The Department of Labor this morning issued a final rule that will change how senior living companies and other employers determine who is an employee and who is an independent contractor.

The rule is effective March 11.

“The misclassification of employees as independent contractors may deny workers minimum wage, overtime pay and other protections,” the Labor Department said in an online post. “This final rule will reduce the risk that employees are misclassified as independent contractors while providing a consistent approach for businesses that engage with individuals who are in business for themselves.”

The rule also ensures that “employers that comply with the law are not placed at a competitive disadvantage when competing against employers that misclassify employees,” the department said in an email. 

According to the DOL, the final rule:

• Restores the multifactor, totality-of-the-circumstances analysis to assess whether a worker is an employee or an independent contractor under the Fair Labor Standards Act. 
• Ensures that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors. 
• Uses the longstanding interpretation of the economic reality factors. Those factors include opportunity for profit or loss depending on managerial skill, investments by the worker and the potential employer, the degree of permanence of the work relationship, the nature and degree of control, the extent to which the work performed is an integral part of the potential employer’s business, and the worker’s skill and initiative.

The new rule also rescinds one issued during the final days of the Trump administration in January 2021. The Labor Department under the Biden administration had sought to delay the rule, and then withdrew it in May 2021, believing that it was inconsistent with the FLSA’s text and purpose. A district court, however, in March 2022 determined that the rule had taken effect on its original effective date and remained in effect.

That rule, Solicitor of Labor Seema Nanda said at the time, “legally risked increasing instead of reducing misclassifications because it narrowed the facts and basis for determining whether a worker is an employee under the FLSA” and was ”out of sync” with what the courts had been saying for decades.

In June 2022, the DOL announced plans to hold public forums to gather feedback on writing a new rule. A proposed rule was issued in October of that year.

Tuesday, the Labor Department said it had received “thousands of comments from a diverse array of stakeholders that helped inform the regulatory updates” during a comment period that was open through November 2022.

The rule issued Tuesday has not been published in the Federal Register yet but is available as a PDF. Read it here.

Editor’s note, Jan. 10: Read the follow-up story with industry reaction here.

Completion of changes to a 35-community Brookdale Senior Living portfolio owned by Westlake Village, CA-based LTC Properties has resulted in 17 communities being re-leased to Brentwood, TN-based Brookdale, eight communities being sold, the operation of five communities being transferred to Oxford Senior Living, and the operation of five other communities being transferred to Navion Senior Solutions.

The real estate investment trust, which announced the changes late Monday, said it expects net proceeds of $23 million and an anticipated net gain of $17 million related to the property sales.

“We are pleased to have reached a favorable outcome,” LTC Chairman and CEO Wendy Simpson said in a statement. “Importantly, rent from the previous portfolio has been fully replaced, and we’ve generated sales proceeds to pay down a portion of our debt, which was incurred to pre-fund accretive investments earlier this year.”

The transactions resulted in three new master leases. Revenue from the portfolio will be fully replaced through a combination of new leases, interest related to seller financing, and pre-invested proceeds at a weighted average yield of 8.5%, according to the REIT.

LTC’s portfolio still will contain Brookdale communities but said the moves reduce its revenue concentration from Brookdale by 40%. In April, LTC Chief Investment Officer and Co-President Clint Malin said that the REIT would “welcome the opportunity to reduce operator concentration.”

As of Sept. 30, LTC’s senior living and care portfolio included 29 operators and 208 properties. Of them, there were 42 ALG Senior communities, 35 Brookdale properties, 24 Prestige Healthcare communities, 13 HMG Healthcare properties, 12 Anthem Memory care communities, seven Ignite Medical Resorts properties, seven Ark Post-Acute Network facilities, six Genesis Healthcare properties, five Fundamental facilities, four Carespring Health Care Management properties, and 53 settings managed by other senior living and care operators, according to a presentation posted on LTC’s website.

The 17 communities that LTC re-leased to Brookdale are located across four states — Colorado (six), Texas (six), Kansas (four) and Ohio (one) — and have a total of 738 units. The new master lease, which was effective in January, has a duration of six years at an initial annual rent of $9.3 million.

On the REIT’s first-quarter 2023 earnings call, Malin said that the Brookdale properties that LTC planned to keep have “much higher” EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring or rent costs). Rate growth and occupancy trends in LTC’s Brookdale portfolio were similar to those that Brookdale has publicly disclosed for its overall portfolio, he added.

The eight communities that were sold are located across three states — Florida (four), South Carolina (three) and Oklahoma (one) — and have a total of 341 units. LTC said they were sold for $28 million, that REIT received $23.2 million in proceeds net of transaction costs and seller financing, and that it anticipates recording a gain of $17 million related to the sales. 

LTC provided financing to the seller, with two of the Florida properties, with a total of 92 units, serving as collateral. The $4 million seller-financed mortgage loan term is two years, with a one-year extension, at an interest rate of 8.75%.

As for the communities for which management was transferred to new operators, the five communities now operated by Oxford are located in Oklahoma and have a total of 184 units. Oxford already operated senior living communities in LTC’s portfolio.

The new master lease, which began in November, has a duration of three years, with one four-year extension, at an initial annual rent of $960,000.

The five communities now operated by Navion are located in North Carolina and have a total of 210 units. Navion did not previously have a relationship with LTC. The master lease, which began in January, has a six-year duration at an initial annual rent of $3.3 million.

In the first half of 2023, LTC Properties had announced plans to sell approximately half of the 35 Brookdale communities it owned and re-lease the other half after Brookdale opted not to renew its lease with the REIT. LTC reported in October, however, that it would be re-leasing 17 of the 35 properties back to Brookdale under a new six-year master lease beginning Jan. 1.

The exact fates of all 35 communities previously had not been announced.

