The largest gains in occupancy were for skilled nursing care – for both entrance fee continuing care retirement communities (CCRCs) and rental CCRCs. But, CCRCs still have challenges related to the pandemic and need to make up more ground on occupancy despite the progress in the last year.
That is according to a blog post by NIC Principal Omar Zahraoui.
Across entrance fee and rental CCRCs, occupancy for nursing care segments increased by 4.1pps and 3.6pps, respectively, partly due to negative inventory growth, while the smallest gains were seen across independent living segments – 0.9pps and 1.8pps, respectively.
“The unprecedented challenges posed by the pandemic have had a profound impact on the senior housing and care industry. To ensure financial stability and sustainability as the sector navigates through recovery, it may be strategic to aim for a higher occupancy rate, even above pre-pandemic levels,” the Zahraoui noted.
Researchers expressed the need for CCRCs to better adapt to changing market dynamics, and address the rising costs of operations. Moreover, properties with occupancy rates above 80% – a majority in the analysis – were likely to be “better positioned to maintain a healthy bottom line and navigate the evolving market conditions,” researchers noted.
As far as the distribution of occupancy rates across entrance fee and rental CCRC care segments, there was a greater prevalence of entrance fee and rental CCRC care segments within the higher occupancy rate ranges.
“The most notable share is observed in the [less than] 90% occupancy range, ranging from 36% in rental CCRC nursing care segments to 61% in entrance fee CCRC independent living segments,” researchers wrote. “The 80-90% occupancy range follows, with shares ranging from 17% in rental CCRC memory care segments to 27% in entrance fee CCRC nursing care segments.”
Researchers noted that while the positive figures are encouraging, there are still segments within both entrance fee and rental CCRCs that report relatively low occupancy rates.
The largest shares of low occupancy were noted in rental CCRC memory care segments – 15% below 50% occupancy, 4% within the 50-60% occupancy range, and 6% within the 60-70% occupancy range. For rental CCRC nursing care segments, low occupancy looked like 12% below 50% occupancy, 4% within the 50-60% occupancy range, and 8% within the 60-70% occupancy range.
“It is worth mentioning that there are fewer entrance-fee care segments within these relatively low occupancy cohorts,” researchers noted.
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