CareTrust REIT was able to secure personal protective equipment for its smaller operators just as nationwide shortages started occurring amid the coronavirus pandemic — saving them $2 million in the process. 

“Very early on we saw that PPE and testing were critically important to our operators’ ability to contain the virus and treat COVID patients in a controlled fashion,” Chief Operating Officer Dave Sedgwick said during a first quarter earnings call Friday. 

He explained that at the start of the pandemic operators expressed worries that they’re relatively small orders of PPE wouldn’t garner enough attention from large medical suppliers. CareTrust immediately began communicating with them and was able to find a “reliable source of reasonably priced PPE” quickly. The company is now working on another order of PPE for operators. 

“We leveraged our portfolio’s size to get the attention of the supplier and placed a seven-figure order on behalf of our operators. Not only did they get more PPE and get it sooner, we estimate that our bulk order resulted in roughly $2 million of combined savings for our smaller tenants,” Sedgwick said. 

CareTrust executives are also calling for skilled nursing providers to be given higher priority for the Abbott-style molecular tests, which provide results quickly. Sales are currently restricted to clinics, hospitals and labs, according to Sedgwick. 

“We need the White House to raise skilled nursing to that same priority as soon as possible. With good information, skilled nursing providers will be able to be instrumental in helping turn the corner on the spread of the virus,” he explained. 

Gregory K. Stapley, CareTrust REIT, Inc.
CareTrust CEO Greg Stapley

The company reported that it has seen its skilled nursing occupancy drop during the pandemic. It said hospitals running low occupancies, stopping non-critical and elective procedures, and having drops in emergency department volume are the reason. 

The company’s SNF portfolio consists of about 75% Medicaid residents and 16% short-term Medicare and managed care patients. Not including The Ensign Group, CareTrust’s SNF portfolio occupancy dropped 370 basis points in April. However, its higher margin skilled occupancy increased by 240 bases points “providing additional revenue to offset the occupancy loss.” 

“Therefore the [SNFs] that depend most on short-term rehab patients coming from hospitals are being hardest hit. By contrast, the facilities that primarily care for the long-term Medicaid residents are less sensitive to the sharp decline in hospital census,” Sedgwick explained. 

The company has collected 99.3% of April rent, and so far, it’s received 99.8% of May rent. Chairman and CEO Greg Stapley added that the company is in “good shape” and expressed optimism as it works through the pandemic. 

“We are very liquid and well-positioned to weather the present storm,” he said.