Senior living operators will continue to face inflationary pressures and capital market challenges in 2024, but some effects may lessen before the year is out, according to industry experts. Expect the workforce-related issues that have dogged providers for years to persist, however, they said.

“The elevated interest rates driven by the Federal Reserve efforts to bring down inflationary pressures had a profound impact on the sector in 2023,” National Investment Center for Seniors Housing & Care President and CEO Ray Braun told McKnight’s Senior Living.

Noting the “significant demographic wave on the horizon,” he said that the past year also saw record absorption of new senior housing inventory as it hit the market. “At the same time, we experienced a marked decline in new construction as well as transaction activity in 2023,” Braun said. “The lending environment and overall cost of capital has been prohibitive and has been a definite headwind.”

Capital still will be constrained early this year, he said, “but we are also hopeful that as the year progresses, we will start to see some improvement on this front.”

National Center for Assisted Living Executive Director LaShuan Bethea singled out inflation as the top issue faced by the industry over the past year.

“Inflation has caused soaring labor costs, in addition to other expenses, and made it difficult for assisted living providers to compete for caregivers,” she told McKnight’s Senior Living. “As a result, assisted living communities have been forced to use more contract nurses and staffing agencies, many of which are charging two or three times more than they charged prior to the pandemic.”

As 2024 dawns, Bethea said, the financial challenges will continue.

“Inflation makes all other expenses in assisted living more expensive, from food to cleaning supplies,” she said. “Additionally, the entire industry is still facing the ongoing ripple effects of skyrocketing costs from the pandemic.”

Assisted living providers, Bethea said, managed their COVID-19 response with little support from the government. According to some estimates, assisted living communities collectively received approximately $1 billion in relief funds, compared with the $12.5 billion received by nursing homes, despite the fact that assisted living providers serve about the same number of older adults and incurred more than $30 billion in pandemic losses and expenses.

“Federal and state policymakers provided little support to these communities in terms of personal protective equipment, testing and staff support,” she said. “Those COVID-related expenses continue today.”

Senior living providers, American Seniors Housing Association President and CEO David Schless said, continue to be confronted by “inflationary pressures across several key expense categories and a significant and rapid increase in interest rates.”

“Ultimately, the top challenge in 2023 was related to the capital markets and liquidity challenges,” he told McKnight’s Senior Living, adding that he expected those issues to continue this year.

“While inflationary pressures appear to be moderating somewhat, the interest rate environment and overall capital market environment for all real estate-based assets will likely remain challenging,” Schless said. “And we know there are many owners facing debt maturities in the upcoming year, which may prove to be extremely challenging with an ongoing liquidity crisis.”

NIC believes that the industry will reach an inflection point this year and that a “reset” will occur, Braun said.

“There will be some distressed inventory and underwater loans that the market is going to have to work through,” Braun said. “We think this reset is going to force a narrowing of the bid-ask spread and some reconciliation around equity contributions to stabilize outstanding debt.”

A ‘patchwork’ system

From a broader perspective, LeadingAge President and CEO Katie Smith Sloan told McKnight’s Senior Living, operators are challenged by “the shortcomings of our current patchwork system of delivering and financing long-term care.”

The association for nonprofit providers across the continuum of aging services is “doing all we can to raise up and urge policymakers and other stakeholders” to address the issue, she said.

“America is experiencing a massive demographic shift with implications for every aspect of society,” Sloan said. “Accessing quality long-term care is very often challenging, for many reasons. There is little political will to address these issues systemically, but policymakers are quick to criticize. Too often, aging services and providers are the scapegoat.”

Policymakers and members of the public must be educated about the industry as a whole as well as the differences between provider types, Sloan said.

“Ensuring that the public understands how long-term care is delivered and paid for — in a patchwork, inefficient system — and that the public appreciates the support that is needed, is critical,” she said. “And then advocating for long overdue change. We’re committed to doing everything we can to achieve that goal.”

Issues related to access and affordability also are on NIC’s radar screen, said Braun, who called them “an ongoing challenge for the sector.”

“NIC has been committed to defining and finding solutions for the middle-market consumer segment, and this work is more important than ever,” he said. “We need to be creative in finding solutions and models that are scalable and will bring forth greater access and options for the wave of baby boomers ahead.”

NIC funded a 2019 study by NORC at the University of Chicago that found that 54% of the 14.4 million middle-income older adults in 2029 in the United States will lack the financial resources to pay for senior housing and care, and a combination of public and private efforts will be needed to address the looming crisis.

More recently, Braun noted, NIC provided funding for the Housing for America’s Older Adults 2023 report, prepared by the Joint Center for Housing Studies of Harvard University. According to findings shared in that report, only 13% of adults aged 75 or more years who are living alone across 97 US metro areas can afford to move into an assisted living community without starting to cash in their assets.

NIC also has partnered with CVS Health to support a soon-to-be released report from the Milken Institute, “Innovative Financing and Care Models to Scale Affordable Housing Solutions for Middle Income Older Adults,” Braun added.

Intertwined with staffing issues

Access and affordability issues are intertwined with senior living’s perennial challenges related to staffing, Braun indicated.

“​​Staffing-related expenses continue to pressure margins, and there is sensitivity to how much of this expense can be passed along to the consumer,” he said, noting that in the first quarter of 2023, the percentage of assisted living rent increases surpassed the percentage of wage escalation.

“We went several years where wage increases consistently exceeded rent increases,” Braun said. “This is an ongoing challenge for operators, who need to ‘read the tea leaves’ and determine how far they can go in rent increases to cover some of these expenses without pricing themselves out of the market.”

Sloan cited labor issues — specifically, recruiting and retaining workers — as the top challenge that has faced senior living owners and operators over the past year. And those issues affect access, she said.

