10 Quotes That Capture 2022 and Suggest What’s In Store for 2023

After a difficult 2020 and 2021, the senior living industry seemed to hit its stride in 2022. With occupancy on the rise and a demand wave on the horizon in the form of the baby boomers, 2023 is shaping up to be a crucial year for growth and evolution.

That said, the industry has many hurdles still left to vault over. One big headwind for the year ahead is the high cost of doing business, which has eaten into margins and pressured senior living companies to find cost efficiencies in their operations. Another is recruitment and retention, a longtime industry issue that only became more acute with the arrival of the pandemic.

These and other trends were apparent in executives’ own words in our coverage throughout 2022. The following quotes show the progress the industry made in 2022, where the focus lies for many companies and what they are planning in 2023. And they illustrate the challenges and opportunities left for the industry in the aftermath of a disruptive pandemic.

“I think it’s an employee’s world right now, so we’re going to have to learn how to acclimate and be more flexible.” — Summit Vista Associate Executive Director and COO Tineka Hardwrick, March 28, 2022

It’s no secret that 2022 was a year marked by staffing challenges across the industry. As hiring became harder, the industry settled into a belief that workers, not operators, were in the labor market driver’s seat. Wages rose and benefits evolved accordingly.

The flip side to that challenge is that it led to some creative solutions and better staffing practices that will continue to serve both employees and employers well into the years to come.

At the start of the year, many operators were still grappling with using costly overtime and agency staffing in their communities. Coupled with other costs, many operators saw their budgets blow up earlier this year.

In response, some companies adopted creative ways to vault over those pressures. For example, Frontier Management reduced its use of third-party workers with the help of a new staffing model after “literally spending millions a year” on agency staffing, according to CEO Greg Roderick.

In 2022, more operators than perhaps ever before in a single year launched new flexible scheduling efforts, new benefits and other ways to meet worker demands. And in some cases, those initiatives translated into a lower labor cost and more efficient practices. Heading into 2023, more operators will take notice of those results and likely follow suit — if they haven’t already.

“The demand is continuing to maintain or accelerate. It’s pretty remarkable how interested people are in Latitude Margaritaville.” — Minto Communities USA President Bill Bullock, April 12, 2022.

When Covid-19 first struck in 2020, it was an open question as to how the pandemic would impact lifestyle-oriented projects like Latitude Margaritaville.

At the tail-end to 2022, it’s clear that didn’t happen and that demand for lifestyle-oriented niche communities is still robust. That is reflected in the fact that Latitude Margaritaville is looking to expand the resort-style model to other states, including Texas.

Margaritaville communities include for-sale dwellings and are designed with amenities themed after the life and music of Jimmy Buffett, with venues such as “Fins Up” fitness centers and “Barkaritaville” pet spas.

Now, other companies are looking to grow into the branded senior housing sector. Chief among them is The Walt Disney Company (NYSE: DIS), which earlier this year began forging ahead with a new resort development concept called Storyliving by Disney. As planned, Storyliving would include a variety of “neighborhoods,” with some housing planned for residents age 55 or older.

Both Storyliving and Latitude Margaritaville are concepts that represent an ongoing movement to market senior housing to specific kinds of people; with those brands aimed at Disney fans and self-professed “parrotheads.” 

And the trend has a parallel in the rental senior living sector. Senior living companies are creating products with more narrow appeal in an attempt to reach similar niche groups. For example, older adults can move into communities designed to accommodate the preferences of LGBTQ+ people, different cultural groups or college alumni.

“I think in the future you’re going to see communities with a focus on lifestyle,” Nexus Insights Founder and Fellow Bob Kramer told Senior Housing News earlier this year. “You want people who have similar passions or people that are motivated by similar things.”

“We better begin to think differently as an industry in trying to protect and hold on to this private-pay assisted living world, because it might not be in place very much longer,” — Bickford Senior Living Executive Vice President Alan Fairbanks, April 25, 2022

What Fairbanks was referring to was the ongoing shift toward value-based care in senior living. In his view, the “old” way of assisted living may not be feasible in the future. As such, he thinks operators need to “disrupt ourselves” in order to evolve for the future and try new things.

Fairbanks’ ideal model is one that shifts senior living from “sick care,” meaning residents receive clinical services only after they need it; to one that prioritizes “well care,” meaning residents get services that keep them well before they get sick.

Across the industry, those words are being turned into action as operators look to better serve residents and improve health outcomes with the overall goal of boosting length of stay and satisfaction. For example, senior living company ​​Lifespark has worked to build a value-based care model for senior living.

