“When aggregated across all care segments, one-half of responding operators (52%) report an acceleration in the pace of move-ins in April 2023. This marks the highest level of operators reporting an acceleration since April 2022, when 54% of organizations reported the pace of move-ins to be accelerating. However, this is still below the peaks experienced from April to July 2021, when approximately 60% of operators reported an acceleration in the pace of move-ins. 

The higher cost of debt is having an influence on organizations’ development pipeline. More than one-half of independent living operators (57%) report the higher cost of debt is having a significant impact to their development pipeline, followed by one-half of memory care (50%) and assisted living (49%) operators. Just under one-third of nursing care operators (29%) report the higher cost of debt having a significant impact on their development pipeline.”

 –Ryan Brooks, Senior Principal, NIC

This ESI survey includes responses from April 1, 2023, to April 30, 2023, from owners and executives of 45 small, medium, and large senior housing and skilled nursing operators across the nation, representing hundreds of buildings and thousands of units across respondents’ portfolios of properties. The number of properties owned or operated by survey respondents in the April 2023 ESI ranges from one to as many as 400. 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. 

In the April 2023 ESI, the share of operators reporting an acceleration in the pace of move-ins in the past 30 days has increased across all care segments. More than one-half of assisted living (56%), memory care (56%), and independent living (52%) operators report an acceleration in the pace of move-ins. For independent living operators, this marks the third consecutive month with an increase, up from 37% in March 2023 and from 27% in February 2023. Slightly fewer than one-half of nursing care operators (44%) report acceleration in the pace of move-ins, up from 28% the previous month.

When aggregated across all care segments, approximately one-half (52%) of operators report an acceleration in the pace of move-ins in April 2023. This marks the highest level of operators reporting an increase since April 2022, when 54% of organizations reported an increase. However, this is still below the peaks experienced from April to July 2021, when approximately 60% of operators reported an acceleration in the pace of move-ins. 

The increasing proportion of organizations reporting an acceleration in the pace of move-ins is creating optimism with regard to the anticipated timeframe for occupancy to recover to pre-pandemic (March 2020) levels. Across all care segments, almost two-fifths of operators (38%) anticipate occupancy to recover in 2023, while one-quarter (25%) anticipate the recovery won’t occur until 2024. Only 6% of operators anticipate it will take until 2025 or later for occupancy to recover.

Perhaps predictably, the needs-based settings are the most optimistic about the occupancy recovery timeline, with almost one-half of nursing care (46%) and two-fifths of assisted living (41%) and memory care (40%) operators anticipating occupancy recovery in this calendar year. Conversely, for the wants-based setting of independent living, only one-quarter of operators anticipate occupancy to recover to pre-pandemic levels in 2023.

Despite optimistic occupancy recovery timelines, difficulties persist on the labor front. Attracting community and caregiving staff is cited as the biggest challenge by respondents (78%), followed by rising operator expenses (76%) and staff turnover (67%). The proportion of organizations reporting more than 25% of full-time, open positions across their organization has more than doubled – to 12% — since the last time this question was asked in November and December 2022, when only 5% of organizations reported more than 25% of full-time positions as open.

These openings are a leading cause of operators experiencing a staffing shortage and greater than 90% of operators report experiencing a staffing shortage in April 2023. Among these operators, just under one-tenth (8%) indicate the shortage to be severe. Three-quarters (75%) of respondents indicate their staffing shortage to be moderate, followed by one-sixth (17%) who indicate the shortage to be minimal.

Agency staff is still being used to supplement job roles, with nurse aides (38%) and nurses (33%) being the roles that are most often being supplemented. Food services employees (13%) and plant operations employees (10%) follow as the next most likely job roles to be supplemented by agency staff. 

Even with the open, full-time positions being high in April 2023 and attracting community and caregiving staff being cited as the biggest challenge, almost one-half (48%) of operators believe staffing challenges will improve in 2023, followed by one-quarter (28%) of operators who anticipate seeing improvements in 2024, and the remaining one-quarter not anticipating seeing improvements until 2025 or later. 

New questions to the ESI survey ask about the impact of the current operational environment (occupancy rates, operating expenses, inflation, etc.) on the ability to service debt as well as the impact of the higher cost of debt on their organization’s development pipeline. 

