The Economics of Recovery for Small Assisted Living Residences

Brian J. Pinkowski, Esq., President

There’s no doubt that the pandemic caused a decline in occupancy in most assisted living residences across the U.S. with as many as 1 in four units vacant as of January 2021. Reports from NIC and others suggest that occupancy seems to be showing signs of improving. But, several factors are now affecting recovery for the smaller assisted living businesses.

Recovery from the Pandemic is . . . challenged.

The ongoing political battle for control of people’s minds and opinions has left the U.S. with a somewhat uneven response to the virus and an ongoing churn of disagreement from different sectors of the population. The Delta Variant of COVID 19 has begun surging through the unvaccinated parts of the U.S., and caregivers and residents are uncertain. Regardless of our opinions on the underlying truth, one result of this uncertainty is that families are unwilling to trust their elderly loved ones to healthcare facilities that, as a group, seem to be conflicted. 

While the U.S. fumbles through recovery of the COVID 19 pandemic we continue to have more people turning 75 every day and between 5% – 15% of them will require assistance. Thus, there is a growing demand for assistance. Whether those people choose home health care or assisted living is influenced by confidence in the care that is provided.

Consumer Confidence

We all want confidence and science-based certainty from our healthcare professionals whether the topic is COVID 19 or urology. The ongoing political messaging battle may negatively affect families considering assisted living for some time.

Supply

Supply of assisted living units has been exceeding demand since at least 2015 according to our friends at NIC. Demand for senior housing generally was roughly 56,000 units in the first quarter of 2020, while inventory grew by 80,000 in the same quarter. And there are many new senior living developments in the pipeline.

Caregiver Wages

The pandemic and related government activities related to unemployment have created pressure on employers to increase the hourly wages for caregivers. Healthcare workers have been identified as one of the riskiest professions during the pandemic, and caregivers have taken note. The days of $10/hour employees, with no benefits, are likely gone.

Increased Regulation

“When in doubt, increase regulation.” Mounting pressure from legislators and media has caused health departments across the U.S. to react with the only tools available – more regulation and more penalties. Increased demands for testing, infection control, PPE, and numerous other things have increased the price of care for all assisted living homes. Many smaller ALRs, with tight margins, are struggling with these new operational demands.

The Solution – Marketing

In the face of an excess supply of assisted living beds, higher labor costs, higher operational costs due to regulation, and frail consumer confidence, the small assisted living residence has few options. 

But, the increasing number of seniors in need of care is a certainty. Thus, the small assisted living needs to find that demand, strengthen the demand, or create the demand by satisfying a niche.

Your national association has a “RAL Home Locator” available to help you increase your visibility to potential residents. We also have an ever-expanding list of marketing experts specifically focused on your business sector, as well as regular free webinars to help you understand the tools you need to increase your sales.

Let’s face it, marketing conducted by the large facilities is not very good. They don’t return calls, and seldom work to impress you. You CAN outwork them and succeed.

Your Residential Assisted Living National Association is here to help.

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