Business course

Demand trends reverse for skilled nursing

After hitting dramatic lows during the pandemic, trends in demand for skilled nurses have reversed in the past year, according to the National Center for Investment in Housing and Aged Care.

From the first quarter of 2020 to the first quarter of 2021, demand, as measured by occupied stock or change in net absorption, decreased by approximately 62,000 beds on a net basis for free-standing skilled nursing facilities for the aggregate of the 31 NIC MAP primary markets. That’s according to NIC senior data analyst Omar Zahraoui in a new Blog.

“This was equivalent to 15% of the stock of occupied beds before the pandemic (1st quarter 2020). Net burn rates have averaged minus 4% on a quarterly basis over this four-quarter period,” he explained.

From the first quarter of 2021 to the first quarter of 2022, he said, demand patterns reversed. The net absorption rate averaged 1.1% quarter over quarter, which equates to over 15,350 beds absorbed on a net basis during this four-quarter period. The occupation of skilled nursing has reached its highest level since April 2020 in February, according to NIC MAP data prepared and published by NIC MAP Vision.

“While this is a very welcome positive trend and indicates some light on the horizon, the sector continues to face serious financial challenges, unfortunately for a number of reasons,” he said. writes Zahraoui.

He noted that the loss of occupancy for skilled nursing in primary markets in the first year of the pandemic was primarily a function of a contraction in demand. However, the loss of occupancy in the private seniors’ residence sector over the same period was a function of both an increase in supply and a decrease in demand.

Occupancy of privately paid senior housing for core stock declined by 9.2 percentage points between the first quarter of 2020 and the first quarter of 2021, 3.6 percentage points less than the housing sector. skilled nursing care.

Although improving, occupancy rates remain low. In addition, skilled nursing is challenged by Medicare funding cuts and Medicaid reimbursement underfunding in many states, escalating expenses, and staggering staffing shortages that are limiting admissions of residents at some skilled nursing properties, Zahraoui said.

“While ranges of uncertainty remain wide regarding when occupancy rates for skilled nursing facilities will return to pre-pandemic levels, a key question is whether obtaining a sustainable level of occupancy and revenue growth will be sufficient to increase the NOI [net operating income] and recoup losses from the sharp decline in occupancy rates, escalating expenses, and the inflationary impact associated with the pandemic,” Zahraoui wrote.