Brookdale Senior Living plans to tighten its focus on workforce, occupancy, and resident and family trust as it maintains its strategic priorities into 2023, President and CEO Lucinda “Cindy” Baier said Wednesday during a fourth-quarter and full-year 2022 earnings call.
2022 was a year of growth and continued recovery, she said, adding that the company successfully navigated inflationary challenges and a highly competitive labor market, although opportunities remain for improvement.
Challenging labor markets leave room for improvement
As in 2022, one of the company’s stated top priorities in 2023 remains to attract, engage, develop and retain the competent employees. Under this goal, Brookdale reported expanding its workforce by 15% in 2022, with almost 5,000 net hires.
But Baier said the company continues to confront elevated turnover, resulting in lower labor productivity. To decrease turnover rates, Brookdale will expand on previously successful pilot programs, including educational and career development opportunities, diversification of recruiting programs, and improved training and onboarding.
“We believe these are the right plans to ensure we are attracting and retaining the best talent while improving our labor productivity,” Baier said.
Challenging labor markets also disrupted efforts to manage expenses in 2022, the CEO said.
The company “dramatically” reduced contract labor by 80% from its peak in December 2021 to December 2022, with reduced contract labor spending in every quarter in 2022, Baier said, adding, however, that the company has an opportunity to improve in 2023.
Labor expense management remains a “critical” focus this year, she said. As the permanent workforce stabilizes and occupancy improves, Baier said, further reductions in premium labor, as well as improved productivity, should follow.
“Many of the pandemic-related challenges our communities have faced have eased, but labor has remained the most persistent headwind for the entire healthcare industry,” said Dawn Kussow, executive vice president and chief financial officer. “We’ve been diligent in attracting the best associates and have delivered growth in our workforce. We’ve actively adjusted wages to remain competitive in the market and made positive strides to reduce premium labor costs.”
Occupancy shows signs of improvement
Under the company’s goal to get every available residential unit in service at the most profitable rate, Baier said that the company intends to increase occupancy this year through targeted efforts, the implementation of “appropriate pricing actions” that consider inflationary pressures and competitive labor markets, improved labor productivity and reduced premium labor costs.
Same-community senior living weighted average occupancy increased 370 basis points year over year and 70 basis points from the third quarter of 2022, to 77.2%, in the fourth quarter. January’s weighted average occupancy represents an increase of 720 basis points since the start of the pandemic recovery in March 2021.
January marked the 15th consecutive month of year-over-year occupancy growth, and January move-ins were “strong,” Baier said. In 2022, the number of move-ins accelerated “significantly,” resulting in same-community move-in volume that exceeded the three-year pre-pandemic average by 7%, the CEO said.
Executive director role changing
Brookdale also is targeting occupancy through organizational leadership changes — announced in January — as well as changes to the community executive director role. The evolving executive director role, Baier said, emphasizes a stronger growth mindset, underscoring strong sales acumen.
“During the pandemic, the day-to-day care and safety of our residents and associates required extraordinary effort from our executive directors as they led their teams’ heroic effort to help protect those living and working in our communities from COVID-19,” she said. “As we emerge from the pandemic, we believe that targeting and developing successful leaders with both operational and financial acumen is another way we can deliver further occupancy increases within our communities.”
Specifically, Brookdale is piloting special executive director compensation programs in some communities this year. If successful, the program will roll out more broadly to all of the company’s senior living communities, she said.
Baier said that executive director job descriptions also have been updated to help those in the role understand exactly what the company views as most important to success in the position. Brookdale also is working to develop training programs and cohorts that allow executive directors to learn and grow as leaders.
In addition, Brookdale has realigned operational support functions, including financial planning and analysis, to further support those community leaders, the CEO said. This realignment, she added, will assist communities in their recovery efforts and a return to pre-pandemic labor productivity levels.
Earning resident, family trust key to success
Brookdale’s third priority is earning resident and family trust and satisfaction by providing high-quality care and personalized service.
JD Power’s 2022 US Senior Living Satisfaction Study named Brookdale tops in customer satisfaction among assisted living / memory care communities. The company also had the most senior living communities recognized in the US News & World Report Best Senior Living initiative in 2022.
This year, Baier said, the company plans to build on its resident relationships and strengthen associated engagement, leading to an enhanced resident experience.
“We believe customer focus is strong, and that belief is reinforced by the recognition we received in 2022,” she said. “We are a learning organization, and in 2023, we seek to raise the bar even higher.”
