Medicaid continues to be growing percentage of total patient days; Medicare mix reaches lowest point in five years; decline in managed Medicare revenue per-patient-day slows by more than 50 percent
Annapolis, Md.—The occupancy rate of America’s skilled nursing properties declined 0.8 percent in the fourth quarter of 2016 from 82.6 percent to 81.8 percent, its lowest level since the National Investment Center for Seniors Housing & Care (NIC) began collecting data in late 2011, according to its latest quarterly Skilled Nursing Data Report. The occupancy rate also experienced its largest-ever year-over-year decline for the fourth quarter.
“Occupancy continued to face downward pressure in 2016, therefore operators must adapt quickly and aggressively to control costs and capture market share,” said Bill Kauffman, NIC’s senior principal. “This decline persists despite an early and significant flu season, which likely drove the stability in skilled mix in the fourth quarter.” Skilled mix is the share of patient days paid for by traditional and managed Medicare.
The new data also showed that Medicaid not only remained the primary source of patient volume, but also continued to be a growing percentage of the total patient days in the fourth quarter of 2016, representing 66.2 percent, up 1.3 percent from the 64.9 percent in the fourth quarter of 2015. Revenue per patient day from Medicaid was up 0.9 percent quarter-over-quarter, and 1.8 percent year-over-year reaching the highest mark in the data series at over $200 revenue per patient day. However, the year-over-year growth rate failed to keep up with wage inflation, which was greater than 3%.
“The growth in Medicaid mix is significant as federal officials consider proposals to make major changes to the Medicaid program, which is the primary funding source for frail seniors in nursing homes,” said Robert Kramer, NIC’s founder and chief executive officer. “As the number of frail seniors in the United States continues to rise in the years ahead, whatever is decided on Medicaid payment reform will impact this vulnerable population.”
Medicare mix—the share of patient days paid by traditional Medicare—reached its lowest point over the past five years in the fourth quarter and ended 2016 at 12.9 percent, which was flat compared to the third quarter of 2016. Year-over-year Medicare mix decreased 0.9 percent, which is especially significant, because traditional Medicare pays the highest patient day rates among all payer types.
Skilled mix was up slightly quarter-over-quarter by 0.3 percent from 24.0 percent to 24.3 percent, which also represents a 0.8 percent decline year-over-year between 2015 and 2016. The fourth quarter increase in skilled mix may be attributed to the early flu season, which usually results in higher admissions to skilled nursing properties.
The decline in managed Medicare revenue per patient day slowed by more than 50 percent from the fourth quarter 2015 to the fourth quarter 2016. The decline quarter-over-quarter was also notably less than in previous quarters at 0.1 percent, the smallest decrease in the past six quarters. This suggests year-over-year decreases in managed Medicare revenue may continue to shrink over time.
The decrease in managed Medicare revenue was under $9, year-over-year, compared to a $19 decrease between the fourth quarters of 2014 and 2015. While revenue per patient day for managed Medicare reached its lowest point in the data set at $421.84 in the fourth quarter 2016, the 2.1 percent decrease over 2016 was considerably less than the previous year’s 4.3 percent decline.
NIC’s Skilled Nursing Data Report is released quarterly to provide operators and investors with timely, relevant data that is not readily available from other sources. Select metrics include: occupancy, quality mix, skilled mix, patient day mix, and revenue per patient day by payor source. The current report features time-series data from January 2012 through December 2016. NIC has collected this data since the fourth quarter of 2011.
The NIC Skilled Nursing Data Report is available at 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 will grow its base 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 at http://www.nic.org/analytics/nic-initiatives/skilled-nursing-data-initiative. NIC maintains strict confidentiality of all data it receives.
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About NIC
The National Investment Center for Seniors Housing & Care (NIC) is a 501(c)3 organization established in 1991 whose mission is to enable access and choice by providing data, analytics, and connections that bring together investors and providers. For more information, visit natinvcenterdv.wpengine.com, and follow NIC on Twitter.