Federal COVID-19 relief funding saved the skilled nursing industry from crumbling during the earlier days of the pandemic as providers struggled with increased expenses and historic occupancy lows, an industry leader emphasized Wednesday.
“The occupancy challenge, combined with the calls for PPE and labor costs increasing, would have collapsed the [skilled nursing] industry if it wasn’t for the federal government support and state government support. It was critical,” noted Brian Beckwith, CEO of Arcus Healthcare Group.
“If you think about that 12% drop in occupancy combined with higher costs and just the challenges of dealing with a COVID population, [things] would have been catastrophic for a lot of providers,” he added.
His comments came Wednesday during an online leadership “huddle” hosted by the National Investment Center for Seniors Housing & Care. Focusing on the state of the skilled nursing and seniors housing market, the event was led by NIC’s Chief Economist Beth Mace and also featured Omega Senior Living CEO Craig Hanson.
Beckwith also said that COVID relief funding has started to dry up, expenses are still high and providers are now starting to pay back financial aid received from federal and state governments.
“It’s becoming a little bit more stressed today for skilled nursing providers. I don’t see more federal dollars coming into this system. I do think there’s a couple things the federal government could do and one of those is extending the public health emergency declaration,” Beckwith said.
“There’s a lot that can still be done but it was critical during the 2020 and 2021 timeframe to have that [COVID relief funding] in the system,” he added.
Other key discussion points centered around the staffing struggles, transaction prices and the rate of occupancy recovery.
Recent NIC data shows\ that skilled nursing occupancy is still down about 9% when compared to pre-COVID levels, according to Mace. SNF occupancy levels during the first quarter of 2020 were close to 87% but dropped near 74% during January 2021. Occupancy is now about 76.7%, new data shows.
“We’ve seen a change in the [skilled nursing] industry. We’ve had some microeconomic changes here,” Hanson said. “We’ve also seen pressure from the hospitals pushing residents that would normally be in our markets into home health care.”
Hanson also said that the skilled nursing world has been under extreme pressure and now has to innovatively pivot and try to find niches to fill gaps.
Beckwith added that it’s important to recognize the harm that the omicron variant had on staffing shortages, which stalled whatever recovery the industry had at the time.
“[Recovery has] taken longer than I thought,” he admitted. “I expected that we would have a clearly significant rebound once tours opened up and once hospital procedures in the skilled nursing world began to happen at a more rapid pace. I’m surprised a little bit that we’re not further along than we are today.”