The company is aiming to achieve that by partnering with payers in value-based arrangements that help control costs and improve beneficiaries’ wellness through home-and community-based services.

Lifespark last year acquired a senior living portfolio. In the time since, it has essentially built a health care delivery system with a minimal real estate footprint that, in theory, allows it to employ its home-based health care approach in senior living communities.

Lifespark is not the only company looking to achieve those goals. And looking ahead, others will surely follow in their footsteps as the math of value-based care becomes increasingly appealing to operators.

“[Active adult] is a sector with strong prospective growth and recession-resilient qualities.” — Carlyle Group Managing Director Zachary Crowe, Oct. 11, 2022

The rise of active adult was already underway at the start of 2022, but it gained momentum this year as large capital providers including Carlyle prioritized the product type for development.

That momentum was further fueled by the release of a NIC report in September narrowly defining the product type for the first time. According to that report, active adult communities usually carry lower rates but far higher margins than rental senior living communities.

Few know the potential of active adult than Clover Founder and President Michael Joseph, who has nearly nearly three decades of industry experience with the product type. Looking ahead to 2023, Clover is in growth mode.

“You’re not trying to build something and saying, ‘Well, maybe they’ll come’ — they’re there,” Joseph said. “It’s strong and I think that it’s only going to get stronger.”

Big senior living developers such as Ryan Cos. are putting time and resources into developing active adult communities, a product type that EVP of Senior Living Julie Ferguson said is a “huge opportunity” ahead.

Other large companies including Carlyle, PGIM Real Estate and Livingston Street Capital have also taken note of those trends and have prioritized growing their active adult holdings, as well.

And given the amount of capital flowing into the space, it seems that 2023 will be at least a similarly active year for active adult as 2022 was.

“The perspective of having less risk than multifamily, less risk than senior housing in terms of where operating expense margins can be — that’s really why we got into the space,” PGIM Managing Director Todd Goldberg said during a panel discussion at this year’s NIC conference in Washington, D.C. “Whether that’s development, core or lease-up … we need to be in this sector.”

“People want to benefit from a wellness program that’s of their own choosing. They feel like they can succeed and their efforts involve engagement with others.” – Mather CEO Mary Leary, June 2, 2022.

Another defining trend in 2022 has been the new importance of wellness in senior living operations. Once a perk, wellness is becoming a must-have for new residents as they move into senior living, especially the baby boomers.

Whereas previous residents may have been happy with the so-called “three hots and a cot” and bingo, residents of tomorrow are likely to desire a way of living that addresses not only their physical needs, but also their mental, social and spiritual needs.

Last year, Mather sought to address those needs with the launch of a person-centered wellness framework where residents decide what is most important to achieving wellbeing.

Others, including Juniper Communities CEO Lynne Katzmann, have explored similar ways to foster wellness. Katzmann in particular is focused on a concept called “wellspan,” which prioritizes quality over quantity in older adults’ later years.

Earlier this year in August, Juniper launched a new membership-based program called Cataylist with the goal of creating an ecosystem of programs and services where residents can receive lifestyle concierge services.

These and other efforts show the senior living “wellness era” is only gaining momentum into the new year.

“We have an opportunity to develop much deeper, longer ties to our market before they come in with an identified need.” — HumanGood CEO John Cochrane, July 15, 2022

Although many of the baby boomers have already reached retirement age, most still have some years before they hit the average age of senior housing. But HumanGood CEO Cochrane thinks there is an opportunity now for senior living operators to reach the baby boomers.

“The greater opportunity is to reach back 10, 15 years earlier and start building that database for people of what your best life is going to look like at 70, 80, or 90,” Cochrane said earlier this year during an appearance on SHN+ TALKS. “How do we help you define that sense of purpose? How do we help you understand where you are today physically and maintain your optimal physical health without spending six hours a day in the gym and eating only broccoli three meals a day?”

Lowering the average age of senior living has been a longtime goal of many operators. According to conventional wisdom, the sooner a prospect begins thinking about senior living, the more time they have to become educated on what they want and need.

Currently, many older adults still don’t think about senior living until they suffer an acute health event or have other needs. But Cochrane sees an opportunity in 2023 and beyond to create new products and services that will instead push people to think about senior living sooner, potentially as much as 10 to 15 years earlier.

“You may be accessing services, programs, you may be teaching in a community long before you would ever make a move — and maybe you never will,” Cochrane said. “That’s where I think the real opportunity is, what I think of as aspirational well-living.”

