One-half of respondents (52%) in Wave 36 anticipate their organization’s operating margins will improve in the next six months. One-third (32%) expect a 1% to 5% increase, and an increasing share (16%) anticipates growth between 6% and 10%. However, labor costs will continue to be a mitigating factor. Nearly all respondents since July have been paying staff overtime, and the use of expensive agency/temp staff is growing, with nine out of ten organizations (89%) now tapping agency/temp staff. The ability to hire from outside of the seniors housing and care industry has grown modestly from 11% to 25% since the Wave 33 survey Factors supporting NOI growth going forward include anecdotal reports of operators beginning to implement rate increases to counterbalance pandemic and recovery-related cost pressures. About one-half (47%) of respondents are currently offering rent concessions (most frequently in the form of rent discounts and free rent for a specific period of time). Single site operators are significantly less likely to offer rent concessions than their larger competitors.

–Lana Peck, Senior Principal, NIC

NIC’s Executive Survey of operators in seniors housing and skilled nursing is designed to deliver transparency into market fundamentals in the seniors housing and care space as market conditions continue to change. This Wave 36 survey includes responses from December 6, 2021, to January 9, 2022, from owners and executives of 66 small, medium, and large seniors housing and skilled nursing operators from across the nation, representing hundreds of buildings and thousands of units across respondents’ portfolios of properties.

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. 

Wave 36 Summary of Insights and Findings

• The pace of move-ins in independent living declined over the past four waves of survey data, while the pace picked up in assisted living and memory care, suggesting a slight slowdown for choice-based seniors housing and an increase in needs-based moves. (The slowdown in independent living may be due to typical patterns of seasonality). Roughly one-half of organizations with assisted living and/or memory care units reported an acceleration in the pace of move-ins (51% and 49%), compared to just over one-third with independent living units (37%). Fewer organizations with nursing care beds reported an acceleration in the pace of move-ins since the previous survey (33% vs. 44%).

• Considering the pace of move-outs in the past 30-days, no change was reported by the majority of organizations across care segments (65% to 68%). More organizations with assisted living units have seen a deceleration in the pace of move-outs than in recent surveys. However, roughly one-quarter of organizations with nursing care beds and/or memory care units reported an acceleration in the pace of move-outs typically due to discharges, natural attrition, and moves to higher levels of care.

• Although the pace of move-ins across care segments was brisk during the past two quarters, and occupancy rates as reported by NIC MAP Vision improved, only around one-third of organizations (29%) indicated that their leads volume were at pre-pandemic levels in Wave 36–down from 36% in the prior survey, but higher than 20% in Wave 26 conducted April 5 to April 18, 2021.

• In Wave 36, nearly two-thirds of organizations (61%) with assisted living units reported increases in occupancy from prior surveys, and nearly one-half (47%) of organizations with nursing care beds saw recent improvement. However, about one-third (32%) of organizations with memory care units noted declining occupancy—down from roughly one-half in Waves 35 and 33 (48% and 55%, respectively). 
• Similar to the pattern shown for the pace of move-ins for the independent living segment, the share of organizations reporting occupancy increases in independent living declined over the past four survey waves from roughly 60% to roughly 40%. 
• Although one-half (50%) of organizations with independent living units noted no change in occupancy compared to one month ago, between one-quarter and one-third (27% and 33%) of organizations with memory care units and/or nursing care beds reported declining occupancy in Wave 36.

• The expected timeframes for occupancy recovery have lengthened among operators. In Wave 36, one-half of respondents expect their organization’s occupancy to return to pre-pandemic levels in 2022 (52% down from 73% in Wave 33), and just over one-third now believe it will recover by 2023 (38% up from 8% in Wave 33).

