“Declining demand in long-term care markets is not a popular topic, but the inaugural SNF {skilled nursing facility} report from the National Investment Center for Seniors Housing & Care (NIC) clearly shows this trend. The occupancy rates in long-term care markets have been dropping, and in the SNF category, occupancy fell from just under 85% in October 2011 to 82.8% in December 2015, according to NIC. The decline in occupancy in this specific long-term care market would have been worse if owners and operators had not been removing capacity (taking beds off-line) from the system progressively over the same period of time. When both the number of beds is declining, and occupancy is decreasing, how can this be described as anything but a late mature, early declining market?”
“The biggest single factor in the decline in demand in the long-term care markets is the Demographic Dip or Birth Dearth. Demographics are like gravity; you can learn to work with it, but you can’t deny it.”
We at CMG take issue with part of Stackpole’s remarks below. The implication that nursing homes will only be available for rich people is not correct. Strong skilled nursing facilities are emerging in the Medicaid sector.
“Compounding the challenges of declining long-term care markets, are the initiatives by CMS and … managed care organizations to reduce utilization, and ‘squeeze out’ margin in the sector. The transition from volume-based payments to value-based payments through such mechanisms as Accountable Care Organizations (ACOs) and Bundled Payment for Care Improvement (BPCI) are laudable and needed, but these will have devastating effects on the sector. The shift from volume to value will benefit the strongest (i.e., SNFs with the best quality payor mix) and disproportionately hurt SNFs serving the most vulnerable populations in our society. As intermediaries and value-based payment initiatives reduce utilization, and margin from the sector, the weakest will be forced to either close or merge with other, bigger and stronger systems.”
To read their report, please this link.
