Q4 2023 Brookdale Senior Living Inc Earnings Call
Participants
Jessica Hazel; Investor Relations; Brookdale Senior Living Inc
Cindy Baier; President, CEO & Director; Brookdale Senior Living Inc.
Dawn Kussow; EVP & CFO; Brookdale Senior Living Inc.
Ben Hendrix; Analyst; RBC Capital Markets, LLC.
Joanna Gajuk; Analyst; BofA Securities
Josh Raskin; Analyst; Nephron Research LLC
Presentation
Operator
Good morning, all, and welcome to the Brookdale Fourth Quarter 2020 Earnings Call. All lines have been placed on mute during the presentation portion of the call with an opportunity for question and answer at the end. If you'd like to ask a question, please press star followed by one on your telephone keypad. I would now like to turn this conference call over to our host from Brookdale's Investor Relations team.
Kathy?
Jessica Hazel
So thank you and good morning. I'd like to welcome you to the fourth quarter 2023 earnings call for Brookdale Senior Living. Joining us today are Cindy Baier, our President and Chief Executive Officer, and Dan Caruso, our Executive Vice President and Chief Financial Officer. All statements today, which are not historical facts, may be deemed to be forward-looking statements within the meaning of the federal securities laws. These statements are made as of today's date, and we expressly disclaim any obligation to update these statements in the future.
Actual results and performance may differ materially from forward-looking statements. Certain of the factors that could cause actual results to differ are detailed in the earnings release we issued yesterday as well as in the reports we file with the SEC from time to time, including the risk factors contained in our annual report on Form 10 K and quarterly reports on Form 10 Q. I direct you to the release for the full Safe Harbor statement. Also, please note that during this call, we will present non-GAAP financial measures for reconciliations of each non-GAAP measure from the most comparable GAAP measure. I direct you to the release and supplemental information, which may be found at brookdale Investors.com and was furnished on an eight K yesterday. Now I will turn the call over to Cindy.
Cindy Baier
Thank you, Jessica, and good morning to all of our shareholders, analysts and other call participants. Welcome to our fourth quarter and 2023 year end earnings call, we started 2023 with a clear vision, an intense focus and a commitment to deliver positive results. This commitment extended beyond achieving positive operational and financial outcomes. It also encompassed fulfilling our overarching priority, which is the health and well-being of our residents and associates. We dedicated ourselves to ensuring that we had created the right plans and initiatives for the year had clearly communicated, while these were the most important priorities and have the right people in place to effectively meet our objective. But our efforts didn't stop with our plans.
Our leaders focused intensely on achieving our objectives work together as a team and adjusted our tactics as new information became available for this. I'm extremely grateful to our team for their leadership and their efforts. And I'm proud to say that the result was an incredibly strong year, marked by more residents who chose to be part of a Brookdale community, which led to greater occupancy, significant improvements in our operations and robust financial growth. Although complete recovery is still ahead of us with each quarter of 2023 we continue to build a solid foundation that paves the way for sustained growth for the fourth quarter. We are pleased to report another quarter in which both RevPAR and adjusted EBITDA achieved or exceeded our previously provided guidance.
Additionally, by remaining focused on our key strategic priorities, we delivered a number of positive outcomes throughout our community operations, our real estate portfolio and our financials. Same-community RevPAR increased approximately 10% over last year's fourth quarter on positive occupancy and RevPAR growth.
By pursuing RevPAR through a balance of occupancy and rate. We delivered favorable top line results in the fourth quarter, we maintained the positive margin improvements we have achieved throughout 2023, while ensuring that we continue to meet our residents' needs, provide high-quality care and personalized service and remain in compliance with applicable regulations through RevPAR growth and appropriate expense management.
Same-community adjusted operating income grew 37% over the prior year fourth quarter in addition to these financial accomplishments, we once again achieved meaningful progress towards our leadership, retention and associate turnover goals. This is critically important because our business is all about people serving people year over year. Retention rates for our key three community leadership roles increased 190 basis points and full-time hourly associate turnover improved by 910 basis points from the prior year fourth quarter. I am incredibly proud of the progress we are making in this critical area of the business.
