‘SNF-Heavy’ CCRCs Continue to Suffer as Staffing, Revenue Pressures Mount

Skilled nursing beds continue to be associated with more operational stress among continuing care retirement communities (CCRCs) this year, despite improved occupancy from 72.4% in 2022 to 82.2% in 2023, and preliminary 2024 data showing further improvement.

Fitch Ratings recorded eased labor challenges as well among skilled nursing providers as part of its “exposure draft” document that proposed revising rating criteria for CCRCs. Such campuses continue to redesign care to focus more on assisted living and memory care, along with home health care, all of which are mostly private pay.

“In response to improving SNF occupancy, some [CCRCs] have brought SNF beds back online, although not to pre-pandemic levels, and have begun to rebuild their skilled nursing staffing,” according to the Fitch Ratings exposure draft.


Fitch Ratings found that “SNF-heavy” CCRCs, or those where skilled nursing beds comprise more than 20% of total units, experienced significant operational stress in 2023. Such stress was caused by labor costs, inflation, tighter reimbursement and heightened government oversight pressuring skilled nursing expenses and revenues, according to trends seen in Fitch’s rated portfolio for the year.

CCRCs with more independent living units generally performed better than SNF-heavy peers – they were able to spread costs to independent living business lines to cover skilled nursing costs. Further independent living expansion among CCRCs is likely, given the solid demand for such units and the support independent living revenue has provided in terms of operational performance.

This is on top of CCRC efforts to reduce their number of SNF beds as staffing and revenue pressures continue. Others have reduced external admissions to focus sometimes exclusively on their own residents, according to Fitch Ratings.


Fitch also found that those with 20% or more skilled nursing beds will continue to lag in performance despite lower monthly independent living rental rate increases. These CCRCs have been less able to reduce skilled nursing exposure and limited ability to raise rates, given that Medicaid and Medicare are major components of nursing home revenue.

Both payors set non-negotiable rates, compared to independent living rates which are private pay and have more pricing power, the credit rating agency said.

CCRCs have been backing away from skilled nursing for the past several years, again citing tighter reimbursement and more regulation. Less than half of respondents in Ziegler’s December 2023 CFO Hotline survey said they reduced SNF beds by 11% to 25%.

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