Managed Medicare Patient Day Mix Continues Increase

NIC MAP^® Data Service, powered by NIC MAP Vision, an affiliate of NIC, released its latest Skilled Nursing Monthly Report on May 6, 2021, which includes key monthly data points from January 2012 through February 2021.

Here are some key takeaways from the report.

The occupancy rate for skilled nursing increased by 42 basis points in February 2021, edging up to 71.2% from its all-time low of 70.7% in January. This brought the occupancy rate back to its December 2020 level. Despite the February improvement, occupancy remains 13.7 percentage points below its year-earlier level. There have been only three monthly-increases since the pandemic started and the February increase was the largest among them. The other two increases were short-lived in September and October of 2020 due to the Fall/Winter surge of COVID-19 cases across the country. There is cautious optimism that occupancy will continue to inch higher and stabilize in 2021 but questions remain of how consistent and how fast these month-to-month improvements will be.

Medicare patient day mix decreased in February, ending the month at 13.4%. This represents a 142-basis point decrease from January and a 175-basis point drop from December 2020. On the other hand, managed Medicare patient mix increased from January and ended February at 7.9%, up 107 basis points since December and up 255 basis points from the 2020 low set in May last year. It is possible that managed Medicare patient days are starting to increase after significant declines due to elective surgery delays and home health competition during the pandemic.

Managed Medicare revenue mix increased by 48 basis points from January to 11.1% in February. The revenue mix trends provide further evidence that managed Medicare admissions may be increasing as they are up 275 basis points from the 2020 low set in May last year. In addition and in a similar trend to patient day mix, Medicare revenue mix decreased 171 basis points from January to end February at 23.4%. This suggests there was less need to convert Medicaid patients to Medicare as resident cases of COVID-19 declined in February.

Medicaid patient day mix increased in February after hitting a multi-year low of 64.8% in January. It increased 110 basis points from January but is still down 119 basis points from February 2020. In addition, Medicaid revenue mix increased from January, ending February at 48.6%. However, it has decreased 6.4 percentage points from February 2020 suggesting Medicaid patient days have dramatically decreased from one year ago, due to lower overall admissions and some Medicaid patients who may have converted to Medicare due to the waiver of the 3-Day Rule during this crisis period.

To get more trends from the latest data you can download the Skilled Nursing Monthly Report here. There is no charge for this report.

The report provides aggregate data at the national level from a sampling of skilled nursing operators with multiple properties in the United States. NIC continues to grow its database of participating operators in order to provide data at localized levels in the future. Operators who are interested in participating can complete a participation form here. All data is maintained with strict confidentiality.

About NIC MAP Vision:

NIC MAP Vision, an affiliate of NIC, is a leading provider of comprehensive market data for the seniors housing and care sector. NIC MAP Vision brings together two strong, well-respected, and complementary teams and platforms – the market-leading NIC MAP^® Data Service (NIC MAP) and VisionLTC’s best-in-class market research analysis platform. For more information, visit www.nicmapvision.com.

“Are we beginning to see signs of an upward inflection point in occupancy? The market fundamentals data continue trending positively as seen in the most recent ESI results. Between 40% and 57% of organizations reported upward changes in occupancy depending on care segment. This is especially the case for nursing care. The survey shows a clear trend of 50% or more organizations with nursing care beds reporting occupancy rate increases for six consecutive waves of survey data (collected between February 8 and May 2), without notable increases in the pace of move-outs.  Moreover, data compiled in NIC’s Skilled Nursing COVID-19 Tracker clearly shows that COVID-19 cases in skilled nursing communities have fallen dramatically and at a faster pace than the broader population since the launch dates of the Pfizer and Moderna vaccines in long-term care settings in late December. These results are further substantiated by an increase, albeit modest, in February skilled nursing occupancy statistics as reported in NIC’s May Skilled Nursing Data Report.”

–Lana Peck, Senior Principal, NIC

NIC’s Executive Survey of operators in seniors housing and skilled nursing is designed to deliver transparency into market fundamentals in the seniors housing and care space as market conditions continue to change. This Wave 27 survey includes responses collected April 19 to May 2, 2021 from owners and executives of 77 small, medium, and large seniors housing and skilled nursing operators from across the nation, representing hundreds of buildings and thousands of units across respondents’ portfolios of properties.

