Beth Burnham Mace

Occupancy rates in the skilled nursing sector could sink to new lows this year if current trends continue, according to a report released Thursday by the National Investment Center for Seniors Housing & Care.

Occupancy ticked up slightly to 82.6% at the end of the first quarter, an expected increase due to seasonal factors, NIC’s first-quarter 2017 Skilled Nursing Data Report showed. But that rate dropped down slightly in March from the 83% reached in February — the first time in eight months occupancy rates had risen to such a milestone.

Average occupancy over the last year was 82.9%, NIC reported, compared to 84.3% for the prior 12 months and 85.7% for the year before that. If those year-over-year decreases continue, “a new low will be expected later in 2017,” the report reads.

“The first quarter data typically shows an uptick in occupancy due to seasonal factors, such as the flu,” explained Bill Kauffman, senior principal at NIC. “We did see a monthly occupancy rate decline in March after increases in January and February, so we will be watching the data carefully to see if the decline continues into the second quarter.”

The report also revealed that managed Medicare patient day mix reached its highest point in NIC’s data series in February. It’s a statistic that backs up earlier analysis “suggesting a trend away from what had been a rapid decline in the managed Medicare [revenue per patient day],” said NIC Chief Economist Beth Burnham Mace.

Increases in managed Medicare and Medicare patient day mix also drove up quality and skilled mix in the first quarter, a jump that’s expected due to seasonality and may have been amplified this year by a relatively intense flu season. Patient day mix during the first quarter hit 65.2% for Medicaid, followed by 13.7% for Medicare, 6.7% for managed Medicare and 9.1% for private pay.

“Considering the current environment in post-acute care, competition for Medicare patient days is higher than at any time in recent memory for skilled nursing property operators,” Kauffman said. “Therefore, occupancy could feel additional pressure until the supply and demand equation comes into better balance.”

Click here to read the full NIC report.