“All of our investors that we’ve worked with in the past two years are asking [about ESG]. And I’d say that about four years ago, nobody was asking those questions.” – Ryan Cos. EVP of Senior Living Julie Ferguson, Oct. 3, 2022

Environmental, social and governance (ESG) is becoming an increasingly larger part of senior living business and operations.

In 2022, that trend accelerated with projects from companies such as Aegis Living and The Springs Living.

While the term ESG still likely doesn’t elicit excitement among senior living companies, climate change and social justice are now areas of focus when planning new projects thanks to interest from companies such as Ryan Cos., Brookdale Senior Living (NYSE: BKD) and PGIM.

“We don’t look at ESG as a separate project within Brookdale, we actually plan it … into our long-term corporate strategies,” Kathy MacDonald, senior VP of investor relations for Brookdale, told Senior Housing News in October.

Provided companies like PGIM and Ryan Cos. stick with their ESG pushes in the year-ahead, it’s likely more such projects will come together in 2023.

“We are at the start of a multiyear recovery and growth period in senior housing.” — Ventas CEO Debra Cafaro, Nov. 4 2022

For the better part of a year, senior living executives have vowed that margin expansion and growth beyond pre-pandemic occupancy was on the way. Ventas executives believe that time is now, at least if their latest earnings are any indication.

In the REIT’s SHOP segment, year-over-year cash net operating income (NOI) increased 9% in Q2 2022 and 13% in Q3 2022. Looking ahead, Cafaro has expectations of 15% to 21% growth in the fourth quarter of this year.

“This is what we have been waiting for,” Cafaro said during the company’s 3Q earnings call in November.

That optimism was shared by Welltower CEO and Chief Investment Officer Shankh Mitra, who in November said he “strongly believes the labor market is changing for the better” and noted that he is bullish about where the company’s margins are headed.

The challenge for both companies is to make sure their operating partners can achieve needed results and truly help expand margins in 2023. But no doubt Cafaro and Mitra feel confident that they can hit those marks next tear, given recent comments during earnings calls.

“If you’re a company that has 40 properties and you take on five, that’s probably fine. But if you’re a company that has 40 properties and you take on 40 properties, that’s a major problem.” — Aegis Living CEO Dwayne Clark, Nov. 10 2022

A variety of pressures are pushing more senior living operators to consider joining forces in 2022 through mergers or acquisitions. In the words of Clark, that could lead to some “stupid M&A” in the year ahead if they aren’t planned carefully.

The thinking is that senior living operators will have to spend considerable energy figuring out what to cut and keep from their companies. With rapid scale also comes new challenges and cultural quandaries that, at worst, could end up sinking a new company in the long run.

Those risks didn’t stop a handful of companies from joining forces or acquiring this year, including Cogir and Transforming Age. And those may well be successful examples of scaling up through M&A.

But as market distress and the end of extend and pretend pushes more companies to merge or acquire to stay competitive, there will likely be many more attempts — and likely some failures — along the way.

“Consolidation will happen and there will be successful organizations that merge. The ones that are being announced now may very well be part of those success stories,” Discovery CEO Richard Hutchinson said at BUILD in November. “Or, they may be part of our industry’s history of unsuccessful mergers — but I am certainly intrigued to watch this play out.”

“I think development is off the table for ‘23.” – Big Rock Partners Managing Partner Richard Ackerman, Nov. 16 2022.

Earlier in the year, some had hoped 2022 would bring better conditions for new construction and development. Fast-forward to November, and that does not seem to be the case.

At this stage … I think development’s off the table for ‘23, between no profitability in the existing portfolio, construction costs, lack of labor, regulatory [issues],” said Big Rock Partners Managing Partner Richard Ackerman during the Senior Housing News’ BUILD conference in November.

Two big hurdles for developers are construction costs and interest rates, which have tempered appetite for new growth among some in the industry.

For instance, Frontier Management CEO Greg Roderick in April said he wants to be “much more mindful about the where, when and the why” behind new projects. Other companies, like Southfield, Michigan-based American House, adopt a more contrarian view and welcome development challenges as a higher barrier to entry.

Those trends do not not appear to be changing at the tail end of 2022. But beyond those lay more hazards clouding the future, including cost inflation of materials and labor and environmental impacts from a changing climate.

Even so, there are some, like Ryan Cos.’ Ferguson, who are still forging ahead with projects — albeit with a dose of caution about the coming months.

“We do have a lot of deals in the pipeline — we’ll see if the economy cooperates with us on being able to get all of those out of the ground,” Ferguson said at BUILD.

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