Detailed reports for each “wave” of the survey and a PDF of the report charts can be found on the NIC COVID-19 Resource Center webpage under Executive Survey Insights.

Wave 27 Summary of Insights and Findings

• As in the Wave 23 survey (conducted in late February) respondents to the Wave 27 survey were asked to list one of the things that their organization plans to keep doing, stop doing, bring back and further develop. Necessity bred innovation during the worst days of the pandemic. Now, due to widespread penetration of the COVID-19 vaccine among seniors housing and care residents, many organizations are restoring the value proposition of living in seniors housing. With visitation and social distancing restrictions cautiously abating, parties and social gatherings, communal dining, group activities and events, off campus outings—and safely hosting visitors in-house—are starting anew.
• In the Wave 27 survey, organizations remain dedicated to continuing ongoing infection mitigation, health screenings of residents and visitors, and many respondents say their organizations are committed to further developing their use of technology including platforms for facilitating resident/family communications, remote work and employee training, comprehensive company-wide reporting, digital marketing including search engine optimization (SEO) lead generation, and telehealth/telemedicine. Others will continue developing niche services and healthcare partnerships. Some plan to cut back on COVID-19-related staff wages, and the cohorting of staff, meal delivery/take-out only dining, but continue to limit especially large or crowded group gatherings. Buffet-style dining may well be a relic of the pre-pandemic era.

• In the current and prior waves of the survey, respondents were asked if their organizations had seen an increase in resident lead volume since the beginning of the year—and if they had—is lead volume above pre-pandemic levels? As shown in the chart below, roughly nine out of ten organizations reported an increase in lead volume (89%); one-quarter reported lead volume currently above pre-pandemic levels (26%).
  

• Between two-thirds and one-half of respondents note that the pace of move-ins accelerated in the past 30-days. The shares of organizations reporting acceleration in the pace of move-ins remained at or above 50% with the highest share noted for the assisted living care segment (64%) and the lowest for the nursing care segment (50%). The independent living care segment saw the largest share of organizations reporting acceleration in move-ins (57%) since the beginning of the survey in March 2020.

• The Wave 27 survey data continue to show a trend in the shares of organizations reporting higher occupancy for the independent living, assisted living and memory care segments, and each of the care segments (except nursing care) set new peaks in the time series. Between 40% and 57% of organizations reported upward changes in occupancy depending on care segment.
• Given that the survey shows a clear trend of 50% or more organizations with nursing care beds have reported occupancy rate increases for six consecutive waves of survey data (collected between February 8 and May 2), without notable increases in the pace of move outs—and further supported by an increase in occupancy reported in NIC’s May Skilled Nursing Data Report—nursing care occupancy may have reached an inflection point.

• The degrees of occupancy change vary. As referenced and shown in the chart above, occupancy increases in organizations with memory care residences peaked in the Wave 27 survey. As shown in the chart below, about one-quarter with memory care units reported no change in occupancy (27%), but about one-third reported increases of five percentage points or more (30%).

• In the face of historically low occupancy rates according to NIC MAP® data, powered by NIC MAP Vision, in the first quarter of 2021 (all-time low of 78.8% seniors housing occupancy rate), on average, about 50% of respondents to the survey since July 20 indicated their organization was offering rent concessions. As of Wave 27, two thirds (65%) of organizations with three or more properties in their portfolios are offering rent concessions to more than half (54%) or all of their properties (11%).
• Three-quarters of respondent organizations are offering discounts on rent (78%), like the Wave 26 survey, but one-half (53%) are offering free rent for a specified time (down from 65% in Wave 26). Non-monetary benefits and “something else” include community fee discounts, waiving second person fees, moving allowances, and locking in rent freezes.

• Fifteen months into the pandemic, the share of organizations that report staffing shortages has grown to nine out of ten (90%)—up from two out of three (68%) in the Wave 25 survey conducted in late-March to early-April. One-third (34%) of organizations with more than three properties in their portfolios are experiencing staffing shortages in all their properties—up from one-quarter (24%) in the prior survey.

