The senior housing and care sector is constantly evolving, but fresh industry, economic, and societal pressures force owners and operators to be nimbler than ever to thrive. On July 13, NIC hosted its final Leadership Huddle of 2022 – Chris Taylor, managing director of Capital One Healthcare Real Estate led the conversation between senior living experts Cindy Baier, CEO of Brookdale Living, and Kimberly Lody, CEO of Sonida Senior Living, to explore how leaders can navigate change and utilize it to improve their organizations.

For more insights, view all past leadership huddles in the 
NIC Leadership Huddle Archives.

Baier and Lody are focused on ushering their companies through some of the biggest challenges facing the industry, including a tough labor market. “One of our top priorities is to attract, engage, develop, and retain the best workforce,” Baier said. As Sonida works to attract new staff, Lody explained, “it’s about leading through the inflationary pressures that are impacting everyone… understanding the pressures that people are faced with every single day.”

As organizations change and adapt, encouraging team members to embrace transformation by involving them in the process is critical. “I think that people are much more likely to embrace change if they’re a part of the solution,” Baier said. Lody agreed, adding that mapping and sharing goals can create a shared mission. “It [allows] people to embrace the concept and have ownership in it,” she said.

Speaking broadly of leadership, Lody believes that a willingness to collaborate sets senior living apart from other industries. “There’s really not a moment of hesitation for people to raise their hand and say to you, ‘I’m happy to share with you what we’re doing.’” Baier sees the amount of passion among senior living leaders as a key differentiator. “It’s really the heart of people in this industry that I think is truly unique… how much people will sacrifice for others in this industry.”

Both speakers agreed that growing as a leader requires a constant pursuit of knowledge and a willingness to listen. “I’m really proud that Brookdale is a learning organization,” Baier said. “The day you stop learning is the day you stop adding value.” Lody relies on her board of directors and feedback from professional and personal relationships to continue growing as a leader, “I ask for feedback all the time… I think you can learn from everyone.”

NIC Co-Founder and Strategic Advisor Robert Kramer has identified “Six Key Drivers” that will shape the senior living industry over the next 10 years. Kramer is also Founder & Fellow at Nexus Insights, a think tank to advance the well-being of older adults through innovative models of housing, community and healthcare. NIC Notes will publish a bi-weekly series detailing each key driver. What follows is an introduction to the series.

What will the senior housing and care environment look like in 2032? It’s a question that has broad implications for the decisions we make today.

Do we understand the long-term impact of the pandemic and the changing make-up of our customer base? Can we anticipate their housing and service preferences? How is technology changing the senior living landscape? Where can we find the workers to meet the needs of our residents? How does healthcare fit in? Are we prepared for what’s ahead?

To anticipate the next decade, we need a clear understanding of the social, technological, and economic factors that form an ever-changing senior living environment. As a result, in my role as NIC’s strategic advisor, I have identified “six key drivers” that will shape our industry over the next 10 years.

To put the “six key drivers” in perspective, I’d like to highlight a quote: “The historic challenge for leaders is to manage the crisis while building for the future.” The quote appeared in an April 2020 op-ed in the Wall Street Journal by Henry Kissinger. He was comparing certain aspects of the COVID crisis to World War II.

In both cases, the challenge for leaders has been to manage the crisis, but at the same time to build for the future. That’s where our industry finds itself today.

Internal and External Threats

Our industry faces both internal and external threats. Internally, particularly among operators and their workforce, the mood is one of “exhaustion.” Exhaustion in every sense—physical, emotional and mental.

The senior living workforce from top to bottom is dealing with post-traumatic stress syndrome. But the real internal threat is exactly what Kissinger is talking about. It’s exhaustion that leads to a failure to anticipate and to prepare and therefore to build for the future.

The greatest external threat to senior living has long been considered “the home.” Elders would rather stay put in their long-time residences. But taking a wider perspective, the greatest external threat is from those outside our field who see the opportunity to serve our customers in a different, better and less expensive way than we do presently.

