“A new series of questions in the May 2023 survey, suggested by April 2023 ESI survey participants, asked about the utilization of third-party referral aggregators. Of respondents who are currently using third-party aggregators, almost two-thirds (64%) successfully convert less than 25% of the third-party generated leads. Just under one-quarter of respondents (23%) successfully convert between 26% and 50% of the third-party generated leads. Less than one-sixth of respondents successfully convert more than 50% of third-party generated leads, with just under one-tenth converting more than 75%.

When asked to compare the cost of their property insurance currently to one year prior, between 86% and 95% of operators across all care segments – independent living, assisted living, memory care, and nursing care – reported it to have increased (either significantly or slightly). More than one-third of independent living (37%) and assisted living (36%) operators report the change in the cost of their property insurance to have increased significantly, followed by memory care (32%) and nursing care (32%).”

–Ryan Brooks, Senior Principal, NIC

These Executive Survey Insights, May 2023 results include responses from May 1 to May 31, 2023, from owners and executives of 47 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 May 2023 Executive Survey Insights (ESI) ranges from one to as many as 275. 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 May 2023 ESI, approximately one-half of memory care (53%) and assisted living (49%) operators, and two-fifths of nursing care (41%) and independent living (39%) operators report an acceleration in the pace of move-ins in the past 30 days. This represents a decrease in the share of operators reporting an acceleration in the pace of move-ins across all care segments. The slowdown was greatest for independent living and assisted living operators, while memory care and nursing care operators reported only a slight decrease of three percentage points.

When asked what they attributed the deceleration in move-ins to, a slowdown in leads conversions or sales was the most common response (71%), followed by potential residents’ fear of rising unemployment or unstable economy (14%), and an increase in community pricing (7%).

May 2023 ESI respondents were asked if lead volumes were above the prior year. With a slowdown in the pace of move-ins being reported across all care segments, lead volumes are an important indicator to watch with regards to occupancy recovery and stabilization. As shown above, in May, organizations reporting lead volumes that are above one year prior were down compared to the two most recent times this question was asked – in February and March 2023.

Single-site operators and operators with between two and nine properties have experienced three consecutive decreases in reported lead volumes, while operators with 10-25 properties and those with more than 26 properties experience more volatility. Despite the decreases in lead volume, most respondents are still reporting higher lead volumes than one year prior.

A new series of questions in the May 2023 survey, suggested by April 2023 ESI survey participants, asked about the utilization of third-party referral aggregators (Caring.com, A Place for Mom, etc.). Just over one-half (51%) of operators report currently using these types of referral aggregators.

Of respondents who are currently using third-party aggregators, the May 2023 ESI asked about the percentage of leads which are successfully converted as well as the expected duration of their relationship with their current third-party aggregator. With regard to the rate of successful lead conversion, just under one-tenth convert more than 75% of the third-party generated leads, less than one-sixth successfully convert more than 50%, and just under one-quarter of respondents (23%) successfully convert between 26% and 50% of their third-party generated leads. Almost two-thirds of respondents (64%) successfully convert less than 25% of the third-party generated leads.

When asked about the expected duration of third-party aggregator contracts, most respondents (43%) have no current plans to discontinue the relationship, while just under-one third anticipate their third-party aggregator contracts will remain in place through 2024. One-sixth of respondents (17%) expect to discontinue their third-party aggregator contract before the end of 2023 and slightly less than one-tenth of respondents (9%) expect to discontinue their contract before the end of 2024.

The most cited challenge facing operators – reported by more than 80% of respondents in the May 2023 ESI – is rising operator expenses, and responses to questions on property and professional liability insurance emphasize the sentiment.

When asked to compare the cost of their property insurance currently to one year prior, between 86% and 95% of operators across all care segments – independent living, assisted living, memory care, and nursing care – reported it to have increased (either significantly or slightly). More than one-third of independent living (37%) and assisted living (36%) operators report the change in the cost of their property insurance to have increased significantly, followed by memory care (32%) and nursing care (32%). No owners or operators reported a decrease in the cost of property insurance.