Lastly, as reported in December, we completed two financing transactions and sold our remaining equity interest in our home health and hospice venture. Dan will share the specifics, but I want to recognize our Brookdale team for the successful completion of these transactions, particularly our Treasurer, George Qix and to share my gratitude toward each of the counterparties as we close out 2023.
I would like to highlight some notable accomplishments that significantly contributed to our remarkable results this year was pivotal in refining our operations to favorably impact our performance as we further recover from the pandemic while continuing to support consistent and high-quality resident experiences. We began the year with a strategic rebuild of our senior leadership team. These changes while incredibly difficult for central for matching our organizational structure with our business priorities and streamlining decision making.
We then evolved the executive director role to emphasize a stronger growth mindset, combining both mission and margin and underscoring strong business acumen for the incumbents and future community leaders, all the while maintaining our focus on driving resident satisfaction and providing high-quality care and services. This led to some turnover in 2023, but it was a necessary step to foster a culture of excellence and continued effectively delivering our mission. And by year end, these changes have started yielding noticeable positive improvements at the community level.
We further supported a growth mindset by introducing new training for our community and field leaders to provide alignment across our core priorities and support operational excellence that would enhance not only the business, but importantly, our overall resident and family satisfaction to attract, engage, develop and retain the best associates. We piloted and launched several new processes and programs that resulted in outcomes like the improved retention and turnover that I spoke to by hiring associates who are dedicated to our mission, extending the length of employment of our Brookdale community leaders and hourly associates and increasing the number of shifts staffed with full and part-time Brookdale associates rather than contract labor.
We are building stronger teams that will have a favorable impact for years to come. I am so pleased with the community level successes we have already seen from these improvements. We remain committed to continuous improvement and are confident in our plans for further progress. Our annual resident and family survey, which we completed in the fourth quarter and which received roughly 45,000 responses once again provided invaluable insight, residents and family satisfaction has consistently been a key priority at Brookdale. This priority became even more critical in 2023, given the rate increase we implemented at the beginning of the year. I'm proud to report that our total Company engagement score improved by a significant amount with positive increases across all of our product lines.
Additionally, we are grateful, but the vast majority of our residents responded overwhelmingly that they would recommend or highly recommend their community to friends and family. These positive results reflect the great work of our dedicated associates, and we will build upon this to ultimately achieve our desired overall satisfaction goals for Brookdale residents and their families. We are always extremely appreciative of the meaningful insights received from regular resident and family engagement, and we'll continue to focus on this critical area.
Another accomplishment in 2023 was the expansion of the Brookdale Health Plus program, which has demonstrated remarkable success in improving resident health outcomes through its innovative care delivery model. Independent evaluations confirmed that residents in our health plus communities experienced fewer urgent care visits and hospitalizations, underscoring the effectiveness of our proactive and preventive care measures planning for our next Brookdale Health Plus expansion is well underway, and we expect to have nearly 130 communities in this industry leading clinical program by the end of 2024, continued expansion of Brookdale Health Plus not only creates an integrated benefit for our residents, but also it creates value for many stakeholders and further establishes Brookdale's position as a market leader and industry innovator.
Also, in 2023, we continue to proactively manage our leased and owned portfolios to further improve our long-term financial position. This included negotiating favorable terms with two long-standing landlords as well as making strategic decisions about our portfolio, such as disposing of certain leased and owned properties that were no longer right for Brookdale through these transactions. We not only obtained additional landlord funded CapEx. We also secured favorable purchase options on certain communities that were previously not available to us. This will support future cash flows and enable us to further improve our own to lease portfolio mix in the years to come.
Lastly, as a result of our strong 2023 adjusted EBITDA growth, our annualized leverage decreased from 19.8 times at the end of 2022 to 11.1 times at the end of 2023. Throughout the pandemic and subsequent recovery period, we have successfully executed plans to manage our capital structure and maintain appropriate liquidity.
Our fourth quarter transactions are the most recent examples of this, combining a passion for successfully executing our mission. While focusing on delivering an appropriate margin is critical for our success. While our overarching priority remains the health and well-being of our residents and associates, cash flow and liquidity will continue to be our top financial priorities.