With regards to the impact of the current operational environment on the ability to service debt, half (50%) of nursing care operators reported there was no impact, followed by just under one-half of assisted living (46%), independent living (43%), and memory care operators (41%). Comparatively, just under one quarter of nursing care operators (23%) reported the current environment had a significant impact on their ability to service debt, while one-sixth of memory care operators (17%), and one-tenth of independent living (11%) and assisted living operators (10%) reported a significant impact. 

While most respondents indicate the current operational environment is having no impact to their ability to service debt, the higher cost of debt is having an influence on organizations’ development pipeline. More than one-half of independent living operators (57%) report the higher cost of debt is having a significant impact to their development pipeline, followed by one-half of memory care (50%) and assisted living (49%) operators. Just under one-third of nursing care operators (29%) report the higher cost of debt having a significant impact on their development pipeline. 

Despite the impact of higher debt costs, two-fifths of operators are still considering diversifying their product offerings in 2023. Among organizations who are considering product diversification, three-quarters plan to diversify into lower acuity settings (76%), while only one-sixth plan to diversify into higher acuity settings (18%). A small portion of responding organizations (6%) plan to expand into both lower and higher acuity settings.

April 2023 Survey Demographics

• Responses were collected between April 1 and April 30, 2023, from owners and executives of 45 senior housing and skilled nursing operators across the nation.
• Owners/operators with 1 to 10 properties comprise roughly one-half of the sample (56%). Operators with 11 to 25 properties and operators with 26 properties or more account each account for roughly one-quarter (22%) of respondents.
• More than one-half of respondents are exclusively for-profit providers (58%), one-third operate not-for-profit seniors housing and care properties (33%), and 9% operate both.  
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, three-quarters (71%) of the organizations operate seniors housing properties (IL, AL, MC), 22% operate nursing care properties, and 36% operate CCRCs – also known as life plan communities.

The May 2023 ESI survey is currently open and will be collecting responses through May 31, 2023. If you are an owner or C-suite executive of seniors housing and care and would like an invitation to participate in the survey, please contact Ryan Brooks at rbrooks@nic.org to be added to the list of recipients.

NIC wishes to extend a heartfelt thank you to the owners and operators who have contributed to this survey over the past three years. It is remarkable that we have now completed more than 50 waves of surveys. We have surveyed through numerous challenges — COVID-19, threats of a looming recession, labor shortages, inflation, and rising expenses — many of which still persist. As we continue to navigate through these challenges, your input and real-time insights help ensure the narrative on the senior housing and care sector is accurate. By demonstrating transparency, you build trust. Thank you.

NIC MAP Vision released its latest Skilled Nursing Monthly Report on May 4, 2023.  The report includes key monthly data points from January 2012 through February 2023.   

Here are some key takeaways from the report: 

Occupancy 

Skilled nursing property occupancy increased 23 basis points from January to end February at 81.3%. Occupancy is up 196 basis points from one year ago in February 2022 as it continues to recover since the pandemic low of 74.6% set in January 2021. Occupancy has increased for three months in a row. To be clear, challenges do persist as staffing shortages continue to create difficulties within skilled nursing properties limiting the ability to admit new residents in some markets. However, the current occupancy trend does suggest that demand for skilled nursing properties is recovering, given the increase in occupancy in 2022 and continuing in 2023. Occupancy remains low compared to February 2020 pre-pandemic levels of 88.8% (7.5 percentage points). 

Managed Care 

Managed Medicare revenue mix declined slightly, dropping 5 basis points from January to end February at 11.6%. It has declined 78 basis points since its recent high of 12.4% in February 2022. However, it is up by 254 basis points from the pandemic low set in May 2020 of 9.1%. Expectations are that it will continue to increase over time with the growth of managed Medicare. Meanwhile, Managed Medicare revenue per patient day (RPPD) was flat, holding at $473 in February, but it is down 1.7% from last year in February 2022. It has decreased $119 (20.1%) from January 2012 and continues to pressure some operators’ revenue as managed Medicare enrollment grows around the country. However, some operators see managed Medicare as an opportunity for growth in patient volume. 

