“In periods when increased cases of COVID-19 occur at properties around the country, residents require isolation and higher skilled care, allowing operators to bill at the Medicare rate instead of Medicaid. As cases decline, you will see the mix revert back.”

– Bill Kauffman

NIC MAP^® data, powered by NIC MAP Vision, released its latest Skilled Nursing Monthly Report on March 31, 2022. The report includes key monthly data points from January 2012 through January 2022.

Here are some key takeaways from the report:

Occupancy

After reaching a 19-month high level of 76.1% in December 2021, skilled nursing property occupancy fell 27 basis points to start the 2022 new year at 75.8%. The Omicron variant caused COVID-19 cases around the country to spike at the beginning of the year, which seemingly stalled the occupancy recovery. Occupancy had been relatively flat since July 2021 but the January reversal pushed occupancy to being only 383 basis points above the low point reached in January 2021 (72.0%) and it remains low compared to the February 2020 pre-pandemic level of 86.1%. The COVID-19 delta variant over the summer months and more recently the Omicron variant posed challenges to growing occupancy further. In many instances heightened absenteeism associated with sickness related to Omicron and restrictions on when staff could return to work safely caused many operators to limit patient admissions because they were unable to have sufficient numbers of staff to care for patients. With a national unemployment rate of 3.8% in February 2022 and the number of skilled nursing workers at the national level remaining 15% below pre-pandemic levels, the labor crisis is unlikely to abate anytime soon.

Medicare

Medicare revenue per patient day (RPPD) increased slightly from December 2021 to end January 2022 at $585. This was an increase from $580 in December and its highest level since June 2020. The January increase was likely due to the need for more skilled care as some residents contracted the Omicron variant. The federal government implemented many initiatives to aid operators of properties for cases of COVID-19, including increases in Medicare fee-for-service reimbursements to help care for COVID-19 positive patients requiring additional care. Meanwhile, Medicare revenue mix also trended up in the month of January, increasing 411 basis points from 21.1% to reach a pandemic high of 25.2%. Given the elevated number of COVID-19 cases in January, this suggests there was a significant uptick in the utilization of the 3-Day Rule waiver as COVID-19 cases increased in the month of January. The 3-Day Rule waiver was implemented by Centers for Medicare and Medicaid Services (CMS) to eliminate the need to transfer positive COVID-19 patients back to the hospital to qualify for a Medicare paid skilled nursing stay, hence increasing the Medicare census at properties. As the cases decline, the Medicare revenue share is likely to decline as well.

Managed Care

Managed Medicare revenue mix increased 54 basis points from December to end January at 10.5%. This was up 258 basis points from pandemic low set in May 2020 of 8.0%, but 57 basis points below the most recent highwater mark of 11.1% prior to the pandemic. The increase is likely due to growth in elective surgeries from the early days of pandemic, which typically creates additional referrals to skilled nursing properties. Meanwhile, Managed Medicare revenue per patient day (RPPD) inched up from $453 to $454 in January and has fluctuated around this value since August. Compared to its year-earlier value of $468, it is down 2.9%, however and it is down $106 (19%) from January 2012. It continues to create pressure on operators’ revenue as managed Medicare enrollment continues to expand its reach and coverage around the country. The persistent decline in managed Medicare revenue per patient day continues to result in an expanded reimbursement differential between Medicare fee-for-service and managed Medicare, which has accelerated during the pandemic. Medicare fee-for-service RPPD ended January 2022 at $585, representing a $130 difference. Pre-pandemic, in February of 2020, the differential was $99.

Medicaid

As Omicron cases spiked in January, Medicaid patient day mix decreased 269 basis points to 63.7%. It has decreased 313 basis points from the most recent high set in in September 2021. In a similar trend, Medicaid revenue mix deceased in January, declining 258 basis points to 47.5%. As mentioned above, this was likely due to the spike in Omicron cases in January as operators moved residents from Medicaid to Medicare days as they required isolation and higher skilled care. Meanwhile, Medicaid revenue per patient day (RPPD) decreased 1.6% from December 2021 to end January 2022 at $245. After hitting a high of $249 in October 2021, it is now at a level last seen in May of 2021. However, Medicaid reimbursement has increased more than usual as many states embraced measures to increase reimbursement related to the number of COVID-19 cases. Medicaid has increased 3.4% since February 2020. On the other hand, covering the cost of care for Medicaid patients is still a major concern as reimbursement does not cover the cost of care in many states. In addition, nursing home wage growth is elevated along with overall inflation, and staffing shortages are a significant challenge in many areas of the country.

