NIC Senior Principal Ryan Brooks called the results "a promising sign of relief," but noted that nearly a quarter of senior living operators surveyed said they have had to limit admissions due to staffing shortages.

According to NIC, employment in the skilled nursing sector remains 220,200 below pre-pandemic levels. The latest survey results indicated that competition from other industries (25%), an inability to hire nurses (21%), competition from staffing agencies (17%) and an inability to fill nurse aide positions (15%) are all contributing to the staffing crisis in senior living.

The ongoing labor shortage is contributing to rising costs—the use of staffing agencies can increase operating costs by 20%–that have been shrinking operators' NOI margins despite steadily improving occupancy rates at senior living facilities.

NIC's latest data showed that 38% of nursing care respondents said the cost of their property insurance has increased significantly, compared to two-fifths of independent living operators, 30% of assisted living operators and 25% of memory care operators.

Professional liability insurance costs also have increased, the survey found.

Managing costs has become priority number one for senior living operators. For those relying on agencies to fill staffing shortages, that's a tough row to hoe.

"Operators' bottom lines are being squeezed tremendously due to higher agency costs," Edward Pan, a Colliers first vice president who specializing in senior housing, told GlobeSt. "Operators are relying heavily on agencies to fill staffing shortages, adding as much as 20% to cost of labor compared to [an in-house paid staff]."

Some operators have seen their margins cut in half by rising labor costs, a few have seen them shrink to a near-breakeven point. Rent increases and rising care fees remain the remedies of choice for dealing with rising operating costs.

Rents surged by 4.7% YOY in the senior living sector in Q2 2022, the quickest pace in more than a decade. But by Q4, some were warning that affordability could impact on occupancy levels.

"Margins in this sector are such that increased costs must be passed along, which can impact affordability," Pan said. "Rising rents negatively impact occupancy recovery, especially in independent living."

"Operators are exploring several ways to manage increases, including the use of volunteers, partnering with non-profits and technology enhancements. But this sector is by nature a high-touch, very personal business and best practices will take time to react to and address the labor shortages," Pan said.