Skilled Nursing Gets More Data Just As It Begins To Change

An example of the model discussed is Kennett Square, PA-based Genesis HealthCare’s product offering, PowerBack Rehabilitation.

ANNAPOLIS—The National Investment Center for Senior Housing and Care has launched a new initiative that it hopes will shed more light on the actual fundamentals in the skilled nursing asset class. Called the Skilled Nursing Data Initiative, it is a confidential database for skilled nursing data to provide, detailed, aggregate data on skilled nursing properties for operators and investors. Currently, the NIC is collecting monthly data from 18 skilled nursing operators across a total of 1,500 properties, according to a blog post by  Senior Research Analyst Bill Kauffman. The organization also has commitments for participation from other operators for an additional 500 properties. The operators submit monthly data to the NIC, which then calculates such metric as occupancy, skilled mix, quality mix, Average Daily Rate (ADR) by payor class, patient day mix and overall revenue trends. In exchange, NIC will give contributing operators an aggregate monthly summary of the latest national data and a benchmark comparison of their data to national aggregate statistics, including the metrics computed from the data. It is, for those not familiar with such data-sharing initiatives, a structure occasionally used by impartial associations that want more data about their members — data that may be sensitive and closely held. The Washington DC-based CRE Finance Council, the former Commercial Mortgage Securities Association, used it several years ago when it was revamping its orientation to include all forms of commercial real estate finance. It enticed erstwhile rival life companies into its group with the offer of conducting a survey in which the responses would be masked but that would provide insight into aggregate life insurance loans’ performance. See, life insurance companies were so secretive about their performance, that they had little objective data against which to benchmark themselves. And so now NIC is bringing the same carrot to the skilled nursing providers. But while CREFC’s motivate may have been one of relationship building, NIC says it is coming from a different perspective. As Kauffman writes, “Our goal with this initiative is to increase transparency into the sector with relevant, timely data so that skilled nursing is in a better position to attract new funding for much-needed building and technology improvements.” And capital is needed in this sector. The average age of skilled nursing properties in the top 99 markets is 36 years, making many buildings functionally obsolete, according to NIC data. Certainly, there is capital flowing into the senior housing and care industries, but NIC argues, most of it goes into private pay senior housing. Finally, the government data that is available about the skilled nursing asset class largely comes from the US government, namely the Centers for Medicaid and Medicare Services and that data is typically anywhere from 12 to 18 months old, Kauffman writes.

“A New World Order”

NIC is launching this initiative as this asset class is starting to see hints of change in use and investment. Last year, for example, Irvine, Calif.-based Sabra Health Care REIT announced that it was purchasing a portfolio of four transitional care facilities located in Maryland. At the time, at the end of June, CEO Rick Matros made an interesting observation about the state of skilled nursing. “Currently, there is a small percentage of operators in the skilled nursing sector that have strategically moved their model in this direction [short stay post-surgical patients and longer term complex medical patients requiring ventilator care and other complex conditions] which we believe to be the future of the business.” Later in the year, Matros elaborated on this theory in the REIT’s Q3 earnings call.

….if you really want a good indicator as to whether operators in your skilled portfolio are moving their business to sort of a new world business model, which is short stay, transitional care, post surgical, and longer stay complex medical care, like pulmonary and vent patients, you have to look at skilled mix, which is Medicare and managed care.

Another example of this model — actually one of the first examples in the industry — is Kennett Square, PA-based Genesis HealthCare’s product offering, PowerBack Rehabilitation, circa 2012. It is a short-term care facility aimed at getting patients home within a few weeks. Patients expecting to undergo major surgery can pre-book their stay and even, if they are 50 and older, get their own personalized PowerBack Card.  “You never know when you will end up in the hospital and in need of rehabilitation,” as CEO George Hager said at the time. The first PowerBack Rehabilitation location was Brightwood Campus, north of Baltimore in Lutherville, MD.

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