“These challenges are particularly acute in senior living communities that provide skilled nursing and home healthcare,” such as continuing care retirement / life plan communities or assisted living communities where home- and community-based services are provided, she said. “Insufficient reimbursement rates, coupled with a highly competitive labor market, make for a very tough operating environment. Members are having to make hard choices — which service lines to continue, what to reduce — in order to maintain operations. That prospect of limiting older adults and families’ access to much-needed care is really antithetical to our members’ mission. Yet without staff, there is no care.”

NCAL’s Bethea noted that assisted living providers and those they could serve are feeling the pain as well.

“While the assisted living workforce has recovered in many areas, workforce shortages still remain a top challenge, especially in rural areas,” she said. “ Rural areas do not have as many people in general, let alone the qualified caregivers needed to support the communities’ seniors. As a result, assisted living providers are having to compete with other healthcare sectors for new hires or make the tough decision to limit admissions.”

Limiting move-ins, Bethea said, “leaves vulnerable residents displaced from their long-standing communities, as well as reduces their options for quality care. …Families are left scrambling to find new care options and often must travel farther to visit their loved one.”

NCAL, she added, is working with its state affiliates and individual providers to try to find solutions to address workforce challenges so that older adults’ access to assisted living is protected.

Mandate effects outside of nursing homes

Both Sloan and Bethea cited the federal government’s proposed minimum staffing mandate for nursing homes as a potential challenge for other types of providers along the long-term care continuum.

“There’s a bit of irony here. I’ve spent my career in this sector and finally — a true first in a long time — the federal government is focused on aging services and older adults’ access to quality care,” Sloan said. “But the Biden administration is not making the right choices.”

At LeadingAge’s annual meeting in November, Sloan said that even though the staffing mandate proposed by the Centers for Medicare & Medicaid Services directly would apply only to nursing homes, senior living and other providers would be affected because they are “fishing from the same pool” of workers and “there are just not enough people to hire.”

In December, she told McKnight’s Senior Living that “decisions are being made that will have far-reaching impact and potentially negative unintended consequences.”

Bethea predicted that the proposed mandate will be senior living’s top challenge this year.

“With the impending Biden administration’s staffing mandate for nursing homes, assisted living communities are at risk of losing staff,” she said. “No matter where an assisted living community sits on this continuum, a federal minimum staffing mandate threatens to take away the essential staff on which these communities depend to provide high-quality care for millions of residents.”

And because labor shortages can lead operators to curtail admissions, Bethea said, another top challenge for the industry will be to rebuild the capacity to accept new residents.

“As [the] workforce slowly recovers, assisted living providers must do everything they can to effectively communicate that they are willing and able to accept new residents,” she said. 

ASHA continues to pursue a variety of legislative solutions to workforce challenges, including immigration reform, Schless said. “Of course, the politics of immigration reform are extremely challenging,” he added, noting that, with 2024 being an election year, “getting any significant legislation enacted is unlikely,” although “ASHA will continue to look for any opportunities that may add new foreign workers to the workforce.”

Although the situation has improved from the previous two to three years, Braun said, labor issues continue to be a “pressure point” for operators.

“We have seen year-over-year wage increases come down from record highs, and a number of operators are reporting reduced agency dependency, but the challenges have not gone away,” he said.

Operators, Braun said, “need to be better about reducing turnover and ultimately improving the experience of our workforce, which in the end will pay dividends.”

Workforce issues also are a primary concern for affordable senior housing providers, Sloan said.

“Congressionally appropriated funds are critical to both meet rising demand for homes and support the programs for service coordinators, whose work helps residents to age in place,” she said. “Research — and the experience of our nonprofit members who provide federally assisted homes to seniors with low-incomes — show that residents are better able to age in community with improved health and overall well-being thanks to service coordinators’ work, yet for the past  decade, these programs hadn’t received support, until only recently.”

In December, the US Department of Housing and Urban Development released $40 million in new funding for service coordination programs in affordable senior housing. LeadingAge said it was the first service coordinator funding opportunity in 10 years.

A 2015 study by LeadingAge and the Lewin Group found that the availability of an on-site service coordinator, such as a social worker, at federally subsidized seniors housing reduced hospital admissions among residents by 18%. More recent studies found that service coordinators improved affordable senior housing resident resilience during the COVID-19 pandemic.

But “even with recent support, there are still significant unmet needs,” Sloan said.

Looking to the future

Looking toward the future, Braun said that the industry is “going to have to refine the owner-operator relationship in some cases.”

“We remain a fragmented space with many different owners and operators, and those relationships can be complicated depending on experience in the sector and generally a limited set of industry standards for measuring and defining quality,” he continued. “NIC is working with some others on this very topic. We think it will be critical to advance the sector in this regard as we prepare for the wave of new development that will come once the capital starts to free up.”

Look for the topics to be covered in educational sessions, forums and networking opportunities at the 2024 NIC Spring Conference, Braun said.

Meanwhile, Sloan said that LeadingAge members “are laser-focused on reimagining themselves for the future.”

“We know that the majority of Americans want to age in community, in their homes. That’s an opportunity for providers across the spectrum,” she said. “The big question for our members is determining the path that is consistent with their mission and sets them up to be successful well into the future. It’s really about making the smart and strategic choices and executing on them while at the same time navigating workforce shortages and other pressing issues.”

To educate potential residents and their families about senior living options, Schless said, ASHA will be re-launching a “completely overhauled” version of its consumer website, Where You Live Matters, this year.

Bethea said that quality will remain a top focus for NCAL and its members in 2024.

“Assisted living continues to deliver high-quality care in a safe, homelike setting that offers the ability to meet residents’ needs,” she added. “The only thing the current labor shortage has impacted is access to care, not quality. The caregivers in our assisted living communities are dedicated individuals who are committed to continuous quality improvement.”

Sixty-six percent of respondents to a newly released survey said they expect rental rate increases of 3% to 7% over the next 12 months for active adult, independent living, assisted living and memory care communities.

