Transcript Generated by AI 00:01 Mark Parkinson here with Park Place, and today is our very first Parkview. 00:07 Parkview is a weekly segment that I'll be doing where I'll be talking about 00:12 something in the sector that I think you need to know about, 00:16 either some like big news event that's occurred that we need to discuss or maybe 00:21 some big trend that I think it's important for you to know about. 00:26 Parkview is made possible by the sponsorship of Capital Funding Group, 00:30 which is a great HUD lender and we certainly appreciate Capital Funding 00:34 Groups support. 00:36 My very first Parkview is going to be about why I'm bullish about the sector. 00:41 I'm very excited about our prospects for at least the next three to five to maybe 00:47 even like 7 years. 00:50 There are some phenomena that are coming together that I think are incredibly 00:54 helpful. 00:55 And let's start out by talking about the fact that we have now clearly and 01:00 completely recovered from the COVID crisis. 01:04 When the COVID crisis hit back in 2020, I think most of us spent the first six 01:09 months or so, among other things, wondering about whether or not the sector 01:13 would survive. 01:15 Would people ever come back to our buildings? 01:18 Would we be able to figure out how to cure this horrible plague that had 01:23 descended down upon us? 01:25 There were many sleepless nights and multiple ways that this could have gone 01:29 wrong, and I think a lot of us just didn't know 01:31 if it would last at all. 01:33 Well, fortunately, the vaccine came out and things started 01:37 to turn around towards the end of 2020, but we were still in a horrible spot. 01:42 Our census had been devastated, our workforce in many cases had left us, 01:47 and it wasn't clear at all that we would survive. 01:51 Well, fortunately we now know that we will 01:54 survive and in fact we will probably even thrive. 01:57 When you look at the occupancy chart that we now have up on the screen, 02:02 you can see that it has been a long run. 02:04 It's taken some time to do it, but over the course of the last three or 02:08 four years we have completely recovered our occupancy. 02:12 Second, and I think even, you know, more encouraging is our workforce has 02:17 come back. 02:18 At the very bottom of the pandemic, we had, you know, over 250, 02:23 000 workers that had left us. 02:25 We wondered if they would ever come back. 02:27 And if you look at the data that we receive from the federal government, 02:31 you can see it's taken some time, but our workers have come back. 02:36 So why am I bullish? 02:38 I'm bullish because I believe that we haven't just recovered, 02:42 but we will continue to do better in the future. 02:45 While since this is just now back to where it was when the pandemic started, 02:50 in all probability our census is going to continue to increase. 02:55 This is true for two reasons. 02:57 The first reason is that the aging of the population is finally going to help us. 03:03 Back in the mid 90s when Stacey and I opened up our first facilities, 03:06 people would often say, you know, Mark, you guys are so smart because there's all 03:10 these people getting old and they're going to need your services. 03:14 And for a while I would correct them and say, hey, 03:17 the fact that baby boomers are turning 55 or 60 or 65, 03:20 that doesn't really help us because the people in our facilities have an average 03:25 age of 83. 03:26 In fact, I used to say to Stacy, if we can just last until the year 2020, 03:30 we're going to be fine. 03:32 Well, that's proven to be the case. 03:34 Starting in the year 2020, the number of people that needing our 03:39 services increased a lot and starting next year, 03:42 the very first baby boomer will turn 80. 03:47 If you then look at the data for the years beyond that and the growth in the 03:51 over 80 population is dramatic. 03:53 As we sit here today, there are 14 million people in the United 03:57 States over the age of 85. 03:59 Years from now, there will be 18,000,000. 04:01 Five years after that there will be 23 million. 04:04 Five years after that, there will be almost double the number 04:07 that there are right now. 04:08 There will be a huge demand for our services. 04:12 The second reason that I'm bullish is that the number of nursing homes 04:15 continues to decline. 04:17 If you look at this chart, you will see that since the start of the 04:22 pandemic, we've had almost 900 nursing homes across 04:25 the country that have closed and only 300 that have been built. 04:30 So this becomes a matter of simple math. 04:32 With dramatically increasing demand, a huge number of additional people that 04:37 need our services and fewer rooms that are out there, 04:41 Census will continue to increase. 04:43 Now, I'm not saying that we're going to have 04:46 this dramatic bump up in census, but what I do believe is that over the 04:51 next three to five years we will increase our census about 1 or 1 1/2 percent a 04:55 year. 04:56 You might say to yourself, what does that really make very much of a 04:59 difference at all? 05:00 The answer is absolutely. 05:02 Each additional resident in a skilled nursing facility adds very little to the 05:07 overall cost. 05:08 You know, maybe there's a marginal cost for food, 05:11 a little bit of cost for nursing, but the marginal cost is quite low. 05:16 So almost all of the revenue from that additional census comes to our bottom 05:21 line. 05:21 And we're talking hundreds of thousands of dollars over the course of a year for 05:26 just a single resident. 05:28 So after having gone through the scare of our life, 05:31 wondering if we would even survive, we're sitting here now in pretty good 05:36 shape, and I think that things are going to be 05:39 even better in the future. 05:42 It will be incumbent upon us to utilize these additional resources that we have 05:46 to continue on our journey for quality care. 05:50 But together we can create a terrific scenario where we can both make money and 05:55 provide quality care at the same time. 05:59 In the next segment, I'm going to be talking about how things 06:02 could go wrong, what could derail us from this? 06:04 But for now, let's just bask in the idea that we're in 06:08 the right space right now. 06:10 Thank you very much for listening and thank you for joining Park Place.