Professional liability insurance has also increased compared to one year prior. When asked to compare the cost of their professional liability insurance to one year prior, two-thirds of memory care (68%) and assisted living (65%) operators report the change in cost to have either increased significantly or increased slightly, followed by three-fifths of independent living operators (62%), and one-half of nursing care operators (52%). No owners or operators reported a decrease in the cost of professional liability insurance.

May 2023 Survey Demographics

• Responses were collected between May 1 and May 31, 2023, from owners and executives of 47 senior housing and skilled nursing operators across the nation.
• Owners/operators with 1 to 10 properties comprise roughly two-thirds of the sample (64%). Operators with 11 to 25 properties account for one-fifth of the sample (19%), and operators with 26 properties or more account for the remaining one-sixth (17%) of respondents.
• More than one-half of respondents are exclusively for-profit providers (57%), one-third operate not-for-profit seniors housing and care properties (34%), and 9% operate both.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, more than three-quarters (83%) of the organizations operate seniors housing properties (IL, AL, MC), 21% operate nursing care properties, and 36% operate CCRCs – also known as life plan communities.

The June 2023 ESI survey is currently open and will be collecting responses through June 30, 2023. If you are an owner or C-suite executive of senior 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.

The senior housing stabilized occupancy rate for the NIC MAP Primary Markets edged up to 84.7% in the May 2023 reporting period, up 0.1 percentage points (pps) from the April 2023 reporting period on a three-month rolling basis, according to intra-quarterly NIC MAP® data, released by NIC MAP Vision. From its pandemic record low of 80.3% in June 2021, senior housing stabilized occupancy increased by 4.4pps but remained 4.7pps below pre-pandemic March 2020 levels of 89.4%.

Stabilized occupancy – defined by NIC MAP Vision as the occupancy of properties that are (a) at least two years old, or (b) if less than two years old, properties that have achieved occupancy of at least 95.0% since their opening – still has more room to make up in order to reach pre-pandemic levels, when compared to the all-occupancy rate, which is currently 3.6pps below March 2020 levels.

The senior housing market is experiencing a pronounced change in occupancy dynamics. The May 2023 data shows that the gap between the stabilized occupancy rate, currently at 84.7%, and the all-occupancy rate, slightly lower at 83.6%, has reached its smallest point since 2014, standing at 1.1pps.

This narrowing gap indicates intense competition among senior housing properties, particularly those that have recently opened and are still in the lease-up phase. These newly opened properties are actively attracting residents and taking a share of the market from stabilized properties, despite higher asking rates in general.

Factors like the design and appearance of these new properties could be influencing residents’ choices. However, it’s important to consider that novelty and attractiveness alone do not guarantee success. Newly opened properties may not have had the opportunity to establish a solid reputation and may lack an experienced staff or team who have worked together effectively for a significant period of time.

The current trend also helps explain the overall recovery in occupied units, even though occupancy rates remain below pre-pandemic levels.

By Majority Property Type. At 86.3%, the stabilized occupancy rate for majority independent living (IL) properties for the NIC MAP Primary Markets has remained unchanged for four consecutive reporting periods beginning in February 2023. In the May 2023 reporting period, stabilized occupancy for independent living was 1.0pps above the all-occupancy rate (85.3%). For majority assisted living properties (AL), the stabilized occupancy rate for the NIC MAP Primary Markets was up 0.2pps to 83.1% from April 2023, and is now 1.3pps above the all-occupancy rate for assisted living (81.8%).

The inventory of majority independent living properties for the NIC MAP Primary Markets increased by 1.7% or 5,777 units from year-earlier levels in the May 2023 reporting period. Assisted living inventory increased by 1.3% over this same period. This was the smallest year-over-year inventory gain since NIC MAP Vision began reporting the data in 2005.

Stabilized Occupancy Across Select Metropolitan Markets. The stabilized occupancy rate for majority independent living properties increased or remained stable in 16 of the 31 Primary Markets in the May 2023 reporting period compared with April 2023. At 85.8%, Detroit independent living occupancy saw the largest increase from the prior month, up 0.7pps, but remained 4.2pps below March 2020 levels. Las Vegas independent living occupancy had the largest decline from April 2023, falling by 1.5pps in May 2023 to 85.3% and is now 5.7pps below pre-pandemic March 2020 levels.

