U.S. occupancy rates at skilled nursing facilities stabilizes in Q4 2018
Occupancy at skilled nursing facilities in the United States held steady at 82.4 percent in fourth quarter 2018, virtually unchanged from the previous quarter and down 40 basis points from the previous year. The data released by the National Investment Center for Seniors Housing & Care (NIC) suggest that occupancy nationwide could be stabilizing after four years of decline.
“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.”
Occupancy increased to 83.7 percent in urban areas and declined to 80.4 percent in rural areas, according to data from NIC’s latest Skilled Nursing Report.
Kauffman added, “Even though we’re seeing stability in both rural and urban areas, rural areas face distinct challenges 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.”
Experts say declining occupancy and fewer facilities in the rural sector are concerns for the future. For example, a recent Bangor Daily News report on nursing home closures in Maine, which has lost nearly 40 facilities since 1995, said nearly a third of the state’s population is projected to be over age 65 by 2030. Yet the state has fewer nursing home beds than other states. Recent data from the Cowles Research Group indicated more than 440 rural nursing homes have closed or merged nationwide in the past decade.
The latest NIC data reveal the growing importance of private Medicare Advantage plans as a driver of skilled nursing facility occupancy. In urban areas, where occupancy increased in the fourth quarter of 2018, managed Medicare plans are experiencing significant growth. They are now responsible for one-eighth (13 percent) of skilled nursing facility revenue, up five percentage points between January 2012 and December 2018.
“Even though Medicaid still accounts for half of skilled nursing’s revenue, evidence suggests that managed care, specifically Medicare Advantage and Medicaid managed care, is the future,” said Beth Mace, NIC’s chief economist. “As low Medicaid reimbursement challenges skilled nursing, federal policymakers are making Medicare Advantage 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.”