Nursing care market fundamentals remain stable

The stability in nursing care market fundamentals continues, as occupancy remains essentially flat, according to NIC MAP.

In 1Q12, nursing care occupancy was 88.2 percent, which is unchanged from the prior quarter and a 30 basis point decrease in the past year. Absorption continued to post modest declines, with the number of occupied units decreasing by 0.1 percent during 1Q12.

While absorption was negative, the number of operational beds also declined by 0.1 percent–on par with absorption, resulting in unchanging occupancy. The phenomenon of net declining inventory is the result of both the closing of properties as well as a shift from semi-private to private rooms. Although properties that are renovating semi-private rooms into private rooms are not necessarily decreasing their number of licensed beds, with the conversion to private rooms, the operational bed supply of those properties typically does decline.

Private-pay rents continued to increase during 1Q12 at an average annual pace of approximately 3 percent–a pace which rent growth has oscillated around for more than two years. The average per diem private-pay rate was $273 as of 1Q12. Private-pay residents, however, are a minority among nursing care residents, making up less than 20 percent of nursing care residents. The largest payor source continues to be Medicaid, which was the payment source for 62.8 percent of nursing care residents in 1Q12.