For assisted living, the stabilized occupancy rate increased or remained stable in 25 of the 31 Primary Markets in May 2023. At 81.3%, Cincinnati assisted living stabilized occupancy saw the largest increase, up 0.9pps in May 2023 but still 4.4pps below March 2020 levels. The assisted living stabilized occupancy rate in San Jose had the largest decline and fell 1.5pps from the prior reporting period to 80.9% on a three-month rolling basis. San Jose stabilized occupancy remained 10.9pps below pre-pandemic levels, the largest gap across the 31 NIC MAP Primary Markets and property types.

Keep track of the most timely and comprehensive review of the sector’s market fundamentals and trends. The NIC Intra-Quarterly Snapshot monthly publication, available for complimentary download on our website, continues to provide a powerful and closely watched means to stay ahead of industry trends, even as senior housing markets sustain a fast pace of evolution and adaptation.

The senior housing sector posted a total return of 0.11% in the first quarter of 2023, up from a decline of -0.88% total return in the prior quarter. Short-term total returns for senior housing outperformed the broader NPI, which posted a total return of -1.81% in the first quarter. Positive income returns for senior housing were partially offset by negative appreciation, which reduced the overall investment return. In comparison, negative appreciation for the NPI more than offset positive income returns, driving negative total returns for the quarter. 

The senior housing income return in the first quarter was 0.88%, stronger than the hotel (0.82%) and industrial (0.83%) sectors, but below the overall NPI (1.01%). The senior housing appreciation (capital/valuation) return was negative for the third consecutive quarter at -0.76% but improved from the prior quarter’s return of -1.75% and better than the apartment sector’s appreciation return of            -3.05%. Overall, current economic and capital market conditions drove negative appreciation returns in all sectors except hotel (+1.47%). Further, many investors have reduced their appreciation expectations for senior housing as the sector has not yet recovered to its pre-pandemic occupancy rate. The appreciation return is the change in value net of any capital expenditure incurred during the quarter.   

On a longer-term basis, the ten-year return for senior housing (9.33%) was the strongest of the main property types, except for industrial (15.64%), and outperformed the NPI ten-year annualized total return of 8.34%. Income returns for senior housing (5.17%) surpassed the NPI (4.64%), as did the appreciation return (4.02% vs 3.58%). 

The performance measurements cited above for senior housing reflect the returns of 205 senior housing properties valued at $11.15 billion in the first quarter. This was the highest property count and market value in the NCREIF time series for senior housing. It is notable that the number of properties tracked by this index has grown significantly since the beginning of the pandemic, up from 134 properties in the first quarter of 2020 that were valued at $6.3 billion. The additional properties may be influencing the overall performance returns of the index. 

First quarter 2023 market fundamentals data for senior housing showed a continued recovery in senior housing occupancy rates in the 31 Primary Markets, according to NIC MAP® Data powered by NIC MAP Vision, as demand for senior housing units outpaced new supply during the first quarter. As a result, the occupancy rate for senior housing stood at 83.2%, up 0.3 percentage points from the prior quarter and 5.4 percentage points from its low point, but still 4.0 percentage points below its pre-pandemic level of 87.2% in the first quarter of 2020. Overall, the relatively steady improvement in market fundamentals against a backdrop of significant volatility in other parts of the economy illustrates the needs-driven demand among older adults for housing and care that the senior housing industry continues to meet. 

Source:  NCREIF, NIC Analytics 

Source: First Quarter 2023 NCREIF Performance Report, NIC Analytics

The Bureau of Labor Statistics (BLS) reported that nonfarm payrolls rose by 339,000 in May 2023, in line with the average monthly gain of 341,000 over the prior 12 months, but above the upwardly revised gain of 294,000 in April and 217,000 in March. Market expectations had called for a gain of 195,000 jobs. Of note, revisions added 93,000 positions to total payrolls in the previous two months.

Healthcare added 52,000 jobs in May, like the average monthly gain of 50,000 over the prior 12 months. Employment in nursing care facilities grew by 2,900 jobs from last month and 54,000 from year-earlier levels and stood at 1.402 million positions. Jobs increased by 1,700 positions in CCRC and assisted living facilities in May and were up by 55,600 from year-earlier levels to 946,600 jobs. 

