Amid short-term headwinds that are threatening occupancy rates and driving up expenses, monthly fees for independent living residents in not-for-profit communities have reached historic levels in 2022. Some not-for-profit operators are even contemplating more rate hikes in the midpoint of this year.
That’s according to a report published by Chicago-based speciality investment bank Ziegler. The report, released this week, includes responses from 230 not-for-profit senior living CFOs and financial professionals, with a breakdown of 62% representing single-site organizations and 38% with multi-site organizations.
In 2022, the median percentage of increase in monthly independent living rates for residents in nonprofit communities was 4.4% — a “historic high” over previous years, when senior living nonprofits grew rates between about 3% and 3.3%, according to Ziegler.
That average monthly fee increase was actually higher than what CFO Hotline survey respondents originally predicted in September 2021, when they said they believed average monthly fee increase for operators would register at 3.7% in 2022.
Across the board fee increases were between 4% and 5.6% nationwide, including an average rate increase of 4% for the Northeast, 4.4% for the South, 4.4% for the Midwest and 5.66% for the West.
The survey also included a smattering of comments from survey respondents.Two operators cited the need to raise monthly fees while facing staffing shortages, an industry-wide problem, while other providers cited the need to increase fees due to inflationary pressures.
“We could have increased fees quite a bit more based on staffing shortages, rising costs, inflation, etc. but it would have been difficult for our resident population to absorb more than 5% at one time,” a respondent told Ziegler.
Some providers cited in the survey also weighed the possibility of conducting a mid-year fee increase rather than a traditional annual increase due to the many short-term challenges.
“Despite occupancy challenges, wage pressure, increased agency costs, and inflationary pressure on expenses, we tried to keep monthly fees from increasing too much,” a survey respondent wrote. “I’m afraid we may need to contemplate a mid-year increase.”
And several said they wished they had set even higher rate increases, given the rising cost of doing business this year.
“Concerned that this increase may not be enough in light of current inflationary pressures, particularly with wages,” one operator wrote.
“I wish we had gone higher,” wrote another.
Despite recent rate hikes, many senior living residents still believe that they are receiving a good value for the amount they are paying.
In fact, 47% of assisted living residents and 46% of independent living residents said they “agreed” that they are satisfied with the value they are receiving for what they pay, while 16% of assisted living and 19% of independent living residents “strongly agreed,” with that statement, according to survey findings from Activated Insights, the organization that conducts data gathering and analysis for the annual Best Workplaces in Aging Services list.