It’s no secret that skilled nursing is going through a shakeup. Reimbursement models are changing with the increase of Medicare Advantage Plans, leaving providers struggling to make their SNF margins work while also battling severe licensed worker shortages and demands for increasing wage rates. So how are providers determining whether to SNF or not to SNF? It’s a tough question to answer. The approaches range from eliminating or deferring nursing care environments to rightsizing and redeveloping existing SNFs. The solution depends on the balance (or imbalance) of the continuum of care at your CCRC/Life Plan Community. It also depends on how your community is positioned relative to key opportunity/risk factors.

Opportunity/Risk Factors
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Growing Market/Depressed Occupancy

In addition to the explosion of the senior population, average life expectancy has increased dramatically. The US population gained 30 years of life expectancy over the last century. This senior market growth suggests ongoing support for all levels of living, including nursing care, but other challenges exist.

According to the National Investment Center, SNF occupancy dipped 27 basis points month over month, ending March at 81%. That level is down 7.8 percentage points from the pre-pandemic February 2020 level of 88.9%. In addition to these numbers, the total number of skilled nursing properties increased 2.2% month-to-month. Despite the increase in SNF units and occupancy, communities are also experiencing reduced length of stays, dampening the occupancy rebound.

Revenue Mix

The changing Medicare and Medicaid landscape continue to impact occupancy levels and revenues for SNFs. Medicare fee-for-service RPPD was $591 at the end of March, and managed Medicare ended the month at $478, a differential of $113. Depending on the business model a provider is using, this sustained decline in managed Medicare revenue per patient day puts pressure on driving higher occupancy to maintain revenues. Despite this declining reimbursement, some providers are depending on the growth of long-term managed care to sustain occupancy in assisted living, memory care and SNF environments.

Staffing Shortages and Rising Wages

In addition to these market changes, providers are seeing an increased need for experienced staff, which is made even more difficult in the face of the current workforce shortage.  As a result, the national average salary for DONs in CCRCs increased 5.49% in 2022, up from the 3.10% increase in 2021. This equates to an average annual salary of $106K. The acuity level of the average nursing care resident increased 8.25% since 2010 driving up the requirements for more skilled staff.

Senior Preferences

According to a 2021 AARP survey, 77% of adults 50 and older want to remain in their homes for the long term. This number has remained consistent for more than a decade. As seniors remain intent on aging in their homes, providers are forced to revisit their current unit mix for long-term care environments as well as consider home and community-based services.

Solutions Our Clients Are Implementing

• Phased Approach: Providers are prioritizing the opening of independent living and assisted living/memory support units to optimize financial sustainability and match growing customer desires for more residential health care environments, then expanding to include a SNF in a future phase as current CCRC residents age in place and need nursing care services.

• Right Sizing: Providers are reevaluating their mix of SNF beds based on demand and occupancy. Many are repositioning to right size their unit mix, as opposed to purely eliminating SNF beds, is a more financially viable strategy.

• SNF Consolidation: Some system providers are consolidating their current SNF environments across various campuses in a single location or eliminating beds or wings.

For more information on Greystone’s strategic planning services to right size your continuum, visit our website at www.greystonecommunities.com/services.