After setting record prices for four straight years, the 2016 record price may have some staying power.
As you know, the average price per bed for skilled nursing facilities hit a record in 2016 for the fourth year in a row. The number of properties selling for more than $100,000 per bed, which used to be reserved for only the very best facilities, also hit a record. I hate to be the bearer of bad news, but I believe last year’s record average price may have some staying power. As I said last week, I have been accused of being Mr. Doom and Gloom, but realistically, when looking at the landscape, there is little positive that would push prices higher. Medicare Advantage is pushing down lengths of stay and daily rates, Medicaid is still stuck with low rates with the specter of block grants coming your way, and labor costs are going to increase faster than inflation and daily rates, which may not increase at all. Demographically, SNFs will have to wait several years to see a big increase in potential customers, and without major capital improvements, they will continue to age and show it. The SNF business is not going away; it will just continue to bifurcate.
