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 Rural Areas See Sharper Drop in Occupancy than Urban Locales

For 2017, rural skilled nursing facilities (SNFs) experienced a more pronounced decline in occupancy than urban-centered buildings, but the average occupancy for all SNFs regardless of location fell “significantly” in the fourth quarter, according to a report by the National Investment Center for Seniors Housing & Care (NIC).

The fresh data reviewed the closing quarter of 2017 as well as the yearlong statistics, and both measurements were not positive for SNFs, NIC said.

SNF occupancy in the fourth quarter of 2017 declined to 81.9 percent, down 66 basis points from the previous quarter and 159 basis points year-over-year, NIC’s Skilled Nursing Data Report said. Rural occupancy declined 381 basis points from December 2016 to December 2017, while urban occupancy experienced a 148 basis point decline.

Bill Kauffman, senior principal at NIC, said the numbers were down even as the country recorded a relatively early and severe flu season. An aggressive flu outbreak often leads to an increase in occupancy in a typical fourth quarter, he said.

On the rural-urban occupancy divergence, NIC Chief Economist Beth Burnham Mace said a combination of factors, including demographics and competition from home health care and telehealth, played roles in the data’s findings.

NIC also said revenue from Medicaid now represents just under half of all revenue at skilled nursing properties (49.3 percent), which is up 70 basis points from the prior year (fourth quarter, 2016). Revenue from Medicare, which pays the most for SNF care, declined to 22.8 percent, down 98 basis points from the prior year.

Other data showed that managed Medicare revenue per patient day (RPPD) hit a new low of $433. But, NIC said this lower revenue trend from managed Medicare is more prevalent in urban areas. “Additionally, more of the total patient days, or the amount of skilled nursing business coming from private payers, either private insurance or payment out of pocket, was higher in rural areas (15.6 percent) than it was in urban areas (6.5 percent),” the report said.

Kauffman said a possible explanation for the differences among geography types is that urban SNFs may face fiercer competition for private payer market share, brought on in part because of a greater supply of home care and other seniors housing.

The NIC Skilled Nursing Data Report is available at http://info.nic.org/skilled_data_report_pr.

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