Q: What does the second round of NIC MAP Monitor information tell us about private-pay residents in the top 30 metropolitan areas?
A: Basically, the erosion in the private pay side of the SNF business is probably only going to continue, though at lesser rates than in the past. If you can legally be in assisted living, it just doesn’t make sense to be in a nursing home.
Q: What type of erosion has taken place?
A: In 1985, according to the OSCAR database, 44% of all patients in skilled nursing were private pay (non-governmental). In 1995, it had shrunk to 28%. In 2003, it was 22%. We’re now showing it’s down to 20.4% in 2004, of which pure private pay (out of pocket) are just 14%.
Q: What does this mean for operators?
A: From a strategic standpoint, the private pay market is going to become even more medically complex than it’s been. On the flip side, the assisted living market is really going to have to deliver. These people are growing more frail each year.
Q: Does private-pay census change much if more than one level of care is offered?
A: Properties that combine nursing care with assisted living and/or dementia care have almost twice the percentage of private pay nursing residents as freestanding nursing homes. They also charge more, $190 per day to $183 per day.
Q: What’s a silver lining for nursing homes?
A: Those companies prepared to be in more complex care areas will have an advantage. But those that have made money while having a high Medicaid census will continue to do so. The nursing home business will only continue to get more difficult and make people be truly innovative.
