The skilled nursing industry has experienced consistent declines in average occupancy over the past few years, sinking to a new low of 81.8% in the fourth quarter of 2016, according to NIC’s latest Skilled Nursing Data Report. It should be said that the actual level of occupancy has become less important for skilled nursing facilities because the focus has been centered on short-term-stay patients. Almost by definition, because of the high level of turnover with these patients, and the inability to consistently and constantly fill those beds on discharge, overall occupancy tends to suffer. But since these patients are more profitable than longer stay patients, providers have not worried as much about this, unlike in seniors housing.

However, the difference in average price per bed between “stabilized” properties, which we define as occupancy of 85% and higher, and non-stabilized widened in 2016 to $59,650 per bed, according to the just-published 2017 Senior Care Acquisition Report. The average price per bed for stabilized skilled nursing facilities was $96,500 in 2015 and $114,700 in 2016 (the first time it has broken the $100,000 per bed threshold). The average price per bed for non-stabilized facilities was $54,300 in 2015 and $55,050 in 2016.

This is somewhat counter intuitive because it is those high-acuity skilled nursing facilities that have been driving the higher prices, and in theory their occupancy levels should be lower given the high patient turnover. One would at least expect a rise in “non-stabilized” facility prices, which stayed roughly the same year over year. Nevertheless, those short-stay care facilities helped push the overall average skilled nursing price per bed to a record-high.