Entering 2022 having experienced 10 months of sequential weighted average occupancy growth, Brentwood, TN-based Brookdale Senior Living has identified strategies to improve occupancy from the December rate of 73.6% as well as tackle labor challenges, President and CEO Cindy Baier said Tuesday.
“As we work to accelerate our recovery, we are focused on three priorities that will position us for growth,” she said during the company’s fourth-quarter and full-year 2021 earnings call, describing 2021 as “intense” but saying that Brookdale is “solidly on the path to recovery.”
Three priorities for 2022:
Three priorities for the company in 2022, Baier said:
1) Attract, engage, develop and retain employees.
“Due to the unprecedented competition for talent, by the end of 2021, we reviewed wages in all our markets, made appropriate adjustments and will monitor to ensure that we remain competitive in 2022,” Baier said.
In addition to wages, she said, Brookdale is going to try to retain workers through corporate culture, career development and learning opportunities. The company currently employs approximately 33,000 people, according to a presentation released in conjunction with the earnings call.
Brookdale also started modifying recruiting plans, having seen net positive hires by the end of 2021. “Our January net positive hires were even better,” Baier said. “With this early success, we will continue to enhance our recruiting plans to make further progress.”
In the fourth quarter, she said, the company’s use of contract labor was higher due to staffing challenges and federal, state and local COVID-19 quarantine protocols. “Our contract labor levels remained elevated in January but improved slightly month-over-month,” she said.
Contract labor can cost two to three times what an employee costs, Baier said. “One of the things that’s true about our business is that we have to be staffed, and we have to operate, 24 hours a day, seven days a week, 365 days a year,” she added. “So if we have an opening, we need to call in contract labor, and that is an expensive alternative for us.”
Brookdale Executive Vice President and Chief Financial Officer Steve Swain said that the company plans to reduce its use of overtime pay and contract labor by filling open positions. “The savings from lower overtime and fewer contractors will more than offset the cost of filling these positions,” he said.
The company has not “had to turn away any significant number of residents” due to labor shortages, Baier said.
2) Get every available room in service at the best profitable rates.
Weighted average occupancy in the fourth quarter was 73.5%, up from 72.5% in the third quarter, Brookdale reported.
“At our core, the business provides high-quality, needs-based services,” Baier said. “We will remain focused on driving appropriate pricing to match the services we deliver in each community within our portfolio. As part of our targeted sales and marketing efforts, we expect to attract the growing senior population through enhanced outreach and by publicizing each community’s points of differentiation.”
December 2021 was the first December in nine years that saw sequential occupancy growth, the CEO said. “In addition, the fourth quarter was the first positive year-over-year occupancy growth since the pandemic began,” she said. “Historically, our fourth-quarter occupancy percentage is relatively flat from the third quarter, so a 100-basis-point [1%] occupancy increase in the fourth quarter is outstanding.”
As of early February, almost all of Brookdale’s communities were open to move-ins, Baier said.
Swain said that the company expects to “return to more typical seasonal trends” for occupancy in 2022, with the first quarter being the lowest-occupancy quarter of the year, occupancy building in the second quarter and then momentum accelerating in the third quarter.
“Our industry, and Brookdale in particular, had been at that 89%, 90% sort of stabilized occupancy before the oversupply hit the industry,” Baier told an analyst on the call. “So we’re looking at a path to get back to that 89% to 90% stabilized occupancy across the portfolio. We can’t provide a timeline at this point in terms of when that will happen, but that’s our goal.”
In 2021, she said, Brookdale “applied a Lean Six Sigma process to make our sales cycle more effective, efficient and replicable across our diverse portfolio.” Additionally, digital programs were enhanced via search engine optimization and other efforts, Baier said, adding that those efforts led to a higher inquiry-to-move-in conversion rate, with the fourth quarter of 2021 having the highest rate since the fourth quarter of 2017.
“In addition, our fourth-quarter 2021 move-ins were higher than our three-year fourth-quarter pre-pandemic average, and this allowed our fourth-quarter occupancy to outpace the industry sequentially as reported by [the National Investment Center for Seniors Housing & Care] on a stabilized basis,” she said.
As of Dec. 31, Brookdale had 679 communities across 41 states, with the ability to serve approximately 60,000 residents, according to a company presentation. Brookdale owned 55% of those communities, leased 37% and managed 8%.
3) Earn resident and family trust and satisfaction by providing value, high-quality care and personalized service.
“Every positive encounter with a resident, family member or customer advocate can lead to future referrals,” Baier said. “Therefore, it’s important that we provide high-quality experiences in everything we do. While we believe we already have a strong customer focus, we’re a learning organization and we will continue to raise the bar higher.”
Looking ahead
This year, she said, “the baby boomer demographics are finally at a point Brookdale dreamed about more than 15 years ago.” More than 1 million Americans will enter senior living’s target age group every year for the rest of the decade, Baier said.
The quickly growing population of older adults who require needs-based services, and shrinking supply in senior living due to lower construction, are positive trends as well, she said.
Brookdale, Baier said, also is buoyed by the fact that third-party research shows that the company has brand awareness among consumers that is approximately two times Brookdale’s closest competitor, among people who expressed awareness of Brookdale without prompting.
