Skilled Nursing Occupancy Rose in Third Quarter, Breaking Recent Downward Trend

The nation’s skilled nursing facilities saw a slight uptick in occupancy between the second and third quarters of 2018, though census remains well below the previous year’s totals — and analysts stress that it’s not time to celebrate the gain as a Christmas miracle just yet.

SNFs were 82.2% full in the third quarter of the year, the National Investment Center for Seniors Housing & Care (NIC) announced late Wednesday, a gain of 14 basis points over the second quarter. That’s the first increase between those two quarters in the last three years, the data and analytics nonprofit noted, but it still sits nearly a full percentage point below the figure for the third quarter of 2017.

“While the increase in occupancy is notable after several quarters of decline, a one-quarter increase does not yet mean we’re witnessing a new trend,” NIC senior principal Bill Kauffman said in a statement announcing the results. “The last couple of years have seen a negative growth rate among the 83- to 87-year-old cohort — a key demographic most likely to use nursing homes. This quarter’s data may show the beginnings of a turnaround.”


In perhaps less positive news for skilled nursing operators, Medicaid revenue mix reached a recent high of 50.5%, a gain of 88 basis points from the previous quarter and 162 basis points from the same time last year — a trend driven primarily by urban operators. Similarly, Medicaid patient day mix topped out at 66.7%, another time-series high according to NIC.

Medicaid traditionally provides the lowest per-day reimbursements for nursing home services, with average revenue per patient day of $209 in the third quarter. That’s actually a 2% gain over the prior year, the fastest increase of all payor types, but Medicaid still lags far behind the $515 figure for traditional Medicare and $426 for managed Medicare plans.

Those managed plans, including Medicare Advantage options, continued to make inroads, with a patient day mix gain of 7 basis points. That small gain belies larger increases in urban areas, where managed Medicare accounts for a full 12% of all nursing home revenue, compared with just 4.7% at rural facilities.


Medicare Advantage and similar managed offerings have vexed operators in recent years, as their private-insurer operators bring a greater focus on controlling costs than the traditional Medicare program.

“As Medicare Advantage continues its rapid growth, we’re seeing it become a larger contributor to skilled nursing revenue, while at the same time possibly contributing to occupancy declines with shorter lengths of stay,” Beth Mace, chief economist at NIC, said in a statement. “With the influx of older seniors, we may start to see skilled nursing shortages as facilities close, but the numbers of potential occupants rise.”

Written by Alex Spanko

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