The senior living industry is facing unprecedented challenges due to a growing staffing crisis. Rising costs and a limited labor supply have left many senior living leaders grappling with how to navigate these turbulent times. In this paper, we explore the key challenges, financial impacts and risk management solutions to address this pressing issue.
Key challenges
- Recruiting and retaining skilled care workers remains a significant challenge for senior living operators. Over half of the workforce comprises care aides, nurse assistants, licensed practical nurses (LPNs), licensed vocational nurses (LVNs) and registered nurses (RNs), putting operators in direct competition with other healthcare providers for qualified staff.
- Workforce demand is outpacing population growth. While the US population is projected to grow by just 4% by 2033, the population over age 75 and senior care resident base are expected to grow nearly 50%. By 2033, the US will need 660,000 more workers in core roles to meet the demand for senior housing and skilled nursing care.1
- Retaining existing talent is becoming increasingly difficult, straining relationships between managers and staff.
- Nearly half of US states are nearing a caregiving emergency, with the senior care sector experiencing the most severe labor shortages.2
- Skilled nursing facility employment levels dropped 7.6% from 2016 to 2024.3 This decline is exacerbated by the rapid aging of the American population.
Financial impact
- The staffing shortage has forced many operators to depend on expensive staffing agencies, placing significant strain on budgets.
- Many operators are reducing admissions due to a lack of available workers, impacting revenue and limiting their ability to serve seniors in need of care.
- Labor shortages have led to higher risks associated with less-trained temporary workers and increased claims (e.g., improper care). This has resulted in rising premiums for professional liability and workers' compensation, with many operators shifting to Excess and Surplus (E&S) insurance markets.
- Communities with staffing ratios below state requirements are experiencing insurance premium increases compared to well-staffed counterparts.
- As of 2024, 72% of nursing homes reported labor levels below pre-pandemic levels, leading to increased reliance on overtime and untrained temporary workers.4
Risk management solutions
To address the staffing crisis and its associated risks, senior living operators can implement the following strategies.
- Leverage advanced AI tools to optimize staffing schedules, reduce overtime and improve workforce efficiency.
- Create internal staffing pools to reduce reliance on costly external agencies.
- Develop partnerships with nursing schools to create a pipeline of qualified applicants.
- Build robust retention programs that focus on employee satisfaction, career development and competitive compensation.
- Implement integrated systems and real-time performance tracking to achieve more with fewer resources.
- Use predictive analytics to anticipate staffing needs and improve care planning.
- Work with insurance brokers to explore tailored coverage options that address staffing-related risks and reduce premium costs.
- Invest in training programs for temporary and less-experienced workers to mitigate risks associated with improper care.
- Offer flexible scheduling and remote work options for administrative roles to improve work-life balance.
- Provide mental health resources and support to reduce burnout and improve employee retention.
Conclusion
The staffing crisis in the senior living industry is a multifaceted challenge that requires innovative solutions and proactive risk management strategies. By leveraging technology, building strong partnerships and focusing on employee retention, senior living operators can navigate these challenges and ensure the long-term success of their communities.
For more information or assistance in developing tailored risk management strategies, please contact your Gallagher representative.