Despite improving occupancy, fewer operators expect operating margins to improve, according to a new National Investment Center for Seniors Housing & Care survey.
Although senior living and skilled nursing operators are looking at the COVID-19 omicron variant in the rearview mirror, and occupancy recovery continued for the third consecutive quarter, the NIC Executive Survey Insights Wave 42 revealed that 60% of respondents expect operating margins to increase in the next six months — down from 75% in the Wave 38 survey.
Limited operating margin growth
Rising operating expenses and staffing challenges were cited as limiting operating margin growth in the next six months, according to a blog from NIC Senior Principal Ryan Brooks.
According to the survey results, 35% of respondents anticipate operating margins increasing between 6% and 10%, 18% anticipate increases of more than 10%, and 5% anticipate increases between 1% and 5%.
But the share of respondents anticipating decreases in operating margins in the next six months grew. One-fourth (27%) of respondents anticipate operating margins will decrease between 1% and 5%, whereas 13% anticipate decreases between 6% and 10%. This compares with the Wave 38 survey, in which only 5% of respondents anticipated decreased operating margins in the next six months of between 1% and 5%.
A significant number of respondents (84%) reported increased operating expenses since the beginning of the year, whereas 11% reported expenses remained the same and 5% reported decreases.
Workforce issues remain a top concern for operators, which expect that staffing challenges will stretch further into the future than initially thought.
Only 20% of respondents anticipate that staffing challenges will improve in the next year. The percent of respondents anticipating improvement in 2024 doubled from 10% in Wave 41 to 20% in Wave 42, whereas those anticipating improvement not coming until 2025 tripled from 10% to 30%.
Most respondents (71%) defined staffing shortages as moderate, whereas 20% characterized shortages as severe and 8% as minimal. When asked about open positions, one-third reported that 11% to 15% of their full-time positions remain unfilled, one-quarter reported that between 6% and 10% of positions are open, and one-fifth each reported open positions ranging from 16% to 20% or more than 20%.
The most effective methods cited for attracting staff were increasing wages (65%), flexible schedules (15%) and hiring bonuses (5%).
Staffing also affected the pace of move-ins, which declined substantially (20%) and for the third consecutive wave in memory care. Move-in rates remained consistent for assisted living (52%) and independent living (44%), but SNFs (37%) reported a decline in the pace of move-ins.
Most survey respondents (70% to 80%) reported no change in the pace of move-outs. Among operators reporting an acceleration in the pace of move-outs, 41% cited residents moving to higher levels of care. That compares with 73% in Wave 39.
The Wave 42 survey of senior living and skilled nursing operators was conducted from May 31 to June 26.