Separately, the BLS also reported the unemployment rate rose to 3.7% in May, up from 3.4% in April when it stood again at its lowest level since 1969. The May level was the highest since October of 2022, but notably, the rate has hovered between 3.4% and 3.7% since March 2022. The increase in the jobless rate reflected an increase in the civilian labor force (130,000) coupled with a decline in household employment (310,000). The unemployment rates peaked at 14.7% peaked in April 2020 at the height of the pandemic.  

Average hourly earnings for all employees on private nonfarm payrolls rose by $0.11 in May to $33.44 or up 0.3% from the prior month. This was an increase of 4.3% from year-earlier levels, slightly less than in March at 4.4%.  

Today’s report is a bit mixed, with wage growth moderating, but still strong, the labor market weakening per the rise in the unemployment rate but offset by the large increase in payroll jobs. Its likely that the Fed will “skip” an increase in the fed funds rate at its upcoming June 13^th and 14^th FOMC meeting as it pauses to see how the large and frequent rate hikes in the past 15 months take hold and as it waits to see if there is further fallout in the banking system. The Fed has raised the fed funds rate 5 percentage points to a range of 5.0% – 5.25% since March 2022 in an effort to combat inflation. This is the highest rate in 16 years. The Fed is looking for evidence of a softer labor market to help ease wage pressures and prevent a wage/price inflationary spiral from occurring. 

The underemployment rate was 6.7% versus 6.6% in April. Among the major worker groups, the May unemployment rates were 3.3% for adult women, adult men (3.5%), teenagers (10.3%), Whites (3.3%), Hispanics (4.0%), Blacks (5.6%), and Asians (2.9%). The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.2 million in May. These individuals accounted for 19.8% of all unemployed people. The labor force participation rate held steady at 62.6% in May, unchanged from April and up from 62.5% in February, which followed three prior monthly increases in the rate. It was below the February 2020 level of 63.3%, however.  

NIC MAP Vision released its latest Skilled Nursing Monthly Report on June 1, 2023. The report includes key monthly data points from January 2012 through March 2023.

Here are some key takeaways from the report:

Skilled nursing property occupancy decreased in March, after increasing for two months in a row. It declined 27 basis points from February to end the month at 81.0%. There has been positive momentum in occupancy throughout 2022 and the first couple months of 2023. It is up 6.3 percentage points since the low (74.7%) point reached in January 2021. However, staffing in the sector is still a significant burden on skilled nursing operators and is limiting additional admissions in many markets around the country. Occupancy is down 7.8 percentage points from the pre-pandemic February 2020 level of 88.9%. As staffing and general inflation pressures persist, operations for many operators will be under pressure but the long-term demand for skilled nursing services is expected to grow over time.

Both Medicare revenue mix and the revenue per patient day (RPPD) increased in March. However, both are down slightly from December 2022. Medicare revenue mix is down 251 basis points from the most recent in high in February 2022 which was a time when increased cases of COVID-19 resulted in additional need for utilizing the 3-Day rule waiver and per day reimbursement for COVID-19-positive patients. Medicare revenue mix ended March at 22.2%. Medicare RPPD ended March at $591 and is up 0.78% from one year ago. Meanwhile, Managed Medicare revenue mix was down 28 basis points to 11.4% in March. However, this is 220 basis points above the pandemic low of 9.2% set in May 2020.

Managed Medicare revenue per patient day (RPPD) increased slightly in March, but it is down 0.8% from March 2022. Depending on an operator’s business model, the continued decline in managed Medicare revenue per patient day can pose a challenge as the reimbursement differential between Medicare fee-for-service and managed Medicare has increased during the past two years. However, some operators see opportunity to capture patient volume with the growth of managed care. Medicare fee-for-service RPPD ended March 2023 at $591 and managed Medicare ended at $478, representing a $113 differential. In March of 2021, the differential was $90.

After increasing slightly in the month of February, Medicaid patient day mix was flat, ending March at 64.9%. However, it has increased 188 basis points from the pandemic low of 63.1% set in February 2022. Meanwhile, Medicaid revenue mix declined 45 basis points from the prior month, ending March at 50.1%. One element of the Medicaid revenue share of a property’s revenue is RPPD and that declined 0.23% from February. However, it up 3.44% since last year in March 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.