Occupancy rate at U.S. skilled nursing facilities increases to 82.2%

Occupancy of U.S. skilled nursing facilities increased to 82.2 percent in the third quarter of 2018, up from second quarter, according to the latest data report from the National Investment Center for Seniors Housing & Care (NIC).

Experts say the increase is surprising, given occupancy has declined or been flat between the second and third quarters for the past three years.

“While the increase in occupancy is notable after several quarters of decline, a one-quarter increase does not yet mean we’re witnessing a new trend,” said Bill Kauffman, senior principal at NIC. “The last couple of years have seen a negative growth rate among the 83 to 87 year-old cohort — a key demographic most likely to use nursing homes. This quarter’s data may show the beginnings of a turn around.”

NIC experts say changing usage patterns are affecting skilled nursing facility occupancy rates. Factors that may be at play include:

• Medicare Advantage (MA) is gaining ground and encourages shorter lengths of stay.
• Medicaid is encouraging seniors to tap home and community-based services for care over skilled nursing.
• Hospitals are increasingly discharging patients to their homes rather than to qualified skilled nursing facilities.

Other findings from NIC’s quarterly Skilled Nursing Report show the share of revenue from MA patients is up over the prior quarter at 10 percent in third quarter 2018, with a larger portion coming from urban areas (12 percent) than rural (4.7 percent). They note that rural areas are seeing MA plan growth, but more slowly than in urban areas.

“As Medicare Advantage continues its rapid growth, we’re seeing it become a larger contributor to skilled nursing revenue, while at the same time possibly contributing to occupancy declines with shorter lengths of stay,” said Beth Mace, chief economist at NIC. “With the influx of older seniors, we may start to see skilled nursing shortages as facilities close, but the numbers of potential occupants rise.”

The National Investment Center for Seniors Housing & Care provides data, analytics, and connections that bring together investors and providers.