Some senior living providers are increasing entrance fees and monthly fees for their independent living residents. That’s according to the results of a new CFO Hotline survey by speciality investment bank Ziegler.
Ziegler said that the “vast majority” of respondents came from continuing care retirement / life plan communities.
“Not only are the fee increases higher than previous years, they are higher than predicted cast just last year,” wrote Lilly Ludwig, research assistant for senior living research.
In September’s CFO Hotline survey, operators forecast that monthly fees for independent living residents in CCRCs could increase by up to 5% this year. At 6% now, the median monthly increase is the highest percentage increase since Ziegler began keeping an eye on the data more than a decade ago.
Inflation, coupled with state-mandated minimum wage increases have created financial pressures, leaving providers “with few options to mitigate other than raising rates and evaluating service delivery options in [independent living],” one executive responded.
The majority of organizations with entrance-fee contracts reported increases for the current year. The median increase reported was 5%, but several organizations reported double-digit increases. More than two-thirds of respondents said that they expect to increase entrance fees mid-year; the rest either have no plans for increases or do not have entrance-fee contracts. The average mid-year price hike is predicted to be 6.48%, according to the survey.
“I think what we are seeing is clearly a response to the economic headwinds. Wages are up significantly, as are cost of supplies and just the general cost of operations. Many providers absorbed some of these increased costs early-on when we started to see skyrocketing inflation, but you can only do that so long,” Lisa McCracken, director for senior living research and development at Ziegler, told McKnight’s. “We will likely see market adjustments in the coming years as the economic conditions ebb and flow.”
The poll surveyed more than 260 not-for-profit senior living chief financial officers and financial professionals. Sixty-four percent of the respondents represent 64% single-site organizations; 36%, multi-site organizations. Geographically, 30.6% of the responses came from the Midwest, 29.8% from the South, 23% from the Northeast and 16.7% from the West.
