Long-term care operators look to new strategies to protect margins, report says

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States using Medicaid stimulus funding to fill budget gaps, report finds
States using Medicaid stimulus funding to fill budget gaps, report finds

Given many states' attempts to rein in Medicaid spending, and ongoing troubles in the housing market, long-term care operators are starting to consider new approaches to protect their margins, according to the “Senior Housing Research Report” from Marcus & Millichap.

Operators of skilled nursing and assisted living facilities have been contracting with hospitals to aid in the rehabilitation of post-orthopedic surgery patients. Also, delaying a transition from assisted living to skilled nursing helps manage bottom lines, according to the report, which is based on data generated from the National Investment Center for the Seniors Housing & Care Industry.

Large real estate investment trusts and management companies are poised to take advantage of cost savings and economies of scale in the skilled nursing sector, the report said. Small-property owners also can improve resident mix and cost structure of poorly run facilities to realize returns. Meanwhile, in the continuing care retirement community market, “creative operators are converting entrance-fee CCRCs to rental CCRCs or are targeting states with favorable reimbursement rates, mitigating some of the risk of ownership,” the report said.