Optimism on operating margins tempered by occupancy recovery and workforce challenges
LONDON: About half of senior living (independent and assisted living) and skilled nursing operators anticipate that operating margins will improve in the next six months, up from one-third last fall, according to the latest Executive Insights Survey from the National Investment Center for Seniors Housing & Care.
According to Wave 36 survey data, 32% of respondents expect to see an increase of between 1% and 5%, whereas 16% anticipate growth between 6% and 10%.
Among the factors cited for income growth moving forward are reports of rate increases to counterbalance pandemic and recovery-related cost pressures.
About half (47%) of poll participants said they are offering rent concessions, mostly in the form of rent discounts (76%) and free rent (69%) for a specific period of time. Single-site operators were significantly less likely to say they are offering rent concessions (14%) compared with their larger competitors — 75% for operators with 11 to 25 properties and 44% for operators with 26 or more properties.
Occupancy optimism waning
Optimism over occupancy recovery is waning, as expected timeframes have lengthened among operators. About half (52%) of the respondents reported that they expect occupancy to return to pre-pandemic levels in 2022, down from 73% in Wave 33. And 38% now believe that recovery will not occur until 2023 — up from 8% in Wave 33.
The pace of move-ins in independent living has declined over the past four surveys, whereas assisted living and memory care has seen increased move-ins. The data, according to NIC, suggest a slight slowdown for choice-based senior living and an increase in needs-based moves.
Approximately half of responding organizations with assisted living (51%) and / or memory care units (49%) reported an acceleration in the pace of move-ins, compared with 37% of those with independent living units. Fewer organizations with skilled nursing beds reported an acceleration in the pace of move-ins (33%) since the previous survey (44%).
The majority of responding organizations across all care segments reported no change in move-outs in the past 30 days. More organizations with assisted living units saw a deceleration in move-outs than in recent surveys, but about one-fourth of organizations with memory care units (23%) and / or skilled nursing beds (22%) reported accelerated move-outs. This typically is attributed to discharges, natural attrition and moves to higher care levels, NIC said.
NIC pointed out that although move-ins across care segments were “brisk” during the past two quarters, and occupancy rates improved, only 29% of organizations saw their lead volumes return to pre-pandemic levels, down 36% form the prior survey but higher than the 20% reported in April.
Almost two-thirds (61%) of organizations with assisted living units reported occupancy increases from previous surveys, and 47% of those with nursing care beds saw recent improvement. But 32% of organizations with memory care units noted declining occupancy, down from 48% in Wave 35 and 55% in Wave 33.
Reported occupancy increases in independent living have declined over the past four surveys, from roughly 60% to 40%. And although half of participating organizations with independent living units noted no change in occupancy from the previous survey, between 27% and 33% of those with memory care units and / or nursing care beds reported declining occupancy.
Workforce issues continue
Labor costs continue to be a mitigating factor for operators. Four out of five organizations with multiple sites (83%) reported staffing shortages, up from 46% in mid-March.
Almost all respondents since July have reported staffing shortages and the need to pay overtime, with the use of staffing agencies increasing; 89% of survey participants said they now are tapping agency and temporary staff to fill shifts, up from 77% in the prior survey. And 25% indicated that the use of agency / temp staff increased more than 75% in 2021.
Providers increasingly are looking outside the industry to increase staffing, with the percentage growing from 11% in the Wave 33 survey to 25% in the Wave 36 survey.
The Wave 36 survey includes responses from 66 senior living and skilled nursing operators from Dec. 6 to Jan. 9.
