With skilled nursing facilities on average selling for a record price per bed of $76,600 in 2014, surely the quality of the facilities sold was higher than in previous years. Probably the best measure of quality (and consequently the best explanation for the record-high prices) is the trend in average net operating income per bed. Since 2011, this figure has risen steadily, going from $6,500 per bed in 2011 to $8,950 per bed in 2014, which is a new record and 33% higher than the last peak in the skilled nursing market in 2007. Why this increased cash flow? For one, the industry is taking on higher acuity patients, with higher daily rates, and while the margins may not be expanding, the cash flow per patient day is growing, and it’s the cash flow that impacts the value.
