Johnson was addressing investors at a Thursday webinar moderated by Kevin Holloran, senior director and sector leader of the not-for-profit healthcare group in Fitch’s public finance department. 

Earlier this month, Fitch Ratings assigned the CCRC sector a rate of “deteriorating” for the second year in a row, indicating that the company anticipates that credit pressures will worsen this year amid persistent labor and cost pressures.

The sector would have to demonstrate improvement in staffing numbers as well as the efficacy of measures leading to “stable” or “improving” ratings if it is to revise the outlook to “neutral,” according to Fitch, the McKnight’s Business Daily previously reported. 

CCRCs “still face a number of considerable headwinds heading into 2024,” Johnson said. “Cost inflation in terms of supplies and labor, higher interest rates and volatility in the housing sector all contributed to the ‘deteriorating’ or ‘negative’ outlook. But by far, the biggest driver of the ‘deteriorating’ outlook is continued wage pressure.” 

CCRC payrolls are below pre-pandemic levels, whereas wages are at a historic high, Johnsonn said, “meaning it’s taking more and more money to hire workers and even then, [CCRCs] overall remain understaffed.”

This situation is especially true in communities that offer skilled nursing services, she said. 

The good news, Johnson said, is that most of the CCRCs that are a factor in the Fitch outlook have more independent living units than skilled nursing units and are able to take nursing beds offline and adjust staffing levels.

Doing so “allows them to limit the use of more expensive agency nurses and also positions them well to withstand the effects of possible new regulation around minimum staffing ratios that’s been getting some air time at the federal level,” she said, adding, “They also have the ability to pass through rate increases to their independent living residents to offset these high labor and supply costs.”

Demographics also favor the sector, Johnson said.

“I’d say the [CCRC] model of communal living has a distinct competitive advantage over aging at home and other models of senior living. And this is especially in light of a recent Surgeon General advisory about the negative health impacts of loneliness and isolation, especially among seniors,” Johnson said.

She added that the communal living model appeals to baby boomers — those born between 1946 and 1964 — which is on the brink of forming the largest cohort of demand for senior living and care over the next decade.

Against the backdrop of the strong demographics, Johnson said, it is possible for the sector to change its outlook to “improving” or “stable” over time.

“But until we get to a situation where we have a significant stabilization of labor availability, wages and housing prices, so that [CCRCs] can move away from double-digit rate increases and back to their historical norms of 2% to 5% rate increases per year, I think the best we can probably hope for for the sector is ‘stable,’” Johnson said.

“Despite this earlier age, emerging adults, known as GenNext for being the next generation of workers, heads of households, consumers and investors, haven’t started planning for retirement just yet,” the authors noted.

Simply put, the so-called GenNext has other financial priorities at this stage of life, including planning for a family and taking care of everyday expenses, according to the report. 

At the same time, however, Edward Jones advisers indicated that more than 40% of their younger adult clients are “thriving” (42%) and actually are in a more favorable position regarding their financial stability than people of the same age a decade ago.

“We know from our research with emerging adults ages 18 to 34 that they want to be comfortable or have enough money to have a meaningful life, but they aren’t concerned with financial accumulation or career in the same way,” said Julia Bartak, an Edward Jones financial adviser in the Kansas City area. 

But only 12% of those surveyed said they discuss their finances with a financial adviser, and one reason for the finding may be a simple one, according to Edward Jones. Sixty-eight percent of members of the generation “don’t think they have enough income or savings for professional financial advice, despite being the most educated generation in history, with one in three having some college education and access to information,” the company said.

The long-term care-related11  transactions that were closed ranged in size from $2 million to $89 million, largely for skilled nursing, a personal care home facility and assisted living operators, the lending organization announced Tuesday.

“Heading into 2024, Oxford remains well-positioned to continue its current expansion trend into the new year and beyond,” the company said. 

In the first half of the year, Oxford closed on $131.35 million in transactions related to long-term care facilities. At that time, Oxford Finance said that its pipeline for the remainder of the year was “active.”

Transactions for the first half of 2023:

• In Texas, a $14.25 million revolving line of credit to finance working capital needs for 29 skilled nursing facilities.
• In Pennsylvania, a $34.1 million term loan, a $2.5 million mezzanine loan and $2 million revolving line of credit recapitalized two SNFs and one personal care home.
• In northern California, a $16.6 million term loan and a $3 million revolving line of credit went to finance the acquisition of two SNFs.
• In Illinois, a $53.9 million term loan and a $5 million revolving line of credit were extended to finance the acquisition of 11 SNFs and one independent living community.

