Recruiting, hiring, and maintaining qualified staff has been an ongoing issue within the senior living/skilled healthcare industry for several years. Though problematic before the COVID-19 pandemic, the events that unfolded in 2020 served only to elevate the problem to crisis level.
Many senior living/skilled care facility operators have reported that staffing is one of their top concerns when it comes to future growth. With approximately 10,000 baby boomers reaching retirement every day until the year 2030, “The problem of staffing senior living/skilled care facilities isn’t one that is going to solve itself any time soon,” said Cambridge Realty Capital Managing Director Anthony Marino.
Rather than ignoring the elephant in the room that is staffing issues, Marino suggests that operators be direct and frank with lenders about the true picture of current staffing in their facilities, as well as historical barriers they have faced in recruiting or maintaining appropriate staffing levels. “A seasoned lender with industry-specific experience such as Cambridge Realty Capital can work with owner/operators to identify and understand their facility-specific staffing expense numbers, what should be considered normalized labor expenses and how to anticipate future needs.” Marino also added that “not all nursing homes handle staffing the same, and some operators do it better. Those operators should be rewarded in the underwriting, and we as a lender should take the time to understand these expenses in more detail.”
Marino went on to highlight that, from the perspective of a lender, there are five major points that lenders want to understand and borrowers should be prepared to address:
- A historical analysis of staffing costs, during COVID (2020 through 2022) and current, and reconciling any differences.
- The effect of agency nursing, if any, on the project.
- How the operator has, in the past, overcome struggles finding nurses. “This,” Marino added, “is especially key with rural facilities.”
- Unique solutions to staffing issues that have been successful in the past as well as considering some creative solutions for future implementation. Some of these may include same-day pay, creative retention bonuses, partnering with educational organizations to recruit nurses right out of school, and accessing international labor pools.
- Recently implemented staffing requirements by the state (where applicable) and how they are/will affect staffing expenses.
By being candid with lenders about staffing, borrowers can identify what has been working well (and which may result in faster closing times, eligibility for greater funding, or other potential perks) and where improvement might be beneficial or necessary. “Addressing staffing issues, both current as well as what may arise in the future, can boost an operator’s chance of financial success in the long term” Marino finished.