Nursing Home Operators Expect Rising Occupancy and Single-Room Initiatives to Clash, M&A to Flourish

Despite ongoing staffing challenges and inflationary fallout from the pandemic, skilled nursing operators are optimistic about this year – many expect occupancy rates to increase in the years ahead, along with general growth in the sector.

That’s according to a Skilled Nursing News survey conducted at the end of last year, in partnership with EHR provider Net Health. More than half of 272 respondents said occupancy will increase this year, but not without challenges.

Most notably, providers said the increase in occupancy rates will clash with efforts to meet single-occupancy room requirements. With 10 representing the most difficult challenge, respondents considered this challenge a 7.


Janine Savage, vice president of post-acute analytics solutions for Net Health, said most findings reinforced what she was hearing from clients, with one small surprise – the amount of planned M&A activity this year.

“With the uncertainty of the economic outlook, we expected people to be a little more reluctant, a little more hesitant there,” said Savage. “I think it means that they’re seeing the opportunities, if they’re an organization that’s well positioned and looking for those opportunities.”

These well-positioned operators are seeking financing mostly from banks and finance companies over other sources; 53% of respondents said they’re opting for this type of financing.


Respondents said private equity will be the biggest buyer of skilled nursing assets in 2023 at 42%, seemingly despite the Biden administration’s outspoken efforts to “crack down” on this type of investor.

Private real estate investment trusts (REITs), institutional investors, public REITS and “other” were mentioned as well.

“We are seeing that some of the REITs are letting some of their properties go. With private equity, we’ve seen that trend start a few years ago, and I think that is likely to happen,” Savage said of PE buyers this year. “It will be an interesting trend to watch as well, to see what kind of regulatory and enforcement efforts are associated with that.”

Perhaps unsurprisingly, more than half of providers said recruitment and retention of staff will be the greatest challenge to the sector in 2023 – 43% believe the hiring environment won’t improve until 2024 or later.

Findings are in line with last year’s skilled nursing outlook published by SNN, in which 41.5% of respondents said they didn’t see staffing getting better until after 2023.

Of clinical staff, certified nursing assistants (CNAs) and registered nurses (RNs) were considered the most challenging positions to recruit and retain.

Tech is top investment priority

In terms of investments in 2023, 38% of respondents said new technology is top of the list.

“I think we’re finally over the curve,” Savage said of tech investment among long-term care providers. “Everybody now accepts that EHR is a cost of doing business, we must have it. We’re not there with the analytics, certainly not compared to other industries.”

Savage said the analytics discussion now reminds her of the early days when EHR was coming on the scene.

“When they think about new and innovative technologies … they understand primarily from the experience they have with using analytics in their daily lives. It’s everywhere, from social media to the weather app. Analytics is behind what we use in our daily lives,” said Savage. “I think more and more providers are seeing that there’s a benefit to that in health care, and that it’s something that can be trusted.”

About 34% of respondents said deepening relationships will be their top area of investment, while 30% planned to launch an ancillary and 25% said speciality care services like dialysis and ventilators would likely be investment opportunities this year.

Only 19% of surveyees said they would invest in an institutional special needs plan (I-SNP) in 2023.

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