While many owners in the skilled nursing space saw a reduction in beds this year, the biggest losers were overwhelmingly government entities and not-for-profit organizations, while for-profit entities have lost far fewer beds.

In terms of bed reduction by location, rural markets largely took the hit, according to Lisa McCracken, director of senior living research and development at Ziegler.

“Your composition can vary a little bit, but the drivers generally are pretty universal,” she told Skilled Nursing News, referring to staffing issues, inflationary pressures and other economic headwinds leading to bed reductions.

Such challenges are particularly acute in certain markets, such as rural areas. This is one factor behind the reduction in SNF beds for the Evangelical Lutheran Good Samaritan Society, McCracken noted.

The nonprofit giant reported 8,452 nursing beds for 2021, compared to 8,602 in 2020, a drop of 60 beds, according to the 2022 LeadingAge Ziegler 200 report.

The report lists the largest not-for-profit systems providing aging services through senior living in the United States, in order of total owned market-rate units, as of December 31, 2021.

Many operators are also converting semi-private to private rooms, as the pandemic reinforced some of the benefits of doing so, McCracken said; it’s also in line with the Biden administration’s reforms for the sector.

Connecticut-based Masonicare, for example, received state approval to reduce its beds from 357 to 260 among its four campuses – its private room count ballooned from 43 to 110 in the conversion, according to Masonicare CEO Jon-Paul Venoit.

State officials have undertaken efforts for several years now to reduce SNF beds, Venoit said, spurred by a report prepared by the Mercer Human Services Consulting firm; the report found prospective nursing home residents would prefer home care, a precursor of sorts to Biden’s federal push toward the care setting.

A continued pattern

Ziegler compiled data from the Centers for Medicare & Medicaid Services (CMS) between 2015 and October 2022 in addition to its work on the LeadingAge report, finding that government-owned SNFs saw a 7.1% reduction in beds, while not-for-profit bed count reduced by 7.5%.

That translates to a loss of 8,175 beds among government owners, and 26,473 that not-for-profits took offline in the past seven years. Not-for-profits appear to have a steep drop off between 2019 and 2022, losing 18,430 of the 26,473 beds.

“The pattern definitely continues,” added McCracken. “I’m pretty confident that our 2023 report will show some additional decreases in the total number of nursing beds. There’s rarely a meeting we’re in with a leadership team or a board where they’re not talking about the pressures in nursing related to workforce, reimbursement issues and challenges.”

Changing referral patterns coming out of the hospitals — with more aging in place and home care options, and more technology options allow people to go to other care settings — are leading to bed reductions if the demand isn’t there.

There’s a lot at play this year and into 2023, McCracken said, and these alternative options aren’t going away in the next year.

“We definitely anticipate that the pattern is going to continue into next year,” she said.

Government beds, meanwhile, remained relatively steady between 2020 and 2022, with a steep decline seen between 2016 and 2020.

“County homes, VA-sponsored nursing homes are a whole different dynamic … we know, generally, they tend to be very large, and a lot of them got hit very, very hard during the pandemic as well,” added McCracken.

In contrast, for-profit entities saw a 1.3% in bed reductions between 2015 and 2022, or a loss of 16,313 beds. These entities make up 71% of skilled nursing ownership mix, according to Ziegler data, compared to 23% nonprofit and 6% government-run facilities.

“There have been some closures on the for-profit side and some downsizing, but we’ve seen that trend unfold at a little faster pace in the not-for-profit space and to a greater extent the government – that’s a lot of the county homes and [facilities] of that nature,” said McCracken.

The not-for-profit decline in beds can be attributed to a shift in ownership too, with a lot of freestanding nursing homes selling to for-profit entities, she added, a trend that has not gone unnoticed.

Venoit has seen the trend in Connecticut as well, with SNF beds again being repurposed for other services.

Outside pressures and looking ahead

Masonicare expanded its rehab floor along with converting to private rooms, Venoit told SNN. A shift in payer mix helped support restructuring, with revenue now split even between government funding and commercial and private pay at facilities.

Less reliance on government funding helped “rightsize the ship,” Venoit said, while more beds were put toward other care continuum services – notably a surge in beds with the expansion of Masonicare’s behavioral health hospital.

“We really looked at what our consumers, our residents are looking for or where we’re seeing shortfalls – and we adapt,” said Venoit. “Less and less people were coming into the nursing home because of all the other services we had. We knew we had to reduce our nursing home [beds], recognizing that many of those that might have gone to the nursing home years ago now are in our assisted living units or have home care.”

Moving into 2023, Venoit said he plans to continue that trajectory with more independent living on its campuses.

Masonicare’s SNF bed reduction played into campus restructuring, adding a hospital unit and rehab beds, and another floor dedicated to long-term care converted to behavioral health beds. In this operator’s case, SNF bed reduction was more a function of business plans and community need than reactionary closures, he said.

SNF operators, especially those that are part of continuing care retirement communities (CCRCs), continue to shut down entire wings of SNF beds as the reality of workforce pressures take their toll, according to McCracken.

Across all operators, the ability to staff for nursing units dictates occupancy and leading to general downsizing, but that doesn’t mean full-on exiting of the space, she said.

Masonicare is carrying out the alternative, Venoit said, with its shifting in services reflecting its drop in SNF beds.

“Successful organizations need to be able to balance [different service lines] very well as things change. The Medicaid rates have gone up, which is great, but salaries and wages have gone up even more … the regulatory side is not getting easier, it’s getting more difficult,” added Venoit.