Staffing Remains Hurdle for Beleaguered Senior Housing Sector

Staffing remains a primary challenge to the senior housing and skilled nursing sectors, with more than half of operators surveyed by National Investment Center for Seniors Housing & Care in June saying they expect operating margins to increase over the remainder of this year. What’s more, a whopping 84% of operators surveyed say operating expenses have already increased since the beginning of 2022. 

Increasing operating expense will likely continue to limit margin growth for the second half of the year, and the outlook among operators for 2023 isn’t much better.  Just 20% of respondents said they think staffing challenges will improve next year, and another 20% say it will take until 2024 to see relief. Another 30% pit that target at 2025 or later.

The American Health Care Association/ National Center for Assisted Living has said that staff shortages plagued more than 95% of nursing homes and assisted living communities last year.

“Staffing and a slowdown in lead conversions are affecting the pace of move-ins, which slowed for memory care and nursing care properties, but remained consistent for assisted living and independent living properties,” said Ryan Brooks, Senior Principal, NIC, in an analysis of the survey.

Move-ins were most steady for independent living and assisted living residences, but declined “substantially” for memory care residences and nursing care residences. NIC analysts said that this “wave” of survey results marks the third consecutive period with an increase in memory care properties reporting a deceleration in the pace of move-ins. And overall, 65% of respondents reporting a deceleration in move-ins attribute the decline to a slowdown in lead conversions or sales, while 15% said they were the result of resident or family member concerns. Just 15% attributed the slowdown to staffing issues.

Of positive note: between 70% and 80% of respondents reported no change in move-out data, “which may aid occupancy stability or improvements in the coming months,” Brooks says. The survey includes responses from May 31 to June 26, 2022, from owners and executives of 61 small, medium, and large senior housing and skilled nursing operators across the country.

Overall senior housing occupancy ticked up modestly in the first quarter, rising 0.2 percentage point from fourth quarter numbers across 31 primary markets tracked by NIC MAP. While an encouraging increase, the number remains 6.7 percentage points below pre-pandemic levels in the first quarter of 2020. The sector saw 3.1% rent growth last year, an increase that was largely offset by inflation and operating cost and wage increases.