Experts expect slow occupancy rates in skilled nursing facilities

Multiple players across the skilled nursing industry have offered predictions as to when slumping occupancy figures will bottom out, and two prominent voices earlier this month declared that the bottom may be upon us.

“I think we’re probably at around the trough,” Sabra Health Care REIT (Nasdaq: SBRA) chief investment officer Talya Nevo-Hacohen said during the Senior Housing News Summit in Los Angeles.

The Chicago-based Aging Media Network publishes both Senior Housing News and Skilled Nursing News.

Nevo-Hacohen was seconding a prediction from LTC Properties (NYSE: LTC) president and CEO Wendy Simpson, who pointed to favorable demographic trends over the next 10 to 15 years as a source of optimism for investors and providers.

“We hope that occupancy — both on the skilled nursing and the assisted living side — has hit kind of a trough over the last couple of years,” Simpson said.

The reasons for the occupancy declines have varied between the skilled nursing and senior housing markets: The former has dealt with reimbursement pressures and a shifting model that has put a premium on shorter lengths of stay, while the latter has struggled with a glut of assets that don’t match current consumer demand — particularly in the memory care space. Both sectors have repeatedly pointed to the so-called “silver tsunami” as a source of continued optimism in the face of sagging census, but Nevo-Hacohen preached caution when looking toward the future.

“You’ve got to remember that X axis — people only grow older one year at a time,” she said. “There’s never an acceleration of that timeframe,  and so you have to be patient. And we have gotten ahead in terms of developing supply in certain markets ahead of where the population is. But it will catch up.”

During the course of the wide-ranging talk — which also featured Sarabeth Hanson, president and CEO of senior living company Harbor Retirement Associates — Nevo-Hacohen described a rift between private and public investors in the skilled nursing community. With only a few public companies to use as reference points when analyzing potential deals, investors might be scared off or simply “baffled” by the industry, particularly amid well-publicized issues at players such as Genesis Healthcare (NYSE: GEN) and Kindred Healthcare’s complete exit from the space last year.

“The public market investor, and that’s our shareholders … and others find that with the choices they have to make as to where they place their dollars, the skilled nursing business is a complicated business, and they don’t necessarily have the patience to really figure it out,” she said.

Read the full story at Skilled Nursing News.


Topics: Leadership , Uncategorized