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Higher occupancy and even resident rental rates don’t always mean higher margins. That makes senior living expense and revenue management even more critical in 2026.
With that in mind, Senior Housing News reached out to operational leaders or executives at five senior living companies to learn how they avoid top revenue management mistakes. Leaders at operators Sonida Senior Living (NYSE: SNDA), Discovery Senior Living, LCS, Frontier Senior Living and Wellpointe stressed the need to correctly charge for senior living services, personalize care and take a holistic view into account when counting incoming and outgoing dollars.
Esmerelda Lee, SVP of Operations, Discovery Senior Living
Senior living is entering a different phase of the operating cycle and continuing to mature. For the past several years, much of the industry’s focus has been on rebuilding occupancy. Today, as we see more of our communities move into the 90s and some reaching 100%, the challenge is shifting from increasing occupancy to revenue optimization.
A key revenue mistake is assuming a full building is a fully optimized building.
At Discovery, we’re constantly thinking about that distinction because senior living is a complex operating business. You’re managing real estate, hospitality, healthcare, labor, sales and a highly personalized resident experience simultaneously. As occupancy strengthens, sophisticated operators have to look across all of those areas and understand not only how to fill an apartment, but how to maximize the value of every occupied unit while continuing to deliver an exceptional experience for residents.
Treating occupancy is the starting point, not the finish line
Occupancy tells you whether an apartment is filled, it doesn’t necessarily tell you whether you’re maximizing the economics of that apartment. That’s why we’re looking beyond occupancy to RevPOR, rate quality, care revenue, concessions, unit mix, resident tenure and margin. A community can be 100% occupied and still have opportunities to improve its economic performance.
Failing to change pricing as occupancy increases
As occupancy increases because pricing has to evolve with demand. The strategy that was appropriate at 82% occupancy isn’t necessarily appropriate at 97%. As availability tightens, our teams are thinking about the specific inventory remaining, demand for individual unit types, the competitive environment and what the market is telling us about value.
Not capturing care as acuity changes
Care revenue is a major area where revenue can unintentionally be left on the table, and it’s where Discovery’s technology and operating infrastructure is a major differentiator reducing potential revenue misses. A resident may enter one of our communities as independent, but their needs will evolve significantly over time. When acuity increases, the amount of labor and services required to support that resident increases, as well. If the assessment and billing processes don’t keep pace, you’re effectively increasing the expense required to care for that resident without capturing the corresponding revenue.
That’s one of the reasons Discovery has invested significantly in standardizing our clinical technology and processes. Our enterprise deployment of ECP gives us greater consistency around assessments and better visibility into resident acuity across our communities. That allows us to better connect acuity with individualized service plans, staffing requirements, licensure and care revenue. Ultimately, it’s about making sure residents are receiving the services appropriate for their needs while ensuring the economics accurately reflect the care being delivered.
Focusing on rate vs. total resident revenue
We challenge our teams to evaluate “What is the total value of a specific occupied unit?” That includes base rent and care revenue, but it can also include community fees, second-person fees, unit premiums and ancillary services such as guest meals, parking, event space and other offerings. Individually, some of those revenue streams may appear relatively small. Across more than 420 communities and thousands of residents, however, small inconsistencies can become meaningful. Scale gives us an opportunity to identify those patterns and build systems and processes around them.
Using portfolio-wide pricing vs. hyper local pricing
One of the most important elements of Discovery’s approach is recognizing that senior living remains intensely local. We don’t apply the same pricing strategy everywhere. Two communities 20 miles apart can have completely different competitive sets, demographics, inventory, consumer preferences and demand patterns.
Our operating model is specifically designed around that reality. Discovery provides our management companies and communities with centralized expertise, technology, data, business intelligence and enterprise capabilities, while our management companies remain close to their individual markets and consumers. We believe that’s where scale becomes a real advantage because it gives local operators better information and more sophisticated tools to make better decisions.
Segmentation adds another important layer to that strategy. At its simplest, Discovery’s recently announced updated Tier-Segmentation programs which are about understanding precisely who the consumer is for a particular community, what they value, what they expect from the experience and what they’re willing to pay for and then aligning the product and operating model accordingly. That includes everything from services, amenities and programming to staffing, dining, technology, physical environment and ultimately, pricing.
That’s particularly important when you’re trying to eliminate revenue mistakes. Without a clear understanding of the consumer and the product you’re delivering, it’s easy to overprice something the market doesn’t value, underprice something it does, offer concessions unnecessarily, invest in amenities or services that don’t influence the purchase decision, or fail to charge appropriately for features and experiences that consumers are willing to pay for.
Not focusing on retention of existing residents and team members
While we absolutely celebrate every move-in and every community that reaches 100% occupancy, we are just as proud when residents choose to remain with us year after year.
