Senior Living Mid-Year Outlook: Occupancy Optimism Tempered by Slow Grind of Staffing Woes

Nearing the halfway point of 2023, senior living operators are ramping up efforts to maintain momentum in various areas, from generating revenue growth to innovating on staffing, with a goal of seeing year-end success.

But the road to wider margins and boosted revenue is fraught with challenges, from outside pressures on interest rates that hamper new growth to persistent expense and labor pressures.

Senior living operators are having to get creative amid these challenges to turn 2023 into a strong year for their bottom lines. Some are focused on optimizing operations, while others remain laser-focused on new growth despite outward pressures on it.


And that’s just what operators with Charter Senior Living, Cogir Management USA, Distinctive Living, Goodwin Living and Sonida Senior Living (NYSE: SNDA) are doing to make 2023 a positive year moving away from the nadir of the Covid-19 pandemic.

Occupancy momentum, new growth

Many senior living operators had a strong start to the year, as average industry occupancy ticked up to over 83% in the first quarter of 2023. That momentum is continuing into the second quarter of the year.

Naperville, Illinois-based Charter Senior Living saw a “very strong” first quarter, and is well-positioned to continue occupancy growth in the second quarter and beyond, according to President and Chief Operating Officer (COO) Jayne Sallerson.


That optimism comes from Sallerson’s tracking of key metrics across Charter’s portfolio. The trends bode well for the rest of the year, she said.

“We are already seeing leads and tours outpacing prior years which has resulted in increased move-ins,” Sallerson told Senior Housing News.

In the last 10 months, Charter Senior Living added three new communities across Alabama, Michigan and Connecticut, along with three additional sites in Kentucky. In an interview earlier this year with Senior Housing News, Charter CEO Keven Bennema said he saw the company’s new development most likely occurring “east of the Mississippi River.”

“We’re not just chasing new growth,” Bennema said in March. “It’s very calculated and we owe it to our partners to continue to focus our attention on certainly managing assets that we manage while expanding our joint venture partner relationships.”

Freehold, New Jersey-based Distinctive Living, while focusing on optimizing operations, has seen rapid growth in the last three years. CEO Joe Jedlowski told Senior Housing News the company’s acquisition of distressed assets is progressing as planned, with a high ceiling for new opportunities.

“Even within the new assets that we have on-boarded, we have seen an immediate pop in occupancy, RevPAR, and net operating income (NOI) across the board,” Jedlowski said.

That strong performance has allowed Distinctive Living to forge ahead on development financing and Jedlowski said he expects the momentum to carry the company forward “through the end of the year.”

But even with Jedlowski’s optimism on new growth high, he cautioned that the next “10-plus months” would continue to pose a major challenge to operators looking to expand their footprint via acquisition or new construction.

That’s not to mention record-high interest rates and sustained high construction costs preventing some operators from jumping back into a pre-pandemic, organic growth mindset. If operators can sustain their current portfolios through optimizing operations, Jedlowski said he was confident that, in the long run, the company would be rewarded for their responsible management.

With new construction muted in the first quarter, Jedlowski sees the possibility for greater lease-up success, with less competition across all markets, regardless of scale as demand for senior living remains high.

With interest rates high and new revenue generation at a premium, Sallerson said opportunities for new growth could come via acquisition of distressed assets.

“Many smaller operators have had a harder time overcoming the wage pressures and increased expenses we all experienced last year,” Sallerson said. “As a result, they have not been able to cover debt service allowing for more opportunities for value add.”

Operators must also consider that those underperforming assets, and operators, could make “aggressive measures” to move occupancy, according to Goodwin Living CEO Rob Liebreich, and all operators must be prepared to present their value to prospective customers.

“We need to be ready for significant discounting and be able to clearly highlight our value proposition,” Liebreich said.

Being able to highlight that value looks different for each operator, and Liebreich said providers must “provide more true value” to both residents and their families through “enhanced communication and more collaboration.”

That allows families to be more involved in decision-making, thus keeping them in the buying mindset for longer.

The Alexandria, Virginia-based company has seen “solid” occupancy rates in 2023, Liebreich said.The company is currently focusing on growing its number of assisted living and skilled nursing assets, as both product types have helped propel the company forward during the last three years, he added.

“We anticipate though the economy may be more challenged in the second half of the year, our value-oriented offerings will continue to be in high demand,” Liebreich said.

Despite the headwinds facing the sector, there’s still room for recovery across the industry, Sonida CEO Brandon Ribar told Senior Housing News.

“This year just feels like we’ve got a good opportunity to continue to really see acceleration in the recovery for the industry as a whole,” Ribar said.

That outlook stems from Sonida’s renewed focus on operations and investing in its company leadership across the board.

“We’re very optimistic that our investment in our people and communities positions us really well to achieve our goals this year,” Ribar said. “Hopefully that will continue to be much improved from previous years.”

