While a rocky economy and severe workforce challenges have stress-tested the skilled nursing industry, experts are seeing encouraging signs that the worst may be over.
“2023 was positive in terms of occupancy,” Bill Kauffman, senior principal for research and analytics at The National Investment Center for Seniors Housing & Care, told McKnight’s. Occupancy in the sector increased 240 basis points through the third quarter of 2023 — marking the 10th straight quarter of positive growth.
“And all indications point to continued increases, albeit at a slower-yet-steady pace,” Kauffman said.
Another positive: Rebasing efforts and increased annual Medicaid rates.
Meanwhile, one of the unexpected positives coming out of workforce shortages was the nursing home industry’s overall appetite “to improve not only wages and benefits, but also the culture,” added Jeff Binder, managing director at Senior Living Investment Brokerage.
But rough patches still loom. For one, access to long-term care is at a “tipping point” in rural America, Good Samaritan Society leaders recently told McKnight’s. Inflation and other factors also have led to a rapid reduction in personal savings among seniors who will need care in comings years
Then there’s the so-called “forgotten middle,” which NIC describes as a demographic with just enough savings to be ineligible for aid but too short on finances to truly afford long-term care. That could mean an even further erosion in the already small sliver of private-pay nursing home patients.
Kauffman joins others in foreseeing greater margin pressures with costs continuing to increase. After some promising downward movement in late 2023, the Consumer Price Index jumped again in January.
Still, need for services will present opportunity. By the time the first of the baby boomers turns 80 in 2025, NIC projects the nursing home sector will need 200,000 additional units.
Lisa McCracken, NIC’s head of research and analytics, recently observed that 2024 could mark a positive period of regaining momentum, dubbing it “the year of the Great Reset.”
