4 Truths of Post-Pandemic Recovery in Senior Living | Blog | MMA

4 Truths of Post-Pandemic Recovery in Senior Living

August 24, 2021

2021 marks the beginning of a long-awaited recovery period for the senior living sector. For the first time in over a year, operators can turn their attention to the road ahead instead of triaging a worldwide health crisis. Senior living organizations are emerging from the ashes to a whole new normal that requires them to reevaluate what it means to succeed post-pandemic.  

As case counts continue to decline, the time for reflecting, rebuilding and recovering is now. So, let’s break down the most pressing issues every senior living organization should tackle to ensure they can adapt, thrive and boost their net operating income (NOI) in the coming years. 

Truth #1

Resident occupancy will not recover to pre-pandemic levels until public trust is rebuilt.

Dispelling negative perceptions is not a new challenge for senior living organizations. Many communities break this stereotype everyday with patient-centered methods of care and proactive staff training. Today, these concerns are more intense than ever thanks to COVID-19’s horrific toll on communities that had reports of uncontrolled outbreaks.  

Further enabled by this bad press, home health care companies also will continue to aggressively attempt taking over market share from senior living communities. To mitigate this shift, industry leaders should allocate resources toward showing prospective residents and their families that senior living communities are, in fact, a safer and more enriching alternative to living alone at home.

Truth #2

Expect a significantly greater emphasis on publicly available quality scores.  

Surveys and inspections in long-term care settings were suspended for some time during the COVID-19 pandemic. Even in previous years, inspection and survey results generally were a lagging indicator and not representative of ongoing care levels throughout the senior living sector. 

As potential residents consider their long-term care options, they will be meticulously considering publicly available quality scores as a key part of their decision-making process. Plus, physicians and hospitals are already being hyper-cautious about only referring patients requiring ongoing care to communities with the highest quality scores and strictest infection control measures.

Truth #3

Turnover rates are higher than they have ever been.

The senior living sector has long struggled with high staff turnover, and this age-old issue has only worsened during the COVID-19 pandemic. With a whopping 50% average turnover rate across the industry (U.S. Bureau of Labor Statistics, 2021), we are now seeing this number rise exponentially.  

Unfortunately, given the insufficient reimbursement levels provided by Medicaid, it has historically been difficult to reduce staff turnover in the senior living sector. Competition for labor is fierce and will only intensify as the economy begins to recover.  

Hotels, restaurants and entertainment venues are starting to reopen at full capacity. With these industries’ ability to hire at higher pay rates than senior living, your employees will have various alternative employment options to consider. Now is the time to give them meaningful reasons to continue working for your communities.

Truth #4

Improving cash flow through cost containment is critical.

In the past year, operators saw their expenses ballooning for PPE; infection prevention and control supplies; hero pay for staff members; and the need for additional staffing levels at their communities. Some relief was provided through Provider Relief Fund as part the CARES Act, but for most operators, it was not nearly enough to cover these additional expenses. 

As some of these costs begin to level out, operators must turn their attention to cost containment strategies that lower spend within their facilities and improve overall cash flow from operations so capital can be deployed to mission-critical efforts.

So, what can you do?

Significant improvements in NOI will only emerge with an entourage effect of containing costs successfully, stabilizing staff turnover and rebuilding public trust to recover occupancy levels to near pre-pandemic levels.  

Operators should look at their business models and consider expanding to other platforms such as home health, independent, assisted and memory care. Large building operators will need to make decisions about restructuring their communities to reduce bed counts and create private or semi-private room configurations.

Want to learn more? Reach out to your MMA representative.