Staffing is a top priority for senior housing operators. From managing hourly employees and controlling labor costs, to recruiting, hiring and retaining a millennial workforce, the issues are big…and getting bigger.
Perkins Eastman, a global architecture and planning firm, recently examined the industry in their 2017 report The State of Senior Living: An Industry in Transition. Among the findings? The #1 concern keeping industry executives up at night is staffing.
And today, with the unemployment rate hovering between 4% and 4.5%, not only are operators facing staffing challenges, but so are developers and those working to bring new senior housing properties to market.
Because senior housing operators compete with other industries such as retail and food service for hourly employees, the low unemployment rate is stressing the employers in the market—including those that aren’t even open for business yet, as well as potential acquisition targets.
Staffing’s Effect on Building or Buying
There are numerous risks companies must account for when thinking about merging or acquiring new properties. Staffing is now counted among them, said Patrick McCormick, partner at Plante Moran, a certified public accounting and advisory firm that works with senior living developers, during a recent webinar.
“Do you have the right strategy to attract [employees]? And when do you go into the marketplace and really start looking at that?” said McCormick.
Organizations will have to decide whether to hire an entire team or keep existing staff in place, McCormick said, and each decision comes with a certain amount of risk.
Keeping existing staff in place also means absorbing its existing culture, compensation levels, benefits and more. If these risks are too great, they could cause an organization to bypass a merger. Similarly, an organization may believe hiring a completely new staff is not worth the risk either.
Ultimately, owners and operators looking into acquisition opportunities will need to closely consider existing local staffing pressures and whether there is room to improve recruiting and retention practices in acquiring a new community.
An Early Look at the Labor Market
Executives must consider the labor market when looking to expand or enter new markets. The question is, will senior living operators be able to hire enough local staff to run a new property?
According to Argentum, the industry will need to add about 1.2 million additional employees by 2025. Given natural uncertainties surrounding the future of the labor market, developers have to be sure they’ll be able to staff new communities.
“It’s a more significant risk today than it would have been three or four years ago,” said McCormick.
Some communities have experienced failure in local markets where staffing was not considered closely enough and occupancy struggled as a result. Particularly in markets where home values are well above average, it may not be affordable for staff to live nearby. Recruiting talent can actually be as important as attracting new residents in determining a property’s success.
Combating the Staffing Challenge
For those who are targeting recruitment and retention relative to new properties and acquisitions, there are some steps that can help alleviate senior care staffing shortages down the road:
- Conduct a thorough market study including an examination of local employment figures
- Seek expertise and onboarding software that helps in managing new employees
- Focus on a culture that will work to engage and retain employees once they have been hired and onboarded
If you encounter difficulty attracting and retaining employees, examine internal policies to present senior living and long-term care communities as more appealing places to work.