• Nearly all operators responding to NIC’s Executive Survey Insights conducted since July (98% – 100%) reported staff shortages. In the Wave 36 survey, four out of five organizations with multiple sites (83%) reported staff shortages in more than half of their properties—up from roughly one-half (46%) in the Wave 24 survey conducted mid-March. Attracting community/caregiving staff and employee turnover remain significant challenges for survey respondents.
• When asked how they are backfilling staffing shortages, 97% – 100% of respondents cited overtime hours since Wave 25 (data collected between March 22, 2021, and January 9, 2022). And the use of expensive agency/temp staff is growing. Currently, 89% of organizations are tapping agency or temp staff—up from 77% in the prior survey. In Wave 36, approximately one-quarter (25%) indicated that their use of agency/temp staff increased more than 75% in 2021.
• While the use of volunteers remains relatively low, the ability to hire from outside of the seniors housing and care industry has grown from 11% to 25% since the Wave 33 survey.

• Offering rent concessions to new residents often helps drive increases in occupancy. Currently, about one-half (47%) of respondents are offering rent concessions to attract new residents. Of those offering rent concessions, three-quarters are offering rent discounts (76%) and more than two-thirds are offering free rent for a specific period of time (69%).  
• The chart below breaks out the 47% of responding organizations currently offering rent concessions by the size of the organization. Single site operators are significantly less likely to offer rent concessions than larger organizations. In Wave 36 only 14% of single-site providers were offering rent concessions.

• In Wave 36, one-half of respondents (52%) anticipate their organization’s operating margins will increase—up from one-third (35%) in the Wave 33 survey conducted in September. One-third (32%) expect margins to increase 1% to 5%, and a growing share of organizations anticipate growth between 6% and 10%.

Wave 36 Survey Demographics

• Responses were collected between December 6, 2021, and January 9, 2022 from owners and executives of 66 seniors housing and skilled nursing operators from across the nation. Owner/operators with 1 to 10 properties comprise roughly one-half (47%) of the sample. Operators with 11 to 25 and 26 properties or more make up the other half of the sample (31% and 26%, respectively).
• Approximately one-half of respondents are exclusively for-profit providers (54%), one-third operate not-for-profit seniors housing and care organizations (33%,) and 13% operate both.  
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 75% of the organizations operate seniors housing properties (IL, AL, MC), 28% operate nursing care properties, and 33% 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.

The current survey is available and takes 5 minutes to complete. 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 Lana Peck at lpeck@nic.org to be added to the list of recipients.

NIC wishes to thank survey respondents for their valuable input and continuing support for this effort to bring clarity and create a comprehensive and honest narrative in the seniors housing and care space at a time when trends are continuing to change in our sector.

Senior Living investors and operators discuss innovative approaches.

The pandemic has been a stress test like no other for owners, operators, and lenders alike. Lessons have been learned. But what’s the best way to align incentives among the stakeholders for success going forward?

A panel discussion at the 2021 NIC Fall Conference explored the possibilities. The session, “Capital for Operations: Aligning Incentives,” was moderated by Torey Riso, managing director at Huron Consulting. He was joined on the panel by Brian Beckwith, CEO, Arcus Healthcare Partners; Mercedes Kerr, president, Belmont Village Senior Living; Fee Stubblefield, CEO & founder, The Springs Living; and Chris Taylor, managing director, Capital One Healthcare.

Considering the events of the last 20 months, Riso asked: “What kinds of incentive structures between operators and capital sources are now most sustainable to produce returns and best serve the interests of the resident populations?”

The panelists agreed that capital providers have been patient during the pandemic. “Lenders stepped up,” said Beckwith. They adjusted agreements as needed to keep operators afloat as they struggled with occupancy, cashflow, and labor issues.

Stubblefield echoed that sentiment. “We could not have gotten through this without our financial partners,” he said. “This was tough.”

Kerr noted that capital partners have been patient because the fundamentals of the business represent a great opportunity amid the growing demographic wave of older adults. Capital One’s Taylor said, “We’re in this for the long term.” He added that as a lender he wants to align with the right owners and operators.

Even so, the panelists acknowledged several issues currently confronting the industry, especially the rise in expenses and the shortage of labor. “The industry needs a coordinated effort around labor,” said Beckwith.

Management Fees in Flux

Riso asked if the standard 5% management fee is still the right number.

