Skilled Nursing Occupancy Hits New 5-Year Low

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Last quarter, skilled nursing occupancy was lower than it had been in years—and that could be due to the emerging impact of health care delivery and payment reforms, according to the latest Skilled Nursing Data Report from the National Investment Center for Seniors Housing & Care (NIC).

The report, released Thursday, is based on data from about 1,500 skilled nursing properties in 47 states from October 2011 through June 2016.

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Skilled nursing occupancy fell to a five-year low in the second quarter of 2016, dropping 123 basis points quarter-over-quarter to 82.2%, the report shows. This represents the lowest occupancy recorded since NIC began tracking skilled nursing occupancy data in October 2011. Though skilled nursing occupancy typically drops in the second quarter every year, this year’s second-quarter decline was more significant than in previous years, the report notes. This implies that factors other than seasonality are impacting the lower occupancy, including several health care delivery and payment reform initiatives that are beginning to impact the industry.

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Skilled mix was the primary driver of lower occupancy, the report says, as Medicare patient day mix hit 13.5%. This represents a drop of 107 basis points from the first quarter of 2016. Managed Medicare patient day mix fell as well, hitting 5.8% of patient days in the second quarter of 2016, the report shows.

Additionally, the rate of decline within managed Medicare revenue per patient day (RPPD) slowed, implying the managed Medicare rate of decline could be plateauing, the report says. The quarter-over-quarter drop to $437.85 per day was just -0.2%, compared with the steep drops of -1.2% and -1.7% recorded in the previous two quarters.

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Medicaid RPPD also increased a bit in the second quarter of 2016, marking a change from the flat growth recorded in the first quarter of 2016. The June Medicaid RPPD rate of $198 represents the highest rate since October 2011 and reflects a compound annual growth rate of 1.23% since October 2011, the report says.

Written by Mary Kate Nelson

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