Senior Living Industry Challenges and Outlook
Many senior living executives hoped 2023 would be the year that the senior living industry finally pivoted away from its biggest ongoing challenges. That did not happen as planned. In 2024, operators are sure to confront many of the same challenges as they have for the last almost four years. Staffing, occupancy, margins, and other woes remain at the forefront of senior living executives’ minds as they start a new year. But the period of survival may be coming to a close all the same. In the last couple of years, many leaders have taken the phrase “survive to ’25” to heart as they have sought to ready their companies to capitalize on the post-Covid landscape. After a year in 2023 defined by operational stops and starts, many feel as though they’ve survived long enough and are ready to thrive instead. Just ask Solera Senior Living CEO Adam Kaplan, who proposes the industry should instead seek to “thrive in 2025.” “It’s time to rally around a more inspiring future,” Kaplan told Senior Housing News. “Senior living needs more than incremental change if we are going to reach our full potential and distribute the greatest benefit across all stakeholders.”
Senior living companies are seeking to thrive in part by adopting forward-thinking programs meant to help attract a new customer base. All the while, they are pondering what exactly thriving means to them and what is best for their organizations. To learn more about how senior living executives are feeling heading into the new year, Senior Housing News connected with a variety of industry leaders. What follows is the first part of a two-part series sharing those responses:
Cindy Baier, CEO, Brookdale Senior Living
As we look ahead to 2024, we are focused on several areas of opportunity and growth. We are responding to both changing demographics along with new technology. Taking both into account, we have introduced some exciting new programs to help improve the lives of seniors. One of these innovations is a new model of care coordination in assisted living called Brookdale HealthPlus, which we are successfully implementing in a number of our communities.
Brookdale HealthPlus is a community-based, technology-enabled, proactive care coordination program. This initiative has not only brought increased coordination of care to our residents, it has also helped deliver better health outcomes for them. An independent third-party confirmed urgent care visits were 78 percent lower and hospitalizations were 36 percent lower for Brookdale HealthPlus residents compared to seniors residing in other senior living communities or living independently. Brookdale HealthPlus is designed to enhance health outcomes by focusing on preventative care, chronic condition management, and timely coordination of care. By integrating technology with value-based care, we are looking for better ways to help our residents live well longer.
As we look into the next year and beyond, we believe that it is important to demonstrate social responsibility to our residents, their families, and current and future associates. We are focused on taking steps to help protect the environment in which we live, promoting diversity and inclusion in the workforce, and adopting best-in-class corporate governance. Retaining associates is a challenge our entire industry faces and it’s one we have worked hard to overcome. One of our continuing goals is to attract, engage, develop and retain the best associates in the business. To help overcome this challenge, we offer services and support for our associates. Over the past year, we have been able to increase our internal workforce, and focus our efforts on boosting retention. We also continue to work toward staffing our communities with engaged full- and part-time Brookdale associates and leaders who are united around our mission to serve our residents. As we move into the future, we will continue to see increased demand from an aging population. We can and should utilize emerging technology to further coordinate quality care. As always we remain committed to our mission of enriching the lives of those we serve with compassion, respect, excellence and integrity. I am proud of the proactive and innovative steps we are taking to continue to drive better health outcomes for older adults.
Greg Puklicz, President, 12 Oaks Senior Living
As we closed the books on 2023, we celebrated the success we achieved in regaining much of the census lost in the past few years. Much of this growth occurred in the first half of the year, as pent-up demand produced a wave of delayed, needs based, move-ins. As a portfolio, our average occupancy went up a dramatic 16.5 percentage points from 61.5% to 78.8%. More impressively, 25% of our communities are exhibiting occupancy greater than 90% compared with only a handful of a year ago. Additionally, renewal increases averaged 10.4% for 2023, helping to drive REVPAR above budgeted values. For 2024, we expect occupancy increases to moderate and our focus will be more focused on occupancy, by level of care, and unit type; attempting to finely tune unit pricing to drive occupancy for unit types within specific markets and communities that lag the overall occupancy growth. We expect concession based selling to decelerate while renewal increases will also moderate, more to a 5-7% level in 2024. Our goal for 2024 is to achieve a portfolio wide 85%+ average occupancy and meeting or exceeding our REVPAR budget projections
Staffing
We feel staffing concerns have moderated during the last half of 2023, as wage increases to the “new normal” levels for line staff and care positions were implemented, stressing budgets, but necessary to achieve hiring targets. 12 Oaks Senior Living expanded their internal recruitment staff and efforts resulting in positive hiring in eight straight months, to close 2023. We measure new hires and terms, just like move-ins and move-outs, and our efforts to increase recruitment and retention, have proven successful. For 2024, we feel a restoration to normal scheduling, with most positions filled, agency out of the communities, and overtime waning, we will be able to return to a more normalized scheduling of staff, thus reducing operating expense and most importantly, the stress of filling positions and shifts, borne by community leadership.
Margins
The last year was one of stabilization, so the focus wasn’t on margin per se, as much as it was on the elements that are manifested in margin at the end of the day. Occupancy. revenue, staffing, food costs, utility costs, insurance and property taxes all provided challenges with unique attention required for each. We have seen stabilization in most of these categories, especially the controllables, through the addition of improved technology and systems, implemented as part of our 12 Oaks growth strategy, to achieve best-in-lass operating results for our regional, high touch, operating model. For 2024, we expect a restoration of margin, albeit not quite to pre-pandemic levels, as we feel there is more work to be done. The real success will come in 2025, where we predict a full return and restoration of normalized operating margins, as market demand and supply achieves equilibrium and our ability to drive real REVPAR increases with high occupancy, will be achievable.
The 12 Oaks business plan
The past year was an important tipping point for 12 Oaks Senior Living as we significantly enhanced our portfolio to now, 40 communities under management. Our focus on 2024 will not be so much on continued growth, as it will be on solidifying our position as the best-in-class regional operator in the southwest, through our proven performance model consisting of high-touch community management, experienced leadership, integrated systems, and most importantly, optimized culture.
Steve Lindsey, CEO, Garden Spot Communities
As we look forward, we continue to see a VUCA (volatile, uncertain, complex and ambiguous) world, but believe that there are some exciting opportunities in the coming year that will help shape our future. In developing our strategic blueprint this year, we identified our organization’s envisioned future as “sparking a pro-aging revolution.” We believe that the biggest impact that we can have is to begin a conversation that stops denying aging, but begins to define again in new terms — one that sees aging as a natural progression of life that brings many benefits, not as a liability. We see older people having gifts of experience, wisdom, resilience and self-discovery that need to be shared with the world…