Participants in the 13th edition of CBRE’s Senior Housing & Care Investor Survey primarily were private or institutional investors, brokers or developers. The survey was conducted in October, and results were released in December.

No respondents said they anticipate rent decreases for any long-term care asset class.

The highest percentage of participants said they expected senior living and care rate increases of 3% to 7% over the next 12 months, with 72% of respondents in this group predicting such increases at continuing care retirement / life plan communities, 63.3% anticipating them at active adult communities, 61.3% expecting them at independent living communities, 56.3% predicting them at assisted living communities and 53.1% anticipating them at memory care communities. By comparison, 47.8% in this group said they expect such increases at SNFs.

Of those who said they expect rent growth greater than 7%, 28.1% predicted that it will occur in assisted living, 25% anticipated that it will happen in memory care, 19.4% said that it will take place in independent living, 13.3% predicted that it will occur in active adult, and 4% anticipated that it will happen at CCRCs. By comparison, no respondents said that rent growth of this level will take place in skilled nursing.

Of those who said they expect rent growth of 1% to 3% over the next 12 months, 20% said they expect it in active adult, 16.1% said they predict it for independent living, 15.6% said they anticipate it for memory care and 12.5% said they expect it in assisted living. By comparison, 43.5% said they anticipate rate increases of this level for SNFs.

Some respondents predicted no change in rates for CCRCs (12%), memory care communities (6.3%), active adult communities (3.3%), independent living communities (3.2%) and assisted living communities (3.1%). By comparison 12% of respondents predicted no rate increase for nursing homes.

The full report is available here.

• In discussions, lead off by talking about the more popular flu vaccine.
• Be consistent in your messaging about the safety and effectiveness of both vaccines.
• Address people’s vaccine-specific beliefs, such as the limits of protection from prior COVID infections. 

The research, which included a July survey of more than 2,000 adults, including 659 of whom were aged 50 or more years, 71% of the older adults said it was “very likely” or “somewhat likely” that they would get the flu vaccine, and 64% said it was very or somewhat likely that they would get the updated COVID vaccine. Forty-nine and 50% of the older adults, respectively said they thought that the flu and COVID vaccines were “very effective,” and 65% and 51%, respectively, thought that they were “very safe.”

The survey results also reveal the most common reasons that some respondents said they are hesitant about vaccination, which can help you with your talking points.

Among those 50 and older who said they were “not very likely” to get the flu vaccine, the top three reasons were that they would prefer to get natural immunity from becoming ill (35%), that they don’t trust the government agencies that promote vaccination (33%) and that they feel as if people are expected to get too many vaccines in general (31%).

Among those 50 and older who said they were “not very likely” to get the COVID vaccine, the top three reasons were that they want to see more research done on the vaccine (62%), that they are worried about the vaccine’s safety (59%) and that they don’t trust the government agencies that promote vaccination (55%).

(You can read about the other concerns of respondents, including those aged 18 to 64, here.)

Other recent research also provides motivation for staying current with vaccines:

• For instance, an analysis of more than 10 million cases of COVID-19 in adults between May 2020 and February 2022, published in December in the Journal of the Royal Society of Medicine, found that among adults aged more than 50, the case fatality risk was 10 times higher in the unvaccinated compared with those who had been vaccinated within six months before testing positive for COVID-19.
• Research published in December in Lancet Infectious Diseases indicates that people hospitalized with seasonal flu also can end up with “long flu,” long-term, negative health effects, especially involving their lungs and airways.

See the Centers for Disease Control and Prevention’s website for more information and resources about COVID and flu vaccination for long-term care residents or workers — long-term care workers have relatively low vaccination rates compared with other healthcare personnel.

Lois A. Bowers is the editor of McKnight’s Senior Living. Read her other columns here.

Brookdale Senior Living has sold the remaining 20% equity interest it held in its Health Care Services unconsolidated venture and received aggregate proceeds of approximately $27 million in the process, the Brentwood, TN-based company announced Wednesday. The company did not disclose the buyer.

The country’s largest senior living provider had announced in February 2021 that it was selling an 80% stake in Brookdale Health Care Services — a provider of home health, hospice and therapy services — to HCA Healthcare for $400 million. At the time of the announcement, BHS operated 57 home health agencies and 22 hospice agencies across 26 states, along with 84 outpatient therapy locations. 

Brookdale at the time said that the move was designed in part to position the company’s core senior housing operations for sustained growth. The sale was completed in July 2021.

In September 2021, LHC Group inked a deal to buy some Brookdale Health Care Services agencies from the HCA–Brookdale venture for an undisclosed price. The deal, which was finalized in November 2021, included 23 home health locations, 11 hospice and 13 therapy agencies across 22 states. LHC Group subsequently was acquired by UnitedHealth Group for $5.4 billion in a transaction that was finalized in February 2023, and the company now is part of UnitedHealth’s Optum diversified health services division.

Brookdale’s Wednesday announcement of the sale of its remaining 20% equity interest in the venture also included news of the completion of two other transactions to refinance all of the company’s remaining 2024 debt maturities:

• This month, Brookdale obtained a $180 million loan under a 2017 master credit facility agreement and secured the principal via non-recourse first mortgages on 47 communities. Those communities also continue to secure approximately $580 million of additional outstanding mortgages with a later maturity. The $180 million loan has a fixed interest rate of 5.97% and matures in 2031. The facility includes “borrow-up” provisions that the company expects will enable it to obtain additional funding in 2024 under the loan, based on the performance of the underlying communities. At the closing, Brookdale repaid $260 million of debt under the facility, which was scheduled to mature in 2024, using proceeds from the $180 million loan and cash on hand.
• Also this month, Brookdale amended its revolving credit agreement with Capital One to provide an expanded commitment of up to $100 million that can be drawn in cash or as letters of credit. The amount represents a $20 million increase from the previously existing commitment, according to Brookdale. The amended credit facility will mature in January 2027, and Brookdale has options to extend it to March 2028 and March 2029.

