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How the pandemic reshaped the financial outlook of the senior housing industry

April 10, 2024 | by ProviderCFO

The COVID-19 pandemic unveiled the fragility of many economic sectors, including the senior housing industry. This industry faced unprecedented challenges, which significantly reshaped its financial outlook. 

Before the advent of the pandemic, the senior housing sector was on an upward trajectory. The growing elderly population was a significant factor driving this trend. However, the pandemic has disrupted this growth, forcing a rethink of financial strategies and operational models.

The first and most apparent impact was a marked increase in operating expenses. The need to implement stringent health and safety protocols led to a surge in costs. These expenses included the procurement of personal protective equipment (PPE), increased testing, and enhanced cleaning procedures. The shift to telehealth services and the associated costs of technology and training also added to the financial strain.

Simultaneously, the pandemic sparked a significant decline in occupancy rates. Fear of contagion led many seniors and their families to reconsider senior living options, resulting in a decrease in move-ins. This drop in occupancy rates led to reduced revenues, further straining the industry’s financial health.

Moreover, the industry had to grapple with heightened workforce challenges. Higher staff turnover, increased sick leave and overtime, coupled with the need for additional hiring and training to ensure resident safety, compounded the financial pressures. 

However, it’s not all grim for the senior housing sector. The pandemic has also offered opportunities for financial resilience and innovation. The crisis has heightened awareness of the unique needs of seniors, particularly those in communal living environments. This recognition could spur investment in the sector, leading to financial rejuvenation.

One potential avenue for financial recovery is the increased adoption of technology. Virtual tours have become a new norm in the senior housing industry, helping to maintain engagement with prospective residents and their families. The rise of telehealth services has also opened up possibilities for new revenue streams.

Moreover, the industry is exploring partnerships and collaborations. For instance, partnering with healthcare providers can help senior housing operators mitigate some of the rising healthcare costs. Collaborations with local communities and businesses can also enable the creation of environments that enhance seniors’ quality of life, making senior housing more appealing.

Government funding and stimulus packages also played a crucial role in shoring up the sector’s finances during the crisis. Moving forward, policy support and advocacy will continue to be critical in maintaining the financial viability of the industry.

The pandemic has undoubtedly reshaped the financial outlook of the senior housing industry. It has underscored the need for resilience, adaptability, and financial prudence. The industry now faces the task of navigating this new financial landscape, balancing the critical need to provide safe and quality care for seniors with the financial realities of operating in a post-pandemic world.

Despite the challenges, the future of the senior housing industry is not bleak. The sector’s fundamentals remain robust. The aging population continues to grow, and the need for senior housing will persist. The industry’s ability to adapt and innovate will be key to overcoming the financial challenges and seizing the opportunities ahead.

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ProviderCFO was founded with a simple goal in mind: we wanted to expand the accessibility of top-flight accounting and financing services throughout the industry. Whether you’re looking to outsource an entire accounting department or simply need help automating your Accounts Payable and adding security to your cash management process, ProviderCFO has got you covered.

Since 2019, our unique shared service model has helped assisted livings, nursing homes, group homes, home cares and other direct care facilities improve their financial stability and optimize their ability to focus on care to their clients.

For more information on how the ProviderCPO can assist you, please call us at (763) 354-1113.