Skilled Nursing Occupancy Drops to Five-Year Low

Skilled nursing occupancy rates have dropped to their lowest levels in the last five years, and the bottom still may not be in sight.

SNFs were 81.7% occupied in the second quarter of 2017, according to the most recent data from the National Investment Center for Seniors Housing & Care (NIC). That’s a drop from 82.7% in the first quarter, and 147 basis points lower than the second quarter of 2016, NIC reported.

“Many factors such as the growing role of managed care, sending patients directly home from the hospital, and more complex surgeries performed in an outpatient setting are contributing to occupancy challenges for skilled nursing operators,” NIC senior principal Bill Kauffman said in a release announcing the results.

Kauffman called out the significant drop in Medicare patient days: The Medicare day mix dropped from 13.9% in March to 12.7% in June, which was also the lowest level in the last five years, and well below a recent peak of 16.5% in February 2015.

Medicaid day mix, meanwhile, reached nearly a five-year high, coming in at 65.9% — just 10 basis points lower than the record set in November 2016, according to NIC.

“The importance of Medicaid patient days to the current skilled nursing business model is evident by its growing percentage of overall patient day mix,” NIC chief economist Beth Burnham Mace said in the release. “Given the fact the aging population is projected to grow significantly in the coming decade, and the likely need for long-term care services, this trend warrants attention.”

NIC noted that skilled nursing occupancy typically takes a hit in the second quarter, but warned that the declines only continued into the third and fourth quarters of the last two years — “suggesting that occupancy may fall even further in the second half of 2017.”

Earlier this year, when NIC released its first-quarter skilled nursing data, the Annapolis, Md.-based research firm warned that a new low could be possible by the end of 2017, based on then-current rates. Skilled nursing occupancy hasn’t hit 84% since March 2016, or 85% since April 2015, NIC noted.

“Pressure on occupancy witnessed over the last two years has several drivers, including policy changes from the Centers for Medicare & Medicaid Services that discourage skilled nursing utilization or encourage short lengths of stay for Medicare patients in an attempt to bend the cost curve,” NIC healthcare analyst Liz Liberman said in the report. “Indeed, NIC data indicates that pressure on Medicare patient day mix began in early 2015, which is also when overall occupancy started to decline.”

Written by Alex Spanko

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Alex Spanko
Assistant Editor at Aging Media Network
Alex covers the skilled nursing and reverse mortgage industries for Aging Media. Outside of work, he reads nonfiction, yells at Mets games from his couch, and enjoys pretty much any type of whiskey or scotch — often all at once.

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