The nation’s largest senior living provider is making headway in its effort to test its residents and associates for Covid-19, and thus reopen more of its communities to move-ins.
Brentwood, Tennessee-based Brookdale Senior Living (NYSE: BKD) has so far tested roughly 20% of the residents and workers at its 741 communities, according to CEO Cindy Baier, who updated analysts and investors during the 2020 RBC Capital Markets Global Healthcare Virtual Conference on Wednesday.
“While we’re very early in the process, I’m pleased that some communities have completed the full testing with no residents and no associates testing positive,” Baier said. “In other communities, we found isolated, asymptomatic residents or associates, and we’ve been able to take those positive residents and associates and isolate them.”
In some markets, Brookdale got help with testing from local and government public health departments. The company is also looking at private testing options and incurring some of the cost in other markets.
“Right now, we are looking at testing as a baseline to understand what’s happening in our communities,” Baier said. “It’s too soon to say what the impact will ultimately be with regard to costs.”
By testing its residents and associates, the Brentwood, Tennessee-based senior living provider can better understand how its infection control protocols are working, Baier added. The company can also use that information to more quickly reopen affected communities for new move-ins and grow its occupancy rate in the coming weeks and months. In communities where there are no positive cases, Brookdale is already allowing move-ins, as long as the incoming resident can self-isolate for 14 days.
Brookdale’s consolidated senior housing occupancy dropped 220 basis points last month, falling from 82.2% on March 31 to 80% on April 30. Move-ins plummeted almost 35% across the provider’s same-community portfolio since it began enacting lockdowns to slow the spread of the pandemic. As of its first-quarter earnings call on May 6, fewer than 1% of the company’s residents across its 741 communities had tested positive for Covid-19.
With more widespread rapid testing capabilities, Brookdale may even be able to test visitors for the disease — a crucial step to allowing loved ones back into senior living communities after months of no face-to-face contact with residents.
Despite the progress in testing, Brookdale does not expect to see an immediate turnaround in move-ins, at least not one that is reflected in its upcoming second-quarter earnings report.
“As we see move-ins at a percentage of what we’ve historically had, I do think that occupancy will likely fall in both May and June,” Baier said. “But I’m encouraged by the fact that we’re starting to see some sequential improvement in both move-ins and move-outs.”
And, if residents and their families feel that the company took good care of them during the pandemic, Brookdale may see a lingering “halo effect” on move-ins and move-outs, she added.
Labor costs are also expected to be “significantly higher” in the second quarter. But the company is matching that higher spend with an effort to support its associates during a challenging time, Baier added. In some cases, Brookdale was also able to successfully move employees around the company as needed.
“When work slowed down for certain positions in our corporate office and our healthcare services business, we pursued opportunities for associates to fill positions in our senior housing communities,” Baier said.
The provider issued a national press release that it sought to hire more workers in order to “change our business model overnight” as the pandemic disrupted normal operations, she noted. The company’s application volume rose 26% in April compared to March.
One thing Brookdale does not want to do right now is lower its rates. Baier does not believe it needs to offer discounts that would entice someone to move in during a pandemic, as most of Brookdale’s move-ins are needs-based.
“Given how fragmented our industry is, I’m sure that someone is offering discounts to gain new move-ins,” Baier said. “Having said that, we will retain discipline on price, and we strongly believe in charging an appropriate rate.”
Looking ahead, Baier believes that while there are short-term challenges, Brookdale will emerge in a stronger position in the post-pandemic world.
“Similar to what happened after the Great Recession, I believe that there will be fewer competitors, and I do believe that there is less construction that we’ll see going forward,” Baier said. “I think the one thing that this has highlighted is the care-driven nature of the business and the health care component of our business, which plays to Brookdale’s strengths.”
