Occupancy in the senior housing sector has long been characterized by peaks and valleys. But recent history has hardly been typical. 

Occupancy decreased to 87.8% in the second quarter of 2019, from 87.9% a year ago — the lowest level in eight years, as reported by the National Investment Center for Seniors Housing & Care (NIC).

An analyst attributed it to isolated economic factors in some areas and in a larger context, zoning, regulations and shifting demographics. But the issue may have legs, according to Beth Burnham Mace, NIC’s chief economist. She pointed to “a clear downward trend” occurring in construction starts nationwide for new senior housing units. 

Mace urged industry leaders to “keep an eye on this data going forward to make informed decisions on new developments and other potential investments.”

The number of independent SNFs has been declining, according to a report in the National Real Estate Investor. Twenty-one new facilities opened in 2018, compared to 51 in 2013. 

Hardest hit have been rural areas, where at least 440 facilities have closed in the past 10 years, a New York Times report notes.

Observers agree that nursing home beds are currently being added more via replacement properties than new construction.

Meanwhile, demographics alone seem to defy any long-term doubts about the need for considerably more beds across every senior living setting over the next 10 years — statistics tempered by a recent Health Affairs report that most middle income seniors won’t be able to afford to sleep in them. 

Such trends may help explain the impetus behind the Ensuring Medicaid Provides Opportunities for Widespread Equity, Resources and Care Act (EMPOWER), which created the “Money Follows the Person” (MFP) program. 

The bill provides states with enhanced reimbursement for Medicaid services that promote the use of home- and community-based health care services in place of institutional, long-term care services.

According to the federal Medicaid program, since 2016, more than 75,000 people with chronic conditions and disabilities have transitioned from institutions like skilled nursing back into the community through MFP programs.