 in the 99 Primary and Secondary Markets, the overall occupancy rate at CCRCs was 5.0 percentage points higher than at non-CCRCs (91.4% vs. 86.4%). And, between 3Q 2016 and 3Q 2019, care segment occupancy improved more for CCRCs than non-CCRCs.
• The current occupancy rate for both CCRCs and non-CCRCs was highest in the independent living care segment (92.7% and 88.4%); occupancy was lowest for CCRCs in the nursing care segment (88.7%)—and for non-CCRCs in the memory care segment (83.7%).
• The difference in current occupancy between CCRCs and non-CCRCs was the highest for the memory care segment (7.6 percentage points), followed by the assisted living care segment (6.1 percentage points), the independent living care segment (4.2 percentage points) and the nursing care segment (2.8 percentage points).
• For the three-year time period under study (3Q 2016 to 3Q 2019), CCRCs had higher rates of occupancy growth than non-CCRCs for each of the four care segments.
• The memory care segment at CCRCs reported the highest occupancy growth (2.3 percentage points). The least growth in occupancy was noted for the non-CCRC independent living and assisted living care segments (declining 3.0 and 2.6 percentage points, respectively).
• Inventory growth (reported as the change in the number of units from 3Q 2016 to 3Q 2019) was higher for non-CCRCs across all of the four care segments.
• Both CCRCs and non-CCRCs reported the largest (proportionate) inventory growth for the time period in the memory care segment.
• Only the nursing care segment reported negative inventory growth (CCRCs -2.3% and non-CCRCs -1.1%). Reasons for negative inventory growth may include some beds being taken offline, combined, or shifted to lower acuity care segments.
• From 3Q 2016 to 3Q 2019, the highest average year-over-year same store asking rent growth was noted for CCRCs in the independent living and assisted living care segments (3.4% and 3.3%), and the lowest for non-CCRCs in the independent living care segment 2.1% (which, incidentally, also had the largest negative average change in occupancy for the three-year period under study, -3.0 percentage points).

Current Unit Mix and Occupancy

In the third quarter of 2019, CCRC occupancy, which is inclusive of both entrance fee and rental payment types in both nonprofit and for-profit communities across the 99 Primary and Secondary Markets, was 91.4%–equal to the highest occupancy rate achieved since 4Q 2008. Non-CCRC occupancy averaged 86.4% in 3Q 2019 (5.0 percentage points lower than CCRC occupancy).

Conventional wisdom suggests that the wide discrepancy in occupancy rates may be due, in part, to the unique CCRC product offering, which tends to attract retirees who are “planners”—those who wish to make one move to a continuum of care—or perhaps because new CCRC residents are generally healthier than residents in other types of seniors housing, resulting in lower resident turnover in CCRCs.

However, another potential reason for the difference in occupancy rates may be a result of the relative influence of the majority inventory mix in CCRCs compared to non-CCRC communities (freestanding and combined). As shown in the chart, in aggregate, CCRCs are comprised of a majority of independent living care segment units (55.5%), followed by nursing care units (27.1%), assisted living units (13.8%), and memory care units (3.7%). Compared to CCRCs, non-CCRCs have lower proportions of independent living care segment units (14.2%), higher proportions of nursing care units (53.3%), assisted living units (24.2%) and memory care units (8.3%) than CCRCs.

Thus, the overall CCRC occupancy rate, compared to the overall non-CCRC occupancy rate, may be influenced positively by majority unit mix as the CCRC independent living care segment (which represents 55.5% of CCRC units) garnered the highest occupancy in the third quarter of 2019 (92.7%), as well as on average for the three-year period under study. The current nursing care segment occupancy rate in non-CCRCs, which represents 53.3% of non-CCRC units, was much lower at 86.0%.

CCRCs vs. Non-CCRCs in Detail

The table below compares each of the care segments—independent living, assisted living, memory care and nursing care—in the 99 Primary and Secondary Markets. The table shows the 3Q 2019 total open units, occupancy and year-over-year same store asking rent growth—and average change in occupancy, average year-over-year same store asking rent growth, and average change in inventory for CCRCs and non-CCRCs for the three-year time period (3Q 2016 to 3Q 2019).