Brookdale said Wednesday that it also has “made significant progress on a financing transaction involving 11 of its currently unencumbered owned communities, which it expects to complete in the coming months.”

“We believe the positive strides we have made in 2023 are reflected in these completed financing transactions, which clear our debt maturities until 2025,” Brookdale Executive Vice President and Chief Financial Officer Dawn Kussow said in a statement. “The ongoing proactive management of our liquidity position, including these completed and pending transactions, together with Brookdale’s solid improvement in operating results, support our continued strong liquidity position.”

Wage growth has declined but remains elevated, according to a December report from Fitch Ratings. Wage inflation at continuing care retirement / life plan communities is higher than at assisted living communities, but favorable rate and occupancy growth are offsetting higher staffing expenses. Providers, the ratings agency said, will “continue focusing on efficiency and productivity efforts in 2024 considering the tight labor market and high cost of increasing headcount in the current environment.”

Good news as 2023 comes to a close is that senior living occupancy is on its way to 10 consecutive quarters of positive growth, according to a November report from NIC MAP Vision. The positive growth trend in senior living (independent living and assisted living) marks the longest period of uninterrupted gains since the National Investment Center for Seniors Housing & Care and NIC MAP Vision began reporting data in 2005.

Year-over-year inventory growth remained relatively modest compared with pre-pandemic times, but sustained supply-demand trends could drive senior living occupancy rates to return to pre-pandemic levels in 2024, according to NIC and NIC MAP Vision.

Some providers, such as Maplewood Senior Living, are seeing healthy occupancy across their portfolios. Westport, CT-based Maplewood recently reported that occupancy averages 95% across its senior living portfolio, with multiple communities currently at 100% occupancy. In August, Thrive Senior Living reported that three of its communities in Georgia had reached 100% occupancy, with one community at full capacity for the past 19 months. Pegasus Senior Living and Watercrest Senior Living Group were two other organizations reporting 100% occupancy news in 2023.

Here are some of the other major stories in senior living in 2023.

Federal regulation

Senior living provider groups in 2023 continued to work to maintain regulation of the industry primarily at the state level, with leaders from the National Center for Assisted Living and Argentum addressing the topic at various gatherings.

Provider groups, however, continued to advocate for passage of the federal Expanding Veterans’ Options for Long Term Care Act, which would establish a three-year pilot enabling some veterans to have their care needs met in assisted living communities rather than a Veterans Affairs home. The bill was reintroduced earlier this year after going nowhere last year. Its fate in 2023 appears to be the same, although at a House Committee on Veterans’ Affairs Subcommittee on Health hearing in June, the US Department of Veterans Affairs expressed support for the legislation — with conditions. 

Meanwhile, provider advocates said that a proposal that the Centers for Medicare & Medicaid Services says is meant to “support and stabilize the direct care workforce” in home- and community-based settings, if it becomes final, ultimately could lead to fewer jobs, stagnant pay for caregivers and a reduction in older adult access to home- and community-based services — the exact opposite of what the government intends.

The American Seniors Housing Association, Argentum, LeadingAge and the NCAL were among the more than 2,000 groups and individuals submitting comments to CMS on a rule it had proposed in April titled “Medicaid Program; Ensuring Access to Medicaid Services.” The proposed rule — with an overall goal of increasing access to HCBS — in part would require that providers spend at least 80% of Medicaid payments for personal care, homemaker and home health aide services on compensation for direct care workers as opposed to administrative overhead or profit. It also proposes quality measures, which some of the associations said have the potential to burden assisted living providers financially and administratively. A final rule has not been published.

2023 also saw CMS propose a minimum staffing mandate for nursing homes that provider groups say would affect assisted living communities because providers would be competing for nursing staff.

Federal agencies also proposed an overtime pay rule and issued a new definition for “joint employer.”

The proposed overtime rule, under which most salaried workers earning less than $1,059 per week, or about $55,000 per year, would be eligible for overtime pay, was introduced in August. The Labor Department said that 3.6 million salaried workers would be affected. Senior living industry representatives said that the proposal was “ill-timed” and would worsen workforce issues for providers, threatening access for residents.

Under the final joint employer rule, from the National Labor Relations Board in October, “an entity may be considered a joint employer of a group of employees if each entity has an employment relationship with the employees and they share or co-determine one or more of the employees’ essential terms and conditions of employment,” the NLRB said.

Long-term care providers that use temporary or contract workers, as well as operators that are part of franchises, are among those that could be affected.

The rule will have a “particularly negative impact on senior living arrangements,” the top Republican member of the Senate Special Committee on Aging and three other Republicans on the committee told NLRB Chairman Lauren McFerran in November.

The NLRB has extended the effective date of the rule by two months, to Feb. 26.

Crime and punishment

In December, the US Supreme Court declined to hear an appeal from former assisted living community and nursing home owner Philip Esformes, clearing the way for federal prosecutors to retry him on six charges in a case that the federal government once described as “the largest healthcare fraud scheme charged by the US Justice Department.”

It was the second time in 2023 that the high court denied appeals from Esformes. In April, Justice Clarence Thomas rejected an emergency appeal seeking to stay a decision from the 11th US Circuit Court of Appeals affirming his 2019 conviction on 20 charges.

Esformes was convicted on charges including conspiracy to defraud the United States, money laundering, paying and receiving kickbacks, bribery, wire fraud and obstruction of justice. The jury, however, did not reach a verdict on six counts.

Former President Donald Trump comminuted Esformes’ 20-year prison sentence in December 2020 but left intact the remaining parts of his sentence, including three years of supervised release, the payment of $5.5 million in restitution and the forfeiture of $38.7 million equivalent to property traced back to Esformes’ money laundering offenses.

