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Threading a Needle: Lower Occupancy, Fewer Staff Pose Dual Challenges for Operators

As the senior living industry seeks to grow occupancy in the aftermath of the Covid-19 pandemic, one major hurdle is staffing.

On the one hand, operators need to demonstrate the quality of their operations to prospective residents to get them to move in — and to do that, they need enough workers to maintain service levels. On the other hand, senior living operating budgets are already constrained given the state of occupancy and revenue, leaving less money with which to recruit staff.

The combination of low occupancy and staffing levels can make life difficult for operators, particularly those looking to wean themselves off of high staffing agency costs in 2022. In more dire cases, those conditions can create a kind of feedback loop wherein operators don’t have the workers to staff a particular wing or section in their community, leaving them unable to fill beds or adequately care for the residents they already have.

While the issue of staffing and occupancy are ever-present for operators, leaders at companies that spoke with Senior Housing News said they felt occupancy levels at their respective communities were not greatly impacted by staffing issues. But they also believe that is a result of strategies they have implemented to simultaneously build back occupancy from pandemic lows while also addressing staffing challenges.

Retirement Center Management (RCM) President David Keaton, Jr. called staffing the “number one issue” facing the senior living industry.

“Trying to get the building staffed and make sure you are providing good care, we are able to do that,” Keaton, Jr. said. “But we do have to supplement with agency staff, and that’s a habit we would like to try and break.”

To grow occupancy, Meridian Senior Living Chief Sales Officer Kevin Carlin acknowledged the continued need to hire more staff, adding that the company was using its talent recruitment process “like a sales process.”

The Bethesda, Maryland-based operator has avoided large occupancy losses due to staffing challenges only through what Carlin called a “heroic effort” from the company’s workforce, with some department heads filling in basic roles of vacant staff positions at certain communities — a practice other operators have implemented across the industry, as well.

“Even as we had some things going on in the background that we had to do, our people really stepped up,” Carlin said. “It wasn’t felt as much by the residents.”

Other operators, like Irvine, California-based MBK Senior Living, focused on bringing in new workers while keeping the ones they had.

“Unfortunately it took a pandemic for us to realize that every interaction we have with prospective residents and future staff is an opportunity that must be valued highly and be a priority,” she added. “I think we are looking at staffing much more creatively.”

Staying on top of retention, recruitment

One way to avoid facing simultaneous staffing and occupancy issues is to avoid having worker shortages in the first place.

Backfilling positions that require experience and training, such as nurse or leadership roles, has been a particular sore spot for senior living companies. That is why MBK developed an executive director training program, which has resulted in the promotion of six internal candidates to executive director roles at various communities. Other promotions have helped keep vital staff on board as executive directors have been promoted to regional director posts.

“It’s a symbiotic relationship of treating your team members with respect and kindness and love,” Van Der Westhuizen said. “In turn they will do the same for our residents and families.”

She added that the company’s recruiting team made finding new, qualified staff “a huge priority” akin to the same way communities approach prospective residents. As a result, staffing challenges have not impacted MBK’s inquiries, tours and move-ins.

“I think that speaks really highly of our talent acquisition,” she added.

MBK’s occupancy low point came in February 2021 when the company was facing an approximate 12% occupancy shortfall. Fast forward to today, and MBK has regained 10% of that loss, while some communities remained at or near capacity throughout the pandemic, according to Van Der Westhuizen.

MBK clawed back occupancy losses and stabilized its portfolio partly by staying extremely sales-focused, Van Der Westhuizen said.

“Unless we stay sales-focused and get to know our prospects and help them through the process, we aren’t going to be able to touch as many lives as we want,” Van Der Westhuizen said. “I think that’s how we’ve been able to recover occupancy so quickly.”

Similarly, Sinceri Senior Living CEO Chris Belford said the Vancouver, Washington-based company’s recruitment hub had been a bright spot for new hiring at its 77 communities in 21 states, but added that certain parts of the country faced greater challenges in bringing in staff due to location or local labor market conditions.

