‘Stacking Pennies’: Senior Living Operators Seek to Tamp Down Rising Costs in 2026
February 5, 2026 | News
By Andrew Christman | Senior Housing News
Taxes, staffing and insurance premiums are putting pressure on senior living operators’ bottom lines. But they are not resting on their laurels.
With margins still under pressure, senior living operators in 2026 are seeking to tamp down costs across their companies. This year, multiple budget line items are growing more costly, placing operators like 2Life Communities in a tough spot.
“The biggest difference is the level of uncertainty and cost escalation across several categories at once,” Sarah Glassman, chief of property management at 2Life Communities, told Senior Housing News.
In response to these pressures, operators such as 2Life, along with Watermark Retirement and Triple Crown Senior Living, have deployed strategies including new software systems, audits and sustainability efforts to bring down the operational cost of senior living.
Mounting expense pressures in 2026
Senior living operators are watching as costs rise across their organizations.
In 2026, costs are rising for health insurance premiums and marketing at companies like Tucson, Arizona-based Watermark Retirement Communities, according to CEO Paul Boethel. An increasing cost of insurance claims has led to “unusually high” costs to that end.
Watermark also has upped its marketing budget, with a cost per lead in the “high single digits,” with 7% to 9% increases year over year as it continues to invest in digital platforms.
“Over the last handful of years, you had a pretty unique situation with entire markets all in lease-up at the same time and really leaning heavily on spending pretty deep on the different marketing channels,” Boethel told Senior Housing News. “That marketing component from an operational standpoint, continues to grow.”
Brighton, Massachusetts-based 2Life Communities also expects health care premiums will rise in 2026. The operator also is experiencing significant increases in utilities, service contracts and real estate taxes.
Food is another area where costs are rising, from the price of menu staples to kitchen supplies, panelists said during a recent panel at Senior Housing News’ DISHED conference.
It almost needs not be said that staffing remains among the top expenses for senior living operators, given the operational nature of the business and the needs of residents. Senior living operators have in the last few years increased wages for roles up and down the care continuum to compete with their peers. According to the 2024 State of Seniors Housing report, senior living operators are on average devoting 55% of their total operating expenses to labor-related expenses.
‘Stacking pennies’
Senior living operators are taking different approaches to handle expenses. Watermark leans on auditing, systems and processes to help mitigate its cost overruns.
A third-party company audits Watermark’s vendors on a quarterly basis to find invoicing errors. Watermark also in the fourth quarter of 2025 streamlined scheduling in staffing along with automatic checks that can detect the use of costly overtime.
“We know that we’ll be able to drive some meaningful results on the staffing side … like shaving a minute or two off of overtime,” Boethel said. “This is a business where stacking pennies really matters.”
2Life takes a twofold approach that focuses on revenue and expenses. On the revenue side, the organization pursues rent increases covered by federal and state rental voucher programs, while carefully considering affordability when it comes to rent increases with its straight tax credit units, where residents pay full rent.
The operator also seeks expense reductions through sustainability efforts, such as maximum heating and minimum cooling temperature settings that exceed state requirements and better utilizing integrated building systems that allow for temperature setbacks when windows are open, which reduce utility usage and generate long-term cost savings, Glassman said.
“While these systems have been in place, we believe stronger policies and more consistent use of existing technology will help deliver savings without compromising the resident experience,” Glassman said.
And to further offset costs, 2Life is pursuing grant opportunities to reduce utility and infrastructure costs, along with participating in a group purchasing organization that provides discounted pricing through affiliated vendors and pursuing real estate tax abatements where possible.
Louisville, Kentucky-based Triple Crown Senior Living has grappled with the cost of filling staff vacancies, which is why the company has implemented a new management platform.
Triple Crown has almost entirely eliminated the need for agency usage across its 17-community portfolio.
“Some are crawling, some are walking and some are running,” Marsh said. “there are times in place when leadership changes over or something in the market changes that you have to react to … Agency or third party usage is only appropriate in those settings.”
Watermark is actively adjusting its systems, including those that track staffing. The process began in the fourth quarter of 2025 and will likely continue through the first two quarters of 2026, but Boethel is confident in the impact the new scheduling software will have.
“As you get to better systems, you’re able to get a lot more efficient in what you’re doing day to day, reallocate resources and even pull back on certain resources,” he said.