Skilled Nursing Occupancy Increased in Q1, But Trending Down

Occupancy at skilled nursing facilities rose 36 basis points from the fourth quarter of 2016 to the first quarter of 2017, but ended the quarter on a downward trend.

SNFs had 82.6% occupancy in the first quarter of 2017, according to the latest Skilled Nursing Data Report from the National Investment Center for Seniors Housing & Care (NIC). However, that overall number belies a drop-off in March: After reaching 83% for the first time in eight months, occupancy numbers slid between February and March as flu season, a typical driver of SNF stays, came to an end.

“Over the past couple years, in 2015 and 2016, the first quarter represented the high point for occupancy in each year,” NIC senior principal Bill Kauffman said in a release explaining the results. “We did see a monthly occupancy rate decline in March after increases in January and February, so we will be watching the data carefully to see if the decline continues into the second quarter.”


Occupancy also was down 163 basis points year-over-year in the first quarter of 2017, and given the low starting point, NIC cautioned that the industry could see record-low numbers before the end of the year.

Declining occupancy in skilled nursing can be attributed to several factors, including a shift toward more short-stay rehabilitation patients. To the extent that these patients replace Medicaid long-term care beds with rehab patients on Medicare, profits actually could increase for SNFs even while occupancy declines.

New High for Managed Medicare


NIC’s results also show a continuing shift toward managed Medicare, with the patient day mix increasing quarter-to-quarter and year-over-year — and climbing to its highest point in five years in February.

“The increase, while subtle, reinforces earlier NIC analysis suggesting a trend away from what had been a rapid decline in the managed Medicare revenue per patient day,” NIC chief economist Beth Burnham Mace said in the release.

Revenue per patient day related to Medicare recipients logged its first quarter-to-quater increase in two years, NIC’s report found.

Private-pay revenue ticked up slightly in the first quarter, rising 1.5% from the fourth quarter of 2016 and 2.7% from this time last year — though NIC cautioned that the small gain pales in comparison to a 62-basis-point drop in private patient day mix between 2016 and 2017.

“Private RPPD is one way operators can mitigate revenue loss from decreased occupancy and skilled mix, which may help to explain why the private RPPD has increased in recent quarters,” NIC’s report notes.

Written by Alex Spanko

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