By Steve Moran
On July 9, 2020 National Investment Center for Seniors Housing & Care (NIC) released their Q2 2020 occupancy numbers. While the numbers are ugly they are not surprising. The only question really was how bad would they be?
These numbers represent both the single worst quarterly decline and the lowest occupancy on record since they began reporting these numbers 14 years ago.
Before COVID-19 the numbers were not great, but they seemed to be stabilizing. As bad as these numbers are, the senior living economic picture is really worse because of dramatically increased occupancy costs.
There Must Be a Pony in There Someplace
There is this story about an optimistic kid who stumbles across a pile of horse excrement, immediately grabs a shovel, and starts digging for the center. A second kid comes along, holding his nose, just on the verge of throwing up. He manages to incredulously ask what the boy with the shovel is doing. The one with the shovel responds, “With this pile of horse poop, there must be a pony somewhere.”
There Is a Pony
Here is why there is a pony, actually a whole herd of ponies, in this mess:
- The Demand is Still There – Countless articles and posts have decried the reality that most of senior living is demand-driven instead of lifestyle-driven (yes, I have written some of them). While I think being demand-driven means we are losing a lot of opportunities, which means we are losing a lot of money, it also means getting back to some sense of normal is a ton easier because that demand is still there.
- Rethinking – We are being forced to rethink how we do senior living in many, many areas. And this rethinking will make us stronger. We will create better cultures, we will do a better job of creating resident engagement. We will get better about how we maximize every dollar we spend.
- Bad Operators – I hope, I hope, I hope . . . this will be a shaking time that will force the worst operators and the worst leaders (should really call them managers, not leaders) out of the business. They don’t exist in huge numbers, but they do exist. Mostly they are not bad people with ill intent for their teams or their residents. They just get so bogged down in the unimportant that the most important gets missed.
- Good Operators – Ahh . . . the good operators . . . every time I think about them, they warm my heart. They get the big picture stuff without neglecting the details. They pivot and adjust. They make the lives of their residents and team members better every day. They make the world a better place.
These operators will thrive, gain market share, and displace bad operators. They are the heroes of this industry and deserve to grow and profit because they are serving people.
- The Messy Middle – In every story and in real life much of what happens is in the messy middle. In senior living, the messy middle makes up much of senior living. Operators who are okay, not great but not horrible either. I believe this is potentially the most interesting part of the story. It will be a lot tougher to stay in the messy middle. It will never go all the way away, but I believe it will shrink with some getting much much better and others going away.
The broader pandemic story is far from over. It is a huge ugly messy middle. Senior living is a big part of that messy story. Both in the world and in our little part of the world, there will be resolution, but what that looks like is far from certain.