Ongoing pandemic-related costs slow operating margin growth: NIC

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As the recovery in retirement home occupancy continues and the pandemic subsides, rising operating expenses could limit growth in operating margins over the next six months, according to the National Investment Center for Seniors Housing & Care.

For the Wave 38 NIC Executive Survey Insights report, 75% of respondents said they expect operating margins to increase over the next six months, with the majority (55%) expecting operating margin increases of between 1% and 5%. Only 5% said they expected lower margins.

Those expectations, however, are hampered by ongoing labor issues, which are contributing to rising operating costs, according to NIC senior manager Lana Peck.

The survey was conducted from February 7 to March 6; Respondents were owners and managers of 67 senior living and skilled nursing businesses.


Staffing continues to be the biggest challenge for providers – almost all respondents reported staffing shortages since last July – with the attraction of community/caring staff (86%) and staff turnover ( 60%) cited as the most significant staffing challenges. But nearly three-quarters of participants said they were optimistic about improvements to come.

All wave 38 respondents reported paying overtime. Four in five (81%) said they used agencies or temporary staff to help with shortages, and 49% said they did not expect their reliance on external agencies is changing this year, although 40% expect it to decrease. Just under a third (29%) said they expected staffing issues to improve in the second half of the year, while 43% said they thought labor markets work would relax next year.

Complaints about agency-related price gouging have swirled across the industry for months, and 90% of survey respondents said they support a federal investigation into anticompetitive practices by nurses and other healthcare agencies. direct care staffing.

In January, the American Health Care Association/National Center for Assisted Living, LeadingAge and 10 other health care organizations sent a joint letter to the White House asking for help with these anti-competitive practices after asking the Federal Trade Commission last fall to investigate the matter.


Lead volume may be a leading indicator to watch for occupancy recovery, according to the NIC, given pent-up demand resulting from the pandemic and “near-historic uptake rates” in the third quarter. and fourth quarters of 2021.

More than half (56%) of the largest organizations in the survey said they had reached pre-pandemic lead levels, compared to just 15% of single-site operators. According to NIC, larger sales teams and marketing budgets, sophisticated online and digital marketing capabilities, and the geographic, demographic, and economic diversity of markets are advantages that come with scale.

The pace of moves remained strong for assisted living communities and improved for skilled nursing facilities, but slowed for independent living and memory care communities. Respondents to the Wave 38 survey said the pace of moves had increased over the past 30 days as the omicron variant peaked and COVID-19 cases began to decline in mid-January.

Since the Wave 36 survey reflecting operator experiences in November 2021, half of organizations with serviced housing reported an acceleration in the pace of move-ins. In contrast, the pace of moving in slowed for independent living (27%) and memory care (21%). Independent living also reported an acceleration in the pace of moves (27%). The pace of moves into retirement homes reversed its slowdown during wave 38.

Seasonality, omicron, staffing and slowdowns in hospital admissions were the reasons respondents cited for the slower pace of moves. Fifty-three percent of respondents cited residents moving to higher levels of care as the reason for the accelerating pace of moves.