The threat comes at a time when the industry is not only exhausted but also under enormous financial pressure. We are depleted in terms of energy and resources. This is the classic prescription for “disruptive innovation,” the powerful concept developed by Harvard Business School Professor Clayton Christensen.

Big tech is making an advance into healthcare. Google, Microsoft, Apple, and Amazon all see an opportunity. So does big retail. Walmart, Best Buy and even Dollar General have major health initiatives under way. When I talk to the Health Strategy Officer of Walmart about our “Forgotten Middle,” he says: “That’s not only our customer, that’s our workforce. That’s the group we think we have the opportunity to serve.”

Retail pharmacy chains such as CVS and Walgreens see an opportunity too, along with the major insurers, including United Healthcare, Humana, Blue Cross Blue Shield, Anthem, and others. What do many of these outside disruptors have? In contrast to us, they have huge, positive brand recognition. They customize their services for the convenience of the consumer. These companies have great tech platforms that they’re constantly improving. Notably, they aren’t cash strapped, and they aren’t exhausted.

These companies can easily spend $50 million on an initiative and if it doesn’t work, it doesn’t really matter. That kind of money is a rounding error to them. In contrast, a $1 million tech investment for a senior living operator that goes sideways could have a huge impact or at least end any innovation by that operator.

Six Key Drivers

With that backdrop in mind, here are the six key drivers, in brief, which will impact our industry over the next decade. (Individual blog posts detail each driver.) Any futurist is never going to be 100% correct. But these key drivers are meant to serve as a challenge for the industry to think about how to manage the changes ahead.

1. The COVID-19 Pandemic. The crisis has changed the way we work and ushered in the third generation of senior living.
2. The Endemic Staffing Crisis. The labor shortage will continue. How can providers recruit and retain the best workers?
3. A New Customer Arrives with a Different Take on Longevity. Our new customers want their lifespan to match their healthspan or wellspan. We need an engagement view of aging and retirement shaped by growth and opportunity, not by deficits and decline.
4. Reframing Health and Healthcare. The focus will be on well care, not sick care. Senior living and healthcare providers, and insurers will partner to proactively keep our residents out of the expensive acute care system.
5. The Increasing Importance of Data and Analytics. Market data by itself has limited value. In the future, market data will be coupled with personalized health, genomic, social determinants of health (SDOH), lifestyle and psychographic data, and aggregated by local market. The applications for the future use of this kind of data will be transformative for the industry.
6. Moving from Siloed to Seamless. We will see a shift from the current fragmented, single-point healthcare solutions and technology applications to integrated longitudinal solutions that are setting, disease, and payer agnostic.

These six key drivers provide a discussion starter for senior living stakeholders to reflect on where the industry stands today, and how it will respond to emerging trends as the next decade unfolds. We welcome you to be a part of that discussion.  

• Senior housing occupied units vacated during the pandemic are on track for full recovery, across both the NIC MAP Primary Markets and the NIC MAP Secondary Markets.
• Senior housing occupancy bouncing back but remains far below pre-pandemic March 2020 levels.
• The senior housing market continued to experience a high acuity trend, with occupancy for majority assisted living properties recovering relatively fast compared with majority independent living properties.

According to just released quarterly NIC MAP Vision data, the recovery for senior housing regained pace in the second quarter of 2022 after the momentum weakened in the prior quarter due to the Omicron variant. The graphs below depict the recovery progress for senior housing demand and occupancy for both the NIC MAP Primary Markets (Primary Markets) and the NIC MAP Secondary Markets (Secondary Markets).

NIC MAP Primary Markets. Demand, as measured by the change in occupied units, largely outpaced new supply while marking its fifth consecutive quarter of positive increases, with a net absorption gain from the prior quarter of more than 8,600 units, or 1.6% for the Primary Markets. The improved demand dynamics in the second quarter of 2022 increased the share of senior housing units vacated during the pandemic that have been re-occupied to 78%, up 19pps from the prior quarter (59%).