Medicaid 

Medicaid patient day mix increased slightly to 64.7 % in February. However, it has increased 138 basis points from the pandemic low of 63.3% set in January 2021. In addition, Medicaid revenue mix decreased slightly in February, representing just over half of property revenue at 50.5%. However, it has increased 202 basis points from the pandemic low of 48.5% set in February 2022. Meanwhile, Medicaid revenue per patient day (RPPD) increased to $269 in February. It increased 3.2% from $261 one year ago in February 2022.  

Medicare 

Medicare revenue per patient day (RPPD) decreased slightly from January to end February 2023 at $588. It has increased 2.6% since September 2022. Most of this increase in reimbursement is likely a result of the increase in Medicare rates to skilled nursing properties for fiscal year 2023 and potentially higher acuity patients, which also increases RPPD to care for more complex patients. Meanwhile, Medicare revenue mix decreased for the second month in a row. It decreased 30 basis points from January to end February at 22.1%. It is down from one year ago as well, decreasing 269 basis points from February 2022. 

Get more trends from the latest data by downloading 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 and NIC MAP Vision maintain strict confidentiality of all data received. 

New ways to advance transparency discussed at 2023 NIC Spring Conference. 

Robust data and transparency continue to fuel the growth of the senior housing and care industry. Stakeholders rely on solid information to make big decisions. No one can afford guesswork.  

Addressing the importance of reliable data to inform decision-making, the 2023 NIC Spring Conference featured a Data Town Hall. The interactive session opened the floor to attendees in a town hall format. Participants discussed how the industry can advance transparency for senior housing and skilled nursing stakeholders.   

“We’ve come a long way in the last several years with our data and analytics,” said NIC President and CEO Ray Braun, who led the town hall session. “We have transformed the industry by making it more transparent.” 

Audience questions were fielded by Braun, along with NIC Chief Operating Officer Chuck Harry; NIC Chief Economist Beth Mace; and Arick Morton, CEO at NIC MAP Vision.  

To set the stage, Morton provided an update on new data initiatives. “We have an incredible demand side run ahead of us,” he said. But Morton cautioned that the growing demand for senior living among aging baby boomers will not be evenly distributed. “We are focused on where the market is moving,” he said. 

Here are just some of the new data tools from NIC MAP Vision: 

• An interactive transaction analytics platform that segments data by subcategory. 
• A national property transaction comparison model for better acquisition and disposition decision-making.  
• An operating comparison model that quickly charts buildings of a similar type in a market area. 
• Portfolio analysis to understand performance at the unit level relative to competitors. 
• A free-of-charge listing platform of properties for sale that users can browse.  
• A stakeholder library and database of owners and operators by building.   
• A consolidated data set on consumers by market that includes age, income, and psychographics. 
• New models that track revenue per available room (RevPAR).
• Healthcare utilization patterns by property including which providers are serving the residents.  

More data sets and metrics are in the works, such as operational benchmarking and transaction underwriting tools.  

Discussion Provides Opportunity to Engage 

The audience was then invited to share their thoughts. They offered input on what data tools would be helpful to inform their decision-making.  

Anne Hampton, managing director at Wells Fargo, asked when the industry would have a standard chart of accounts to tally revenues and expenses. She said lenders receive profit and loss statements from operators that vary widely in how results are categorized. Other useful measures would be average occupancy by acuity, and a common definition of move-ins and move-outs.  

Though the need for standardized accounts has been a discussion point for the industry since the early 2000s, the arrival of more robust data will move the process forward, the speakers agreed.  

Hampton also suggested that a breakdown of rents by care level would be useful. Morton said work is under way to add new data elements while maintaining the historical legacy of the time series data. Mace added that a quarterly actual rates time series is available that includes both asking and effective rates.  

Attendee Fara Gold McLaughlin, CEO at Seniors Housing Advisor, said detailed information on consumer psychographics would be helpful. Morton explained how data is now being used to identify subgroups of consumers. Mace added that NIC is sponsoring research with NORC at the University of Chicago to understand the frailty levels of residents. 

Mace added that new research by NORC released at the Conference shows that seniors in assisted and independent living fared just well as in terms of excess deaths during COVID as seniors in the broader community. Seniors in continuing care communities actually fared better.  

Cap rates were discussed. An audience member suggested providing data on cap rates based on market size and building class. “That’s a huge challenge,” said NIC’s Harry. Buyers, sellers, and brokers have been hesitant to share that information, though that’s gradually changing, he explained.  