To get more trends from the latest data you can download the Skilled Nursing Monthly Report. 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 to provide data at localized levels in the future. Operators who are interested in participating can complete a participation form. NIC maintains strict confidentiality of all data it receives.

New to NIC’s professional development offerings, the Skilled Nursing Boot Camp: Evaluating the Investment Landscape course offers participants an in-depth perspective on how value is created in skilled nursing.

The course is designed for those new to the industry as well as those who wish to stay current on underwriting skilled nursing properties. It will orient participants to the nuances of skilled nursing. Participants will be able to understand the unique risks associated with skilled nursing and how they may be mitigated.

NIC will host a virtual Skilled Nursing Boot Camp: Evaluating the Investment Landscape course next month. The course will open on Thursday, April 28, with a live virtual class taking place on Thursday, May 5, from 3:00 pm to 5:00 pm EST.

Developed in conjunction with the NIC Future Leaders Council, the event is structured around a case study grounded in today’s reality that will expound on options from a property owner’s perspective. Participants will hear mock offers and pitches for consideration to determine if they should sell the property, hold the property, and/or retain a new operator.

Prior to and during the course, participants will receive an overview outlining skilled nursing industry trends, from both operators and investors, who will outline key factors for consideration. During the engaging 4-hour course itself, experts will detail approaches on how to analyze the decision.

Topics include:

• • Industry Overview
  • History of Growth in Skilled Nursing
  • Investment Considerations
  • Operational Considerations
  • Capital Market Structure

Course participants will work together in small virtual groups to discuss their prospective options and then collectively decide whether to sell, hold, and/or retain a new operator. Before the course concludes, the small groups will share their respective decisions and rationale with the other groups to gain additional perspectives.

The Skilled Nursing Boot Camp is currently open for registration.

The pandemic disruption in all its forms continues to test and challenge the senior housing sector. But the level of agility, preparedness and responsiveness among senior housing operators has never been higher and remains a tailwind for senior housing demand, as measured by the change in occupied stock. In this analysis, we examine the drop and subsequent recovery in the level of occupied units by majority property type since the pandemic began to influence the senior housing sector, over the period from 1Q 2020 to 4Q 2021, and across the 31 NIC MAP Primary Markets and the 68 NIC MAP Secondary Markets Aggregates.

Note that this analysis looks at demand only and does not take into account inventory growth and properties under development.

Senior Housing Demand Contraction. The first quarter of 2021 marked the lowest level of occupied units since 2017. In the early months of the pandemic (1Q 2020 to 1Q 2021), about 42,100 units were placed back in the market on a net basis or “vacated” on a net basis for the 31 NIC MAP Primary Markets aggregate while 22,100 units were vacated for the 68 NIC MAP Secondary Markets, equivalent to a 7.4% and 7.2% decrease in occupied stock, respectively. At its low point, senior housing occupied units for both market aggregate concepts stood at their 1Q 2017 level.

Drilling down by Majority Property Type. The impact of the pandemic weighed heavily on majority assisted living (AL) properties across both the NIC MAP 31 Primary Markets and the 68 NIC MAP Secondary Markets aggregates with 8.4% and 9.0% declines in occupied units between 1Q 2020 and 1Q 2021, respectively. Demand contraction across majority independent living properties (IL) was relatively smaller at 6.6% for the NIC MAP Primary Markets (1.8 percentage points less than AL) and 5.6% for the NIC MAP Secondary Markets (3.4 percentage points less than AL).

The disparity in the degree of demand contraction during the first year of the pandemic may to be linked to the level of care and the relatively higher acuity levels and often greater frailty seen among residents in majority assisted living properties (defined as properties where assisted living units and/or memory care units comprised the largest share of inventory) than in majority independent living properties. In fact, findings from the 2020 study from NIC and NORC at the University of Chicago showed that the average mortality rate was the least in independent living and comparable to its corresponding county’s mortality rate, while average mortality rate for assisted living was slightly higher but notably not as high as for memory care or nursing care.

Senior Housing Demand Recovery. Due to unprecedented demand momentum in the last three quarters of 2021 (2Q 2021, 3Q 2021, 4Q 2021), senior housing occupied units grew by 4.6% for the 31 NIC MAP Primary Markets, equivalent to over 24,400 units absorbed on a net basis. Over the same period, occupied units within the 68 NIC MAP Secondary Markets increased by 5.1%, equivalent to 14,500 units absorbed on a net basis and 0.5 percentage points higher than the NIC MAP Primary Markets.

