Favorable rate, occupancy growth bright spots for CCRCs still battling staffing shortages

Favorable rate and occupancy growth are providing some relief to continuing care retirement / life plan communities as they claw their way back from pandemic-related staffing shortages, according to a report released Wednesday by Fitch Ratings.

“Efficiency and productivity are the chief mandates for life plan communities, assisted living and skilled nursing facilities across the board in 2024, considering the tight labor market and high cost of increasing headcount in the current environment,” Fitch Ratings Director Richard Park said in a press release issued in conjunction with the report.

According to Fitch, the CCRC sector still is experiencing staffing shortages, high wage inflation and payrolls that have not rebounded to pre-pandemic levels. The data show that payrolls at CCRCs and skilled nursing facilities sit at 6.2% and 9.4% below pre-pandemic levels, respectively. Assisted living communities, however, have fully recovered and are 4.9% above pre-pandemic levels, Fitch said.

Year-over-year average hourly earnings growth had decreased in CCRCs, assisted living communities and SNFs to 5.42%, 4.27% and 4.35%, respectively, as of October. That’s compared with peak growth in the first quarter of 2022 of 12.37%, 11.55% and 11.54%, respectively. By comparison, year-over-year average hourly earnings growth in the private sector was 4.04% as of October.

The silver lining, Fitch said, is that rate and occupancy growth have increased sufficiently to offset higher wages. “Fitch expects LPCs, AL facilities and SNFs to continue focusing on efficiency and productivity efforts in 2024 considering the tight labor market and high cost of increasing headcount in the current environment,” the report stated.

Fitch noted that fewer job openings are available in healthcare and social services, down from a peak of 9.3% in March 2022 to 6.4% as of October.

“Despite the decline, the latest rate remains very high compared to the 4.2% from 2010 to 2019,” according to the report.

The quits rate in healthcare and social services remains high, however, according to Fitch; it was 2.3% as of October, compared with the 1.6% average from 2010 to 2019. 

“The tight labor market continues to be in favor of workers in search of higher wages and better work environments,” Park said.