How Shifts in Resident Acuity Are Forcing Providers to Walk ‘Fine Line’  

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It’s a common refrain in senior living: Today’s independent living is yesterday’s assisted living; and today’s assisted living is yesterday’s skilled nursing. 

Although that is obviously an oversimplification of the senior living care continuum, the current acuity level of residents is driving major strategic decisions at big operators, from staffing levels to community repositionings.

At the same time, the lines between independent living and assisted living have blurred, forcing operators to walk an increasingly narrow tightrope with regard to the services they offer: Too far in one direction, and service quality could suffer; too far in the other, and margins could decrease.

From conversations with providers with small and larger portfolios at Senior Living 100, it’s apparent to me that acuity is top of mind for many executive teams.

“You’re going to have higher acuity and you’re going to need additional staffing today,” Integral Senior Living CEO and President Collette Gray told me. “You’re also going to have to change your price offering and determine service levels that change alongside increasing expenses, and it’s just managing to that fine line.”

Operators are walking that “fine line” as they are taking smaller strides in future growth, from tackling less ambitious additions or renovations, to adjusting their exposure to independent living, assisted living and memory care to get on better long-term financial footing.

In this week’s exclusive, members-only SHN+ Update, I offer analysis and some key takeaways from my conversations on this topic at Senior Living 100, including:

– How acuity is shaping how providers view and execute on operations

– While staffing conditions may be improving, finding licensed care staff remains a key challenge

– Ways that operators are continuing to grow despite capital and operational challenges

Acuity driving operations, growth strategies

In the last four years, operators have had to accept a slate of challenges. This year, operators are continuing to see residents enter communities older, and with increased care needs, which has led to length of stay decreasing. By last year, length of stay had still not returned to pre-pandemic levels – but some operators reported it moving in the right direction.

Trilogy Health Services President and CEO Leigh Ann Barney noted during a panel discussion how having higher acuity offerings on site has helped keep residents who started in an IL setting on campus rather than being forced to move out when they need a higher level of care.

“We have the full continuum on all of our properties so I think that’s an advantage and a great marketing tool, [that] you don’t have to make a decision all at once,” Barney said during the View from the C-Suite panel at SL100. “The key to being successful here is trying to figure out how to keep residents where they are at and you do that with really good partnerships.”

Trilogy has 131 communities in five states, with a full continuum of senior living and skilled nursing services. During a recent earnings call, executives with American Healthcare REIT (NYSE: AHR) – which owns a major stake in Trilogy – noted that the operator has opportunities to expand deeper into independent living to complement those offerings.

Grand Rapids, Michigan-based Brio Living Services, with around a half-dozen communities, is also adding more IL to its CCRC campuses while expanding its home care programming to reach higher-acuity residents outside of their communities after shedding skilled nursing exposure over the last four years, according to Chief of Residential Services Nicole Maag.

Looking ahead, Maag said steps taken to transform Brio’s care continuum and efforts on staffing will help create stability and lead to the organization “to start to be proactive and creative.”

“It’s looking towards the future and how to capitalize on the opportunity in front of us and I believe we are poised to do that,” Maag said in an interview during the conference.

Putting the pieces together…

Care needs put staffing in a crunch

While senior living operators have seen improvements on various aspects of staffing, from wage rates moderating and operators reporting strong application volume, a key challenge as acuity rises is attracting and retaining licenced care staff, and paying for them.

From physicians to direct caregivers, communities have seen persistent problems in bringing new talent on board. Some of that has to do with broader challenges seen since 2020 even as key clinical positions for assisted living care worker wages rose up to 6% in 2023.

In a recent survey by the National Investment Center for Seniors Housing & Care (NIC), 82% of executives polled as part of a staffing survey reported staffing shortages overall, but that has dropped from between 90% and 99% that reported shortages previously. In May, I reported on tech firm LivingPath’s data analysis that found thousands of nursing care staff vacancies nationwide.

As the hearings earlier this year in Washington, D.C. brought affordability and the prospect of future regulation into the minds of leaders across the industry, operators are aware that the future could include new Congressional oversight, especially among assisted living, memory care and long-term care sectors.

Although many states already have guidelines for staffing at senior living communities, mandates are not common for senior living operators across the country. That could be changing, and staffing linked to the acuity of residents is a big reason why.

“We will be regulated at some point more so than we are now, and I believe from a staffing perspective, it’s coming,” Gray said during A View from the C-Suite panel at SL100. “I think we can all agree, we are going to get mandated to have certain staffing requirements.”

Providers based in Oregon in particular have seen more state regulation in the form of an acuity-based staffing tool. Approved by state lawmakers in 2014, it saw providers have acuity and staff reviewed by the Oregon Department of Human Services during evaluations of residential care facilities.

Earlier this year, providers succeeded in communicating needed updates to the regulations, according to Generations President and COO Kathy LeVee. While operators continue to get on the same page as state and federal lawmakers, more work remains.

“I think it had a chance to be aligned with both regulators and from the legislature and it had points of angst and we’re still not there,” LeVee said during a panel on acuity. 

For operators like ISL and Eskaton that have adapted to an increased state regulatory environment, succeeding on staffing has meant getting creative to connect with care staff. In my conversation with Eskaton CEO Sheri Peifer, she told me how her organization is using a $3.2 million grant from the California Department of Aging to improve retention of key care positions.

In a recent internal analysis of staff that have participated in the career training and development program, Peifer noted that retention is consistently higher among Eskaton care staff who participated in the Eskaton Academy as opposed to forgoing it.

“2024 is all about stabilization of investing in our core team, and ensuring that we’re doing things creatively in our different markets,” Peifer said.

Eskaton is not alone in focusing on staffing and investing in a “core team,” but providers also are seeking pathways to growth in 2024. And here, too, shifting acuity is playing a role in determining strategies.

As new demand surges, driven by demographic changes nationwide, operators must consider how to differentiate IL and active adult as acuity challenges loom large. For Trilogy, Barney highlighted how she believes there will be a proliferation of operators integrating telemedicine into lower acuity offerings, along with adding over two-dozen IL additions on Trilogy communities in recent years.

Yet while many providers are seeking out how to attract younger residents and counteract some of the acuity creep that has occurred over time, other operators are doubling-down on a more needs-based offering. The nation’s largest senior living provider, Brookdale, is one example. The company’s HealthPlus model of more integrated care is part of a larger strategy focused particularly on assisted living and memory care.

We may be seeing an increasing differentiation among providers, with some specializing in care while others focus on active adult or independent living. While the continuum-of-care model is time-tested, holds enduring consumer appeal, and is still paying off for many providers in the space, I wonder just how far the continuum can be stretched.

As providers vie for younger consumers while also taking on (or continuing to serve) higher-acuity residents and patients, the difference between a newly retired – or not-yet retired – resident who has just moved into active adult versus someone residing in memory care or skilled nursing will become increasingly dramatic. And if leaders are correct that regulation is going to tighten for higher levels of care, that only adds further incentive to specialize or avoid that part of the continuum altogether.

In other words, the changes created by shifts in acuity could lead to more providers embracing the idea that they cannot be all things to all people. As former Equinox Fitness CEO Niki Leondakis put it when speaking at our BUILD conference in 2019, when she was leading Revel Communities: “It’s about having the courage to say, ‘This is who we are. This is who we’re going to serve.’”