The good news that came out of the NIC Conference was that nearly everyone we talked with or listened to on the panels said that their agency use (and cost) had been in decline in 2022, with some 50% lower and others expecting to be out of the staffing pools by year end, other than some sporadic use to fill a gap, which was what they were always supposed to do. What they did not volunteer was by how much their in-house labor costs were rising as a result, when they could find employees to hire.
Labor is still the number one concern, and someone quipped that they did not even hear COVID mentioned once during the conference. Yes, wages are rising, but are they rising enough to attract all those people who left the workforce during the pandemic. We don’t believe we are there yet, but if the sector can get away with a few more 8% to 10% unit rate increases in their communities, we may just get there, but not for a few years.
And that was the overwhelming sentiment, that we are still a few years away from a full recovery as a sector. Yes, there are companies and communities that have reached 90% occupancy or better, but according to NIC, 40% are still below 80%. It is those communities that are significantly below 80% that will be the problem. They will not be able to raise rates as easily, pay the higher wages, increase census or complete the necessary capex to become competitive.
Labor is just one of the problems, as we heard of struggles with food and energy bills. Without some relief in the near term, margins will be stunted just as the sector needs them to expand. All of this contributed to a somewhat somber mood other than people getting out to see their friends and colleagues.
