Operator investment in talent, company culture and technology, along with a close eye on local markets, are key to survival at this stage of the pandemic.
That’s with skilled nursing care becoming an increasingly localized, segmented industry, according to Bill Kauffman, senior principal with the National Investment Center for Seniors Housing & Care (NIC).
Kauffman discussed these topics with Skilled Nursing News, as well as government funding, staff vaccinations and occupancy in a virtual Q&A. Kauffman leads skilled nursing research at NIC and has authored data-heavy reports specific to this sector of the health care industry.
This interview has been edited for length and clarity.
What sorts of existing issues in the industry have been exacerbated by the pandemic?
Before the pandemic, there was already a widening gap between the good operators and the bad operators, because the healthcare sector has been in transformation for years now given the move to more value-based purchasing.
If you were not an operator that was investing in your staff, if you weren’t investing in your culture, if you were not investing in new technology, in your property, you were already falling behind.
The other part of this, just like real estate, is location, location, location — health care is even more so. What demand can you serve in your market as a skilled nursing operator? You have to think about that. And you have to be proactive.
So the industry is becoming even more localized?
Absolutely. [Operators should be aware of] what kinds of networks are in a location, how much is managed care penetration within that location, are there accountable care organizations within the area, are there other skilled nursing operators already doing [institutional special needs plans] I-SNPs.
All these factors in different locations, in different markets, come into play in how you’re going to operate as a skilled nursing operator.
Any updates on government funding to the industry?
There should be some other funds coming to skilled nursing operators from the [Provider Relief Fund], from the government, however that’s not going to be as much as it has been throughout the last 12 months.
That said, you have some operators that, if occupancy does not bounce back fast enough and the government funds continue to decline in terms of their balance sheet and what they’ve had on their balance sheet, then you could have some challenges here in the second half of the year.
What types of challenges?
It’s possible that some operators might be forced to sell. That’s not in terms of the sector as a whole, there is certainly plenty of capital and liquidity that’s coming into the sector, there are many private buyers out there that are looking to grow and acquire skilled nursing properties.
If some of those operators do have to sell, if they’re forced to sell, there most likely will be buyers there.
Data suggest staff are hesitant to get vaccinated. How have educational plans gone?
I think there’s certainly other education that’s happening … some of it depends on how much education the operators are giving to staff.
Is it a dealbreaker for potential residents?
The thought is the patient should be protected if they have been vaccinated themselves. Staff are not fully vaccinated, [but] we’ve already seen a bounce back in occupancy, in terms of it stabilizing. So, it seems like occupancy is slowly picking up even given the fact that not all staff is vaccinated.
The question is, how long can you go without going to skilled nursing? Many believe there’s pent up demand there. [Residents might] have had an elective surgery and need skilled nursing care, or have too many illnesses and are too frail to go and receive homecare.
How is SNF occupancy looking, in terms of NIC data?
Through the first quarter we released a monthly report to track occupancy and other metrics. And what we have seen is, after occupancy hit a low, we have seen over the February and March time period that occupancy has increased.
The expectation was occupancy would increase given the decline in COVID-19 cases across the country, but the question does remain — how fast will it recover? It seems to stabilize, in terms of occupancy. But I think it’s important to note it’s still very low compared to the pre-pandemic levels.
NIC posted another monthly report since speaking with Kauffman, which SNN reported on here.
Given this trajectory, when do you expect occupancy to be back up to pre-pandemic levels?
That would be anyone’s guess. It’s going to depend on possible referral relationships, on how many patients have pent up demand in terms of, if they’re unable to receive care at home, multiple factors, and to your point, there might be some patients that, you know, realize that not all the staff is vaccinated and they don’t want to go, and they won’t go.
The other side of the equation comes down to supply and demand. You have around the country this sector that is continuing to decline in terms of operational beds … it’s still expected that demand will increase.
How does that demand interact with President Joe Biden’s push for more home-based care?
That is a positive in terms of occupancy increasing, you know, because at the end of the day, even with the new administration, there might be more push to home or community based services, but how much of that population will be able to actually have home care?
There’s a certain segment of the aging population that will require care in a [SNF] setting, which will not be at home because they’re just too sick and too frail to be cared for at home given the current health care infrastructure.
Things can change in the future but the expectation as of right now is that demand will be increasing that need for skilled nursing care.
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