Skilled Nursing Occupancy Falls Again in Q4 2017

Skilled nursing occupancy took another hit in the fourth quarter of 2017, dropping 66 basis points from the third quarter to end at 81.9%.

Not even a severe and early flu season could help boost it, according the fourth quarter Skilled Nursing Data Report from the National Investment Center for Seniors Housing & Care’s (NIC).

“Historically, occupancy experiences an uptick in the fourth quarter if flu season was both early and relatively severe, as has been the case this year,” the report said.

In December, NIC reported third quarter skilled occupancy as 81.6%. However, NIC re-calculated that Q3 figure for the most recent report using the latest data set.

Perhaps confirming that rural skilled nursing facilities face some unique challenges, rural SNF occupancy rates declined more sharply than those of urban ones. However private pay patient day mix was greater in rural areas at 15.6%, compared with 6.5% in urban ones.

This could be because urban skilled nursing properties face higher competition for market share, in part due to a greater supply of other senior housing types and home care, the report posited.

“Rural areas have a higher exposure to private pay patient day mix, in addition to less exposure to Medicaid patient day mix,” Kauffman said in the report. “Coupled with the fact that growth in managed Medicare patient day mix has been essentially flat in rural areas but growing in urban areas, this data suggests there are different risk profiles between the geographic areas.”

Pressures in managed Medicare revenue per patient day (RPPD) were highlighted in the data, as RPPD in this area fell to a new low of $433. In urban areas, the managed Medicare patient day mix is currently at 7.3%, compared with just 2.7% in rural areas.

National Skilled Nursing Trends — NIC

Medicaid continues to be a major driver for skilled nursing revenue; 49.3% of all revenue at skilled nursing properties was represented by Medicaid revenue mix in the fourth quarter of 2017. That percentage is up 70 basis points from the fourth quarter of 2016.

However for Medicare, which typically pays at higher rates than Medicaid or Medicare Advantage, revenue mix declined, falling to 22.8%, or 98 basis points from 2016.

“This trend presents a challenge to the traditional skilled nursing business model as Medicaid, the lowest payor, is growing in revenue mix as the highest payor, Medicare, is decreasing in revenue mix,” the report said.

The fourth quarter report split the findings into the following categories: Urban Area, Urban Cluster and Rural. This illustrated that some trends vary by geography, Liz Liberman, a health care analyst at NIC said in the report.

“Compared to rural areas and urban clusters, managed Medicare patient day mix in urban areas is more prominent and growing at a faster pace than in rural areas and urban clusters,” she explained in the report. “This payor type also makes up a higher share of revenue mix than in the other settings. Providers located in urban areas may need to adapt more quickly to this payor type to maintain market share and remain competitive in an era where pressures on occupancy and reimbursement rates are palpable.”

Written by Maggie Flynn

Correction: An earlier version of this story gave managed Medicare revenue per patient day as $33; the correct RPPD is $433. Skilled Nursing News regrets the error.

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Maggie Flynn
Business reporter at Aging Media Network
When she's not working, Maggie enjoys running, reading, writing and sports, in no particular order. Favorite things include murder mysteries, Lake Michigan and the Pittsburgh Penguins.

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