“The 5% fee is broken,” said Taylor. He explained that investors and operators are coming up with creative alternatives to provide care.

Beckwith said there are cases where the 5% formula might work if a particular facility is in an attractive location and does not need a lot of resources. But investors understand that the quality of the services provided is directly correlated to financial performance. Negotiating which party spends what amount on which resources means that the investor has to understand the operator and what they need to make the facility successful, according to Beckwith.

Stubblefield’s company doesn’t take fee managed assignments. Instead, the company co-invests with its capital providers or owns the properties outright. “We have to be vertically integrated all the way to build incentives,” he said.

Riso asked whether senior living projects can be valued like a cash flow business rather than as real estate.

“Investors in this space recognize this is operationally intensive,” said Kerr. She noted the importance of investing in operations. For example, the pandemic has resulted in innovations such as telemedicine which is improving efficiencies.

Stubblefield sees the pandemic as a “great pivot point.” Owners and operators have had to align their interests to reach the best long-term result for the community. But he added, “We have to make our case to capital providers. We have to point out what we need.”

Beckwith noted that the separation of the real estate from operations has provided an efficient source of capital that has been great for the industry. “It’s a challenge to make sure the operations side and real estate mesh,” he said.

The panelists foresee a lot of experimentation with capital structures to align operational and investment interests.

“There doesn’t have to be one answer,” said Kerr. Some structures provide an opportunity for the operator to share in the upside based on performance benchmarks. But those arrangements don’t work when faced with an unexpected event like a pandemic.

Kerr thinks senior living performance standards could evolve in a way similar to that of the hotel industry where an operator’s results are judged against the performance of its peers. “More data transparency and benchmarking might be an answer to the question of how to hold an operator accountable,” she said.

Beyond financial performance, there are other ways to create alignment among partners by sharing cultural or aspirational objectives, noted Kerr. “Parties driving toward a goal together is a great motivator,” she said.

Beckwith said that the industry is trying to figure out what works best. Compressed margins are impacting valuations, making it a balancing act to generate returns while allowing the operator to make the right decisions.

Capital providers can see the value of investing in operations to deliver the best product. But, Stubblefield observed: “Operators have to lead the way.”

2022 NIC Spring Conference: Care & Housing for Older Adults | March 23-March 25, Omni Dallas Hotel

As the sector enters a new era of delivering community and care to a growing -and aging- population of older adults, no other industry event offers the level of access to decision-makers, ideas, and connections that you need to be successful like you’ll find at the 2022 NIC Spring Conference.
Senior housing and care executives represent ~70% of attendees who will be convening in Dallas this March to explore new models of community and care, build strategic partnerships and business opportunities as they shape a new era.

Operators will be looking for efficiencies, labor solutions and innovation, while capital providers will be looking for deals. Healthcare and services providers will be looking for potential new partnerships or acquisition opportunities.

Not Yet Registered?

Act now to ensure you have a seat at the table! Register and view conference details to jump start your planning. Your registration confirmation email will provide details to reserve your hotel accommodations at the Dallas Omni. Register before the Early Bird deadline of January 26, to save! [Note: Registrations must be received by the NIC Registrar no later than January 26 at 11:59 PM ET to qualify for Early Bird savings.]

To review the professional categories for registration, please visit our rates and registration page.

Networking and Connections

This year’s Spring Conference offers an array of networking resources—designed to help attendees focus on what matters most to them—developing connections and new business partnerships to keep your business ahead of the curve.

First Time Attending a NIC Spring Conference? Jump right in!

This is your chance to network with fellow first-time attendees, meet NIC Leadership, and hear tips on how to make the most of your experience—before, during, and after the conference.

Prior to the conference, first-time attendees are invited to a webinar designed to help navigate the event and the conference’s mobile app, which gives attendees access to the Attendee Listing, the “who’s who” of industry leaders. The conference mobile app offers an array of helpful resources, including floor maps, speaker bios, and Meet-Up points to help get to your meetings on time.

At the conference, attendees are invited to join the First-time Attendee gathering to hear directly from and meet NIC senior staff and volunteer leaders.

