Provider posed a series of questions to Beth Burnham Mace, chief economist and director of outreach at the National Investment Center for Seniors Housing & Care (NIC), on issues tied to the COVID-19 pandemic and occupancy levels across the seniors housing sector.

Provider: What is the current trend for occupancy, and which of the market segments is showing the most negative impact from the pandemic?

Mace: The distinction between nursing care/skilled nursing and seniors housing is especially important to consider in discussing occupancy performance because the frailest elderly are often patients of skilled nursing’s higher acuity setting with around-the-clock nursing attention. And, it has been these elderly patients with significant pre-existing conditions that have seen the highest rates of COVID-19 incidence and fatalities.  

Partially as a result, according to data from the NIC MAP® Data Service, the occupancy rate for skilled nursing properties fell more than other segment types with a 6.5 percentage point decline from the first quarter to 80.2 percent in the second quarter of 2020.

This was significantly more than the 2.8 percentage point drop in seniors housing properties to 84.9 percent, and when the aggregated seniors housing category is broken down into its subcategories, there was a 3.2 percentage point decline seen in assisted living properties to 82.1 percent and a 2.4 percentage point decline in independent living properties to 87.4 percent from the first to second quarters.

Provider: A big if, but if the pandemic is under control and vaccines available to all, what do you expect the occupancy outlook to be once this terrible time abates?

Mace: As you point out, the pandemic holds the cards. At this point, the outlook for the sector is tied to the path of the pandemic, its infection and penetration rate within properties, and the impact of the pandemic on broad economic growth. The seniors housing and nursing care industry as well as the broader national economy will be negatively affected by the COVID-19 virus until a vaccine is available and widely distributed.

And, whenever that happens, I do not believe that we will go back to business-as-usual. I believe that there is a transformational change in the seniors hosing and care industry and that the change will continue to evolve. Occupancy will eventually return to pre-pandemic levels, but the industry will be changed.

Provider: And, we have the demographics to consider?

Mace: : Yes, more broadly, the underlying fundamentals and drivers of seniors housing remain in place. First, the demographics alone support the growing need for care and housing for seniors. Today, there are seven adult children aged 45 to 64 to care for every senior over the age of 80. By 2030, this ratio shrinks to 4:1, and by 2050, it becomes 3:1. Fewer caregivers suggest that community-based congregate settings will be needed more than ever.  

Second, with nearly two of every three properties built before 2000, the inventory of senior housing properties is relatively old, and often a property refresh is needed for design, functionality, and efficiency. And, as obsolescence increases, new supply is needed at least in some markets.