Mitch Brown at Senior Housing Consulting asked for information on the total assets of consumers, rather than only income.  

Mace noted that NIC’s Forgotten Middle study did look at total financial resources as a measure, both assets and income. “We know this is a big issue,” said Mace.  

Aggregate net worth data by market is readily available, said Morton. But he warned that collecting data on individual prospects via a credit check legally requires the individual’s permission.  

Other suggestions included providing more detail on length-of-stay and rate information by building.  

Mace noted that the first of its kind 2023 NIC Data & Analytics Conference will be held September 27-28 in Minneapolis. The event will focus on data-driven senior housing and care analyses. “It’s an opportunity to learn, exchange ideas and provide feedback,” she said. The conference will include NIC and NIC MAP Vision experts as well as representatives from other data-driven organizations. “Mark your calendar,” said Mace.  

It’s now been a little over a year since the Federal Reserve began to increase interest rates to slow the pace of inflation and the rate of economic growth. The increase in rates has been large, and it has been fast. Short-term interest rates have gone from virtually 0% in March 2022 to 4.75% today, the most significant tightening in monetary policy since the 1980s, when then-Fed Chair Paul Volcker also increased rates to combat inflation and slow economic growth. Meanwhile, longer-term interest rates have also risen, with the yield on the 10-year Treasury bonds increasing from 1.7% in early March 2022 to 3.5% today as the bond markets respond to the changing economic and policy landscape.  

Higher rates have made it significantly more costly and more difficult for borrowers to do what they do:  borrow—i.e., borrow for acquisitions of stabilized properties, borrow for new investment, borrow for business-as-usual and on-going business activity, borrow for construction and development projects, and borrow to refinance existing debt when it comes due.

Further, the movement of short-term interest rates away from historically low rates to above 4% has triggered a rapid shift of deposits away from regional bank savings accounts to higher interest-bearing instruments including U.S. Treasury bills, money market funds, and time-bearing deposits such as certificates of deposits (CDs). This poses an additional risk to borrowers because lending by regional banks is highly dependent upon deposit levels and flows. And even if the danger of more deposit outflows lessens, regional banks are likely to exert greater caution with their lending as they experience more regulatory scrutiny.   

This is particularly concerning for senior housing borrowers since an estimated one-third of real estate lending stems from regional banks.  Even before recent weeks, there were both credit and capacity issues in lending.  Most loans today require recourse, face lower loan-to-value ratios (50 to 60%), stricter loan covenants, and higher all-in rates.  

In addition, many permanent loan lenders prefer to extend credit to borrowers with stabilized assets. And for those with non-stabilized properties, bridge financing is significantly scarcer because the recycling of bank capital has diminished as deals are no longer quickly coming off lenders’ books.  Construction financing is very difficult to source for all but the best sponsors with a history of relationships with their lenders. For those in the transactions markets, deals are increasingly all cash with the expectation that borrowing costs will be less formidable in the future. 

The lending environment is just one of many challenging realities facing senior housing operators and their capital providers as we move into the summer months. Other considerations include the valuation adjustments going on across all commercial real estate asset classes including senior housing. Operators also face rising, albeit slower growing, expenses, which continue to take a toll on margins.  

Other realities are more positive in nature, however, and include continued improvement in senior housing market fundamentals. First quarter 2023 NIC MAP data, released by NIC MAP Vision, shows rising occupancy rates, steady demand, and limited inventory growth. In addition, labor shortages are shrinking and staffing challenges are improving for many operators.  Relatively strong demand in an inflationary environment is also supporting rate growth, which rose at its fastest annual pace in the history of the time series going back to 2006.  

Taken as a whole, there are near-term uncertainties and risks ahead, but the medium- and longer-term prospects for senior housing are steadfast, promising, and robust. Health care coordination stands out as one compelling opportunity with revenue enhancing possibilities and promises of cost-efficiencies and savings. Partnerships with other service providers, the use of technology, and the overall agility and creativity of operators seen during the worst days of the pandemic are also reasons to be bullish on the future of senior housing.  And of course, there are the demographics, with larger and growing numbers of older adults finding the value proposition of senior housing increasingly compelling and desirable.   

