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.

The research included 3 million Glassdoor reviews of 500 large employers in 25 industries to uncover which sectors have the most frustrated workers as far as wages are concerned.

Only workers in the education field are less satisfied with their pay than are workers in healthcare, according to the findings.

“This is likely one reason why education and health services have a higher-than average vacancy rate of roughly 6%, compared to about 5% across all industries, according to data from the US Bureau of Labor Statistics,” wrote Carissa Rawson, Glen Luke Flannigan and Robin Saks Frankel.

At the other end, workers in the field of pharmaceuticals/biotechnology were least likely to have complaints about the amount in their paycheck, followed by workers in food/soft beverages/alcohol/tobacco and utilities.

Help may be in sight for some healthcare workers, but optimism may be waning in California, where, in the wake of a projected $38 billion deficit, Gov. Gavin Newson (D) is reevaluating an incremental minimum wage increase to $25 an hour for workers in nursing homes, assisted living communities and other settings. He had signed it into law in October.

California has the largest number of skilled nursing facilities and assisted living communities of any state, according to SNF Data and Statista.

Overall, nursing home salaries — including those of executives — continued their upward trajectory with many facilities responding to staffing shortfalls by increasing hourly rates and offering signing bonuses, according to the industry’s largest annual salary survey released in August.

According to the results of another study, from TollFreeForwarding.com, registered nurse salaries are projected to increase over the next decade at a rate that surpasses the rate of increases for some other healthcare professions.

Meanwhile, resident assistants in assisted living communities received a 9.22% hourly rate increase in 2022, according to the 25th annual Assisted Living Salary & Benefits Report, published by Hospital & Healthcare Compensation Service. Resident assistant hourly rates increased by 10.61% in 2021 and by 9.22% in 2022. As a result of continued pay increases, turnover rates for the position began to decrease in 2022. Resident assistant turnover was 68.09% in 2021 but declined in 2022 to 49.08%. Vacancy rates for resident assistants were 19.91% in 2022.

“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

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.