With overall weighted average occupancy at 74.6% across its communities in the second quarter, Brookdale Senior Living is focused on building occupancy back to a pre-pandemic level of 85% and then will push for a return to its historically high occupancy level of 89%, President and CEO Lucinda “Cindy” Baier said Tuesday during the company’s second-quarter earnings call.
Brookdale, she said, continued on a “strong path” of occupancy recovery in the quarter, with second-quarter overall average occupancy increasing 410 basis points (4.1%) year over year.
The company’s same-community senior living portfolio of properties — including independent living, assisted living, memory care and continuing care retirement communities — experienced an average occupancy increase of 420 basis points (4.2%) compared with the same quarter of 2021 and a 120-basis-point (1.2%) increase compared with the first quarter of 2022.
The sequential growth outperformed the industry, Baier noted, and the increase represented the company’s best second-quarter sequential occupancy growth in more than 10 years.
Second-quarter average occupancy in independent living was 76%, a 250-basis-point (2.5%) increase over the first quarter. Average occupancy in assisted living / memory care increased 470 basis points (4.7%) over the previous quarter, to 74.2%, whereas average CCRC occupancy increased 320 basis points (3.2%) over the previous quarter, to 73.4%.
Baier said that Brookdale saw 2,000 move-ins in March — the highest number since the onset of the pandemic — and that the company has sustained that rate since then, averaging more than 2,000 move-ins per month in the second quarter. The company exceeded its three-year pre-pandemic average move-in performance by 9%.
“This is evidence of both strong demand and the strength of Brookdale’s execution and brand,” she said. “Our lead funnel remains strong, with second-quarter inquiries and visits that exceeded pre-pandemic levels.”
Labor cost reductions expected this year
Despite ongoing challenges in the labor market, Brookdale has experienced eight consecutive months of net hiring, according to Baier. Net hires were more than 2.5 times higher than in the first quarter and were five times higher than in the fourth quarter of 2021, increasing Brookdale’s workforce by 10% with more than 3,000 new hires since the beginning of the year. Brookdale also reduced its reliance on contract labor.
Baier said the company has not seen a reduction in labor costs but expects it to begin later in the year.
“While we are proud of this progress, we are not where we want to be,” Baier said, noting that contract labor usage is declining at a slower pace than desired and the use of overtime pay has increased.
“At the same time, given the current highly competitive nature of the labor market, we are seeing wage pressure and higher sign-on coverage and retention bonuses,” she added. “Through continued focus and discipline, I am confident we will overcome the current U.S. labor pressures over time.”
Executive Vice President and Chief Financial Officer Steven Swain said that second-quarter labor expenses were flat compared with the first quarter and that the company had reduced the use of contract labor by more than 25%. As the permanent workforce stabilizes, he said, he expects to see more reductions in the use of contract labor.
Turnover is higher than historical norms, Baier said, but she added that Brookdale is focused on improving employee retention. Some of those actions include enhanced training and the funding of certified nursing assistant and medical technologist certifications “so they can grow with us and we can help them build a better life through higher wages,” she said.
New programs aim to improve resident health
To help residents improve their health, Baier said, Brookdale is pursuing a variety of programs.
The company is rolling out its HealthPlus program nationwide after piloting it in some communities. The program uses registered nurse care managers to try to prevent avoidable emergency department and hospital visits and improve residents’ quality of life.
“With the growing trend of healthcare services being provided at home, we are building on the knowledge we gained throughout the pandemic to continue to evolve our service offerings to residents in their Brookdale homes, especially with the support of our nurses, who make up 10% of our workforce,” Baier said. “We are seeing longer lengths of stay in HealthPlus communities as our residents are improving their health spans.”
Brookdale also is expanding a technology-based falls prevention and detection program and is testing an artificial intelligence-driven analytics program to improve resident socialization and engagement, she said.