• To attract community staff, 83% of respondent organizations are increasing wages, 79% are offering referral bonuses, 65% are offering hiring/sign-on bonuses and/or flexible schedules. Roughly 35% are doing student outreach, 33% enhancing benefits, and 20% are offering apprenticeship programs.

• According to Wave 27 seniors housing and care survey respondents, on average, nine out of ten residents (92%) of their respective properties—including all care segments across their portfolios—have been fully vaccinated for COVID-19. Having residents vaccinated has made a significant impact in opening communities. Staff uptake of the vaccine, however, leveled off between Waves 25 and 27 (63% to 66%, respectively).

• In the past five waves of the survey (Waves 23 through 27), there has been consistency in the share of organizations that definitely/probably will mandate the vaccine for staff, ranging from 20% in Wave 24 to 27% in Wave 25. Currently, one-quarter of respondent organizations indicate they will likely mandate a vaccine policy for employment.

Wave 27 Survey Demographics

• Responses were collected between April 19 and May 2, 2021, from owners and executives of 77 seniors housing and skilled nursing operators from across the nation. Owner/operators with 1 to 10 properties comprise 57% of the sample. Operators with 11 to 25, and 26 properties or more, make up 43% of the sample (22% and 21%, respectively).
• Roughly one-half of respondents are exclusively for-profit providers (55%), 33% are nonprofit providers, and 12% operate both for-profit and nonprofit seniors housing and care organizations.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 71% of the organizations operate seniors housing properties (IL, AL, MC), 24% operate nursing care properties, and 35% operate CCRCs (aka Life Plan Communities).

Owners and C-suite executives of seniors housing and care properties, please help us tell an accurate story about our industry’s performance.  Now, more than ever, we need your response so that we can track firsthand the inflection point on occupancy. This will be a turning point and we want all of our industry stakeholders to know when this important moment occurs. 

The current survey is available and takes 5 minutes to complete. If you are an owner or C-suite executive of seniors housing and care and have not received an email invitation to take the survey, please click this link, which will take you there.

NIC wishes to thank survey respondents for their valuable input and continuing support for this effort to bring clarity and create a comprehensive and honest narrative in the seniors housing and care space at a time when trends are continuing to change in our sector.

On Monday, the U.S. Department of Treasury announced the launch of the Coronavirus State and Local Fiscal Recovery Funds, established by the passing of the American Rescue Plan in March. The recovery funds provide $350 billion in emergency funding for eligible state and local governments and provide substantial flexibility for each jurisdiction to meet local needs—including support for households, small businesses, impacted industries, essential workers, and the communities hardest-hit by the crisis.

This Treasury Department Fact Sheet outlines generalized categories of eligible uses for the funds, including support for public health expenditures, addressing negative economic impacts caused by the public health emergency, and providing premium pay for essential workers. It is also stated that “recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities.”

Suggested uses to support the public health response include vaccination programs, medical expenses, testing, contact tracing, PPE purchases, support for vulnerable populations to access medical or public health services, and ventilation improvements in key settings like healthcare facilities. In a March 2021 letter to the Department of Treasury, Argentum emphasized that “over the past year, senior living providers in the United States have incurred more than $15 million in COVID-related expenses for procuring PPE, infection control supplies, hero pay, and additional staff costs,” while also noting that “more than 85% of these communities in the United States do not receive state or federal funding…This means these communities have not had the same access to federal relief as other providers.”

Argentum President and CEO James Balda said the Association and its state partners have been meeting with governors and state legislators to request prioritized funding. “We are extremely pleased that additional resources may soon be on their way to help these communities – many of whom are still struggling from the steep costs and lost revenue due to COVID-19,” Balda said.

With respect to providing premium pay for essential workers, the announcement highlights that “Since the start of the public health emergency, essential workers have put their physical well-being at risk to meet the daily needs of their communities and to provide care for others. Many of these essential workers have not received compensation for the heightened risks they have faced and continue to face.” Although it is made clear that there is a broad range of essential workers, i.e., anyone who must be physically present at their job, skilled nursing staff are the first group to be listed specifically.