Braindate^® – Another Efficient Way to Connect, Network, and Learn

Back by popular demand are Braindates^®, 1-on-1 or small group conversations that provide attendees additional opportunities to network and connect with peers and new acquaintances. Available beginning Tuesday, March 1, registered attendees will be able to download the Braindate^® app, where they can sign up to facilitate a discussion related to topics based on areas of expertise or interests and browse other Braindate^® discussions they’d like to participate in. Look for notifications from NIC soon.

Inform Your Strategy with Stand-Alone, Not-to-be-Missed Educational Sessions

The NIC Spring Conference educational sessions have been carefully curated to offer relevant, timely, and actionable programming—to help capital providers, operators, and their partners in care and services stay on top of where the industry is headed, and where their opportunities lie today, as they adjust and adapt to markets experiencing rapid change and disruption.

Stand-alone sessions span all three days of the conference, with formats including keynote and panel presentations, and more intimate facilitated deep dive and peer-to-peer small group discussions.

Featuring admired experts and respected business leaders, topics will include:

• Building Back Occupancy
• How to Increase NOI
• Policy and Macroeconomic Outlook
• Service Markets for Older Adults
• The Middle Market
• Equity and Debt Financing
• Active Adult
• Staffing and Labor

Check our 2022 NIC Spring Conference website frequently for program updates—including speaker announcements and exciting details regarding discussion formats. Make sure to sign up for emails and important notifications from NIC.

We’ll see YOU at “The NIC.”

March 23-March 25
Dallas Omni, Dallas, TX
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The Labor Department reported that the jobless rate fell 0.3 percentage point to 3.9% in December, down 2.8 percentage points from year-earlier levels. The jobless rate is now 0.4 percentage points above the pre-pandemic level of 3.5% seen in February 2020, and well below the 14.7% peak seen in April 2020.

The supply of labor as measured by the labor force rose by 168,000 in December, while household measure of employment rose by more than 651,000 in December. These factors pushed the jobless rate lower to 3.9%. This rate is below the Fed’s estimate of its longer-term unemployment equilibrium level.

Concerns about rising wage costs are supported by this report. Average hourly earnings for all employees on private nonfarm payrolls rose by $0.19 in December to $31.31, a gain of 4.7% from a year earlier.

The household survey data supports the Fed’s view that the labor market is at or close to maximum employment and will provide further evidence that a shift in monetary policy away from being accommodative to a more restrictive stance is appropriate. Indeed, at its most recent and final meeting of the year in December, the Fed changed course sharply as it shifted away from dovish policies of low interest rates and Quantitative Easing (QE) to support overall growth to one that is more hawkish to deliberately fight inflation by slowing its monthly bond buying program and raising interest rates. Reflecting this new tone, it is likely that the Fed will raise short-term interest rates in 2022, possibly three times and further in 2023. The Fed’s bond buying program will also “taper” much more quickly than initially announced, meaning that purchases could now end in February 2022 or sooner, thereby doing less to stimulate the economy which would theoretically and eventually slow price gains as demand wanes. The exact timing depends upon when officials judge the labor market is back at “maximum employment,” with Fed Chair Jerome Powell arguing that the economy has made “rapid progress” towards that goal. The December jobs report will add evidence that this goal has been achieved or is very close to being achieved.

Separately and from a different survey, the Labor Department reported that nonfarm payrolls rose by 199,000 in December 2021. The consensus had been for an increase of 447,000. This was a sharp slowdown from October when jobs increased by 648,000 (originally reported as 546,000) and from November when jobs grew by an upwardly revised 249,000 (originally reported as 210,000). On average, job growth averaged 537,000 in 2021. Nonfarm payrolls have now increased by 18.8 million since their pandemic trough in April 2020 but are still down by 3.6 million or 2.3% from their pre-pandemic level in February 2020.

The potential negative impact of the newly identified omicron variant on jobs is likely not reflected in the December data because the survey week occurred prior to the big surge in omicron-linked cases. But the data show that the labor market continues to be affected by the delta variant especially in the service sector. Indeed, leisure and hospitality payrolls edged up by a muted 54,000, following large gains of 200,000 per month earlier in the year.

