Skilled Nursing Must-Reads: Occupancy Drops, SNF’s Fraud Drama

The industry continues to sort out what went wrong in Florida, but there were other headlines from the week in skilled nursing, including some grim numbers from the National Investment Center for Seniors Housing & Care (NIC) and an interesting ownership shuffle for some former Kindred facilities.

First, the bad news: Nursing home occupancy dipped to a five-year low in the second quarter of 2017, coming in at 81.7%. NIC blames the rise of managed care, as well as increases in direct hospital discharge and outpatient surgeries. And the bottom may not yet be in sight, as occupancy has historically declined in the third and fourth quarters of the year.

American Senior Communities took legal action against two of its former executives last week, suing ousted CEO James Burkhart and COO Daniel Benson after they allegedly “systematically looted” the Indianapolis-based skilled nursing provider’s coffers. Burkhart and Benson currently face federal indictments over alleged kickbacks and other fraud.

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Kindred Healthcare (NYSE: KND) sent a shock through the skilled nursing world earlier this year when it announced a deal to sell all of its SNFs to an affiliate of BlueMountain Capital. But the New York City-based alternative asset firm didn’t hold on to all of the properties for long: SNN discovered that all seven former Kindred SNFs in Idaho will be sold to CareTrust REIT (Nasdaq: CTRE) by October.

And finally, SNN explored how one New York City-based provider has tried to fight the workforce shortage by developing potential employees while they’re still in their teens, and Sabra Health Care REIT (Nasdaq: SBRA) made its first major post-merger deal — for assisted living.

Outrage in Florida

Two of Florida’s newspapers wrote editorials this week critical of the nursing home industry and state officials. The Treasure Coast Newspapers — which include publications in Stuart, Vero Beach, and Port St. Lucie, Fla. — applauded Gov. Rick Scott’s emergency edict requiring skilled nursing facilities to install backup generators within the next 45 days, but also criticized the Sunshine State’s emergency preparedness and coordination efforts.

“Between now and June 1 — i.e., the start of the next hurricane season — state officials have a lot of work to do,” the papers’ editorial board concluded.

The Miami Herald, meanwhile, accused Scott and other lawmakers of being too cozy with the nursing home industry at the expense of resident safety.

“Zoom out from this one particular tragedy,” the Herald editorial board said of the deaths at a nursing home in Hollywood, Fla., “and Floridians will find that the Scott administration as well as industry muscle continue to give cover to nursing homes that shouldn’t be in business.”

The Herald reported that safety inspections for SNFs are frequently redacted, which the paper argues prevents families from making informed decisions about nursing home selection. The paper called on the industry and lawmakers to make sweeping changes at a safety summit in Tallahassee, Fla. on Friday.

“The discussion at Friday’s summit can’t stop at generators. Industry leaders must [conduct] far more discussion about meeting the needs of such vulnerable residents,” the paper concludes. “Why wait for another tragedy?”

Written by Alex Spanko

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