When it comes to sizing up the long-term care market, is it too much of a cliché to trot out Charles Dickens’ famous “best of times, worst of times” line?
Perhaps.
But clichés become clichés for a reason, and that overused phrase does speak to the combo platter of hope and despair now whipsawing the sector. It seems like for every bit of good news, there’s a corresponding gut punch.
Speaking of gut punches and overused phrases, let’s talk about the elephant in the room — staffing shortages.
We all know it’s impossible to operate a skilled care facility without nurses, aides, and other essential workers. Unfortunately, finding and keeping those hearty souls seems to get more difficult by the day. In this market, operators are not just struggling to fill vacancies; they’re bleeding money to keep the workers they do have. For some, staffing has become a Sophie-esque choice that pits paying competitive wages against keeping the lights on.
Then there’s the matter of regulatory pressures. Maybe not quite an elephant in the room, but certainly an 800-pound gorilla. The Centers for Medicare & Medicaid Services has rolled out new rules that are making operators’ heads spin. From stricter quality reporting to staffing mandates, the federal government is turning the screws tighter.
Occupancy rates, while showing some signs of post-COVID recovery, remain a mixed bag. Sure, more elderly residents are getting vaccinated, and that’s helped fill some beds. But the shift to home care continues, pulling potential residents away from skilled nursing facilities. Meanwhile, more senior living organizations are building chummy relationships with hospital discharge planners, further complicating the landscape.
Still, it’s not all “worst of times.”
Just last week, for example, we learned Sabra Health Care REIT appears to be gaining some serious momentum. According to CEO Rick Matros, the firm’s skilled nursing portfolio is not just holding steady — it’s surpassing pre-pandemic levels. The company has been busy this year, with $136 million in new investments during the second quarter alone. Medicaid rate increases, which are estimated to be about 7% on a weighted basis, have given Sabra a nice boost, and Matros is optimistic about another year of “outsized” state reimbursement increases before things settle down.
Then there’s the Supreme Court’s recent decision to overturn the 40-year-old precedent of Chevron deference. The ruling will limit agencies like CMS from broadly interpreting laws, offering nursing home operators clearer regulations. This shift will also let operators challenge burdensome rules more effectively in court, reducing compliance pressures and providing a more stable operating environment.
As the NIC Fall Conference approaches later this month, there’s no doubt that the air will be thick with conversation about the future of the markey. Operators, capital providers and other attendees will surely be focused on how best to navigate the sector’s turbulent waters.
The likely consensus? This year is a test of endurance and strategy. Those who adapt may not just survive but thrive, while others could find themselves washed away in the current.
John O’Connor is editorial director for McKnight’s.
Opinions expressed in McKnight’s Long-Term Care News columns are not necessarily those of McKnight’s.