Resident tenure has significant recurring revenue value. A resident who stays doesn’t require another customer acquisition cost, another sales cycle, another vacancy period or another unit turn. More importantly, retention is one of the clearest indicators that residents and families believe they’re receiving value.
That’s also why team-member retention matters. Community living provides value far beyond housing, i.e. social engagement, nutrition, programming, technology and, most importantly, meaningful relationships with the people caring for residents every day. A stable, engaged workforce helps create a better resident experience, which supports resident satisfaction and length of stay and, over time, creates sustainable pricing power.
When we talk about the next phase of senior living performance, we don’t view revenue optimization as one initiative or one pricing decision. It’s an operating discipline, pricing and rate integrity, consumer segmentation and local market positioning. It’s also care-revenue capture and acuity visibility, concession management and ancillary revenue, faster unit turns, understanding your waitlist and inventory, resident and team-member retention.
Lastly, it’s having the data, technology, expertise and local market knowledge to connect all of those pieces.
That’s where we believe as a sophisticated operator Discovery truly differentiates and distinguishes itself. We look at multiple operating levers that work together to convert occupancy into sustainable revenue and NOI while continuing to deliver the care, service and experience residents deserve.
Brandon Ribar, CEO and President, Sonida Senior Living
The most common mistake we see is treating pricing and occupancy as separate levers rather than a single system. Many operators hold rate increases to a fixed annual cycle instead of adjusting dynamically as occupancy and market conditions evolve, and too often, resident acuity is under-assessed, so the rate charged doesn’t reflect the level of care actually being delivered. That tends to happen when clinical, labor, and financial data live in silos instead of a single real-time view.
As an owner-operator, Sonida doesn’t apply rates uniformly across the portfolio, our SPIN platform gives community leaders real-time visibility into occupancy trajectory, acuity and local market positioning, so pricing decisions are made asset-by-asset. That data-driven precision is what allows rate growth and occupancy growth to reinforce each other rather than compete, and it’s a big part of why we see margin expansion accelerate as occupancy scales.
Chris Bird, President and CEO, LCS
Mistake one: Optimizing sales and operations separately
Marketing wants leads, sales wants move-ins, operations wants expense control and finance wants margin. True revenue optimization requires those functions working together to make the best decision for the business. A low-rate move-in, for example, may look like a sales win but may be the wrong revenue decision when availability is constrained.
Mistake two: Overlooking that resident needs can change, sometimes quickly
Regular assessments are a core part of operations and help ensure residents receive the level of care that is right for them personally at the right time. As operators, we have a responsibility to align services and pricing with residents’ evolving needs in a way that is transparent and focused on delivering quality outcomes.
Mistake three: Thinking revenue growth is simply an occupancy problem.
It’s really a combination of supply, pricing, conversion, retention and occupancy. The strongest operators manage all of those levers together to maximize the value of every unit and every resident relationship.
Greg Roderick, CEO and President, Frontier Senior Living
Rental rate increases
It is not uncommon to miss opportunities to adjust the annual rate increase enough to meet the rising costs of doing business, not to mention enough to meet the debt service coverage ratio that nearly every lender requires.
Some ways to avoid these common pitfalls is knowing what your financial increases are (wages, utilities, supplies, insurance, etc.). Also, it’s important to be knowledgeable as to what comparable properties in your market are charging and what they are planning to do for their rates in the coming year.
Senior living communities have tremendous value to both residents and their families. In order to continue to deliver the programs and services that are available through the fantastic and caring staff and managers, the annual rate increase is unavoidable and it is essential.
Level of care accuracy
The accuracy and continuous review of the personalized service plan is critical as it is what determines the amount of care staff that must be on duty to provide the care and support to the resident population within any community.
The care plan typically determines the level of care that also determines how much a resident is charged for that care. It is not uncommon to not charge quickly enough for the evolving care needs of residents.
Establishing mechanisms that catch this timely is important and can be easily done. One is through your technology platform and another is through holding routine care conferences to review, update, and agree on the services being provided. Take a look at your systems and how your community may benefit from improving your checks and balances from a care delivery and care plan standpoint.
George Kutnerian, Co-founder and CEO, Wellpointe
Setting significant rate increases for existing residents based only on a point-in-time supply/demand imbalance, rather than creating new intrinsic value, is a mistake. Existing, longer-tenured residents don’t feel current supply/demand imbalances the way new prospective residents would.
If existing residents don’t perceive new value when a significant rate increase occurs, the risk is that they will begin shopping around for an alternative.
Companies featured in this article:
Discovery Senior Living, Frontier Senior Living, LCS, Sonida Senior Living, Wellpointe