The CCRC independent living care segment had the highest 3Q 2019 occupancy (92.7%), followed by assisted living (91.6%), memory care (91.2%), and nursing care (88.7%). Among non-CCRCs, the independent living care segment had the highest 3Q 2019 occupancy (88.4%), followed by nursing care (86.0%), assisted living (85.5%) and memory care (83.7%).

The difference in 3Q 2019 occupancy between CCRCs and non-CCRCs was the highest for the memory care segment (7.6 percentage points), followed by the assisted living care segment (6.1 percentage points), the independent living care segment (4.2 percentage points) and the nursing care segment (2.8 percentage points). 

CCRC same store year-over-year asking rent growth in the third quarter of 2019 was 3.9% (down from the time series high of 4.6% reached in the first quarter of 2019). The highest year-over-year same store asking rent growth was reported for CCRCs in the independent living and assisted living care segments (3.4% and 3.1%). The lowest was noted for CCRCs in the memory care segment (1.8%), and non-CCRCs in the independent living and memory care segments (2.1%, respectively).

Higher Occupancy at CCRCs

For the three-year time period under study, CCRCs had positive improvement in occupancy rates for all four care segments, while non-CCRC care segments saw declines in occupancy.  The best improvement in occupancy was for the CCRC memory care segment (2.3 percentage points), and the largest occupancy declines were for the non-CCRC independent living and assisted living care segments (-3.0 and -2.6 percentage points).

• Among CCRCs, the memory care segment had the strongest occupancy improvement (a gain of 2.3 percentage points), followed by independent living (a gain of 0.7 percentage points), assisted living (a gain of 0.3 percentage points), and the nursing care segment (a gain of 0.1 percentage points).
• Among non-CCRCs, the independent living care segment had the greatest change in occupancy and this change was negative (a decline of 3.0 percentage points), followed by assisted living (a decline of 2.6 percentage points), memory care (a decline of 1.1 percentage points), and the nursing care segment (a decline of 0.3 percentage points).

Significantly Weaker Inventory Growth at CCRCs

For the three-year time period under study, non-CCRCs had significantly higher rates of inventory growth (change in inventory), overall, and by segment, than CCRCs. Between 3Q 2016 and 3Q 2019, inventory at CCRCs grew by 1.6% (5,892 units), while non-CCRC inventory growth grew by 5.6% (75,775 units). The highest rate of inventory growth was reported for both CCRCs and non-CCRCs in the memory care segment (12.4% and 24.9%); the lowest was reported for both CCRCs and non-CCRCs in the nursing care segment (-2.3% and -1.1%).

• Among CCRCs, the memory care segment had the highest inventory growth (12.4%–a gain of 1,507 units), followed by independent living (2.9%–a gain of 5,867 units), and assisted living (1.8%–a gain of 895 units). However, inventory declined in the nursing care segment by 2.3% (a reduction of 2,377 beds).
• Among non-CCRCs, the memory care segment had the highest inventory growth (24.9%–a gain of 24,752 units), followed by assisted living (12.1%–a gain of 38,904 units), and independent living (10.8%–a gain of 20,562 units). Inventory declined in the nursing care segment by 1.1% (a reduction of 8,443 beds).

Higher Annual, Same Store Asking Rent Growth at CCRCs

For the three-year time period under study, CCRCs had higher rates of average year-over-year asking rent growth overall, and by segment, than non-CCRCs. The highest was noted for CCRCs in the independent living and assisted living care segments (3.4% and 3.3%), and the lowest for non-CCRCs in the independent living care segment 2.1%.

• Among CCRCs, the independent living care segment had the highest average year-over-year same store asking rent growth for the three-year period (3.4%), followed by assisted living (3.3%), nursing care (3.0%), and the memory care segment (2.9%).
• Among non-CCRCs, the assisted living care segment had the highest average year-over-year same store asking rent growth over the three-year period (2.6%), followed by the memory care and nursing care segments (2.5%, respectively), and the independent living care segment (2.1%).

Look for future blog posts from NIC to delve deep into the performance of CCRCs. For further information on NIC, its reports, and data and analytics services available to providers, please visit the NIC website at www.nic.org.

A version of this analysis was originally posted to Ziegler’s Z-News newsletter on December 13, 2019.