headshot - AHCA/NCAL President and CEO Mark Parkinson

Despite the “harsh reality” of slower-than-expected census recovery, the nation’s most influential nursing home leader said Thursday that occupancy could match pre-pandemic levels within a year and blow past them in 2024.

Occupancy now sits at around 74.5% nationwide. That’s up just 7% from the low of 67.5% in January 2021 and still about 5.5% lower than the pre-pandemic baseline of 80%, noted Mark Parkinson, president and CEO of the American Health Care Association. 

Growth of the vital economic indicator has been painfully slow, he acknowledged in a wide-ranging interview with McKnight’s Long-Term Care News. He exhorted providers to persevere, however, because the sector, he believes, is at the cusp of a recovery that will be powered by an overwhelming demographic surge.

“I would be willing to place a friendly side bet that in 2025, and maybe in 2024, we will have census above pre-pandemic levels,” he told McKnight’s.

“I think the story in the mid-2020s will be, ‘Wow, we have gone above where we were at pre-pandemic levels,’ and we will get into the 82, 83, 84% range. And then people will start talking about building SNFs again. So I’m actually quite optimistic about the middle-range (future) and the long range. But we have to survive to get there.”

The industry is grateful for a larger-than-expected Medicare pay raise included in the fiscal 2023 SNF PPS rule the last week of July, he quickly acknowledged. 

In the next breath, however, he said that staffing challenges — including the administration’s pledge to institute first-ever minimum staffing levels — will dog the sector unless suitable accommodations are made.

Raising overall nursing home census goes hand-in-hand with fortifying the workforce, he noted. Occupancy is the economic driver that will fuel other improvements.

“What’s been hard about this is so many of us thought the recovery would occur a long time ago,” he admitted. “I think if you would have asked people right after the first vaccine came out in January of 2021, how long would it take the industry to recover census, most of us would have thought by the end of 2021, this is going to look a lot better.”

Instead, the recovery has been stalled at times due to the rise of COVID-19 variants.

“I think we now have the harsh reality. Census recovery has been essentially, 2 to 2-and-a-half percent every six months, and so if we continue to follow that pattern, it’s going to take us until at least the middle of 2023 and maybe until the end of 2023, to recover our census,” he projected.

‘Just have to keep going’

For a weary workforce that has lost hundreds of thousands of workers over the last two years, that paints a tough near-term assignment, he recognized.

“It would be very easy to become disheartened about that. But we’ve come so far. We’ve now been at this two-and-a-half years and our message to folks is now we have to just finish this off. If you’re looking at a 26-mile marathon, we’re coming up on mile 18, where it’s painful and you want to quit and you’re not sure why you’re doing what you’re doing but you just have to keep on going. You’ve got to just hold it together and keep moving forward.”

He reiterated that “compelling” demographics are stocked by millions of aging baby boomers. In fact, they have already pushed about 25% of operators above pre-pandemic census levels, Parkinson said. A slowly declining number of skilled nursing facilities also, perversely, helps this case. Parkinson said about 500 nursing homes have closed since the start of the pandemic, putting the U.S. number around 15,200. In addition, he thinks about 100 more may close in 2022, with possibly 200 leaving the market in 2023.

Add in a standstill in new construction due to rising interest rates and a promising recipe for recovery emerges, he explained.

Nursing home census has filled fastest for those focusing on post-acute services, while the slowest recovery has been in rural areas, Parkinson said. Those operators have been more likely to have larger long-stay populations and they also have “tragically lost large parts of their census to the pandemic, and it’s just much harder to replace.”

“But even in those areas, the [changing] demographics will be helpful,” he emphasized.

The power of the aging wave is so strong, in fact, it has left the country with the same number of pay-for-service Medicare patients as five years ago, despite the unabated, “problematic” rise of managed Medicare in recent years, Parkinson noted.

“That’s just one example of how, just because of the sheer numbers out there, even if utilization goes down on a per-patient, per-beneficiary basis, the overall numbers will be positive” for the sector, he said. “The demographic wave we’re about to be hit with is really significant and we’re just on the cusp of it now.”