In summary, 2023 was a year of strong and steadfast execution of our strategic goals, solid operational improvements and meaningful growth towards full recovery in a moment, Don will share with you the measurable results of these efforts, which are significant.
While I'll now turn to our 2024 plans. As we look to 2024. Our expectations are simple, stay the course. We have worked incredibly hard to lay a strong foundation for future growth, and we intend to build upon the successful execution of our strategy. Our commitment is to continue to provide growth opportunities and rewards to our people while reinforcing the favorable initiatives and processes that we introduced in 2023. Brookdale remains a learning organization accordingly will take our learnings from 2023, and we will address and improve areas that require ongoing refinement in our continuous pursuit be the nation's first choice in senior living. We made remarkable progress last year, but driving meaningful change to an organization and reaping the full benefit of that change takes time.
We take pride in our accomplishments and we also see them as stepping stones towards our full recovery and achieving our ultimate potential. As such, our teams throughout the organization are incredibly committed to executing against our key strategic priorities guided our success and growth in 2023. These key strategic priorities for 2024 will remain first, get every available room and service at the best profitable rate second attract, engage, develop and retain the best associates and third, fund resident and family trust and satisfaction by providing valued high-quality care and personalized service. Through consistent execution of these, I believe we will grow occupancy and RevPAR deliver meaningful 2024 adjusted EBITDA growth and adjusted free cash flow improvement and support further shareholder value creation, all while continuing to grow resident satisfaction. I look forward to providing you with positive quarterly updates on our progress throughout 2024.
I'll now turn the call over to Don.
Dawn Kussow
Thank you, Cindy. Good morning, and thank you for being here today. We were very pleased to finish 2023 with another quarter of solid operating results and financial growth. Beginning with fourth quarter revenue residency revenue grew 8.9% over the prior year quarter. Fourth quarter consolidated RevPAR growth was 10% over the prior year, which is in line with the top of our previously provided guidance range. Our year-over-year RevPAR growth was attributable to a 130 basis point increase in weighted average occupancy and an 8.1% RevPAR increase.
This marked our ninth consecutive quarter of year-over-year occupancy growth. Sequentially, these results represented an 80 basis point increase in occupancy and a half percent decrease in RevPAR compared to the third quarter we are pleased to report that this sequential occupancy growth was meaningfully above normal pre-pandemic seasonality for this period. Fourth quarter RevPAR was slightly below our expectations due to resident mix disposition timing and our competitive response on pricing.
Our same-community portfolio performed largely in line with the consolidated portfolio in the fourth quarter, including RevPAR growth of approximately 10%, a 130 basis point increase in weighted average occupancy and approximately 8% rev par growth over the prior year. We are pleased with these top-line results.
Moving to fourth quarter expenses, consolidated facility operating expense was $530 million, while same-community facility operating expense, as shown on page 8 of our financial supplement, was $513 million. Fourth quarter. Same-community adjusted operating income grew by 37% over the prior year fourth quarter, significantly outpacing our peers. This was our ninth consecutive quarter to deliver year-over-year adjusted operating income growth. We are very proud of this progress as we diligently work to return to pre-pandemic segment operating margins while continuing to ensure that we meet our residents' needs, provide high-quality care and service and remain in compliance with applicable regulations.
Same-community fourth quarter adjusted operating margin was 26.3%, which represented the highest reported margin rate since the initial impact of the pandemic. This solid progress as a result of favorable outcomes from the 2023 accomplishments Cindy spoke to including continued RevPAR growth and appropriate expense management.
Fourth quarter general and administrative expense was approximately $1 million lower than the third quarter. Cash operating lease payments were $65 million, which is in line with our previously provided expectations. Fourth quarter adjusted EBITDA was $85 million and exceeded the top end of our guidance range by approximately $3 million. This positive result was due to a combination of strong flow through of fourth quarter revenue and modest favorability in G&A.
Compared to the prior year fourth quarter, adjusted EBITDA grew 83%. This remarkable growth was despite the $13 million quarterly impact of the changes in lease classification and the $5 million in government grants and credits recognized in the fourth quarter of 2022 versus no grant income in the fourth quarter of 2023, adjusted free cash flow was negative $21 million for the quarter.
