When it comes to the bottom line, more than a few senior living operators now find themselves hitting rock bottom.
It’s bad enough that growth and revenue projections they counted on for 2024 are simply not going to happen. Worse, still, the numbers might trail what was recorded a year ago.
Many corner office types are demanding answers. After all, there should be plenty of reasons for continued optimism: The customer-base demographics have never looked better — and will only improve. And there’s no shortage of dealmaking going on, as eager buyers snap up whatever communities become available. Even the overall economy is humming along as perhaps never before.
Given all those good signs, they want to know why this year is looking so bad.
Which just goes to show you that maybe some of the memory care operators out there have short memories themselves. For it seems like more than a few of them forgot what’s been going on for the past three-plus years.
At the risk of sounding like Captain Obvious, we have been dealing with a pandemic. And to be sure, it was undoubtedly a terrible thing in all too many ways. Thousands of residents died. Many workers quit, vowing never to return to this forsaken way to make a living. Occupancy went through the floor boards, while operational costs went up. Yep, it was pretty awful alright.
But here’s COVID-19’s dirty little secret. Financially speaking, at least, it wasn’t all bad for this field. Uncle Sam threw billions of dollars of unexpected funding into this sector, directly or indirectly. Loans that did not have to be repaid were handed out like candy bars. Other funding spigots were turned on. Expensive compliance rules were relaxed. And that was just for starters.
Nobody wants to say this too loudly, lest the wrong people overhear. But a lot of new money came flowing in. And now that COVID-19 is on its way out, so too are a lot of those freebie dollars.
In other words, what’s happening now in many parts of senior living is something that economists like to call a correction.
To someone who does not have a bonus or perhaps continued employment in the same organization at stake, the unexpected influx of support in the past few years can be seen for what it was: an outlier event. And now that this outlier event is over, things are reverting more or less to the way they were before.
Not everywhere, of course. But in a lot of communities.
Still, I don’t get the feeling a lot of top executives are giving thanks for the temporary largess they just experienced. Rather, they are devastated that their irrational projections based on a false assumption — namely, that manna from heaven would keep raining down indefinately — are simply not happening.
Even in the crazy world of senior living, that seems kind of weird.
But as Warren Buffet famously said, forecasts may not tell you anything about the future, but they tell you a lot about the forecaster.
John O’Connor is editorial director for McKnight’s Senior Living and its sister media brands, McKnight’s Long-Term Care News, which focuses on skilled nursing, and McKnight’s Home Care. Read more of his columns here.
