More senior housing providers are turning to rent concessions to entice move-ins and boost occupancy rates as the coronavirus pandemic approaches its eighth month of disrupting the industry.
And an overwhelming number of providers are relying on overtime pay, as well as agency labor, to fill staffing vacancies. These are two of the key findings of the latest Executive Insights Survey from the National Investment Center for Seniors Housing & Care (NIC).
The industry group has been conducting these surveys since the early weeks of the pandemic. The latest report, released Thursday, marks the 14th wave of the survey and includes responses from 70 owners and operators of senior housing and skilled nursing facilities collected between October 12 and October 25.
Rent concessions have steadily increased over the past two months, from 34% of respondents in Wave 10, to 50% of respondents in Wave 12 to 61% of respondents in the latest survey. Providers offering memory care were most likely to offer concessions – 69% of respondents indicated they currently offered concessions. Independent living providers were close behind at 65%, and 60% of assisted living respondents are offering concessions.
A majority of respondents with more than four communities – 57% – are offering rent concessions across more than half of their communities, and 27% are offering concessions across their entire portfolios.
This comes against a backdrop of record low occupancy stemming from the pandemic. The average occupancy rate across NIC’s 31 primary markets fell to 82.1% in the third quarter of 2020. Annual rent growth slowed, as well, from 2.1% in the second quarter of 2020 to 1.7% in Q3. Independent living occupancy fell 2.4 percentage points to 84.9% in the third quarter, while assisted living occupancy dropped 290 basis points in the quarter to 79.1%.
The increase in overtime hours, meanwhile, reflects providers’ struggles to hire workers as the pandemic continues. More than nine out of 10 respondents – 91% – said they relied on overtime pay to fill staffing shortages. Additionally, 63% responded that they were using temp or agency labor to fill shifts. This is a 36% increase from the Wave 13 survey.
Providers that believed the industry would benefit from sharp increases in unemployment in other industries have acknowledged in recent months that they have been largely unable to recruit new talent, partly due to enhanced unemployment benefits that allowed people to stay at home for extended periods. The industry is also contending with an exodus of talent fearful of working in environments where the possibility of contracting coronavirus exists.
The combination is placing significant pressures on net operating income and likely will continue to for the foreseeable future, as positive Covid-19 cases rise for a third time across most of the U.S.