Although senior housing demand for both market aggregates have had three consecutive quarters of real momentum and consistency, the 4Q 2021 occupied stock for the 31 NIC MAP Primary Markets was still 3.1% below pre-pandemic 1Q 2020 levels, equivalent to 17,700 units vs. negative 2.5% for the 68 NIC MAP Secondary Markets, equivalent to over 7,500 units.

Drilling down by Majority Property Type. Like the sector’s demand contraction, its demand recovery has proven to also be uneven across different types of properties. While the demand contraction was relatively larger for AL properties, the demand recovery across AL properties has similarly outpaced that of IL properties. Since 1Q 2021, occupied units for AL properties for the NIC MAP Primary Markets increased by 6.1%, nearly two-fold that of IL (3.3%). The same pattern holds true for the 68 NIC MAP Primary Markets with 6.6% for AL, 2.8 percentage points higher than IL properties (3.8%).

This uneven recovery across different types of properties could be linked to several factors. One plausible explanation could be tied to the move-ins. In majority assisted living properties, there are at least two different types of residents, (1) residents from independent living properties following the continuum of care, and (2) new residents from outside congregate settings. Move-ins in independent living properties generally come from one source–outside congregate settings.

It could also reflect a stronger “pent-up demand” for assisted living, since AL is considered a more need-based property type and services are often required. Independent living is frequently considered more choice-based and the urgency to move into an independent living property may not be as strong.

Notably, not all operators are experiencing the same trends, however. Based on anecdotes from conversations, some operators are finding very strong demand for independent living properties, and sometimes stronger than assisted living. Conversations suggest that the socialization aspects of independent living are drawing potential new residents as the isolation associated with the pandemic has simply been overwhelming and the idea of living with others in a congregate setting has become quite compelling.

This dive into recent trends is based solely on senior housing demand patterns. The concept of aggregate demand or the number of occupied units is important to evaluate senior housing markets’ recoveries. Further, the strong demand recovery patterns across markets and properties show that senior housing demand was not lost, but rather, for many residents, it was largely deferred due to the pandemic.

These demand statistics indicate once again that the recovery differs across markets and by property type. Additionally, individual property performance has been affected by COVID exposure, infection control protocols, acuity levels of residents, move-in and move-out velocity, operator access to capital, pressured operating margins due to low occupancy rates, and staffing challenges. Many of these factors have not gone away and will continue to exert influence over operator, property and metro area performance in 2022. However, as demand more fully recovers toward pre-pandemic levels, the market should begin to balance out.

Senior Housing Demand Pulse Metric– By Majority Property Type

Other related analyses: Senior Housing Demand – Deep Dive & Outlook

NIC MAP clients can access the full analysis on senior housing demand patterns by property type, region, individual markets, property age, profit status, operator chain size, and other NIC MAP data dimensions.

While this analysis looks at demand only and does not take into account inventory growth and properties under development, recent analysis featuring NIC MAP Intra-Quarterly Data shows that senior housing stabilized occupancy for the NIC MAP^® Primary Markets held its ground in February 2022 despite the growth in inventory and the headwinds created by the Omicron surge and the consequential staffing crisis. This was also the case in September 2021 when occupancy withstood the Delta surge and was unchanged from August 2021.

Interested in learning more about NIC MAP Intra-Quarterly data? To learn more about NIC MAP data, powered by NIC MAP Vision, schedule a meeting with a product expert today.

The emerging active adult segment aims to attract baby boomers. The question: What do they want?

At a unique brainstorming session, NIC Spring Conference attendees will have the opportunity to help shape the answer to that question. The session, “The Time is Now: Developing the Active Adult Playbook,” will be among the highlights at the 2022 NIC Spring Conference in Dallas (March 23-25).

“Be a part of the conversation,” said Maria Nadelstumph, SVP of Brandywine Living’s Center of Excellence. She will co-facilitate the 75-minute session with Ben Burke, CEO of Headwaters Group.

In a recent interview, Nadelstumph described the format as something like a think tank experience and encouraged conference participants to attend the Thursday afternoon session (March 24). “Everyone can join the interactive dialogue to share their thoughts on the evolution of active adult communities,” she said.