Normal seasonal working capital, specifically annual real estate tax payments was the primary driver of the variance to the third quarter. Fourth quarter nondevelopment capital expenditures net of insurance proceeds were $36 million. For the full 2023 year, we incurred approximately $26 million in reimbursable remediation costs and received approximately $24 million of insurance reimbursement related to the 2022 natural disasters.
As of December 31, total liquidity was $341 million. The primary driver of the $65 million sequential decrease in quarter-end liquidity was related to the refinancing transaction we reported in a press release on December 27th. In the December press release, we announced four completed or pending capital markets transactions. I'll speak to each of them briefly.
First, we obtained a $180 million agency loan under an existing master credit facility agreement with Fannie Mae. The loan is secured by non-recourse first mortgages on 47 communities. It also secured another larger tranche of debt with a later maturity. The loan has a fixed interest rate of 5.97% and a borrower provision, which allows for potential additional proceeds in 2024.
As communities in the loan continue to recover. We use proceeds from the $180 million loan, coupled with cash on hand to repay a $260 million loan, which was set to mature under the credit facility in September 2024.
With this transaction, we cleared our maturity runway for the next 18 months and right-sized the latter tranche of the existing loan. We were very grateful for Fannie Mae's partnership in this transaction. In the second transaction, we amended our existing revolving credit agreement. We've increased the commitment by up to $20 million and extended the agreement to January 2027 with additional extension options thereafter.
Third, we sold the remaining 20% equity interest in our home health and hospice unconsolidated venture for aggregate proceeds of $27 million. And fourth, as part of the press release, we noted plans for a new financing transaction. Earlier this month, we completed a new financing transaction to obtain $50 million of bank debt, which matures in February 2027 with two one-year extension options. This property level mortgage financing is on 11 previously unencumbered communities and carries a variable interest rate of 350 basis points over sulphur. We are very pleased with the outcome of each of these transactions and believe they are examples of our continued proactive management of liquidity and our capital structure. Our next debt maturity without extension options is September 2025.
Cindy walked you through some of our 2023 accomplishments, thanks to the hard work of our approximately 36,000 associates, we have delivered measurable positive results in 2023. I'll share a few of the highlights. As of 2023 year end, weighted average occupancy has grown a total of nearly 900 basis points from the start of the pandemic recovery.
Full year same-community RevPAR grew 11.4%, which significantly outpaced our peers. Same community adjusted operating income, which excludes government grants, grew 43% over the prior year, supporting a 580 basis point improvement in adjusted operating margin. On a per available unit basis, our same-community adjusted operating income has reached 92% of the 2019 same-community adjusted operating income we reported given the significant runway still available to grow occupancy. We believe this reflects a very strong recovery.
Lastly, adjusted EBITDA grew 39% over the prior year, while adjusted free cash flow improved 76%. This was despite $71 million of higher grant income in the prior year and the $41 million impact of the two changes in lease classification. I am proud of these results and deeply appreciative of our team's efforts that went into achieving them.
Turning to our first quarter expectations. In yesterday's press release, we guided to first quarter RevPAR growth 6.25% to 6.75% over the prior year and adjusted EBITDA in the range of $90 million to $95 million. There are a few considerations I'd like to provide specific to these guidance ranges.
Regarding resin tire, we anticipate first quarter weighted average occupancy will reflect a normal seasonal trend for this period. As a reminder, pre-pandemic, the first quarter generally declined sequentially compared to the fourth quarter. We saw this normal seasonality returned in the prior year first quarter, and we have built this expectation into our guidance.
January weighted average occupancy was 78%, a 140 basis point increase over the prior year January. Additionally, we implemented a lower January first, in-place resident rate increase than in the prior year, but higher than historic norms. We remain focused on ensuring appropriate pricing to match the services we deliver in our communities and believe our annual pricing increase appropriately addresses our expected labor costs, which is the most significant portion of community operating expense as well as normal inflationary increases on food supplies and utilities in addition to interest rates, which remain elevated regarding our adjusted EBITDA guidance, while it has been more normal course for me to note sequential variations in expectations for this particular quarter, I believe noting a few considerations compared to the prior year first quarter would be more helpful.