Despite historically rainy weather out west, Sacramento, California-based Cogir Management USA CEO David Eskenazy said he remains confident 2023 will continue to be a strong year for senior living companies. In late February and into March, Eskenazy said Cogir had strong sales.

“It was a tale of the two halves of the first quarter and it somewhat validated the things we were hearing about the first half of the quarter being somewhat weather-related,” Eskenazy said. “All-in-all, a lot of our buildings are higher than pre-pandemic occupancy, and some aren’t.”

While current headwinds might dampen occupancy expectations, Eskenazy said there was light close on the horizon. He cited high demand for senior living and favorable demographic shifts nationwide, but labor and expenses remain painful.

Staffing remains tough

It’s no secret that senior living operators have faced an uphill climb on recruiting and retaining workers in recent years, a problem that was only made worse by the pandemic. Now, rather than not being able to find staff, some operators are faced with a different problem: Finding the right staff for them across hundreds of positions.

At Sonida, Ribar said the company made an intentional push to solidify its leadership across the board, and those efforts have paid off. Across the company’s entire senior living portfolio, Sonida has fewer than six open leadership positions, he said.

“The strongest operators will be very successful in retaining people through the right programs and engagement,” Ribar said. “The environment right now allows for really strong operators to avoid the use of expensive [agency] labor and there’s no excuse for not being able to retain great team members right now.”

Operators must take action to reduce turnover and retain staff, which will ultimately lead to better service for residents, Liebreich added. At Goodwin Living, the company reported its recent turnover figure was roughly 30% in the last three years.

Organizations have increased wages, offered new benefit packages and provided more incentives to bolster employee rosters.

“There is an amazing opportunity to decrease this number, build continuity of service, grow satisfaction among existing people we serve and thereby sustain occupancies through word-of-mouth referrals,” Liebreich said.

Staffing could remain an even tougher issue for high-barrier to entry markets, Jedlowski said, where public transportation and residential options are limited. At Distinctive Living, the company recently implemented a software that allows leadership to receive feedback from employees, allowing regional leaders the ability to solve problems quicker and communicate directives more efficiently.

“It’s allowed us to obtain real-time feedback about things that are going well and not-so-well in our communities,” Jedlowski added.

While applications may be up, Eskenazy said that doesn’t change the fact that the industry’s labor pool has been shallow for years.

“While we might be eliminating outside labor by beginning to find people to fill these positions, they may or may not be the right fit for these positions. This is difficult work,” Eskenazy said.

Eskenazy said he believed turnover would remain elevated through the rest of the year, but one improvement could come in the form of Covid-19 restrictions being lifted nationwide, allowing greater flexibility by operators to bulk up on staff..

Seemingly every operator’s biggest expense comes in the form of their staffing budget. With staff taking up to around 60% of an annual budget, it’s no surprise that operators are facing extreme pressure as other expenses, like food and general supplies, continue to rise.

But it doesn’t just stop there. Operators also face rising costs due to inflation on insurance plans and litigation costs.

“I don’t see pressure coming off of wage rates and food is still up pretty good,” Eskenazy said. “All those things are in a pretty tough position in my view.”

Rising expenses are forcing operators to get crafty. Jedlowski noted how Distinctive Living was examining its portfolio to find ways to leverage its operating and buying power to decrease overall expenses per occupied unit.

Sallerson echoed Eskenazy’s comments, noting that both food and utilities would remain sticking points in terms of expenses. By focusing on optimizing employee scheduling, having systems to accurately charge for care level and monitoring rent incentives are all ways to prevent expense creep, Sallerson added.

Areas to watch for the rest of 2023

As the year shapes up, operators will be faced with make-or-break decisions. These are some of the top areas to watch for the remaining months ahead, according to those who spoke to SHN:

  • employee retention and improving culture 
  • data and technology adaptation
  • collaboration with other operators
  • operational efficiencies 

Even as applications across various open positions improve, Sallerson said she felt the industry’s labor pressures would remain for the rest of the year and then some, highlighting the fact that certain parts of the country were struggling on staffing than other markets for caregiver and nursing positions.

“Operators should stay laser focused on employee retention,” Sallerson stressed. “Turnover not only adds additional cost to the communities but also impacts the care and service we provide.”

Ribar added, “I think just the primary areas that we’re spending time on are on the health and wellness of our team, and our employees.”

With its programming in place on improving communication among staff and leadership, Jedlowski said operators must take action to foster a welcoming environment for employees and create efficiencies through technology.

“Lastly, operators should continue to seek out ways to collaborate with other operators in the business,” Jedlowski said. “Best practice sharing and benchmarking data is critical for future and current success.”

On building culture, Eskenazy said operators must consider building culture to sustain staff and better resident experiences.

“The best operators will be those that can create an environment where the residents and the employees really enjoy their environment,” Eskenazy added. “The best companies in any industry please their customers and that’s still a simple winning proposition that can’t be forgotten.”

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