Non-Profit Senior Living Rates Surge in 2023, Surpassing Some CFOs’ Expectations
By Nick Andrews | May 1, 2023
Monthly rate increases have in 2023 outpaced increases in previous years — and, they have outpaced what the financial leaders of senior living non-profits projected in the fall of 2022.
More than 250 chief financial officers from nonprofit senior living organizations predicted that monthly rates would go up by about 5% in 2023. However, data from the 2023 Spring Ziegler CFO Hotline, released Monday, revealed that the average increase was more than 6.3% with a median of 6% as of April.
The highest reported resident rate increase for 2023 was a whopping 33%, according to the latest CFO Hotline report.
With the rate increases, slightly more than 68% of respondents said they have already or plan to enact an increase to entrance fees in 2023.
An enormous percentage of study participants – 91.2% – reported that they did not foresee a mid-year increase this year. But while the nonprofit sector’s heads of finance aren’t anticipating a mid-year increase in rates, many (68.1%) are planning on or already have initiated entrance fee increases this year.
This comes after rate increases in the for-profit segment of the industry also neared or surpassed historic levels.
As has been the case in previous reports, the survey also gathered written responses from respondents.
One person who took the survey said that “continued across-the-board inflation, coupled with state-mandated minimum wage increase, [is] putting extreme pressure [on the] cost structure, with few options to mitigate other than raising rates and evaluating service delivery options in IL.”
And while the increase in rates was historic, that doesn’t mean the higher rates made up for inflationary pressures.
“Our historical rate increases have not kept up with price and inflation increases which means it’s too late to do a big catch-up,” an anonymous CFO wrote in the survey. “If we were to truly price our R&B today, the increase could cause a significant impact on the census. And if our competition did not raise rates, it could really price us out of the market.”
Another wrote that “We already wish we had increased the fees a bit more.”
“We have increased entrance fees by about 15% over the past 18 months with minimal market pushback to better align with rapid increases in home prices … we did outsize monthly fee increases as well again with minimal pushback as residents understood the inflationary market forces at work,” the anonymous CFO said.