In other news, Billy Chemirmir, convicted in 2022 for two murders and suspected in the deaths of more than 24 older adults in Texas, most of whom were women residents of senior living communities, was murdered in prison in September.

Mergers, acquisitions and affiliations

Several notable mergers, acquisitions and affiliations were announced in 2023. 

In early February, for instance, Newton, MA-based AlerisLife, parent of Five Star Senior Living, announced that it was being acquired for almost $44 million by a subsidiary of ABP Trust, where Adam D. Portnoy, a managing director of AlerisLife and chair of the company’s board of directors, was the sole trustee and controlling shareholder as well as an officer. The deal was finalized in March, at which time AlerisLife became a private company.

In October, Denver-based real estate investment trust Healthpeak Properties, with a portfolio that includes 15 continuing care retirement communities operated by Life Care Services or Sunrise Senior Living, announced plans to merge with Milwaukee-based Physicians Realty Trust in an all-stock deal valued at approximately $21 billion.

And as the year was drawing to a close, Roanoke, VA-based Retirement Unlimited Inc., announced that it was acquiring Mt. Laurel, NJ-based Brandywine Living’s senior living management platform, forming a combined company that will consist of 59 communities with more than 6,739 independent living, assisted living and memory care units.

Some other activity:

• The year started with Westerville, OH-based Ohio Living and Grand Rapids, MI-based Brio Living Services (formerly UMRC & Porter Hills) announcing that they were exploring a potential strategic affiliation aimed at expanding aging service offerings in the Great Lakes region by the end of the year.
• Westminster Communities of Florida in August announced an affiliation agreement with Florida Presbyterian Homes, a CCRC in Lakeland, FL.
• Also in August, California-based HumanGood and Pleasant Spring Communities, based in Massachusetts, announced plans to affiliate.
• Lancaster County, PA-based Garden Spot Communities and Montgomery County-based Frederick Living announced their planned affiliation in September, saying that the decision was driven by a belief that “the era of the single-site and small-system organization is coming to a close.”
• In October, CCRC Mease Life of Dunedin, FL, and Fort Washington, PA-based Acts Retirement-Life Communities announced the finalization of their affiliation after signing a letter of intent in April to explore the possible arrangement.
• Also in October, Louisville, CO-based Balfour Senior Living became an affiliate of Carlsbad, CA-based Kisco Senior Living.
• Minnesota providers Three Links and St. Francis Health Services of Morris were set to merge Nov. 1.

But just as newsworthy as the deals that were announced were the deals that fell through.

In July, for instance, the planned merger of the parent companies of two of the largest not-for-profit senior living and care organizations in the country was called off for good after being delayed several times. Sioux Falls, SD-based Sanford Health, which includes the Evangelical Lutheran Good Samaritan Society, discontinued the merger process with Minneapolis-based Fairview Health Services, which includes Ebenezer Senior Living, Minnesota’s largest senior living operator.

And in September, Diversified Healthcare Trust, with a portfolio that includes Five Star Senior Living-branded communities and properties operated by several other companies, and Office Properties Income Trust called off their planned merger. The deal had faced opposition from proxy advisory firms Egan-Jones, ISS and Glass Lewis as well as shareholders Flat Footed and hedge fund D.E. Shaw. Subsequently, as the Newton, MA-based REIT sought firmer financial footing, board changes and a new president and CEO, who will start Jan. 1, were announced.

More company news

Enlivant, with a motto of “Where senior living thrives,” did not thrive in 2023. An audit made public in February found “substantial doubt” about the company’s ability to continue as a “going concern,” affecting a 157-community joint venture with Sabra Health Care REIT and TPG Real Estate. In May, Enlivant announced the layoffs of 248 employees at its Chicago corporate support center. In July, the management of 11 other Enlivant communities owned by Sabra was moved to Inspirit Senior Living, with Sabra CEO Rick Matros saying later in the year that performance was “exceeding expectations.” In October came the news that Enlivant faced eviction from its corporate support center. The company ceased operations on Nov. 17.

The year had more positive news for Brookdale Senior Living, which in December reported its 25th consecutive month of year-over-year weighted average occupancy growth. 2023 also saw the country’s largest senior living company continue to roll out its value-based care coordination program for residents, after a pilot that CEO Cindy Baier said delivered “extremely promising” results.

Meanwhile, Westlake Village, CA-based real estate investment trust LTC Properties announced plans to sell approximately half of the 35 Brookdale Senior Living communities it owned and re-lease the other half after Brookdale opted not to renew its lease with the REIT. Ultimately, however, LTC Properties re-leased 17 of the 35 properties back to Brookdale under a new six-year master lease beginning Jan. 1, the REIT reported in October.

Irvine, CA-based memory care provider Silverado also had good news in late October, when a court dismissed all criminal charges leveled against it by the Los Angeles District Attorney’s Office related to 14 deaths that occurred early in the COVID-19 pandemic. “It’s a great day for the industry as a whole,” Silverado President, CEO and Chairman Loren Shook said at the time.

CVS Health, the parent of long-term care pharmacy Omnicare, in the first quarter recorded a $349 million loss on assets held for sale associated with the Omnicare business. In August, CVS said that it was laying off 5,000 employees but did not identify whether any of the layoffs would affect Omnicare, which CVS said in November 2022 that it planned to sell. In November 2023, however, the company said a sale wasn’t expected “in the near term.”

Newsweek launches CCRC rankings

Newsweek became the latest recognition program for senior living operators when in November, with global market research and consumer data firm Statista, it recognized 250 US continuing care retirement / life plan communities via the announcement of the first-ever “America’s Best Continuing Care Retirement Communities 2024” rankings.

