NIC Report: Skilled Nursing Occupancy Hits Lowest Point in Five Years

by Jeff Shaw

ANNAPOLIS, Md. — Skilled nursing occupancy has continued its free-fall, hitting a five-year low of 81.7 percent in the second quarter of 2017, according to a report released by the National Investment Center for Seniors Housing & Care (NIC).

Based in Annapolis, NIC is a nonprofit research and analytics organization serving the seniors housing industry.

The occupancy rate is 100 basis points lower than the previous quarter. It also represents the third consecutive year-over-year decline, falling 147 basis points from second-quarter 2016 to second-quarter 2017, 162 basis points from 2015 to 2016 and approximately 70 basis points from 2014 to 2015.

The report notes that the second quarter is usually a seasonally low point for occupancy, but occupancy continued to fall through the end of the year in 2016 and 2015. “Occupancy may fall even further in the second half of 2017,” the report states.

“Pressure on occupancy witnessed over the last two years has several drivers, including policy changes from the Centers for Medicare & Medicaid Services (CMS) that discourage skilled nursing utilization or encourage short lengths of stay for Medicare patients in an attempt to bend the cost curve,” says Liz Liberman, healthcare analyst for NIC. “Indeed, NIC data indicates that pressure on Medicare patient day mix began in early 2015, which is also when overall occupancy started to decline.”

The numbers are surely unwelcome news for skilled nursing owners and operators, many of which have struggled amid changes to the healthcare model through the Affordable Care Act and other factors. Many of the major healthcare REITs have spun off or divested the majority of their skilled nursing portfolios in recent years to reduce exposure to the sector.

To read the full report, click here.

— Jeff Shaw

You may also like