Employment in nursing care facilities grew by 4,500 jobs in January, while overall employment in health care rose by 58,000 jobs, beating the monthly average of 47,000 jobs added in 2022.
Jobs increased by 8,400 positions in continuing care retirement communities (CCRC) and assisted living facilities and were up by 60,700 from year earlier levels to 930,700 jobs.
Nationally, the unemployment rate fell to 3.4% in January, its lowest level since 1969 and below December’s already low rate of 3.5%, according to the Bureau of Labor Statistics. Meanwhile, non-farm payrolls rose by 517,000 in January 2023.
The average hourly earnings for all employees on private non-farm payrolls rose by $0.10 in January to $33.03, a gain of 4.4% from levels a year ago, but still lower than the increase in recent months.
“While goods inflation does indeed appear to be slowing, service inflation, largely driven by wages, continues to be worrisome,” wrote Beth Mace, chief economist at the National Investment Center for Seniors Housing & Care (NIC).
Inflationary pressures seem to be easing but not at a rate that is satisfying to the Federal Reserve, Mace said, noting that the Fed indicated a need for “ongoing increases” in rates.
The uptick in wages comes amid a decline in occupancy levels for nursing home facilities.
Separate from its analysis of the BLS data, NIC also reported that despite positive momentum in occupancy throughout 2022, skilled nursing occupancy decreased slightly in November due to a labor shortage in the industry, declining 12 basis points from October to end the month at 79.4%. There was positive momentum in occupancy throughout 2022 and it is up 593 basis points since the low (73.5%) point reached in January 2021.
“The staffing crisis in the sector is still a significant burden on skilled nursing operators. As staffing, wage growth, and general inflation pressures persist, operations for many operators will be under pressure but the long-term demand for skilled nursing services is expected to grow over time,” Bill Kauffman, senior principal researcher at NIC, wrote in NIC MAP Vision’s latest Skilled Nursing Monthly Report.
Meanwhile, both occupancy and Medicare revenue are down from earlier in the year when increased cases of COVID-19 resulted in an additional need for skilled nursing care. The three-day rule waiver and per day reimbursement for COVID-19 positive patients afforded nursing homes flexibility and financial support.
Medicare revenue mix increased but the Medicare revenue per patient day also decreased in November.
These trends have created challenges for operators.
On Friday, executives at healthcare real estate investment trust Omega Healthcare Investors (NYSE: OHI), said during an earnings call that given the ongoing challenges to occupancy and staffing, the Biden administration’s intention to end the public health emergency and discontinue the three-day rule waiver in May is “not particularly ideal.”
Omega is observing challenges across its large portfolio of skilled nursing communities, which includes about 900 properties across the United States and the United Kingdom, with 75% of the portfolio being skilled nursing/transitional care facilities.
Still, Omega’s occupancy is trending up, going from 74.6% a year ago to 78.3% in mid-January 2023. And Omega’s executives are hopeful that states will continue to increase Medicaid reimbursements.
“Labor costs continue to pose ongoing challenges, particularly in the widespread use of agency personnel, and many other operating expenses, such as food costs and supplies continue to increase in the face of inflationary pressures,” Omega’s COO Dan Booth said on the earnings call.
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