First, there will be an incremental day this year, specifically Leap Day, which results in higher expense with only a minor impact on revenue. Second, given the timing of a 2023 change in lease classification through the second quarter of 2024 there will continue to be a year-over-year impact to adjusted EBITDA specific to the first quarter, this is a $7.4 million year over year impact. As a reminder, this lease accounting change, decrease adjusted EBITDA, but has no impact on adjusted EBITDA, a standard and widely used non-GAAP valuation metric and no impact to adjusted free cash flow.
Third, in the prior year first quarter, we recognized $2 million in grant income and our guidance does not assume any grant income in the first quarter of 2024.
Lastly, while we are still fully assessing the total cost of needed maintenance and repairs, we currently estimate the expense impact from the two January winter storms to be approximately $2 million. This estimate is reflected in our adjusted EBITDA guidance range. I am very proud of the progress our team has made in 2023, and I'm looking forward to our continued success in 2024.
I'll now turn the call back over to Cindy.
Cindy Baier
Today, standing on the other side of this remarkable year, I am not just proud of what we've accomplished. Also more determined than ever to continue on our path of sustainable growth for the benefit of our residents, associates and shareholders. The future holds even greater opportunities, and we are fully committed to seizing them and building a stronger Brookdale so that we may serve the need of more seniors for years to come.
I'll close by saying thank you.
Thank you to our residents who call Brookdale home to our associates who are dedicated to the health and well-being of our residents and to our shareholders for their continued partnership, trust and support. Operator, please open the line for questions.
Question and Answer Session
Operator
(Operator Instructions) Ben Hendrix, RBC Capital Markets.
Ben Hendrix
Good morning. Wanted to drill into your first quarter guidance comments a little bit more. The RevPAR range certainly appears consistent with historical seasonal occupancy and occupancy trends that we saw pre-pandemic were thinking a step down in the 80 basis points range, give or take. That said, the December into January, occupancy held up a little bit better than last year, certainly. So on a month end basis, I just wanted to see if there could be some conservatism in there given the occupancy momentum that Dan called out through the second half of 2023 and what you've seen into January? And then more broadly, just any updated views on the path back to that pre-pandemic 4Q 19 level occupancy and they were targeting? Thank you.
Dawn Kussow
Yes, good morning, Ben. This is Dawn. Thanks for the question on how we're thinking about it is yes, we did see our January occupancy went down 30 basis points as opposed to 40 basis points last year. But what we would say is we're continuing to our expectation is continuing to follow that historical pre-pandemic trend for the full first quarter. And as far as on full year occupancy, what I would say is we are continuing this year, as Cindy mentioned in her prepared remarks. To focus on getting every room in service at the most profitable rate. So expectations would be that we would continue to grow occupancy through 2024.
Cindy Baier
And if I go to the longer term, Ben, this is Cindy. I would just say that we were really, really pleased to finish 2023 with another quarter of incredibly solid operating results and financial growth. And we believe that we have built a very solid foundation that has paves the way for sustained growth. And so we're looking forward to welcoming new residents into our communities extending the length of service for our associates and focusing on providing quality services, which well help us achieve our long-term objectives as quickly as possible.
Ben Hendrix
If I could just add on a quick one on our periodic labor trackers suggest a pickup in job postings late in the year, which is consistent with the strong occupancy. I wanted to get your thoughts on just the just the full-time labor cost expectations that you're thinking about in guidance and through the through the rest of the year and there could be some some added on-boarding costs in the first quarter?
Dawn Kussow
Yes, I'll start. And I think, Ben, how we're thinking about our labor cost is we have gotten so much of our contract labor out in 2023 that the premium labor savings in 24 would be something less than in 23. However, what we would expect is we will on the productivity of our labor will naturally get better as we increase our occupancy. And Cindy mentioned in her prepared remarks about the focus on training and our focus on retention and turnover. And as we see that improve, we would expect to have increased productivity there as well.
