Despite sagging occupancy nationwide, the CEOs behind some of the country’s leading senior living companies still see plenty of opportunity for growth—and a chance to shape regulations that may be coming down the pike.
That was the theme of a July 13 panel discussion at the Senior Housing News Summit in Chicago that included insights from four senior living executives. Travis Palmquist, vice president and general manager of senior living at PointClickCare, moderated the talk.
Bumpy road ahead
The average occupancy rate for U.S. assisted living properties fell to 86.5% in the second quarter of 2017, according to new data by the National Investment Center for Seniors Housing & Care (NIC). The latest numbers are 0.7 percentage points lower than the average occupancy rate for the first quarter of 2017, and 1.4 percentage points below last year’s numbers.
Average independent living occupancy also recently dropped.
Overall, those properties tumbled to 90.6% occupancy in the second quarter of 2017. That’s 0.3 percentage points below the average occupancy rate for the first quarter of this year and 0.4 percentage points lower than the average occupancy rate recorded the same time last year.
Though these figures may worry some operators—especially those in overdeveloped markets—it didn’t seem to faze Ken Jaeger, founder and CEO of Denver’s MorningStar Senior Living. MorningStar operates 20 communities spread across Arizona, Colorado, Iowa, Nevada and Oregon.
The latest data is part of a larger demand cycle that ebbs and flows with inventory, he argued.
“It’ll come and go,” he said. “You have to hang in there.”
On that note, a little patience can go a long way, Randy Richardson, president of Vi in Chicago, said during the panel discussion. Senior living operators feeling the pain now need to ride out the storm to get to the smoother sailing ahead.
“It’s going to be bumpy, but overall, this industry is poised for tremendous expansion,” Richardson explained. “There’s going to be some ups and downs along that trail.”
In times of turbulence like these, operators should focus on running their businesses with a “sense of purpose,” Jaeger suggested. Part of the equation is hiring or promoting the right leaders.
“If we stick true to our core values and our mission, occupancy is going to take care of itself,” he said. “It’s going to be fine.”
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Another big piece of the puzzle is doing your homework, and that includes conducting market research and analytics, Keven J. Bennema, president and CEO of Naperville, Illinois-based Charter Senior Living, said during the panel discussion.
“Certainly occupancy is incredibly important, and if you’re not tracking your key sales and marketing data, your analytics on a day-to-day basis, you’re dead in the water,” he said. “Unless that’s backed up by data, to me, that’s nothing more than gastrointestinal pain.”
Occupancy woes might seem troubling now, but they could be the least of operators’ collective worries in the near future. One big issue coming down the pike relates to government regulations, like the kind that skilled nursing operators already face. If players in the senior living industry aren’t proactive, they might miss out on a chance to weigh in on how federal and state governments set the rules.
“As the [senior living] industry matures and grows, we are going to have more regulation,” Richardson said. “You need to make a decision whether you want to be at the table or a victim.”
One suggestion he offered was to get involved with political action groups, such as Argentum’s Silver PAC.
“Build organizations in key states and have a much more interactive discussion with policy makers,” Richardson said. “It may not be there today, but it’s at our doorstep.”
Another way to get ahead of forthcoming government oversight is to welcome regulators with open arms, Jaeger said. Treat them as friends, not foes. That way, if problems do arise, a relationship has been developed.
“They’re in the business to help us, they’re not there to harm us,” he added.
Another piece of advice, this time from Tana Gall, CEO of Blue Harbor Senior Living: Hold your company to higher standards than the government might one day.
“Have your own internal checks and balances,” she suggested. “When the state does come in, it’s not as bad. I think we can hold back regulations as best we can by doing a good job of what we’ve got right now.”
Written by Tim Regan