Inside Senior Living’s Occupancy Momentum — And How To Sustain It

After Q4 2021 occupancy data came out earlier this month, NIC Chief Economist Beth Mace described the report as “really bullish, encouraging and optimistic.”

In the weeks since, my conversations with various operators have confirmed a very positive story for the senior living industry with regard to move-in trends.

In this week’s exclusive, members-only SHN+ update, I analyze recent occupancy trends and offer key takeaways, including:

— Several operators posted historically high move-ins to close 2021

— Demand appears to have held up during omicron

— The senior living value prop is resonating with consumers

— To maintain momentum, providers must make the sales process easier, including with more transparent pricing

Resilient occupancy

Seasonal factors such as colder weather and flu typically slow down move-ins during the fourth quarter of each year. But senior housing occupancy rose one percentage point to reach 81% in Q4 2021, according to NIC MAP Vision data.

Not only did occupancy increase despite seasonal factors, but demand held strong in the midst of the Covid-19 delta variant, Mace pointed out.

For certain providers, fourth quarter moves-ins not only bucked seasonal trends but set new records.

For example, LCS — which operates a portfolio of about 135 communities — had the second-best month ever for move-ins in December 2021, COO Chris Bird said on SHN’s recent 2022 Outlook webinar.

And Brandywine Living experienced its best-ever sales month in September 2021. “And they went on like that in October, November, December,” CEO Brenda Bacon told me.

Obviously, not every operator has been so fortunate; staffing pressures in particular have weighed on providers and in some cases have halted move-ins. But nearly every operator executive who I’ve spoken with at this week’s American Seniors Housing Association (ASHA) conference in Phoenix has said that move-ins were robust in Q4.

In even better news, sales metrics remained strong despite the rise of the omicron variant early in 2022.

January is turning out to be another strong month for Brandywine, Bacon said. LCS is projecting January will be the biggest inquiry month ever for communities that have been in the portfolio since before the pandemic, Rick Westermann, VP/senior director of sales and marketing, said during SHN’s recent virtual Sales Summit.

And Juniper Communities has seen similar trends as LCS — and the strong January is a relief, considering the effects that omicron might have had, said VP of Business Development, Sales and Marketing Cindy Longfellow.

“Looking at pending move-ins between now and the end of the month, I’m very optimistic we may in fact end at a very different place than I thought even a week or 10 days ago,” she said.

The resiliency of demand also is reflected in statistics shared by publicly traded real estate investment trusts.

Occupancy in Welltower’s (NYSE: WELL) senior housing operating portfolio increased about 70 basis points in Q4, and average occupancy growth “modestly exceeded” guidance; the REIT noted that average sequential occupancy typically is flat between Q3 and Q4.

And for Ventas (NYSE: VTR), estimated average occupancy increased 110 basis points sequentially in Q4 2021, while “leading indicators in December remained robust.” Leads were at 113% of 2019 levels and move-ins at 106% of 2019 levels.

“The resilience of demand in senior housing is phenomenal,” Ventas EVP of Senior Housing Justin Hutchens said at ASHA.

The value of socialization

Even more than the steady pace of move-ins, I’m encouraged by what I’ve heard about the motivations of new residents.

To be sure, some of the demand surely stems from older adults who — due to deteriorating health — no longer can put off moves that they deferred earlier in the pandemic. But I’ve been hearing strong indications that acuity has not drastically spiked, and other factors are driving demand.

In particular, older adults and their adult children are being motivated by the desire for socialization and to avoid the loneliness and isolation experienced during the lockdowns of the last two years.

The strength of independent living demand seems to support the argument that many consumers are seeking greater engagement and socialization, and are not moving simply because health conditions are forcing them.

Independent living has been “the outperformer” in the LCS portfolio, Westermann said. Likewise, Merrill Gardens President Tana Gall has been surprised to see generally stronger demand on the IL side than in more needs-based levels of care. Brandywine also has not seen acuity spike.

“Our acuity has not gone up … we get asked that question, are people just moving in when they have no choice,” Bacon said. “Certainly people need that support, but they need socialization, they need to be with other human beings.”

And Juniper is in the midst of a data collection and analysis effort to more clearly quantify acuity trends during Covid-19. Although those results are still forthcoming, initial findings do challenge the notion that people moved in with higher acuity than usual during the pandemic, CEO Lynne Katzmann told me.

Seizing a golden opportunity

All these comments and data points paint a picture of senior living providers having a golden opportunity. For years, I’ve heard industry leaders argue that senior living’s main value proposition — and differentiator versus home care — is the socialization that communities offer.

Now more than ever, consumers seem to be compelled by that value prop. LCS and Juniper (and I’m sure other providers) are adjusting their sales and marketing messages accordingly, to emphasize these aspects of senior living.

It seems to me that all providers should be leaning heavily into this messaging, and also focusing their operations around social aspects of the resident experience. Particularly with staffing challenges so rife, now could be the ideal time to support more resident-led social clubs or events, for instance. And I’ve also spoken with several providers that have implemented Cubigo to create a more tech-enabled way of driving resident engagement in programming.

To build on the current move-in momentum, I also think that providers should make it easier for prospects to find information and move through the sales process. It’s a point emphasized strongly by Danette Opaczewski, COO and EVP of Resident Experience at independent living provider Revel.

Pricing transparency in particular is a focus for Revel, informed by Opaczewski’s experience in the hospitality industry and her expectations for how older adults and their children will shop for and choose senior living communities.

“I think you’re going to see independent living be booked through technology; you’re not going to necessarily need to go and visit 16 communities and get the pricing,” she said.

The merits of pricing transparency have long been a matter of industry debate. One concern has been that consumers will experience sticker shock upon seeing prices, necessitating a sales pro to be present in order to put the numbers in context and sell value.

I find this argument unpersuasive. Consumers now purchase all manner of products and services online, including major items like cars and even houses. Senior living providers need to invest in their websites, in curating and managing online reviews, and they need to evaluate whether their pricing structures really are aligned to value and can be easily understood.

I know that veterans’ benefits, long-term care insurance and other programs might come into play for certain individuals, affecting their out-of-pocket costs. And consumers are bringing more emotion to a senior living purchase than buying a car or airline ticket. However, I fundamentally agree with Opaczewski that reducing friction in the sales process is of paramount importance, and greater online transparency builds consumer trust.

The good news is that senior living providers appear to have made great strides in raising their digital sales and marketing games during the pandemic; LCS is budgeting to keep online content fresh and compelling, and both Westermann and Juniper’s Longfellow described how customer relationship management and other tools now generate more precise and actionable data than sales teams had in the past.

Ultimately, I think that like other aspects of senior living, the sales process must become more high-tech and high-touch, with a better online presence balanced by real human connections that can be made quickly and reliably. Best-in-class operators already are moving in this direction, in order to more effectively sell to a consumer base that — to the credit of the industry — sees the value of senior living in a new and more appealing light.