Executives with Sabra Health Care REIT don’t expect some stakeholders’ recent shift of focus from skilled nursing to home care to be a permanent change for the long-term care industry.
“Clearly, home health has benefited during the pandemic, particularly with hospitals admitting [less medically complex] patients who get discharged and go back to home,” Sabra CEO Rick Matros said during the company’s fourth-quarter earnings call on Tuesday.
He said that “as a society in this country, [we actually] need home health to be taking more than they’ve taken historically from an acuity perspective.” He cited a looming demographic crisis, decline in supply on skilled and access issues exacerbated by the pandemic facing SNFs as the reason why “it’s a good thing” for home health to be able to treat more patients.
“However, that said, the paradigm isn’t going to change,” he emphasized. “There are huge acuity differences between the settings. In home health, you’ve got, by definition, interim visits by nurses and therapists, and in skilled nursing facilities, it’s all 24/7; it’s very intense.”
“So the paradigm doesn’t change, and we expect to see things normalize more as everything else normalizes when we move past the pandemic,” he later added.
That normalization has started to accelerate lately, thanks to the COVID-19 vaccinations and eased cohorting restrictions, according to Matros. That should lead to a normalization of facility environments, like group activities and improved margins for operators.
Occupancy also has shown signs of promise after Sabra’s average monthly skilled mix census increased by 530 basis points from Feb. 2020 to Jan. 2021. Average skilled occupancy dropped about 1,200 basis points during that same time period.
The company also reported that its full-year investment activity for 2020 totaled $168.4 million at a blended initial cash yield of 7.97%. Last February, the real estate investment trust expressed plans to focus on “high-yield investments, specifically in skilled nursing, behavioral and addiction” for 2020.
Sabra noted that despite its successful investments, pandemic effects on investment opportunities combined with the cost of capital, kept the REIT from investing as much as it had hoped.
“We expect to continue to focus on maintaining a strong balance sheet with ample liquidity and a well-covered dividend, as we pursue opportunities for accretive growth in 2021, which we believe can primarily come from the skilled nursing, behavioral, and addiction asset classes in the near term,” the company noted.