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 SNF Occupancy Steady in 4Q18, NIC Expert Says Worst May be Over

Fresh data from the National Investment Center for Seniors Housing & Care (NIC) for the fourth quarter of 2018 point to a stabilization of skilled nursing facility (SNF) occupancy levels nationwide after four years of decline, the group said.

NIC said occupancy at SNFs held steady at 82.4 percent in the final three months of last year, virtually unchanged from the previous quarter and down less than half of one percentage point (0.4 percent) from the previous year. It has been hovering around 82.5 percent since April 2018.

“While it appears that the worst of declining occupancy has passed, it’s too early to predict whether occupancy will increase over time,” said 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.”

There was also a continuation of a trend for improved occupancy levels in urban SNFs versus weakness in rural facilities, with occupancy in the fourth quarter increasing to 83.7 percent in urban areas and declining to 80.4 percent in rural areas.

Kauffman said the challenges rural owners/operators face are distinct and “brought on by lower levels of occupancy, low reimbursement rates, and labor concerns. These factors have contributed to hundreds of facilities closing in rural areas.”

Another highlight of the latest NIC findings is the growing importance of private Medicare Advantage (MA) plans as a driver of SNF occupancy, most notably in urban areas. “They [MA plans] are now responsible for one-eighth (13 percent) of skilled nursing facility revenue, up 5 percentage points between January 2012 and December 2018,” the report said.

Beth Mace, NIC’s chief economist, said even though Medicaid still accounts for half of skilled nursing’s revenue, there is now evidence that managed care, specifically Medicare Advantage and Medicaid managed care, is the future.

“As low Medicaid reimbursement challenges skilled nursing, federal policymakers are making MA 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,” she said.

NIC said managed Medicare revenue per patient day (RPPD) increased slightly in the fourth quarter of 2018, ending the year at $430. Any ease in pressure on managed Medicare RPPD would be a positive for skilled nursing operators as the past few years have seen a downward trend, the report said.

The managed Medicare RPPD has decreased from $495 in January of 2012 to $430 as of December 2018. There has not been a quarterly increase in managed Medicare RPPD since the fourth quarter of 2016 when the RPPD was at $449.

“However, RPPD is down 1.7 percent compared to a year ago in December of 2017 when managed Medicare RPPD was at $437. Managed Medicare RPPD trends varied by geography as rural areas saw a decrease and urban areas represented a slight increase. Urban cluster areas increased as well,” the report said.

Read more about the NIC SNF occupancy report at

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