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National Investment Center Data Show Occupancy At 82.2% And Slowing Decline In Managed Medicare Reimbursement To Nursing Homes

October 5, 2016

ANNAPOLIS, MD–-The National Investment Center for Seniors Housing & Care (NIC) today released its second-quarter 2016 NIC Skilled Nursing Data Report, showing that occupancy and the managed care (managed Medicare) daily reimbursement rate declined in the second quarter of 2016, while the Medicaid daily reimbursement rate increased. The daily reimbursement rate for skilled nursing properties (nursing homes) is also referred to as revenue per patient day.

The NIC Skilled Nursing Data Report is released quarterly and provides operators and investors with data collected from skilled nursing properties each month from October 2011 through June 2016. It includes key metrics such as occupancy and revenue per patient day by payor type.

“On the occupancy front, we usually expect some decline in the second quarter due to seasonality,” said Bill Kauffman, senior principal at the National Investment Center for Seniors Housing & Care. “In contrast with previous years, this quarter’s low occupancy rate of 82.2 percent leads us to believe that more than just seasonality is in play here, such as the impact of healthcare delivery and payment reform initiatives.”

The second-quarter 2016 report shows:

• Occupancy declined to a five-year low. Occupancy experienced a significant decline to 82.2 percent, which is the lowest occupancy recorded in this data series. While occupancy usually softens in the second quarter, in 2016 this second-quarter decline was more significant than in previous years, suggesting that lower occupancy is being driven by factors beyond seasonality. According to analysts at NIC, there are a number of care delivery and reimbursement initiatives that could be playing a role in the decline, including changes as a result of the Affordable Care Act and the growth of Medicare Advantage.

• Skilled mix declined due especially to Medicare. Skilled mix, or the percentage of a skilled nursing property’s occupancy that is attributed to Medicare and managed Medicare, was the main driver of lower occupancy as Medicare patient day mix declined significantly from the previous quarter. Managed Medicare patient day mix also declined, albeit slightly.

• The decline of managed Medicare revenue per patient day may be abating.The rate of decline within managed Medicare revenue per patient day slowed, suggesting that the managed Medicare rate of decline may be plateauing. In the second quarter of 2016, managed Medicare revenue per patient day declined to $437.85, or just -0.2 percent. In the two previous quarters, declines in managed Medicare revenue per patient day were steeper at -1.2 percent and -1.7 percent, respectively.

• Medicaid revenue per patient day hit a five-year high. Medicaid revenue per patient day grew slightly in the second quarter, which is a shift from the previous quarter’s flat growth. The June Medicaid revenue per patient day of $198 was the highest rate within this time series and reflects a compound annual growth rate of 1.23 percent since October 2011.

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