Skilled Nursing Care Occupancy Stabilizes After Years of Decline
The NIC reports that overall occupancy at skilled nursing facilities held firm at 82.4% at the end of the fourth quarter of 2018, which was virtually unchanged from the third quarter of 2018 and down 35 basis points from 82.8% in the fourth quarter of 2017.
ANNAPOLIS, MD—The latest report from the National Investment Center for Senior Housing & Care indicates that skilled nursing care occupancy levels are improving in urban areas, while continuing to slide in facilities located in rural areas of the nation.
The NIC reports that overall occupancy at skilled nursing facilities held firm at 82.4% at the end of the fourth quarter of 2018, which was virtually unchanged from the third quarter of 2018 and down 35 basis points from 82.8% in the fourth quarter of 2017.
“While it appears that the worst of declining occupancy has passed, it’s too early to predict whether occupancy will increase over time,” says Bill Kauffman, senior principal at NIC. “However, it’s likely that the growth of elders in their 80s, as part of the Silent Generation, will boost demand for skilled nursing care.”
The NIC notes in the report that national occupancy levels for skilled nursing facilities had been hovering around 82.5% since April 2018.
“The fourth quarter occupancy trend varied by geographic area with urban areas experiencing an increase, while occupancy in rural and urban cluster areas declined from the third to fourth quarter of 2018. The occupancy rate ended 2018 at 80.4% in rural areas and 83.7% in urban areas, representing a significant difference of 330 basis points.
“Even though we’re seeing stability in both rural and urban areas, rural areas face distinct challenges brought on by lower levels of occupancy, low reimbursement rates and labor concerns,” Kauffman adds. “These factors have contributed to hundreds of facilities closing in rural areas.”
The NIC and other senior care experts say that declining occupancy and fewer facilities in the rural sector are concerns going forward. The NIC cites a recent report in the Bangor Daily News report on nursing home closures in Maine, which has lost nearly 40 facilities statewide since 1995. The newspaper report stated that nearly a third of the state’s population is projected to be over the age of 65 by 2030. Despite that demographic trend, the state has fewer nursing home beds than other states.
Recent data from the Cowles Research Group indicated that more than 440 rural nursing homes have closed or merged nationwide in the last decade.
The latest NIC data reveals the growing importance of private Medicare Advantage plans as a driver of skilled nursing facility occupancy. In urban areas, where occupancy increased in the fourth quarter of 2018, managed Medicare plans are experiencing significant growth. They are now responsible for 13% of skilled nursing facility revenue, up five percentage points between January 2012 and December 2018, the report states.
“Even though Medicaid still accounts for half of skilled nursing’s revenue, evidence suggests that managed care, specifically Medicare Advantage and Medicaid managed care, is the future,” says Beth Mace, NIC’s chief economist. “As low Medicaid reimbursement challenges skilled nursing, federal policymakers are making Medicare Advantage more accessible. It has been gaining popularity for years, but greater flexibility to tailor benefits for certain populations is creating a whole new playing field.”