Just days before Christmas, American Health Care Association President and CEO Mark Parkinson painted a bleak picture of the nursing home industry reeling from eight months of pandemic misery.
Nearly two-thirds of long-term care facilities were operating at a loss. Billions in Provider Relief Funds, stimulus money and $165 million in Paycheck Protection Program loans seemed more like bandages than corrective surgery. Providers did get some relief from planned Medicare cuts, while many risked COVID-19 liability issues.
But as the end of the first quarter of 2021 nears and the industry continues grappling with tenuous finances, there are brighter signs on the horizon.
To lenders, promising early indicators are renovation and new construction.
Some actually credit the pandemic for unmasking what they call the SNF industry’s ailing infrastructure.
“Several reports have noted that the age and physical design of nursing homes added to the drastic spread of COVID-19,” said Jeffrey Sands, managing principal at HJ Sims.
Facilities with fewer beds, household-style layouts and all private rooms have been shown to have had fewer cases and deaths.
Sands predicts renovation and new construction will be encouraged, and HUD and other loan instruments will gain popularity the more the issue becomes exposed.
Many lenders remain optimistic about a turnaround as vaccines play a large part in bringing the pandemic closer to a close.
“I anticipate development activity will increase as we hopefully put the pandemic behind us,” said Jeff Binder, managing director, Senior Living Investment Brokerage. This includes a slew of new and renovation projects that could begin resuming after a forced pause from COVID-19 last summer and fall.
Anthony Luzzi, president of Sims Mortgage Funding, expects mortgage interest loans to be popular, much like they were in the 2008 recession, while conventional lending sources remain either dry or too expensive.
Meanwhile, lenders agreed occupancy will ultimately decide how well owner-operators are able to pay the bills in coming months.