On March 13, 2019, NIC released the Q4 2018 NIC Skilled Nursing Data Report and it contains some interesting data.

By Steve Moran

On March 13, 2019, NIC released the Q4 2018 NIC Skilled Nursing Data Report and it contains some interesting data, likely the most important being that occupancy seems to have stabilized in the range of 82.5% since April of 2018. I spoke to Bill Kaufmann and Beth Mace of NIC about the report. Here are some highlights based on the report itself and my conversation with Bill and Beth.

  • Managed Medicare Revenue on a per patient day increased slightly, though it is too early to call this a trend.

  • Private pay revenue per patient day was more or less flat.

  • Managed Medicare care as a percentage of the total revenue mix continues to grow. It now sits at 11%.

  • There continues to be a decline in occupancy in rural nursing homes while occupancy in urban areas increased to 83.7%; it declined to 80.4% in rural areas.

What Does It All Mean?

The nursing home business continues to be a kind of jumbled hairball mess; some operators in some states doing great, others just barely breaking even, and some closing their doors for good. The challenges abound. Labor costs are going up and, in some cases, staff can’t be found at any cost that is affordable.

While the occupancy numbers are slightly more optimistic, I can’t help but wonder if the only way we will see meaningful improvement is for more and more beds to be removed from the marketplace. First glance would suggest that this might even be a good thing, but there are challenges:

  • Rural communities are being particularly hard hit and in too many cases it means displacing residents from their home communities. They are also being hard hit because these small towns have such a small pool of skilled workers to draw from.

  • Managed Medicare is becoming more and more of a thing. It is for sure better than Medicaid but not nearly as good as traditional Medicare and this will likely continue to impact revenue and the bottom line.

  • The current healthy economy while good for most industries makes pretty much everything that a nursing home does harder and more expensive.

  • Nursing home care is a big expense for the federal government and they will continue to work on reducing costs and demanding better outcomes; twin goals that are not very compatible.

Fundamentally nursing homes need to reinvent themselves. They serve an important need and yet no one loves them. It is likely true there will never be much love, but I do believe there is opportunity for reinvention that would create a much better user experience and the trickle-down effect would be higher occupancy and more willingness on the part of the government to reduce the regulatory burden and to increase revenue.