News & Press Releases

Nursing Home Occupancy Flat

National Investment Center data show quarter-over-quarter occupancy holds steady at 82.5%, skilled mix continues to decline

FOR IMMEDIATE RELEASE: December 15, 2016

Contact: Biba Aidoo, (443) 926-3181 or
Contact: Rachel Griffith, (202) 868-4824 or

Annapolis, Md. – Nursing home occupancy held steady at 82.5% at the end of the third quarter, up from the five-year low of 82.3% reached in July of this year and down from the year-earlier level of 83.6%, according to a new report from the National Investment Center for Seniors Housing & Care (NIC).

“We typically see the lowest occupancy rates in the third or fourth quarter, when there are fewer seasonality factors, such as the flu, driving nursing home demand,” said Bill Kauffman, senior principal at the National Investment Center for Seniors Housing & Care (NIC). “Coming out of the five-year low we saw in July, it’s not surprising to see a slight uptick, but we might have seen occupancy hit its peak for 2016 unless there’s an early flu season.”

The decline in year-over-year occupancy was caused in part by declines in skilled mix, the percentage of a nursing home’s occupancy that is attributed to Medicare and managed Medicare as opposed to Medicaid or private pay. A reduction in skilled mix occupancy can be significant because skilled mix patient days are typically reimbursed at a considerably higher rate than Medicaid, even though the majority of patient days are paid by Medicaid alone.

“Some operators are investing for the future to give themselves the best chance for success in the midst of this challenging environment, but time will tell which operators actually win,” Kauffman said. “Chances are, it will be the operators that can continually adapt and demonstrate value to payors and those taking financial risk for the care of their patients, which in turn could also add value to the overall healthcare system.”

The third-quarter 2016 report shows:

  • Occupancy recovered slightly from July low but remained weak. Occupancy in the third quarter ended at 82.5%, up from the five-year low of 82.3% but down from the 83.6% occupancy rate observed in the third quarter of 2015.
  • Downward trend in skilled mix persisted for another quarter. Skilled mix continued its downward trend, driven by the low third-quarter Medicare mix that was possibly caused by an overall decline in total Medicare days. As the Medicare mix declines, it increases Medicaid’s significance as a steady payor source. However, increases in Medicaid mix, combined with a gradually increasing but relatively modest Medicaid reimbursement rate growth, are unlikely to offset the revenue loss which may occur as a result of the decline in skilled mix.
  • Managed Medicare daily reimbursement rates likely stabilizing. Until the second quarter of this year, the daily reimbursement amount for managed Medicare had been steadily declining. For the last two consecutive quarters, however, the daily reimbursement rate for this payor has been relatively stable, dropping by only 0.3% each quarter (compared to 1-2% declines experienced between each of the prior four quarters). While the daily reimbursement amount for 3Q2016 is down a steep 3.5% from last year, the year-over-year figures should flatten soon if this stability trend continues.
  • Private-pay daily reimbursement rate growth accelerated. The daily reimbursement rate for private-pay grew by 2.1% from the year-earlier levels, a rate of increase that has not been seen in a couple of years. In fact, the growth in the rate charged to private pay nursing home residents has consistently outperformed inflation since February 2016 and outperformed or matched inflation since the fourth quarter of 2014. Preliminary NIC research suggests that this growth may have a more significant impact in rural areas, where the share of private-pay residents may be higher than in urban areas.

The NIC Skilled Nursing Data Report is released quarterly and provides operators and investors with data collected from skilled nursing properties each month dating back to October 2011. It includes key metrics such as occupancy and revenue per patient day by payor type. The report is available for download free at

Currently, the report provides aggregate data at the national level from a sampling of skilled nursing operators with multiple properties in the United States. NIC is working to grow its base 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 at NIC maintains strict confidentiality of all data it receives.


About NIC

The National Investment Center for Seniors Housing & Care (NIC) is a 501(c)3 organization established in 1991 whose mission is to enable access and choice by providing data, analytics, and connections that bring together investors and providers. For more information, visit, and follow NIC on Twitter.

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