Assisted living rates rose in 2021 as the senior living industry continued to get a handle on the Covid-19 pandemic and its many pressures on operations.
The cost of assisted living for a resident increased 4.65% in the past year, with a median of about $4,500 per month or $54,000 annually for a private, one-bedroom unit, according to the latest Cost of Care Survey from insurer Genworth Financial (NYSE: GNW).
Monthly rates for care in an assisted living community ranged from about $3,000 in Missouri to nearly $7,000 in the District of Columbia.
Although an increase of 4.65% is sizable given that assisted living costs rose just 1.28% between 2018 and 2019, it falls short of the 6.15% increase seen in 2020. The five-year compound annual growth rate for assisted living costs rose to 4.4% in 2021, which is up 3.62% from last year, according to the survey.
For comparison, the national median cost of adult day services rose 5.41% in 2021 to a median daily rate of $78. The national median cost of home health aide services rose 12.5% last year to $27 per hour, and the national median cost of homemaker services grew 10.64% to $26 per hour.
The most recent Cost of Care report includes data from almost 14,700 surveys for nursing homes, assisted living communities, adult day health facilities and home care providers. About 70 different assisted living operators participated in the survey, which was conducted between June and November 2021.
As was the case in last year’s survey, elevated expenses related to supplies, labor and regulatory compliance drove this year’s cost increase, according to Genworth Customer Insights Senior Manager Patrick Gantz.
“When we spoke to owners and operators of assisted living Facilities in 2020, they mentioned how costs associated with Covid-19 … were at the time not being passed on to consumers,” Gantz told Senior Housing News. “I think you’re now seeing those costs reflected in the price increases, paired with the supply/demand pressure related to recruiting, hiring, and retaining care professionals, which is a trend we’ve observed for years.”
Many senior living operators set historic rate increases for residents in 2022, with some enacting increases of 10%. But, “we shouldn’t necessarily expect dramatic increases in facility care with the next survey,” he added.
“In the 2020 Cost of Care data, we saw facility-related costs increasing at a higher rate than homecare-related costs, now we’re seeing the opposite,” he said. “Facility-care costs in 2020 might have been the leading indicator, so now the costs of home care are catching-up a bit.”
Still, there are some in the industry who foresee another big year of rate increases in 2023. For example, Priority Life Care CEO Sevy Petras sees “one more year of unseasonably high rates” as the industry gets a handle on expenses.
“Do I think that’s the first of the big jumps? I do not,” Petras told SHN during a recent interview on the SHN podcast Transform.
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