Skilled Nursing Occupancy Ticks Up Yet Again

Skilled nursing occupancy continued to increase into late summer, but labor and admissions challenges will likely continue to curtail the sector’s growth prospects, according to a new analysis from NIC Map Vision.

Occupancy rose 48 basis points from July to end the month of August at 78.8%, the highest occupancy rate since April 2020, said NIC’s Bill Kaufmann. Occupancy is up 580 basis points from its January 2021 low of 73.0%, but COVID-19 continued to plague the sector well into last year, slowing initial momentum.

“As staffing, wage growth, and general inflation pressures persist, operations for many operators will be under pressure but the long-term demand for skilled nursing services is expected to grow over time,” Kauffman said.

In addition, while Medicare revenue mix and the revenue per patient day both increased in August, they are down from earlier in the year. Kauffman says Medicare revenue mix ended August at 22.%, down from its pandemic high of 24.9%, while Medicare RPPD is down 2.9% from a peak of $590 in June 2020.  Managed Medicare revenue mix was down 15 basis points to 10.4% in August, 229 basis points above the pandemic low of 8.1% set in May 2020.

Managed Medicare revenue per patient day (RPPD) decreased in August and is down 1.2% year-over-year, Kauffman said.

“Depending on an operator’s business model, the continued decline in managed Medicare revenue per patient day can pose a challenge as the reimbursement differential between Medicare fee-for-service and managed Medicare has increased during the past two years,” he said. “However, some operators see opportunity to capture patient volume with the growth of managed care.”