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Join us to learn more about these and other trends as NIC’s Chief Economist, Beth Mace, presents the well-regarded NIC Blue Book from which she will address current trends, challenges, and opportunities in the senior housing industry in NIC’s first 2023 NIC Leadership Huddle webinar taking place on Tuesday, May 2, at 2 PM ET.  Registration is complimentary. 

Based on current COVID-19 trends, the Department of Health and Human Services is planning for the federal Public Health Emergency (PHE) for COVID-19 to expire on May 11, 2023. The impacts of the public health emergency ending will vary by state, depending on specific policies and programs that were put in place during the emergency.

Certain flexibilities and waivers that were granted during the emergency are planned to sunset, and regulations and restrictions may be reinstated. For senior housing and care operators, three areas to be aware of include Medicaid redeterminations (which are currently underway), cost-sharing on COVID-19 testing and treatments, and the continuation of certain telehealth flexibilities. 

Medicaid Redeterminations

In March 2020, the Families First Coronavirus Response Act (FFCRA) was signed into law. A key provision of the legislation required states to maintain enrollment of nearly all Medicaid enrollees throughout the COVID-19 Public Health Emergency. This stipulation was a condition of receiving a temporary 6.2 percentage point Federal Medical Assistance Percentage (FMAP). 

Medicaid enrollment has grown substantially compared to prior to the pandemic, largely due to this legislation. As a result, the uninsured rate dropped. However, as states begin the process of Medicaid redeterminations, it is expected that between 5 million and 14 million current Medicaid beneficiaries will lose their eligibility. These changes may affect coverage of services provided by assisted living communities under home- and community-based services. 

While the share of disenrolled across states will vary due to differences in how states prioritize renewals, it is expected that the groups that experienced the most growth due to the continuous enrollment provision will experience the largest declines in enrollment. Efforts to conduct outreach, education, and provide enrollment assistance can help ensure that those who remain eligible for Medicaid are able to retain coverage and those who are no longer eligible can transition to other sources of coverage.

The Consolidated Appropriations Act, passed in 2023, delinked the FFCRA’s Medicaid continuous enrollment from the ending of the public health emergency. As a result, beginning April 1, 2023, states are able to begin the termination process for Medicaid enrollees who are no longer eligible. 

Cost-Sharing on COVID-19 Testing and Treatments

Medicare beneficiaries will continue to have access to COVID-19 vaccines without cost sharing even after the PHE has ended. Additionally, Medicare beneficiaries can continue to receive COVID-19 PCR and antigen tests with no cost sharing, as long as the test has been ordered by a physician or other qualified health care provider and is performed in a laboratory. Medicare Advantage enrollees can also continue to receive PCR and antigen testing, although following the end of the PHE, their cost-sharing may change. By law, Medicare does not generally cover over-the-counter services and tests. As such, current access to free over-the-counter COVID-19 tests will end with the end of the PHE. 

There will be no change in Medicare coverage of treatments for those exposed to COVID-19 once the PHE ends. In cases where cost-sharing and deductibles applied during the COVID-19 emergency, they will continue to apply. 

Telehealth Flexibilities Remain – For the Time Being

The Department of Health and Human Services took a range of administrative steps to expedite the adoption and awareness of telehealth during the COVID-19 pandemic. During her confirmation hearing, CMS Administrator Chiquita Brooks-LaSure, indicated that she wanted to examine what CMS’ authority was to extend the flexibilities that were set to expire at the end of the public health emergency. Many of the flexibilities that were put into place– the originating site rule, mental health visits by rural health clinics, and allowing for audio-only telehealth visits have been extended through the end of 2024.

Projected shortages of primary care physicians and specialists, as well as uncertainty on the numbers of nurses that will be available to serve the needs of a rapid expanding population of seniors, highlight the need for telehealth to be a more routine part of care delivery. Technology has enabled physicians to use their medical offices to see higher-acuity patients. This method of care both lowers cost and improves outcomes, and as such, CMS should continue to support the expansion of telehealth and telehealth flexibilities.  

To see the complete list of CMS waivers and flexibilities that will be impacted by the May 11, 2023 end of the COVID-19 Public Health Emergency, please reference the CMS Fact Sheet that covers COVID-19 vaccines, testing, and treatments, telehealth services, and health care access.