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Sherpa Tempo: Move-In and Move-Out Performance Insights 3Q 2022

November 09, 2022 by Lana Peck

We’re thrilled to introduce a new source for industry data called Tempo. Under the Tempo banner, Sherpa’s team of data experts uses anonymized, aggregate data from millions of senior living sales interactions to publish valuable market insights for industry stakeholders. The end goal? To get more older adults moved into senior housing and to increase market penetration.

This month we ask, were move-ins and move-outs impacted by the COVID-19 pandemic? What do they look like now? Sherpa Tempo identified trends and analyzed leads’ time in the pipeline between 1Q 2019 to 3Q 2022.

We also highlight some of the growth challenges operators will face into the end of 2022 and how to mitigate them. But first, let’s get into the data.

Before and after a COVID-19 vaccine

Considering overall move-in and move-out trends, the pace of move-outs accelerated significantly at the beginning of the pandemic, while move-ins slowed significantly. This was due to communities and government entities placing moratoriums on admissions to keep residents and staff safe and reflected the fear and uncertainty surrounding the deadly nature of the novel COVID-19 virus—which disproportionally affected older adults.

Move-ins plateaued and then improved during the emergence of the Omicron variant. This was a testament to the adaptability of communities to employ virus mitigation and safe visitation measures before the vaccine became available.

Currently, the pace of senior housing unit move-ins exceeds pre-pandemic levels.

Average move-ins per community were 13.2 in 3Q 2022, up from a mere 6.0 in 2Q 2020 at the beginning of the pandemic. Average move-ins plateaued and then declined slightly following a spike of move-ins after the COVID-19 vaccine was made widely available in early 2021 but have since returned to near time-series high levels.

Examining the data from a same-store perspective, for independent living units, memory care units and CCRC units, move-ins per quarter are at pre-pandemic levels. The pace of move-ins has been fastest for assisted living units throughout the pandemic. For independent living units and CCRC units, move-ins increased relatively faster after the vaccine was available.

The share of move-outs that were due to death increased during the pandemic but were at pre-pandemic levels in 3Q 2022. The recent trends for move-out due to dissatisfaction or location are small but slightly higher than pre-pandemic levels (competition as a reason is lower).

Sherpa data aggregated over the past 7 quarters since the pandemic low show that senior housing occupancy for most care types (independent living units, assisted living units, and memory care units) steadily improved to exceed pre-pandemic levels in the third quarter.

Occupancy at Sherpa communities is anticipated to continue to improve based on currently scheduled move-ins and move-outs. (Note that this projection does not consider future inventory growth or unscheduled move-ins and move-outs.) From the pandemic low, Sherpa client occupancy increased 3 pp for CCRC units, 9 pp for independent living units, 11 pp for assisted living units, and 13 pp for memory care units. CCRC unit occupancy has remained considerably higher than other unit care types since well before the pandemic.

Lead time by care type

The overall inquiry to move-in trend (in number of days) for independent living units is considerably faster since the sharp slowdown due to the pandemic. Potential reasons for the speed-up in the independent living lead pipeline may include sales counselors working fewer high-quality leads deeper with more success, improved readiness of prospects to move after enduring the isolation of the pandemic, robust home sales prior to the recent rise of interest rates, higher costs and availability of consumer goods and services, and pent-up demand continuing to be at play. Recently, an increase in social security income and the Federal Reserve’s frequent interest rate hikes have relieved some pressure on retirees’ financial and bond yield perspectives.

Need-based assisted living and memory care units naturally have faster move-in rates than choice-based independent living. In the later quarters of the pandemic, assisted living leads increased time to move-in, while memory care remained relatively flat after an initial increase.

Challenges and opportunities ahead

Many operators have been able to raise rates this year to recoup revenue losses during the pandemic and counter growing expenses. However, wage and expense growth and staff turnover continue to stress operators’ NOI significantly. It is not unheard of these days for operators to have staffing expense ratios greater than 50% of revenues.

In response, some operators have reduced sales and marketing staff, cut their budgets, or engaged in reactive speed-to-lead sales tactics as communities worked on refilling pandemic-related vacancies. While speed-to-lead approaches to selling can be very effective under specific situations when care needs are pressing, resident acuity in buildings can grow seemingly overnight. This trend jeopardizes a community’s ability to attract higher-functioning residents, resulting in shorter lengths of stays and unpredictable revenue streams.

The status quo may not be enough to maintain continued growth in occupancy.

It is easy to get tunnel vision while striving to meet budgeted proformas, placing weight on the quantity of activity at the expense of quality, efficiency, and more substantial sales outcomes. However, simple adjustments can save money and still drive positive results.

Organizations may consider separating sales and marketing tasks (while maintaining congruent messaging), delegating non-selling responsibilities to junior staff, generating fewer leads, and minimizing dependence on impersonal marketing automation in favor of professionalizing the sales process to spend time deeply cultivating the community’s existing lead base.

Where does the data come from?

We studied data at the care-segment-unit level as reported by Sherpa customers located in 820 cities, including nearly 150,000 total units across the United States. (Note: Sherpa user communities in Canada and the United Kingdom are not included in these figures.)

As shown above, the proportion of care segment units is roughly consistent with the supply of senior housing properties in the U.S., apart from skilled nursing properties, home health, and active adult properties, which were excluded from this analysis.

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