Report: SNF beds hit record average price

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The average price paid per bed for skilled nursing facilities hit a record $47,400 in 2006, according to the latest edition of The Senior Care Acquisition Report. The figure marks a nearly 10% increase over the 2005 average sale price and 50% premium over the 2003 mark.

The median SNF bed price in 2006 rose a modest 2%, indicating that some very high-priced facilities likely swayed the average figure higher. Researchers said increasing demand from more traditional real estate investors has fueled the price surge. Relatively stable reimbursements and an improving litigation environment have boosted nursing home fortunes over the past few years.

"We have been seeing a changed attitude over the past year or two about the skilled nursing facility industry, and with double-digit yields still available, investors have been taking a second look at the sector," said Stephen M. Monroe, editor of The Senior Care Acquisition Report, which is produced by Irving Levin Associates, Norwalk, CT. "Even though there are still a lot of older nursing facilities in the market, the better quality facilities with a strong Medicare census are driving the market right now."

Although the assisted living per-unit average price dipped 5% to $132,900 in 2006, that market remained strong, Monroe said. The average price for an independent living unit remained virtually unchanged at $145,700, he added. Assisted living and independent living units both nearly doubled in average price in 2005.