Facing Declining Census, Struggling SNFs Turn to Assisted Living, Home Health

As occupancy levels continue to fall in skilled nursing facilities, some providers will have to think outside the box — and sometimes outside their walls — to make the best use of their space and their resources. But they might have more flexibility to do that in part because of the different roles that rural SNFs play in their communities.

While falling occupancy rates are a challenge across the industry, rural providers have been hit particularly hard, according to second-quarter skilled nursing data from the National Investment Center for Seniors Housing & Care (NIC). These facilities experienced an 89-basis-point drop between the first and second quarters, though at the time, NIC health care analyst Liz Liberman noted that rural providers captured the greatest share of private-pay patient days with fewer managed Medicare days.

That difference in payer mix stands out to Lee Delaveris, vice president of health care mortgage banking at KeyBank Real Estate Capital.

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“One takeaway from that, or one assumption about what’s driving that, is that there’s a lack of alternative care options in those rural settings,” he told Skilled Nursing News. “Residents end up in skilled nursing on a private-pay basis for long-term custodial care. So that marketplace could be very different than an urban skilled nursing provider who’s closely aligned with a hospital system and is driving a lot of short-term rehab care.”

As a result of those different conditions, KeyBank has seen significant changes in the skilled space as providers try to reposition themselves in their markets. One example was a provider that added a Medicare-focused short-term rehab wing to its nursing facility, with a goal of targeting discharges from the local hospital.

“The other thing going on in that market is there’s demand for Medicaid-waiver assisted living,” Delaveris explained. “So the business plan was: ‘Hey, let’s kind of capture both ends of it. I need to reposition as a SNF provider, but then there’s this downstream, affordable senior care demand in that market.'”

The move ties into the increasing demand for affordable senior care, he explained, particularly as SNF providers have to utilize beds and bed licenses in different ways depending on the market. It’s a trend that has manifested itself in different ways around the country, with some operators expanding into government-funded behavioral health services. One such facility in Denver, Vivage Senior Living: Denver Senior Care Center, receives 95% of its funding through a state-level Medicaid program that reimburses for certain mental health services in SNFs.

In Washington State, a struggling operator used a similar Medicaid behavioral health add-on to help close the gap between costs and government reimbursements, but eventually bowed to the pressure and converted to assisted living in order to stay afloat.

But even with the occupancy challenge, SNFs might have more options for repositioning themselves than simply converting unused beds into new types of senior housing, according to Health Dimensions Group CEO Erin Shvetzoff Hennessey.

“I think that often we’ve been limiting ourselves to housing options when we talk about diversifying,” she noted. “Diversification can be along the lines of home- and community-based services, so SNFs could get into areas of care they haven’t been in before that aren’t necessarily institutional. They could look at home care, housekeeping, day services for seniors, meal services for seniors.”

And when those seniors need institutional care, they will already be familiar with the local SNF and its brand.

There are some hurdles a SNF will have to consider, such as budget considerations, Hennessey acknowledged. If a provider is thinking about expanding into non-institutional settings, then they have to look at the investment required, the political capital needed, and the financial situation of the SNF and any partners it has. Labor is always a challenge as well, particularly for rural facilities.

SNFs will also need to look at the demographics in their region on a five or even 10-year timeline, to see how the population might be changing, Hennessey noted. But in the short-term, rural SNFs would be well-advised to think outside the box — and perhaps even in the home.

“There are a lot of people trying to improve care delivered in homes, and the SNF is really great at managing care for seniors,” she said. “That care does not have to be in an institution.”

Written by Maggie Flynn

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