The all-occupancy rate for senior housing for the Primary Markets increased to 81.4% in June 2022, up 0.9pps from March 2022, with a gain of 0.6pps in April 2022, 0.2pps in May 2022 and 0.1pps in June 2022. From its time series low of 78.0% one year ago in June 2021, occupancy increased by 3.4pps but remained 5.8pps below pre-pandemic March 2020 levels of 87.2%.

All-occupancy increased or remained stable in 26 of the 31 Primary Markets for senior housing in the June 2022 reporting period compared with March 2022.

NIC MAP Secondary Markets. Senior housing demand for the Secondary Markets also regained momentum in the second quarter of 2022, with a net absorption gain from the prior quarter of more than 4,500 units, or 1.5%. And now, the share of senior housing units vacated during the pandemic that have been re-occupied increased to 86%.

At 83.0%, the all-occupancy rate for senior housing for the Secondary Markets was up 0.8pps from March 2022 and 4.2pps from its nadir in June 2021, but still 4pps below March 2020 levels of 87.0%. Overall, senior housing occupancy for the Secondary Markets is bouncing back quicker, mainly due to a relatively balanced new supply.

All-occupancy increased or remained stable in 55 of the 68 Secondary Markets for senior housing in the June 2022 reporting period compared with March 2022.

Data highlights by majority property type. Occupancy for majority independent living and majority assisted living properties, inventory growth patterns, and select NIC MAP Primary markets’ performance along with analysis and insights from the NIC Analytics team, including myself and NIC Chief Economist, Beth Mace are provided in the complimentary NIC Intra-Quarterly Snapshot monthly publication, available for download on our website. The data underlying every Intra-Quarterly Snapshot report is available to NIC MAP Vision clients.

Interested in learning more about NIC MAP Intra-Quarterly data? To learn more about NIC MAP Vision data, schedule a meeting with a product expert today.

The U.S. Bureau of Labor Statistics reported that nonfarm payrolls rose by 372,000 in June 2022 and the unemployment rate held steady at 3.6%. The June increase was in line with the average monthly gain over the prior three months (383,000). Revisions subtracted 72,000 to total payrolls in the previous two months. The market consensus had been for a gain of 268,000. 

Nonfarm payrolls were still down by 524,000 or 0.3% from their pre-pandemic level in February 2020. Notably, private-sector employment has now recovered the net job losses due to the pandemic and is 140,000 higher than in February 2020, while government employment is 664,000 lower.

Employment in business and professional services is 880,000 higher than in February 2020, while manufacturing jobs have returned to its pre-pandemic level. However, employment in leisure and hospitality services are down by 1.3 million or 7.8% since February 2020, while jobs in social assistance which includes child day care services are 2.0% below their February 2020 level.

Employment in health care rose by 57,000 in June, including 8,000 new positions in nursing and residential care facilities. But jobs in health care remain 1.1% or 176,000 less than in February 2020.

The report confirms that the labor market remains strong, despite inflationary pressures, waning consumer confidence, the war in Ukraine and on-going supply-chain pressures. Concerns about rising wage costs and inflation are also supported by this report, although wage pressures appear to be easing. Average hourly earnings for all employees on private nonfarm payrolls rose by $0.10 in June to $32.08. This was a gain of 5.1% from year-earlier levels but was less than the 5.3% gain seen in May and the 5.5% gain seen in April. 

The report supports the Federal Reserve’s intention of continuing to raise interest rates further following the 1.5 percentage point hike in the fed funds rate that has already occurred so far this year. Another 0.75 percentage point hike is anticipated at the next FOMC meeting later this month.

In a separate survey conducted by the BLS, the jobless rate was 3.6% for the fourth month in a row. The jobless rate is only 0.1 percentage point above the pre-pandemic level of 3.5% seen in February 2020, and well below the 14.7% peak seen in April 2020. The number of persons unemployed was essentially unchanged at 5.9 million but was still above the 5.7-million-person level seen prior to the pandemic. 

Among the major worker groups, the June unemployment rates were 3.43% for adult women, adult men (3.3%), teenagers (11.0%), White (3.3%), Black (5.8%), Asian (3.0%), and Hispanic (4.3%).

The labor force participation rate edged down 0.1 percentage point to 62.2% in June and was below the February 2020 level of 63.4%.

