Skilled Nursing Occupancy Continues Plunge, Drops to 81.6%

For the first time in six years, skilled nursing occupancy failed to increase between the fourth and first quarters as the numbers continued their grim march downward.

Occupancy fell to 81.6% in the first quarter of 2018, according to the most recent data release from the National Investment Center for Seniors Housing & Care (NIC). That translates to a drop of 30 basis points from the prior quarter, and 210 basis points from the same time in 2017.

The decline bucks a time-honored trend of occupancy boosts as the calendar turns and skilled nursing operators begin filling more beds due to seasonal spikes in the flu and other illnesses.

That trend still occurred during the first three months of the year — Medicare and managed Medicare mix increased by 56 and 54 basis points, respectively — but length-of-stay pressures and admission issues worked to counteract the predictable occupancy bump.

“Because the decline did not occur in skilled mix, seasonality is still likely influencing skilled nursing occupancy and patient day mix,” NIC senior principal Bill Kauffman said in the group’s report. “Other factors, such as shorter lengths of stay, may be driving the overall occupancy decline.”

SNFs continued to see greater penetration of managed Medicare plans — such as Medicare Advantage — in the first quarter, with revenue hitting a cycle high in February. That trend was true across rural and urban areas, even though rural SNFs typically see significantly fewer managed Medicare residents than their counterparts in cities.

“Rural areas have been less affected by managed Medicare than others, but the trend warrants attention in the years to come, in all geographic areas,” NIC chief economist Beth Burnham Mace said in a statement announcing the results.

At the same time, managed Medicare revenue per patient day (RPPD) dropped nationwide to $431, as compared to $522 for traditional Medicare residents. Urban and rural operators both saw drops in managed Medicare RPPD, though facilities in so-called “urban clusters” — defined as developed areas with more than 2,500 people but fewer than 50,000 — enjoyed slight gains.

Overall, however, managed Medicare accounted for a six-year high of 10% of total revenue mix, prompting NIC to sound the alarm about the need for savvy providers to adapt or fall behind.

“Managed Medicare may make up some losses in Medicare, but operators are still dealing with the rate differential compared to Medicare and may need to adapt to this increasingly influential payer source,” NIC health care analyst Liz Liberman said.

Nationwide managed Medicare penetration currently sits at about one-third of all program enrollees, and that number is expected to grow rapidly. Speaking at NIC’s annual Spring Investment Forum earlier this year, Avalere Health president Dan Mendelson predicted that managed Medicare penetration will rise 6% to 7% per year, faster than government projections of 4%.

“More and more seniors are voting with their feet,” Mendelson said at the time.

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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