CareTrust REIT’s mid-year concerns about the potential effects of delta variant infections on census recovery have all but disappeared, with executives reporting strong, third-quarter skilled nursing occupancy gains Monday. But severe staffing challenges impacting the entire long-term care industry limited the investment group from making more dramatic gains.
“While we’re still far from pre-pandemic occupancy overall, the continuing trajectory of the census recovery is consistent with our expectations so far,” CareTrust Chairman and CEO Greg Stapley said during a third-quarter earnings call. “These gains on the census and revenue front are welcomed news but only half of the equation. The shortage of qualified workers and the sharp rise in labor costs is a growing challenge, especially as patient and resident census rises.”
The California-based real estate investment trust reported its skilled nursing census grew from June’s 69.7% to 71.5% in September, and continues to inch closer to the pre-pandemic level of 77.7%. Executives also said 60% of CareTrust’s SNFs are now within 90% of their pre-pandemic census or better and that overall skilled mix remained elevated at 18.4% in September, which is about 300 basis points over pre-pandemic levels.
However, some tenants during the quarter also reported turning away patients “simply because they lack the necessary staff to care for more,” Stapley said.
“[SNF] demand is high and the recovery would be much further along if not for the tight labor market,” added CareTrust President and COO Dave Sedgwick.
“Nevertheless, we’re seeing some operators and some facilities hitting either record occupancy numbers or close to them,” Sedgwick said. “We continue to be impressed by those who are managing this latest challenge well.”
Sedgwick specifically credited several operators, including The Ensign Group, Priority Management Group and Trillium Healthcare, for how well they’ve managed the pandemic, occupancy growth and ability to slash staffing agency costs.
“These are the types of successes that we don’t get to read about in the news but are happening throughout the portfolio,” he said.
CareTrust leaders also stressed the occupancy growth will be critical for future success and projected a return to pre-pandemic levels “some time next summer.”
“Of course this projection assumes that qualified labor is available and that no new headwind, such as a new variant or wave of infections, intervenes,” Sedgwick said.