The June underemployment rate or the U-6 jobless rate was 6.7%, up from 7.1% in May 2022. 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.

“After increasing in February and March, occupancy was flat in April. Labor is still a serious challenge within the industry and some operators are still unable to admit new patients due to staffing shortages.”

– Bill Kauffman

NIC MAP Vision released its latest Skilled Nursing Monthly Report on June 30, 2022. The report includes key monthly data points from January 2012 through April 2022.

Here are some key takeaways from the report:

Skilled nursing occupancy was flat for the month of April. Skilled nursing property occupancy held steady at 77.3%. However, occupancy has increased 140 basis points since January 2022 as demand seemingly picked up after the Omicron variant subsided. In addition, occupancy has increased 524 basis points since the low of 72.1% in January 2021 and remains at the highest occupancy level since April 2020, in the beginning of the pandemic. Although occupancy has increased in recent months, it is still down considerably (8.9 percentage points) compared to February 2020 before the beginning of the pandemic. There are some positive signs given the increases in occupancy since the low, but many challenges remain including labor shortages, operating expense pressure, and the proposal to claw back Medicare reimbursement as it relates to the Patient Driven Payment Model (PDPM).

Medicare revenue mix declined in the month of April. Decreasing for a second month in a row, Medicare revenue mix declined 72 basis point to end April at 20.6%. After increasing to start 2022, from December 2021 (20.6%) to January 2022 (24.4%), it has now decreased 397 basis points from the 2022 high (24.6%) set in February. The increase to start 2022 was likely due to the elevated number of COVID-19 cases in January and suggests there was a significant uptick in the utilization of the 3-Day Rule waiver as COVID-19 cases increased. The 3-Day Rule waiver was implemented by Centers for Medicare and Medicaid Services (CMS) to eliminate the need to transfer positive COVID-19 patients back to the hospital to qualify for a Medicare paid skilled nursing stay, hence increasing the Medicare census at properties. As cases declined, the Medicare revenue share has declined as well. Meanwhile, Medicare revenue per patient day (RPPD) decreased for the third month in a row to end April at $568. This suggests that due to decreasing COVID-19 cases there was less additional reimbursement needed for COVID-19 positive residents, who require additional measures of care to be implemented.

Managed Medicare revenue per patient day (RPPD) continued its decrease in April. It decreased from $456 to $454 in April and is down 2.1% from last year in April 2021. It has decreased $111 (19.6%) from January 2012 and continues to create pressure on operators’ revenue as managed Medicare enrollment grows around the country. The persistent decline in managed Medicare revenue per patient day continued to result in an expanded reimbursement differential between Medicare fee-for-service and managed Medicare, which accelerated during the pandemic until January 2022. The difference between Medicare fee-for-service and managed Medicare RPPD in January 2022 was $123. Pre-pandemic, in February of 2020, the differential was $91. However, the difference has decreased since January 2022 to end April 2022 at $114. Meanwhile, managed Medicare revenue mix increased 14 basis points from March to end April 2022 at 10.8%. It is up 26 basis points from last year and has increased 269 basis points from the pandemic low of 8.1%. The increase from the pandemic low is likely due to growth in elective surgeries from 2020, which typically creates additional referrals to skilled nursing properties.

Medicaid patient day mix increased for the second month in a row. It increased 79 basis points in April to end the month at 66.0%. It has increased in a similar trend as Medicaid revenue as it also increased for second month in row. Medicaid revenue mix increased 243 basis points from March to end April at 50.7%. Some of this increase is related to what was mentioned above, regarding the decline in COVID-19 cases from January and patients have now moved from Medicare patient days back to Medicaid, after utilizing the 3-Day Rule waiver. Meanwhile, Medicaid revenue per patient day (RPPD) increased from March to end April 2022 at $247. It is up 3.3% from the pre-pandemic period (February 2020) as many states embraced measures to increase reimbursement related to the number of COVID-19 cases to support skilled nursing properties, in addition to fiscal year increases.

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. NIC maintains strict confidentiality of all data it receives.