Just over a third (37%) of senior living operators say they believe the pandemic will negatively affect their finances for the entirety of 2021, specialty investment bank Ziegler found in its latest CFO Hotline survey on the effects of COVID-19.
Roughly half of the respondents perceive the negative financial impact will be a yielding influence for only part of the year ahead, whereas about one in 10 are optimistic that 2021 will be better than 2020 and are budgeting accordingly.
The report included responses from almost 220 nonprofit senior living chief financial officers and financial professionals nationwide, with 66% representing single-site organizations and 34% from multi-site organizations.
The poll also examined fee increases for 2020 and found that independent living units reported the greatest average fee increase this year, rising by 3.26%. It’s an increase that’s slightly above last year and the highest of what has been reported across the past eight years. Skilled nursing reported an average fee increase of 3.21%; assisted living saw a 3.18% increase.
Respondents also reported on their anticipated fee increases for 2021, with results suggesting that skilled care settings will see an average fee increase of 3.12%. That’s compared with a 3.05% average increase within independent living and a 2.99% average increase within assisted living.
Consistent with previous years, CFOs overwhelmingly attributed increases in fees to labor costs while also citing general overhead expenses. Amidst the backdrop of COVID-19, several respondents noted that decreased occupancy rates also are driving a portion of the increase in monthly fees.
“From a pure economics standpoint, we should be raising by considerably more than 3% increases to aid in amending the labor pressure issues,” one operator wrote in the survey’s comment section. “Unfortunately, the pandemic has been very difficult on residents and ‘assessing’ them by more than 3% is not reasonable, not to mention the competitive pressures are intense and aggressively raising rates can quickly price you out of the market.”
The operator added that “2021 is setting up to be a very difficult year — perhaps worse than 2020. We could be subject to the same or more intense business and pandemic related pressures, without the safety net that government relief funding has provided in 2020.”