Unlike the US News and World Report “Best Senior Living” results first published in 2022, the Newsweek / Statista effort focuses only on CCRCs, ranks them and includes feedback from surveys that were open to anyone choosing to participate who met certain criteria and were willing to provide demographic information and email addresses for data validation purposes. The US News program, by contrast, rates various types of communities — independent living, assisted living, memory care and CCRCs — as “best” if they meet certain criteria based on the results of consumer satisfaction surveys of residents and their families conducted at participating communities. The communities are not ranked.

Attention from the lay press

Late in the year, the senior living industry was the target of two packages of articles published by the national lay media, and industry advocates responded.

In December, the Washington Post published “Memory Inc.,” about assisted living and memory care community residents who had eloped and died. Since 2018, the authors said, “more than 2,000 people have wandered away from assisted-living and memory-care facilities unnoticed or been left unattended for hours outside,” and 98 had died. Read how the industry responded here.

Those articles came on the heels of a package of articles published in November by the New York Times and KFF. That report, titled “Dying Broke,” scrutinized an industry pricing structure that adds fees on top of basic charges, to cover additional services such as help with activities of daily living, insulin injections and blood pressure checks. Read how the industry responded here.

Expect more scrutiny of the industry from the mainstream media as a “silver wave” of older adults thinks about moving into senior living in the coming years.

Stay on top of the news

McKnight’s Senior Living marked the 20th anniversary of its first print magazine issue in October and will continue the celebration in 2024. The magazine has been published every other month since February 2004, with digital and other aspects of the brand starting in 2015.

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Mt. Laurel, NJ-based Brandywine Living’s senior living management platform is being acquired by Roanoke, VA-based Retirement Unlimited Inc., RUI announced Wednesday.

Following the transaction, the combined company will consist of 59 communities with more than 6,739 independent living, assisted living and memory care units.

“Our team is proud of the company we have built over the past 27 years,” Brandywine Living co-founder, president and CEO Brenda J. Bacon said in a press release announcing the transaction. “Brandywine has touched tens of thousands of lives, and it was time to ensure that Brandywine continued to thrive going forward. During this transition period, the dedicated and caring team we have built at both the community and corporate levels will remain in place and I know will be as focused as they have always been on providing great care, service, engagement and fun to our residents.”

Bacon, a 2019 McKnight’s Women of Distinction Hall of Honor inductee and 2022 American Seniors Housing Association Senior Living Hall of Fame inductee for her long and illustrious career, chaired Argentum’s board from 2013 to 2015 and currently is a member of its board. The company’s communities frequently have been recognized for their creative efforts during the National Center for Assisted Living’s National Assisted Living Week activities.

Brandywine was founded in 1996. Its 31 senior living communities predominately are concentrated in New Jersey, with additional communities located in Connecticut, Delaware, Maryland, New York and Pennsylvania. The communities will continue to operate under the Brandywine Living brand name to ensure continuity for residents and staff members, RUI said.

The 40-year-old RUI currently manages 28 communities across the East Coast and has additional communities in development.

RUI CEO William Fralin and RUI President Doris-Ellie Sullivan, also a member of the Argentum board, will continue in those roles for the combined company. RUI said that key property- and corporate-level leaders from Brandywine will be blended with RUI’s leadership structure.

“We believe the alignment of our two companies’ cultures and missions, along with our shared partnership with Welltower, will aid in the integration of these well-located and market-leading communities into the RUI family,” Sullivan said.

RUI’s partnership with the Toledo, OH-based real estate investment trust began in late 2022 when RUI assumed management of the former Fountains at Washington House in Alexandria, VA. With the management change, RUI also unveiled the community’s new name, Elancé at Alexandria, which represented the first installment in RUI’s new luxury brand of Elancé communities. Since that time, RUI has continued to scale through acquisitions and transitions.

As of Sept. 30, Welltower had 99.4% ownership of the 29 Brandywine communities in its senior housing operating portfolio, according to a presentation posted on the REIT’s website. The communities had a total pro rata unit count of 2,704. The REIT was the largest owner of senior housing as of June 1, according to the American Seniors Housing Association’s ASHA 50 list for 2023, with 943 properties and a total of 95,281 units.

On a separate ASHA 50 list of the largest senior housing operators, the combined RUI and Brandywine would appear in the 28th position, based on the 2023 rankings and assuming no changes in unit numbers among other operators on the list.

Brandywine was No. 59 on Argentum’s 2023 list of largest senior living providers, and RUI was No. 72.

“RUI has been presented with a unique opportunity to merge two operations with shared values and tremendous talent. We believe this combination will be a dynamic success,” Fralin said. 

RUI is owned and operated by the Virginia families of Fralin and Waldon and is led by its third generation of Fralins and second generation of Waldrons.

The list below details some of the most popular columns that were posted and read between Jan. 1 and Dec. 18, according to our analysis. Here’s a chance to revisit those columns or read them for the first time.

• Most-read column by Editorial Director John O’Connor:

A new and needed direction for senior living

“Argentum’s president and CEO wants to do something that runs against conventional wisdom. It also happens to be brilliant,” O’Connor wrote May 11, shortly after Argentum’s annual conference had concluded. There, James Balda had called for better provider relations with Congress.

“Increasingly, the actions of Congress are affecting senior living in ways both subtle and obvious. …That alone is reason to be on good terms with lawmakers in Washington, particularly those with clout,” O’Connor wrote, adding that good relations also could help senior living in its quest to continue to be regulated primarily at the state level. Read more here.

Read additional columns by O’Connor here.

• Most-read column by Editor Lois A. Bowers:

‘The Golden Bachelor’ could be a golden opportunity

Is “The Golden Bachelor” another example of stereotyping and ageism? Or is the show’s outreach and focus on older adults a reason to cheer?

Bowers pondered those questions in her and McKnight’s Senior Living’s most-read blog of the year, in which she also discussed senior living community watch parties, researchers’ musings about the TV “reality show” and more.

