Senior Living Executive Forecast 2023: Industry Stands at Crucial Inflection Point | Senior Housing News
Dale Watchowski, President and CEO, American House Senior Living Communities
We continue to look at a recovery in multiple phases and executing on initiatives to drive growth. While we have seen a recovery in occupancy to near pre-pandemic levels, we are focused on revenue and margin recovery.
Our industry tends to focus on occupancy, but for us revenue is a more important indicator. We need to be appropriately compensated for the services we provide; therefore, we need to charge accordingly. Right now, rent increases are dominating many conversations. At American House, the discussion is not just what our residents would accept, but what we need to charge to recover margin.
In 2023, our strategy will be to continue our focus on operational excellence, revenue generation, managing expenses and maximizing income. This year should be an inflection point where we are compensated for the services we provide.
The competitive landscape led to pricing pressure and in some cases a loss to lease. We looked at each unit at our communities focusing on the potential for a return to adequate rents based on market factors, current and future. The result of this was some choppy rate increases, but finally getting us back to an appropriate margin. That said there is no way to make up for the pressures from inflation, wages, and interest rates.
As for new investments, we are pursuing strategic acquisitions to counterbalance increased construction costs and rising interest rates currently impacting development. This will give us an opportunity to further expand our platform, in accordance with our strategic vision, with a footprint in states with favorable demographics.
That being said, there is a demographic wave on its way for the senior living industry. Between now and 2030, 10,000 baby boomers will turn 65 every day. By that same year, seniors will make up over 20% of the population, according to the U.S. Census Bureau.
Right now, the single greatest driver of change is the cost of senior living. This is due to inflationary pressures, supply constraints and staffing shortages.
With respect to the current staffing shortage, we will need to continue to adapt and evolve as an industry to attract the best talent. At American House, we focus on training and career advancement to give back to our hard-working team. We want to be a support system for our front-line workers and we are committed to open and honest communication with our team members. We provide competitive wages and training, incorporate flexible scheduling and, most importantly, we create programs to keep our staff and residents safe and healthy.
As we head into 2023, I am most excited about the impact our team will continue to have on the lives of our residents. Over the last 18 months, we have built an amazing team that is uniquely suited to weathering the challenges the industry is currently facing. While we were hyper focused on the impact of the pandemic then recovery from the challenges created thereby, we remained focused on our utmost priority, resident care.
Everything we do is centered around resident-based programming that is driven by our mission, “Living Well Is Being Well”. We have built and are working to implement “Total Brain Health” and our new memory care program, “Living Well Memory Care.”
Our brain health, wellness and enhanced mindfulness programs help our residents discover and grow and make personal choices that improve and support a healthy lifestyle.
Our wellness team has redone and rolled out every clinical policy to increase consistency and safety. Since then, we have seen fewer number of cases such as the flu, shingles and norovirus.
As for worries, I am always concerned for the wellbeing of our team, the continued impacts of staffing shortages and the high rate of employee turnover throughout the industry. We have been running hard for three years and going from a pandemic to a challenging market cycle hasn’t left us time to recover and enjoy all we have been able to accomplish together. We have worked very hard to build a great culture at American House and with all that we have done the challenges remain. We have, however, seen some improvement and we would like to believe the modest shift is due to the focus we have placed on our greatest asset, our team members.
My top priorities for 2023 will be delivering on our brand promise, with tight margins there is no room for mistakes. We’re in for some monumental changes in this industry. The worst thing we can do is to keep doing something because that’s the way it’s always been done, so continuous improvement has driven my agenda.
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