The high monthly resident fees introduced by senior living operators in the wake of the COVID-19 pandemic are starting to taper off, but that doesn’t mean costs are coming down, according to results of a new survey by Ziegler.
The special investment bank’s most recent CFO Hotline survey of more than 250 not-for-profit senior living chief financial officers and financial executives, released Wednesday, focused on monthly resident fees for the past several years, year-to-date fees and projections for 2024.
Singling out independent living monthly fees, Ziegler noted that this year’s median increase of 6% was significantly higher than the typical 3% increase seen in previous years, and it even was higher than the 4.48% increase of 2022. This result was in line with the company’s April survey, which indicated that fees had surpassed last year’s predictions.
Average increases in monthly fees for independent living remained relatively steady from 2010 to 2021, hovering between 2.94% and 3.26% before increasing to 4.7% in 2022 and jumping to 6.24% this year, with projections to drop to 5.03% next year.
In fact, monthly fee projections for 2024 will be lower than they were in 2023 across independent living, assisted living and skilled nursing, Ziegler said.
This year, independent living monthly fee increases averaged 6.24% — the highest of the past nine surveys — whereas assisted living experienced a 6.03% average monthly increase. By comparison, skilled nursing fees increased even more, 6.26%.
Estimated average percentage increases for next year are lower: independent living, 5.03%; assisted living, 4.84%; skilled nursing, 4.91%.
Regionally, monthly fee increases were highest in the West this year (7.35%), and they are projected to remain the highest compared with other regions of the country next year (5.2%). The Northeast had the lowest average monthly increase this year (5.72%). The Midwest is projected to have the lowest increase next year (4.74%).
Increased wages are the primary driver of monthly fee increases in the year ahead, according to respondents, who said remaining competitive in the labor market and providing employee benefits is a concern. “Inflated costs for food, insurance, and utilities are also predicted factors in fee increases, as inflation was the general theme across all responses,” Ziegler said.
Fewer than one in 10 (7%) of providers saw a mid-year increase in monthly fees this year, but almost 40% noted that a mid-year increase was a possibility in the year ahead. In addition, the majority of respondents (95.5%) said their organizations did not implement a one-time assessment or alternative fee this past year, and 93.4% said their organizations do not plan those fees for next year either.
Only 10% of respondents said that they had raised fees for new, incoming residents before a planned increase for all other residents.
In comments about monthly fee increases, respondents said they hoped that increases were sufficient to cover costs, whereas others said that they did not pursue larger increases as they tried to build census.
“The pressure on the middle-market consumer — who does not have a six-figure savings — for monthly rental assisted living is getting very difficult,” one respondent wrote. “[I’m] not sure how our industry can charge rates that cover expenses and capital needs at current rates of increases that our customers can afford.”