Funding is expected to be distributed beginning this month, and states and entities will have until the end of 2024 to spend the funds.

Key Takeaways. This blog examines the impact COVID-19 deaths through late-April 2021 have had on near-term supply needs for seniors housing. We conclude there are 41,000 fewer units needed at the national level in the near-term than what may have been projected prior to the COVID-19 pandemic. For perspective, 41,000 units is larger than the entire seniors housing inventory in the Philadelphia metropolitan market.

Background. In 2019, NIC published a whitepaper titled, Looking into the Future: How Much Seniors Housing Will Be Needed?. The paper provided supply projections out to the year 2040 for seniors housing at the national level. The paper considered differing scenarios of penetration rates as well as age cohorts (i.e., 75-plus, 80-plus, 85-plus). Based on the 85-plus cohort and the 30% penetration scenario, it concluded that 1,657,868 units of seniors housing would be needed in 2021.

This blog provides an update to these projections using data from the U.S. Census along with provisional death counts to COVID-19 for seniors 85+ from the CDC and National Center for Health Statistics (NCHS).

Findings. The CDC reports weekly updates of provisional COVID-19 death counts by sex and age. As of April 28, 2021, the CDC reported that provisionally 169,545 people aged 85+ in the United States have lost their lives to the COVID-19 pandemic. This staggering number is tragic and reflects the fact that elderly individuals have been the most vulnerable to this insidious virus. These deaths accounted for 30% of all deaths associated with COVID to date. We at NIC express our deepest sympathies to those who lost loved ones and we understand that each one of the 169,545 individuals are more than just numbers and statistics. Importantly, the death counts that the CDC reports are provisional and may be upwardly adjusted as the data is revised. They are based on the death certificates that the National Center for Health Statistics has received and coded at the time of reporting. The CDC notes that the five most recent weeks of reporting are typically less than 90% complete.

As a result of these deaths, NIC Analytics estimates that the revised projected units needed for 2021 using the same methodology as used in the whitepaper for the 85+ cohort and 30% penetration rate is 41,000 fewer units than were projected to be needed in the original 2019 analysis. These 41,000 units represent a 2.5% decrease from the units originally projected for 2021 for the 85+ cohort (1,657,868). For perspective, this volume of units is:

• Larger than the number of open seniors housing units for 29 of the 31 individual metropolitan market inventories that comprise the NIC MAP Primary Markets as of 1Q21.
• Greater than the entire open seniors housing inventory in Philadelphia (40,596 units) as of 1Q21.

Further, if we scale these 41,000 units back to the 99 NIC MAP Primary and Secondary Markets (using the same methodology that we’ve used in the NIC Investment Guide), this scales to 25,300 fewer units needed due to the loss in life from pandemic-related deaths for the NIC MAP Primary and Secondary Markets. For perspective, this value is:

• More than of all the net seniors housing absorption for the NIC MAP Primary and Secondary Markets in 2019 (nearly 24,000 units).
• 96% of the inventory growth that occurred during 2020 for the NIC MAP Primary and Secondary Markets.
• More than all the seniors housing construction starts in the last five quarters (nearly 20,900 units broke ground from 1Q 2020 through 1Q 2021) in the NIC MAP Primary and Secondary Markets.

Methodology and calculation. Considering the tremendous loss of life to COVID-19, we wanted to provide an estimate of what the impact of these deaths is to the supply projections we published in 2019. As stated earlier, the CDC provisionally reported that 169,545 people aged 85+ in the United States had lost their lives to the COVID-19 pandemic from the beginning of the pandemic through April 28^th, 2021.

From the U.S. Census Bureau population projections published in 2017, the population projected to be 85+ on July 1, 2021 was 6,808,852. We aren’t yet at July 1, 2021, which means there are some people who will turn 85 between April 28 and July 1, and there will also sadly continue to be loss of life as well. We chose to use the 2021 population projection and provisional death counts through April 28 instead of using the population projection for 2020 as 2020 would not have captured the full impact of the pandemic thus far. Subtracting the 169,545 COVID-19 related deaths that occurred in 2021 from the population projection yields 6,639,307 people.