Cindy Baier
And the one thing that I would just add is we definitely see that the labor market continues to be competitive. And there are some challenges, particularly in nurses and certain hourly positions like caregivers and CNAs. But there is definitely a stabilization in the labor market, which has resulted in less labor market churn. And so when you think about that, there will be more muted inflation in labor costs on a per employee per hour basis than we saw in prior years. Thank you.
Operator
Joanna Gajuk, Bank of America.
Joanna Gajuk
Hi, good morning. Thank you so much. So I guess first to follow up on the on the pricing. So I guess we just talk about occupancy. So pricing, you made a comment around the pricing be meal less than last year, but above the historicals. But you also mentioned in Q4 some activity around a competitor competition or competitive activity when it comes to pricing. So on can you elaborate a little bit more what's going on is there are just some markets where I guess you have to be more competitive and kind of what do you assume going forward when it comes to this dynamic. And maybe just to confirm, I guess the pricing outlook seems of is the guidance implies maybe mid-single digits increases or so?
Dawn Kussow
Yes, Joanna, this is Dan. What I would say is certainly when you're looking at our risk core for the fourth quarter, it was impacted by the competitive market and the reaction to those competitive markets as well as disposition and a little bit of our product mix speculation coming into the first quarter is that, you know, as we put out for January first, price increase in effect that our expectation is that we would continue to grow our RevPAR.
Cindy Baier
And let me just add to what Dawn said by saying, I'm really pleased with the way that our pricing strategy has worked out for 2023. And if I look back for the whole year and you see the full year, RevPAR was 11.4%. That significantly outpaced our peers. So what that tells me is that we have the right balance for Brookdale of price and occupancy to get that outsized performance.
Joanna Gajuk
Thank you. And if I may just another follow up when it comes to, I guess, your outlook from and EBITDA and how should we think about the impact of the lease exits when it comes to say, you know, our run rate of rent expense and any anything else about EBITDA or occupancy impact from those lease exits that occurred in Q4.
Cindy Baier
So and I think you asked the question that's on many people's minds. What I would say is sitting in our shoes today, I'm very excited about the optionality that lease expirations give us at Brookdale the way that I see is no matter what happens with the lease. It's going to be good for our shareholders. If the assets are performing well, then we can extend the lease and continue that if they're not, we can choose not to extend the lease and and go forward or we may end up with a situation like we have with LTC where we ultimately chose not to extend the lease. That was a 35 asset lease with LTC. But ultimately, we ended up re-leasing 17 of those assets under a favorable lease, which gave us on CapEx support as well as favorable purchase options. So as we win tails, we win.
Joanna Gajuk
And then on the -- so that was actually my question in terms of this LDC. and in particular the impact to the rent expense, I guess, going forward?
Dawn Kussow
Yes, Joanna, this is Dawn. What I would say is on the impact of the 18 LTC dispositions, we would expect that to be modestly favorable as it relates to 2024.
Joanna Gajuk
So you're talking about the kind of annual rent increases, but I was also thinking weather there is material impact when it comes to just not having these 18 leases going forward?
Dawn Kussow
Yes, I think I think that that's what we would say from an adjusted EBITDA perspective, it would be modestly favorable for those leases going away.
Joanna Gajuk
Okay, thank you. And if I may another question, different topic, I guess. So in January, there were some hearings in Congress focus on the assisted-living facilities and they talk about quality of care, lack of transparency and standards. And I guess there's the Special Committee on Aging that called for a Government Accountability Office GAO study on this topic. So kind of your thoughts around that in terms of, you know, what are the risks? It could be some efforts to maybe come up with some staffing requirements or many or other requirements for the operators?
Cindy Baier
Let me start by just saying at Brookdale, the health and well-being of our residents has always been our top priority, and we are dedicated to providing high-quality care and services to residents and their families. As a company, we're honored to have enrich the lives of hundreds of thousands of seniors over the last decade and our communities have been recognized as some of the best in the nation. As an example, in the U.S. News & World Report best Senior Living's ratings for 2023. Crypto has more senior living communities in assisted living and memory care communities recognized than any other provider for the 2nd year in a row.