Health care lost 3,100 jobs in December. And within health care, nursing and residential care facilities lost 6,100 jobs. Losses were offset by gains in residential mental health facilities. Jobs have been on the decline in nursing care since 2011.

The underemployment rate or the U-6 jobless rate was 7.3%, down from 7.7% in November 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 labor force participation rate was unchanged at 61.9% in December but remains 1.5 percentage points lower than in February 2020. The employment to population ratio increased by 0.1 percentage point to 59.5% in December but is 1.7 percentage points below its February 2020 level.

The aging of the U.S. population and the growing incidence of dementia make understanding the local prevalence of this disease more important than ever for planning senior housing projects.

Data show that degenerative brain diseases such as Alzheimer’s are more prevalent in certain parts of the country than others and understanding these patterns can make feasibility analyses more precise and reliable as well as allow for a better targeting of supply and demand. This blog presents selected portions of a longer analysis that we’ve published as a white paper. Analysis was conducted using NIC MAP Vision data.

Memory Care – Memory care is a senior housing product type that is specifically designed for residents with dementia. Properties where memory care is offered may have a secured/locked environment, design features that highlight sunlight, staff that has specialized training about dementia, spaces where residents can move about safely, and interactive activity stations for residents, among other features. Memory care in this article uses the segment type designation from NIC MAP, meaning that the inventory used in this analysis are memory care units that can be located at any type of property.

Memory Care Medicare Beneficiary Penetration Rate – For this analysis, the memory care Medicare beneficiary penetration rate is calculated as the sum of the number of memory care units in a market divided by the total number of Medicare beneficiaries with Alzheimer’s or dementia in that market.

Total Medicare Beneficiaries with Alzheimer’s or Dementia – The total Medicare beneficiaries with Alzheimer’s or dementia in a market area. These data are sourced from the Medicare Chronic Conditions Data Warehouse. NIC MAP Vision has access to these data from Medicare, and these data points are tied to the geographic location of the beneficiary. These data are accessible at a local level in the Vision LTC portal and are as of 2019, which is the most recent vintage of data available.

The number of people diagnosed with dementia is projected to grow

The number of people in the United States estimated to have Alzheimer’s disease in 2021 is 6.25 million, which is projected to grow to 7.16 million in 2025 and reach 12.73 million in 2050.2 Barring major medical breakthroughs like finding a cure for dementia, this means that the pool of potential residents for memory care is expected to see major increases in the coming years.

Methodology

NIC MAP Vision provides Vision LTC subscribers with data from Medicare in the Vision LTC portal. These data are provided to NIC MAP Vision by Medicare in a process where the individual beneficiaries are kept anonymous. As discussed in a recent NIC Insider interview with Beth Mace and Arick Morton, CEO of NIC MAP Vision, underwriters no longer have to rely on national or state level data on dementia and can utilize local data when planning a product offering or evaluating a market.

This analysis focuses on the 31 NIC MAP Primary Markets. We looked at the number of dementia Medicare beneficiaries as a share of the population over 65 in each of the metro areas to investigate differing rates of dementia in local geographic population cohorts. Although most senior housing feasibility studies typically use older populations as a measure of potential demand, 65 is the current age at which someone can qualify for Medicare. In order to not overestimate the possible number of dementia or Alzheimer’s Medicare Beneficiaries in relation to the population in the selected metropolitan areas, this analysis uses population 65+.

Using memory care segment supply data from NIC MAP and dementia Medicare beneficiaries data from Vision LTC, we also calculate how many memory care units there are per dementia Medicare beneficiaries in each of the metropolitan markets.

Selected findings from the white paper

There are differing levels of dementia incidence by metro area and differing levels of inventory, meaning there may be imbalances in some markets and not in others, and individual markets may have varying levels of need as well as utilization of memory care units (as measured by occupancy rates). This finding may also extend to more granular areas than at the metro level.

