NIC Notes

Insights in Seniors Housing & Care

By: Bill Kauffman  |  April 13, 2016

Initial Findings: NIC’s Skilled Nursing Data Report

Economic Trends  |  Skilled Nursing

NIC released its initial Skilled Nursing Data Report on March 10, 2016. The report included a few key data points that showed time-series data from October 2011 through December 2015. This week’s blog post provides a more detailed analysis of the current data release.

Occupancy Continued Gradual Decline

The decline in skilled nursing property occupancy has been a topic of discussion for the past few years. And as we take a deep dive into the occupancy trends, we see that it indeed decreased 180 basis points from 84.6% in October of 2011 to 82.8% in December of 2015. This drop was likely caused by increased resident turnover resulting from a decline in average length of stay, especially for short-stay residents due to the increased penetration of managed Medicare (a.k.a. Medicare Advantage). The decline in occupancy accelerated in the last 12 months, dipping 144 basis points from 84.2% to 82.8%. The decline in the final quarter of 2015 was 30 bps.


Managed Medicare Rates Decreased 2.5% Annually

If the decline in occupancy has been a central subject for discussion in our industry, Medicare Advantage (MA) is even more so. The report showed that rates per day decreased by 10.1% from October 2011 to December 2015 as managed care rates were cut and companies increased their enrollments, giving them greater power to negotiate pricing with providers. The rate fell from $482.66 to $434.15 during the period for a compound annual growth rate of -2.5%. The pace of decline picked up in the last year, as  the rate declined from $453.32 to $434.15, a -4.2% decline.

Medicare Rates Oscillated But Stayed Flat

In addition, the data release showed that Medicare rates were basically flat when comparing October 2011 to December 2015, with the rate decreasing slightly from $500.74 to $496.98 during the time period. The rates fluctuated throughout the period, hovering around the $500-per-day mark. From a year-over-year perspective, rates declined -0.6% from $500.17 in December 2014 to $496.98 in December 2015.

Medicaid Rates Increased 1.3% Annually

In analyzing the Medicaid rates from October 2011 through December 2015, we found that the rates increased 5.5% over the entire period, registering a compound annual growth rate of 1.3%. The rate grew from $187.75 in October 2011 to $198.02 in December 2015. The growth in rates decelerated over the past year, with the growth rate at a mere 0.2% from 2014 to 2015. The rate rose slightly from $197.60 in December 2014 to $198.02 in December 2015. In comparison, the growth rate from December 2013 to December 2014 was 1.7%, as rates grew from $194.23 to $197.60.


A Seasonal Influence on Quality and Skilled Mix?

Quality mix, which includes all payer sources but Medicaid, was flat from October 2011 to December 2015, experiencing some volatility but staying around 34.5%. Skilled mix, which represents mostly Medicare and Managed Care residents, increased by 1.6% over that same time period and was 25% as of December 2015. Quality and skilled mix typically spike in February and March each year, suggesting some seasonality. For example, in February 2015, skilled mix increased to 27.5%, up from 25.8% in December 2014, potentially caused by the flu season. We may not see the same spike in 2016, since the flu has not been as prevalent this year. The main takeaway, however, is that both skilled and quality mix have stayed relatively stable over the past few years, with skilled mix increasing slightly. The next update to the Skilled Nursing Data Report may shed more light on the seasonal influence on quality and skilled patient mix.


About Bill Kauffman

Senior Principal Bill Kauffman works with the research team in providing research and analysis in various areas including sales transactions and skilled nursing. He has lead roles in creating new and enhanced products and implementation of new processes. Prior to joining NIC he worked at Shelter Development in investing/acquiring, financing, and asset management for over $1 billion in assets. He also had key roles in the value creation and strategic planning and analysis for over 65 entities. He received his Master of Science in Finance from Loyola University Maryland and holds the Chartered Financial Analyst Designation (CFA).

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