“There are very certain circumstances where you put yourself on stop placement and you don’t want to bring in anybody new because of your staffing shortages,” Sinceri told SHN. “But we’ve never gotten to that point.”

For the last 12 years, team members at Meridian have gotten to know one another outside of their jobs at various communities — something the provider has helped to foster. Developing a close-knit culture has had a beneficial effect on operations at the company’s 45 communities in 15 states.

“I think that continues to give us an edge,” Carlin said. “We can’t chase them with unlimited wages, so it has to be … that they love working in that particular community that keeps people coming back to work.”

In the last eight months, the operator redesigned its new employee orientation program to better onboard newcomers, while also offering an educational leadership program and providing tuition assistance for those looking to deepen their career in senior living.

“Without training, they are more likely to leave,” Carlin said.

With an emphasis on digital outreach, Carlin said Meridian was in the midst of a revamp of the company’s career website with it to include videos about staff and the culture at Meridian properties.

“Our video campaign with our residents showed great promise and we saw a lot of great results with residents,” Carlin said. “We hope it is going to get people to reach out to us and come and work for us over the competition.

Carlin said Meridian hadn’t suffered a net loss for occupancy in any month since January of 2021, noting that some of the operator’s properties had reached or were close to reaching 90% occupancy. He added that Meridian’s sales culture helped bring residents into the community, particularly through multimedia ad campaigns through video testimonials with residents.

Houston, Texas-based RCM, grew average occupancy at its 25 properties to more than 83%, up from a low point of 70% in 2021. Some RCM properties ranged between 90% and 100% occupancy during the pandemic, according to RCM Vice President of Marketing Justin Yee.

The effort for RCM’s digital push shift in marketing started in 2020 prior to the pandemic, but was spurred on as tours were given virtually for prospective residents and RCM began spending ad revenue in various online formats from social media to online advertising, Yee said. Focusing on digital marketing and advertising helped turn the tide on occupancy losses seen in 2021.

Staffing costs remain high

Filling staffing gaps with agency workers is a strategy that many operators have relied on to avoid staff and occupancy challenges running into one another. Given the sky-high cost of using staffing agencies, this is not a long-term sustainable model for providers to lean on, Keaton said, citing the “astronomical” expenses tied to them.

“It’s really putting a pinch on margins with companies across the board,” Keaton said of staffing. “The way you have to address that is you have to deal with resident rates, both renewal and market rates.”

Leaders with some operators, like Denver-based operator Solera Senior Living, have focused on determining the exact right level to staff instead of trying to fine-tune wages in the short-term. CEO Adam Kaplan, believes the industry will have a years-long path to regaining pre-pandemic margins, and in the meantime, the company is not skimping on staffing ratios in order to maintain quality in its communities.

“We can’t try to run lean on our staffing,” he said during a recent panel at the 2022 NIC Spring Conference in Dallas.

Annual and recurring fees absorbed by residents are on the rise across the industry. Assisted living rates grew 4.65% in 2021 and nonprofit independent living rates increased to “historic highs” earlier this year.

Providers must not only compensate with the cost of staffing, they must also manage inflation. This has pushed some companies to look at annual rate increases in the range of 7% to 10%.

A Social Security cost of living adjustment of 5.9% in 2022 could make fee increases more digestible for residents, but setting steep rates could pose problems for operators in the future, Keaton warned.

“If we are faced with putting in 7% to 10% [increases] and the next cost of living increase is nominal, you might start seeing some people have some concern, but you know right now we’ve not seen any major impact on occupancy at all due to staffing.”

Carlin said the use of temp staff agencies prevented providers from getting a positive job culture cohesive.

“Not that we’ve eliminated [the use of agencies],” Carlin said. “But we are chipping away at it pretty consistently which is good to see.”

The post Threading a Needle: Lower Occupancy, Fewer Staff Pose Dual Challenges for Operators appeared first on Senior Housing News.

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