Additionally, Brookdale Titan is number one in customer satisfaction rankings in both 2020 and 2022 as recognized by J.D. Power for assisted living and memory care. It is true that Brookdale is one of several organizations that were contacted by the Special Committee on Aging, Senator Bob Casey, and we have provided a response or an advocate for seniors, and we're willing to partner with others to serve the best interest of residents and promote assisted living in the industry. We take great pride in serving our hundreds of thousands of residents and communities across the country over the last decade. At this point, it's too soon to tell what the outcome of the inquiry could be. But I'm very comfortable that our focus is and has always been providing quality care.
Operator
Joshua Raskin, Nephron Research.
Josh Raskin
Thanks. Good morning. I wanted to go back to the comment Dan made about the 92% of pre-pandemic same-store operating income of 92%, just better understand what that was. Is that is that on a per unit basis on a per occupied room or per available room? And then how do you sort of juxtapose that with the cost of capital, where do you think returns are versus where they were pre-pandemic?
Cindy Baier
Well, let me start by saying that and this is Cindy. Let me start by saying that we still have the recovery ahead of us. And so senior living communities operate most effectively at that 80 plus percent occupancy rate. So that is still ahead of us, but Dawn can address the 92% that you referenced in our prepared remarks.
Dawn Kussow
Yes, just this is done on the 92% was on available room basis, and that's shown in the in our supplement on the same community side. So you can reference there Okay.
Josh Raskin
I'll take a look at that. And then you guys have referenced, as you know, pre pandemic, 84.5% total occupancy, I think about 600 basis points off of that. I think it's a little bit less if you look at just the AL side. So what's a reasonable timeframe as you think about that as a target is that? Is that a three year timeframe? Is that take longer? Just trying to figure out the cadence of occupancy improvements?
Cindy Baier
What I would say, Josh, is our goal is to recover as quickly as possible. I think there are a number of factors that will impact the timing of our recovery. First, we're seeing incredibly strong supply and demand demographics with more seniors entering our target market this year than ever before. We're seeing a very muted supply environment given the constraints of the pandemic on our industry as well as capital tightening. And then I would say that the Brookdale differentiation is continuing to grow.
We're very excited about Brookdale plus. We're excited about the quality care that we're providing. And so our goal is to serve as many seniors as we can as quickly as like as we can. But it's it's too soon to comment on exactly how long that full recovery is going to take Okay.
Josh Raskin
And if I could sneak a last one in you actually just mentioned at Brookdale Health Plus, I'm curious on the economics of residents that are enrolled in, I guess, sort of the program. I don't know if that's community-based or if that's I assume that's room by room. Was there a difference in the economics of the margin of that individual resident is there a difference in length of stay? Maybe any just sort of economic data that would be helpful for us?
Cindy Baier
So there is no incremental cost to a Brookdale on resident power for telehealth plus. We've priced it as part of the care charges in that particular community. And one of the things that's exciting about Brookdale Health Plus is it is an innovative care model designed to close care gaps. And so when we put into a community, we completely changed the operating protocols of that particular community, which has resulted in sort of 78% fewer urgent care visits compared to similar residents living outside of Brookdale and 36% fewer hospitalizations compared to similar individuals living outside of Brookdale.
But what excites me most for the shareholders of Brookdale is that we have seen that health plus communities profitability grows much faster than non-health plus communities. And so for our shareholders, we think there's going to be a strong return by by supporting the health and well-being of our residents even more than we previously do.
Josh Raskin
Right. So when you say it's not there's no incremental cost to the resident, but that community, I assume that their care charges are higher than a non Brookdale Health Plus community. Is that the way to think about it?
Cindy Baier
Not necessarily. Our business case was built on the fact it it would be such an attractive value proposition for residents. And that would, as you mentioned, help us an increased length of stay.
Now, one of the things that is true is because we're rolling Health Plus out on over the last few years, we haven't gotten to a stabilized length of stay for those communities yet. And so that's one statistic that we're still watching, but we're encouraged by the residents that are choosing Brookdale as a result of Brookdale health plans.
Operator
As this concludes our Q&A session for today. Ladies and gentlemen, I would like to thank you for joining today's call. Have a great rest of your day. You may now disconnect your line.
