‘Tougher Every Day’: Nursing Home Operators, CCRCs Weigh in on Future of Skilled Nursing

Operating a skilled nursing facility today is considered a difficult business with regulations and reimbursement woes making the space “tougher every day.” As a result, some operators say they regularly budget a loss for skilled nursing services, and if it weren’t for other lines of business, skilled nursing would be unsustainable.

This dire view of skilled nursing assets is held by some respondents that took part in Ziegler’s December 2023 CFO Hotline survey, which was released on Thursday.

“We want and need to keep skilled care part of our continuum, but long-term sustainability is concerning,” one operator said.


The respondent pool is heavily weighted toward nonprofit continuing care retirement communities (CCRCs) – Ziegler only collected responses from CCRCs that have skilled nursing units. About 60% were single-site senior living providers.

More than 240 organizations participated in the Ziegler survey.

State and federal staffing mandates, managed Medicare as well as Medicaid rate changes were top of mind for survey participants as well, with one respondent even saying that the growth of managed Medicare in their area is “killing” them.


Staff shortages pitted against SNF need

On the ever-present topic of staffing shortages, another respondent said state and federal regulations are causing them to wonder if SNF care is really needed, or worth it.

“State staffing mandates with no means to improve reimbursement have made it extremely difficult, and in order to comply, significant fee increases are often necessary,” another CCRC provider said.

Another interesting trend among survey comments was an anecdotal need expressed for SNF beds. This is in the midst of previous reports of care settings like CCRCs reducing skilled nursing units. In the Ziegler survey too, more than one third of respondents said they made permanent reductions in the number of SNF beds in the past two years.

About 44% said they reduced SNF beds by 11% to 25%, while 27% said they reduced SNF beds by 26% to 50%. About 6% of respondents exited skilled nursing altogether.

And yet, some survey participants said the demand for SNF services is rising at a rate significantly higher than the labor force allows, one commenter said. That’s due to hospital demand being present, in terms of the transition pipeline from acute to post-acute care. “If we could fill open nurse and [certified nurse aide] positions, we would be full. Skilled nursing census is directly tied to lack of care staff.”

Another respondent called themselves an “anomaly” in terms of how they have handled SNF beds.

“Skilled nursing has been a foundational element of service offerings from the beginning. Instead of decreasing SNF beds [and/or] revenue, we have chosen to add other revenue streams for diversification,” the commenter said.

Along the same lines, one respondent called their move to expand and add SNF beds “ironic” when the rest of the world is looking to reduce.

The Ziegler survey also had a question tied to staff retention, and respondents were asked to list staff retention strategies besides increasing wages. In response, bonuses were most often mentioned, followed by culture and employee appreciation. Other retention incentives included better benefits, flexible scheduling, better training, mentorship and career advancement as well as scholarships and/or tuition assistance.

Occupancy data

Overall, Ziegler found that SNF operators were seeing improvement in occupancy within the last two years, compared to their pandemic low point between 2020 and 2021.

More than 80% of respondents saw improvement in occupancy but only slightly in some cases, according to the Ziegler survey. About 36% saw significant improvement, 29% saw moderate improvement, 18% slight improvement while 17% of respondents said they didn’t see material improvement in SNF occupancy.

When asked if staffing issues forced a reduction in skilled nursing admissions, 46% of respondents said that it did, while 43% pointed to other causes like a lack of referrals from hospitals, general decrease in demand and repositioning skilled nursing units for other uses.

About 11% reported no reduction in SNF admissions.

On average, nursing care beds made up 27% of total units offered at CCRCs, Ziegler found, with 50% dedicated to independent living and the remainder being assisted living units.

Of these nursing units, 71% were single occupancy and 29% were double occupancy.

Other pressure points named in the survey, besides staffing, were reimbursement challenges, the regulatory environment, inflation, consumer preference to avoid skilled nursing facilities, changes in hospital referral patterns, dated physical infrastructure and offerings, and increasing acuity of residents.

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