In the second half of the year, Oxford Finance closed in its largest deal of the year. The company provided a $75 million term loan, a $4 million capital expenditure line and a $10 million revolving line of credit to finance the acquisition of five SNFs and refinance existing debt at five additional SNFs for an Alabama operator.

In addition, Oxford provided a $50 million term loan and a $10 million revolving line of credit to finance the acquisition of two SNFs for an expanding regional operator. 

Lastly, in Florida, Oxford provided a $67.4 million term loan and a $15 million revolving line of credit to finance the acquisition of three SNFs and three assisted living communities for an established multi-region owner in partnership with a local operator.

Fifty-five percent of US CEOs surveyed cited “economic downturn/recession” as a high-impact issue for 2024.

“Both factors also topped the 2023 list of high-impact issues. While we believe a global recession is unlikely in 2024, we do expect slower growth in the wake of tighter monetary policy to tackle inflation,” the authors noted. “Adding to global CEOs’ concerns is that less than 30% believe their organizations are adequately prepared to navigate either a recession or inflation.”

Several leaders of senior living and care industry groups recently told McKnight’s Senior Living that they expect that operators will continue to face inflationary pressures and capital market challenges in 2024, but that some effects may lessen before the year is out.

The Conference Board survey, conducted between Oct. 24 and Nov. 24, asked 1,247 C-Suite executives, including 630 CEOs, for their views on top business threats and opportunities in 2024.

The top five external issues that could affect businesses, according to respondents, are an economic downturn / recession, inflation, global political instability, labor shortages, rapidly advancing artificial intelligence technology and higher labor costs.

“Close to 90% of CEOs see AI increasing the efficiency/productivity of labor and their firms overall. They also see gains in innovation and creativity,” according to the survey. “But there is work to be done to create an organizational culture and structure to maximize AI’s productivity. Almost 80% of CEOs say adopting AI will require new capital expenditures, and 94% say it will require new skills and training.”

Respondents said they were less concerned about the effects of industrial policy in their region, wealth or income inequality, backlash over environmental, social and governance policies, shortages of semiconductors/rare earths and shareholder activism.

Internally, the executive respondents said they mostly were concerned with attracting and retaining talent, accelerating the pace of adding AI, enhancing product and service innovation, improving customer experience, reducing costs and upskilling and reskilling talent.

Respondents said they were less concerned about focus on AI governance policy, a full-time return to offices, accelerating the shift to renewable energy sources, the increasing cost of healthcare benefits and unionization efforts.

“Amid elevated inflation and a potential downturn, CEOs’ plans to grow profits in 2024 include introducing new products/services, investing in technology, increasing sales via marketing, and entering new markets,” according to a press release issued in conjunction with the report

Some Supreme Court justices on Wednesday signaled their willingness to give courts more discretion in interpreting “ambiguous” federal statutes rather than leaving that work to the agencies tasked with implementation.

Abandonment of the so-called Chevron doctrine could have implications for nearly every US sector and industry, including long-term care. Existing practice requires courts to give federal regulators deference when a statute is unclear or could be interpreted two ways, but experts said a change could embolden more lawsuits challenging key rules affecting senior living and skilled nursing providers.

A decision overruling Chevron likely would require Congress to craft more detailed legislation that delegates powers more specifically. It also could “have a significant impact” in keeping administrative agencies from overreaching when such delegation doesn’t exist, said Mark Reagan, managing shareholder of Hooper, Lundy & Bookman.

“This will have impact across the entire regulated economy, including Medicare, Medicaid and other healthcare legislation,” he told McKnight’s. “If overruled, I would expect there to be serious consideration in some quarters to reverse prior decisions made in reliance on Chevron in the healthcare industry, particularly those involving complex Medicare reimbursement methodologies.”

In the long-term care sector, Reagan said the Centers for Medicare & Medicaid Services might have to change how it approaches its requirements of participation and reimbursement rules.

That might not constrain CMS, Reagan said, but instead could lead to more opportunities for successful litigation if the agency’s presumed authority “is far from clear.”

Two fishy cases 

Many conservatives have cheered the possibility of a reversal, which is being pursued by a group of herring fisheries that argue their livelihood is threatened by a Commerce Department rule requiring them to pay for overfishing monitors onboard their boats.

Those fishermen took two separate cases to the court for almost four hours of hearings Wednesday. The full court will weigh Relentless v. Department of Commerce, but Justice Ketanji Brown Jackson had to recuse herself from Loper Bright Enterprises v. Raimondo, in which she heard lower court arguments.

