Nursing Home Occupancy ‘Disappointingly Flat’ in November but States’ Medicaid Rebasing Encouraging

Healthcare Real Estate Investment Trusts (REITs) specializing in post-acute care facilities experienced “disappointingly flat” occupancy rates in November, according to investment analysts.

BMO Capital Market’s Juan Sanabria highlighted the challenges faced by skilled nursing facilities (SNFs) in maintaining growth, with market share loss to home health.

The Centers for Medicare & Medicaid Services (CMS) data revealed that national SNF occupancy remained stagnant month-over-month through November 19, 2023, following a prior increase of 40 basis points. In contrast, REITs exhibited a decline of 10 basis points during the same period. The BMO report noted that the slow upward trend in occupancy since January 2021 had been influenced by labor shortages and the shift of market share to home health services.


As labor challenges and occupancy had improved, the likelihood of SNF rent cuts had diminished, analysts wrote. The note suggested that uncertainties, including share loss, thin margins, and regulatory changes, continued to impact the sector. Market analysts anticipated that CMS may revise its initial minimum staffing proposal after addressing comments from various stakeholders.

Among the REITs noted by BMO analysts, Ventas (NYSE: VTR), National Health Investors (NYSE: NHI), and Welltower (NYSE: WELL), they singled out Ventas’ SNF portfolio as leading in occupancy growth. Conversely, Omega (NYSE: OHI) and Sabra (NYSE: SBRA) had lagged behind in occupancy. However, year-to-date, Ventas lagged and CareTrust (NYSE: CTRE) were lagging in CMS occupancy metrics.

In terms of REIT exposure and risks, the note pointed out that SNF coverage appeared to have bottomed out as occupancy and labor availability had improved.


This trend is evident from recent quarterly earnings from several large publicly-traded REITs.

“We believe our business is moving further and further away from the pandemic-induced bottom,” Sabra CEO Rick Matros said during a recent earnings call. “While we expect labor issues to persist, we do see continued improvement. Despite this challenge, occupancy and rent coverage in our skilled … portfolios remain on an upward trajectory.”

The BMO note also acknowledged that federal government funds, which previously supported coverage, had diminished since the expiration of the public health emergency in mid-May.

“Thankfully states have stepped up Medicaid funding,” analysts noted. “As coverage, occupancy, and labor have slowly improved, we see diminished probability for SNF-related rent cuts/deferrals, all else being equal.”

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