The session will include a short introduction, followed by small group deep dive discussions to explore the challenges and opportunities of the active adult segment. The breakout groups will be facilitated by a powerhouse collection of experts—selected for their industry knowledge of operations, investments, marketing, development and consulting.

The introduction will include a video detailing the key aspects of the active adult market, along with comments from consumers who live in the communities.

The deep dive discussions will focus on three topic areas: People (consumer/marketing); Product (design/amenities); and Program (services/management.) The freewheeling discussion will tackle questions such as: Who is the “right” active adult resident? What are the “right” amenities? What are the “right” services?

Participants will also explore the nuances of the active adult market. For example, don’t call residents “seniors.” And is aging in place something to avoid or embrace?

Each group will report their findings during the last 20 minutes of the session to highlight aspects and themes that could be included in an active adult playbook.

Nadelstumph observed that the trending interest in the active adult segment is much like assisted living was 30 years ago when it emerged as a new type of living option for older people. “Everyone wants to know more about active adult,” she said.

Previewing what attendees can expect to learn at the session, Burke noted some striking differences between the active adult segment and traditional senior housing. Active adult residents tend to be younger than those in senior housing. Active adult services are unbundled, rents are lower than independent living, but higher than multifamily.

Labor pressures are not as much of an issue with active adult because the properties don’t require a big staff. Active adult is not a healthcare model. And residents tend to have a longer length of stay than those in traditional senior housing.

Burke also noted strong investor interest in the active adult segment. “Recent sales in the space show that the properties are highly valued,” he said.

Likening the collaborative session to a hands-on laboratory, Burke said that attendees will come away with a better understanding of the active adult segment and how they can explore further opportunities. Nadelstumph added, “Attendees will have an ‘aha’ moment.”

Despite the headwinds created by the Omicron surge and the consequential staffing crisis, senior housing stabilized occupancy for the NIC MAP^® Primary Markets held its ground in February 2022. This was also the case in September 2021 when occupancy withstood the Delta surge and was unchanged from August 2021.

Although the Omicron wave has slowed the occupancy recovery for the NIC MAP Primary Markets, a recovery nonetheless remains in place as evidenced by the patterns of the past 12 months. In fact, there has been no notable occupancy deterioration since February 2021 despite the Delta and Omicron surges. This is mainly due to the reduced level of severe illness and fatalities – thanks to the vaccines, infection control programs, and pandemic preparedness among experienced and agile operators. Further, a strong and consistent increase in demand, as seen by positive net absorption, still offers a positive outlook for 2022.

According to February 2022 Intra-Quarterly NIC MAP^® data, released by NIC MAP Vision, the stabilized occupancy rate for senior housing for the NIC MAP Primary Markets stood at 82.3% and was unchanged from the January 2022 reporting period on a three-month rolling basis. And from its time series low of 80.4% in June 2021, stabilized occupancy increased by 1.9pps but remained 7.2pps below pre-pandemic March 2020 levels of 89.5%.

The inventory of senior housing properties for the NIC MAP Primary Markets increased by 2.4%, equivalent to about 15,700 units from year-earlier levels in the February 2022 reporting period. This was the second smallest year-over-year inventory gain since March 2020.

Omicron paused the occupancy recovery in 12 of the 31 NIC MAP Primary Markets. However, stabilized occupancy increased or remained stable in 19 of the 31 Primary Markets for senior housing in the February 2022 reporting period compared with January 2022. Sacramento saw the largest improvement in February 2022, up 0.5pps to 82.1%. This placed occupancy just above year-earlier levels, but 9.5pps below pre-pandemic levels. Las Vegas stabilized occupancy fell 0.5pps from the January 2022 reporting period to 78.3% and is now 9.2pps below the pre-pandemic March 2020 level. The 0.5pps decline in February 2022 was the largest across the 31 NIC MAP Primary Markets.

Data highlights, including stabilized occupancy for majority independent living and majority assisted living properties, inventory growth patterns, and select NIC MAP Primary markets’ performance along with analysis and insights from the NIC Analytics team, including myself and NIC Chief Economist, Beth Mace are provided in the complimentary NIC Intra-Quarterly Snapshot monthly publication, available for download on our website. The data underlying every Intra-Quarterly Snapshot report is available to NIC MAP Vision clients.

Interested in learning more about NIC MAP Intra-Quarterly data? To learn more about NIC MAP data, powered by NIC MAP Vision, schedule a meeting with a product expert today.