The court’s conservative majority peppered US Solicitor General Elizabeth Prelogar with questions about Chevron’s ability to create regulatory unreliability, or the idea that existing rules can be routinely “flipped” by agencies without any warning to the businesses they regulate. 

“The reality of how this works is, Chevron itself ushers in shocks to the system every four or eight years when a new administration comes in, whether it’s communications law, securities law or competition law or environmental law. It goes from pillar to post,” said Justice Brett Kavanaugh. “It’s just massive change. That is at war with reliance. That is not stability.”

Lawyers for the fisheries argued that courts could review contested agency actions for their persuasiveness, rather than reflexively deferring to the agency’s interpretation. That approach appeared to be favored by the court’s conservatives, too, Reagan noted. 

Liberal leanings

The court’s decision likely will be split, as several more liberal justices appeared inclined to let the 40-year-old doctrine stand.

Justice Elena Kagan used real-life cases ranging from classifying a product for the Food & Drug Administration and possible legislation on artificial intelligence to illustrate why courts might not be the best final arbiters.

“There are just some times when you look at a statute, and the most honest reading is that there is a gap there because of the limits of language, because of the limits of our ability to predict the future. And so who fills that gap?” she asked. “It’s best to defer to people [agency staff] who do know, who have long experience on the ground, who have seen a thousand of these kinds of situations. Judges should know what they don’t know.”

Kagan argued that the intent of Congress is to have the agencies it empowered make those decisions, not a series of federal courts that could conflict with each other based on their geography and political leanings.

Others, including conservative justice Samuel Alito, also questioned whether a revised approach might lead to more judicial activism. He referred to Chevron’s initial popularity when it was adopted by the Court in 1984 as a conservative tool to stymie a liberal DC Circuit Court.

That policy-making concern resonated with Brendan Williams, an attorney and president and CEO of the New Hampshire Health Care Association, the state affiliate of the American Health Care Association/National Center for Assisted Living.

“Those providers looking to the courts for salvation under a new approach should consider Health and Hospital Corp. of Marion County, Indiana v. Talevski, last year’s 7-2 Supreme Court decision that, in my opinion, fabricated out of whole cloth a right to sue publicly-owned nursing homes,” he said. “When courts, even conservative courts, are allowed to make policy, the consequences could be chaotic and unpredictable.”

Williams added that he was nervous that the conservative majority appears ready to institute an older precedent that was effective in the New Deal’s regulatory-building heyday.

“These days, with an utterly inert Congress, the complex task of governance could unravel if those with lifetime appointments, unaccountable in any way to the public, can second-guess agency scientific analyses,” he added. “Though it perhaps seems improbable, the day may come when an agency interprets an ambiguous statute in a ‘reasonable’ way beneficial to nursing homes, and those hostile to the sector challenge that rule before a judge who is also hostile to the sector. …That judge no longer must offer any deference to that agency.  So it cuts both ways.”

Decisions in the two cases are expected before the court adjourns in June.

The bill was effective upon the governor’s signature Jan. 8.

The law empowers a labor union to file a complaint in court against a contractor or subcontractor for unpaid wages on behalf of workers in certain construction, reconstruction, demolition, alteration and maintenance projects, regardless of whether the workers belong to the union or are unaffiliated with any union.

“It is our expectation that empowering labor unions to pursue actions in court on behalf of construction workers, whether they belong to the union or to no union at all, will inure to the benefit of all workers in this industry and their families,” the governor said in a statement. 

“Every worker should be properly compensated for the work they undertake — no exceptions,” Murphy said in a press release issued in conjunction with the bill-signing. “This bill allows unions to take up for those workers without representation seeking wage claims.”

State Sen. Troy Singleton (D), Assemblywoman Annette Quijano (D) and Assemblyman Anthony Verrelli sponsored the bill.

“This bill signifies a monumental shift in protecting workers’ rights, extending the reach of unions and ensuring that no worker is left behind in the pursuit for fair wages and just treatment,” Quijano said. “Unions being able to start wage claims could encourage employer compliance and potentially lessen the state’s need to closely monitor and enforce these laws.” 

Business groups had opposed the bill, arguing that the legislation “would allow labor unions to act in the place of the state government by filing lawsuits on behalf of workers they don’t represent,” The Center Square reported. 

Labor groups, on the other hand, applauded the new law.

Laborers’ International Union of North America Vice President and Eastern Regional Manager Mike Hellstrom said that the law provides an additional layer of support to construction workers who might find themselves on the losing side of a wage dispute and denied pay they had already earned.

“It is good news for New Jersey, for law-abiding employers and, most of all, for workers,” Hellstrom said.