For our analysis, we used households as the unit of demand in order to use NIC’s penetration rates which are based on households. In our 2019 whitepaper, we converted population projections from the U.S. Census Bureau by age cohort through 2040 to projections of households using a conversion ratio of 1.23 persons per household for the 85+ cohort. This conversion ratio was based on the U.S. Census 2017 American Communities Survey of households and population. This shifts the population of 6,639,307 individuals 85+ and becomes 5,397,811 households 85+.

Then, we applied the same seniors housing penetration rate for households over 85 of 30% and derived a projection of 1,616,586 as the number of units that would be needed in 2021 (if the same penetration rate from the whitepaper were to be maintained). This value is less than the 1,657,868 originally projected for the 85+ group at 30% penetration for 2021 from the 2019 whitepaper.

Caveats and limitations to this analysis. There are a few caveats to this analysis. First, and as stated above, the death counts used in this analysis will likely be upwardly revised because the death measures are provisional. Sadly, more people will lose their lives to COVID-19. Second, this analysis does not consider the changes in consumer attitudes about the sector that have occurred during the pandemic, nor does it consider any potential pent-up demand bounce that could affect the penetration rates; it assumes the penetration rates remain static. And lastly, this analysis also does not take into account occupancy, it is based on population estimates, provisional death counts, penetration rates (not occupied penetration rates), and the population to households conversion factors.

Conclusions. Our thoughts continue to be with all who have lost a loved one to COVID-19 and with the staff of seniors housing and nursing care properties who continue battling the virus on the front lines. We respect and appreciate all of the hard work and constant care. The results of this analysis show that the projected units needed to service the 85-plus cohort are less than what would have been had COVID not occurred.

The Labor Department reported that nonfarm payrolls rose by 266,000 in April.  This was a sharp slowdown from the downwardly revised gain of 770,000 in March, originally reported as 916,000. The consensus estimates for April had been for a gain of 1,000,000. Despite the April increase, job levels remain 8.2 million below the pre-pandemic levels of February 2020.

Employment in health care changed little in April (-4,000) as a gain in ambulatory health care services (+21,000) was largely offset by a job loss of 19,000 in nursing care facilities. Health care employment is down by 542,000 since February 2020.  

Separately and from a separate survey, the Labor Department reported that the unemployment rate edged up to 6.1% from 6.0% in March. The jobless rate is now 2.6 percentage points above the pre-pandemic level of 3.5% seen in February 2020, but well below the 14.7% peak seen in April.  

The underemployment rate or the U-6 jobless rate was unchanged at 10.4% down from 10.7% in March. This figure includes those who have quit looking for a job because they are discouraged about their prospects and people working part-time but desiring a full work week.  

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed from March at 4.2 million but is 3.1 million higher than February 2020, suggesting that this continues to be a very challenging time for many Americans. Long-term unemployed persons account for 43.0% of the total number of unemployed persons.  

The labor force participation rate, which is a measure of the share of working-age people who are employed or looking for work was steady at 61.7% in April but is 1.6 percentage points lower than in February 2020. Many workers have dropped out of the labor force since the pandemic began to take care of family members or out of fear of working and catching the virus.  

Average hourly earnings for all employees on private nonfarm payrolls rose by $0.21 in April to $30.17, a gain of 0.3% from a year earlier. This was well below the 4.2% annual gain recorded in March. Notably, however, the pandemic has affected the ability to fully interpret the wage data due to the wide swings in employment trends. 

The change in total nonfarm payroll employment for February was revised down up by 68,000 from a gain of 468,000 to 536,000 and the change for March was revised down by 146,000 from 916,000 to 770,000. With these revisions, employment in February and March combined is 78,000 lower than previously reported. Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.

The April data was disappointing after such robust gains in recent prior months. It may reflect ongoing health-related concerns about the pandemic and the need for workers to still take care of family members, especially school-aged children. That said, the ongoing drop in COVID cases, the widespread distribution of vaccines, and a shift in consumer confidence should support a more complete re-opening of the economy and a fuller recovery in jobs in the coming months. The weak April number also suggests that the Fed will continue in its resolve to not alter its stated monetary policy goals and will keep its bond-buying program intact and interest rates low as it pursues its full employment goal.