“I’m hoping that the airing of ‘The Golden Bachelor,’ faults and all, will lead to thought-provoking, productive discussions about aging and ageism and that senior living residents, and older adults in general, ultimately will be more visible and celebrated,” she wrote Oct. 23. Read more here.

Read additional columns by Bowers here.

• Most-read guest column:

The big shift coming to senior living

“What’s going to happen to senior living when your best consumer segment — those high-income, high-net-worth boomers — don’t need you anymore? This question is especially important because we know they already don’t want what you offer.” That was the question posed and point made by Matt Thornhill, founder and CEO of a middle-market solution called Cozy Home Community, in an Oct. 23 guest column.

Thornhill encouraged readers to pursue “different, and less expensive” solutions to attract a potentially huge market. Read more here.

Read more guest columns here.

• Most-read marketplace column:

Sliding scale insulin for diabetic residents: Is it helpful or harmful?

Twenty percent of assisted living residents have type 1 or type 2 diabetes, and they are relying on their healthcare professionals to assist in managing their disease, Jered Yalung, PharmD, director of marketing and operations at Options for Senior America, wrote in a May 18 marketplace column.

Yalung suggested actions for senior living operators to take for residents with this chronic condition. Read more here.

Read more marketplace columns here.

Be part of the story

Interested in submitting a guest column or marketplace column in 2024? Find out how here.

And help decide our top columns of 2024.

Subscribe to our free flagship newsletter, the Daily Briefing, and our other free daily e-newsletters, by clicking on “Subscribe” in the upper right corner of our website, wwwmcknightsseniorliving.com, or via the “Have we got news for you!” box in the right column.

Also join us on our social media channels to be a part of the story next year.

McKnight’s Senior Living is on X, formerly known as Twitter, at @_McKnightsSL. Additionally, you can follow editors John O’Connor at @ltcritr, Lois A. Bowers at @Lois_Bowers and Kim Bonvissuto at @KimBonvissuto on X.

To join us on Facebook, visit www.Facebook.com/McKnightsSeniorLiving. Follow the McKnight’s Senior Living company page and join the group on LinkedIn. Find us on Instagram at https://www.instagram.com/_McKnightsSL/.

According to the Post’s research, more than 2,000 residents wandered away from or were “left unattended for hours outside” of senior living communities from 2018 to 2023, and 98 of them died. (Read this article to learn more about the response of industry advocates.)

It isn’t the first time the industry has been scrutinized by the national lay press, of course, and it won’t be the last.

In fact, the Post articles follow the November publication of a package of articles by the New York Times and KFF. That report, titled “Dying Broke,” scrutinized an industry pricing structure that adds fees on top of basic charges, to cover additional services such as help with activities of daily living, insulin injections and blood pressure checks. It also cited the growth of rate increases, the for-profit status of most providers, and the operating margins they see.

Other examples of somewhat recent unflattering coverage of the industry include a 2017 report by CNN that counted more than 16,000 cases of sexual abuse in assisted living communities and nursing homes since 2000 and, on a more local level, articles about the senior living industry in the Minneapolis Star Tribune and Atlanta Journal Constitution in 2017 and 2019, respectively.

Although such attention can lead to efforts to try to increase state regulation of operators, in a recent interview I conducted with Nexus Insights and National Investment Center for Seniors Housing & Care founder Bob Kramer (not about these media investigations), Kramer said he believes that the government’s “desire to invest the money to set up a federal regulatory apparatus is still going to be lacking,” although “there will be a lot of noise” about it.

A 2018 report by the Government Accountability Office certainly generated some “noise” when some federal lawmakers and consumer advocates said they would push for changes in assisted living because of the report’s findings. But the report’s to-do list primarily was for the Centers for Medicare & Medicaid Services and state Medicaid agencies related to state reporting of deficiencies in care and services provided to some assisted living residents.

Still, at a time when demographics mean that a larger number of older adults will be in the market for senior living in the coming years, operators can expect the scrutiny to continue.

As Kramer told me: “The reality is that there are good operators and not-so-good operators.” Even well-intentioned providers may find themselves challenged by staffing shortages, although many have limited move-ins in an effort to better align staffing and resident needs.

“The more the industry can articulate and, in a sense, hold itself accountable for higher standards of care, the better off the industry will be, because we don’t want to go the direction of skilled nursing,” Kramer said as I interviewed him on the occasion of McKnight’s Senior Living’s 20th anniversary. (If you haven’t seen the cartoon of him on the first-ever cover of our print magazine in 2003, you can see it here.)

And therein lies the opportunity.

Possible solutions are suggested in the Post coverage, among them training, increased vigilance and more accurate risk assessments. Industry advocates also point to their efforts to attain and maintain quality among providers.

“Our association has participated in multiple efforts to build sector consensus on assisted living quality measures and other topics,” LeadingAge President and CEO Katie Smith Sloan said Sunday in response to the Post’s coverage.

For instance, LeadingAge, Argentum, the National Center for Assisted Living and the American Seniors Housing Association in June announced that they had joined with the National Association for Regulatory Administration to develop guidance for the industry and resources for operators, regulators, policymakers and other stakeholders. Infection prevention and control was the initial focus of the effort, called the Quality in Assisted Living Collaborative. The work “will help the sector collaboratively address the most urgent issues,” Sloan predicted at the time.

On top of that effort, NCAL offers its National Quality Award program, and Argentum offers several certificate and certification programs, just to name a few quality-focused initiatives. And providers can pursue efforts outside of those offered by industry membership associations, such as assisted living accreditation and memory care certification through The Joint Commission.

Keep it up. The Post is. The media outlet promises to continue to report on the assisted living industry and is soliciting information from readers about their “experiences with elder care, assisted living and dementia care.”

Lois A. Bowers is the editor of McKnight’s Senior Living. Read her other columns here.