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Key Takeaways from the Second Quarter 2018 NIC Skilled Nursing Data Report

The second quarter 2018 NIC Skilled Nursing Data Report was released last week.  The report includes key monthly data metrics from October 2011 through June 2018.  The report also includes the latest urban vs. rural and revenue mix trends.

Here are some key takeaways from the report:

  1. Pressure on skilled nursing occupancy continues as the latest data shows occupancy decreased 79 basis points to a new low at 81.7% as of the second quarter 2018. Year-over-year occupancy decreased 137 basis points from 83.1%.  The decline in occupancy is not unexpected as the data has shown a decrease from the first quarter to the second quarter in past years as well.  The second quarter decrease in occupancy was evident across all geographic areas with rural areas experiencing the sharpest decline, dropping 89 basis points quarter-over-quarter.

  1. Quality mix declined 127 basis points at the national level to end the second quarter at 34%, which is the lowest level within the time-series data going back to October 2011. Year-over-year quality mix decreased 142 basis points from 35.4% in June of 2017. The main driver of the decrease in quality has been the decline in Medicare patient day mix which fell 129 basis points quarter-over-quarter and now stands at a time-series low of 12.1%. Medicare patient day mix has declined 452 basis points since October 2011.  However, the trends in quality mix are completely different when looking across geographic areas as quality mix has increased 135 basis points in rural areas since October 2011.
  2. Managed Medicare patient day mix also saw an expected seasonal dip from the first quarter to the second quarter 2018 as it decreased 41 basis points ending at 6.4% at the national level. When compared to a year ago, the data shows that the growth in managed Medicare patient mix has been relatively flat with a 4 basis point decrease, which is an interesting trend considering the discussions about the increase in managed Medicare throughout the sector.  However, this could also be reflecting more pressure on length of stay from managed Medicare which could result in lower overall patient days.  This recent trend also shows up when looking at managed Medicare revenue mix year-over-year as it decreased 11 basis points to 9.9%.  Although the data shows a drop quarter-over-quarter in managed Medicare across all geographic areas, the managed care penetration varies when comparing urban vs. rural areas.  Rural area managed Medicare patient day mix stands at 3% whereas urban area is at 7.7% as of the second quarter 2018.  Managed Medicare plans can choose to operate in more densely populated and/or more affluent and healthier areas which could explain the lower penetration in rural areas.

  1. Private patient day mix at the national level increased slightly from the first quarter to the second quarter 2018. However, the longer term trend continues downward as year-over-year it declined 78 basis points to 8.8%.  This downward trend persists across all geographic areas, but the level of private day mix is considerably different in urban vs. rural areas.  Private patient day mix is highest in rural areas at 15.4% which is a significant portion of patient days and reflects the fact that there are fewer options for private pay in rural areas.  This is also evident in the revenue mix reflecting the financial importance of private pay for rural skilled nursing properties as 13.9% of revenue comes from private pay as of the second quarter 2018.

The NIC Skilled Nursing Data Report is available here. There is no charge for this report.

The report provides aggregate data at the national level from a sampling of skilled nursing operators with multiple properties in the United States. NIC continues to grow its database of participating operators in order to provide data at localized levels in the future. Operators who are interested in participating can complete a participation form. NIC maintains strict confidentiality of all data it receives.

About the Author

Bill Kauffman

Senior Principal Bill Kauffman works with the research team in providing research and analysis in various areas including sales transactions and skilled nursing. He has lead roles in creating new and enhanced products and implementation of new processes. Prior to joining NIC he worked at Shelter Development in investing/acquiring, financing, and asset management for over $1 billion in assets. He also had key roles in the value creation and strategic planning and analysis for over 65 entities. He received his Master of Science in Finance from Loyola College in Maryland. He also holds the Chartered Financial Analyst Designation (CFA).
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