Dementia Medicare beneficiaries by metro area

Dementia Medicare beneficiaries are not evenly distributed across the U.S. Some markets have notably higher proportions of dementia Medicare beneficiaries than others. The Miami, FL metro area has the largest share of dementia Medicare beneficiaries as a share of the population 65+ at 16.6%. Detroit has the second highest level of dementia Medicare beneficiaries as a share of the total population 65+ at 13.4%. At the other end of the spectrum are Portland Oregon, Phoenix and Seattle, all less than 8.0%. The white paper provides further information for this portion of the analysis.

Memory care units per Medicare beneficiary

Juxtaposing the need for dementia care by metropolitan market against the supply of memory care units shows that there are supply/demand gaps. For example, while Miami has the highest need for dementia care as measured by its large share of beneficiaries with dementia, it has the second lowest number of memory care units per dementia Medicare beneficiary at 1.52%. Detroit also ranks low in the number of memory care units per dementia Medicare beneficiary at 3.1%, the sixth lowest of the 31 Primary Markets.

Both Miami (72.5% occupancy) and Detroit (72.1% occupancy) face pressured memory care occupancy in the third quarter of 2021. Atlanta has the lowest memory care occupancy of the 31 Primary Markets at 70.9%. Portland has the highest memory care occupancy of the Primary Markets at 84.1%. While occupancy is likely still recovering from pandemic lows, San Francisco (83.7%), San Jose (83.6%), and Minneapolis (82.1%) also have relatively high memory care occupancies among the Primary Markets. The Primary Markets has a memory care segment occupancy of 76.8%, with 16 metros of the 31 metros below the average and 15 metros above.

Additional metros are explored in more detail and additional graphs are reported in the white paper analysis. We encourage NIC Notes readers to download the full paper.

Conclusions

Understanding local incidences of dementia can help inform plans for new projects or expansions. This analysis demonstrates that there are local variations in both the availability of memory care supply and of the dementia Medicare beneficiaries in the Primary Markets.

This analysis also  demonstrates that there are metros where there are higher levels of memory care units available to serve dementia Medicare beneficiaries, and there are other metros where there are many dementia Medicare beneficiaries and proportionately lower levels of supply available. This analysis is at the metropolitan market level, and deeper dives into smaller geographic regions in these metro areas could show more detailed information of local dynamics.

VisionLTC subscribers can use the VisionLTC platform to conduct a more localized analysis, drilling down into smaller market areas.

Selected caveats and limitations

This section provides some of the caveats and limitations of the analysis that the whitepaper explains in further detail. For full description of the limitations, please see the full publication. This analysis does not account for utilization rates of home care services, which may also have differing levels of popularity and utilization between markets. The analysis also does not factor in income assumptions for the dementia Medicare beneficiaries or their children (although the Vision LTC portal does have some income data available to subscribers as well for evaluating local income levels). The analysis also does not account for potential regional differences in availability and involvement of family caregivers.

There is also the possibility that some of the totals of dementia Medicare beneficiaries could have notable declines due to loss of life from the pandemic when the data are updated with 2020 figures, as we know many older people with dementia have been severely impacted by the virus. As a result, some of the penetration rates of memory care units per dementia Medicare beneficiaries may be understated here compared to what the 2020 numbers may be due to declines from loss of life from COVID-19.

The NIC MAP Metro areas and the Vision LTC metro areas may not have the exact same geographic boundaries for all metro areas, though they should generally be the same or very similar. This is because the two services use different years of the Census’ boundaries for metros. Visual inspection of the boundaries for each of the Primary Markets did not illustrate notable differences at time of writing, but this difference may be important for any future analysis on a smaller market outside of the Primary Markets.

Sources

1 Alzheimer’s Association

2 Rajan KB, Weuve J, Barnes LL, McAninch EA, Wilson RS, Evans DA. Population estimate of people with clinical AD and mild cognitive impairment in the United States (2020-2060). Alzheimer’s Dement. 2021; 1-10.

VisionLTC, powered by NIC MAP Vision

NIC MAP, powered by NIC MAP Vision