As the skilled nursing market evolves, lengths of stay and occupancy decline, and new entrants like Mainstreet change the way we view skilled nursing/post-acute care facilities, what is the ideal size of facility now? Based on 2016 sales according to the 22nd Edition of The Senior Care Acquisition Report, the average size of skilled nursing facilities sold dropped for the first time in three years to 122 beds, and was closer to the historical norm of 120 beds. That fell from 130 beds in 2015, and is the lowest since 2013, when facilities averaged 121 beds. The smallest facility sold in 2016 was 40 beds, compared with 30 beds in 2015, while the largest facility sold in 2016 was 744 beds, much higher than the 499-bed facility in 2015. So, apart from that especially large sale, SNFs appear to be shrinking in size, or at least buyers covet a smaller, more manageable building.

However, buyers did not pay a premium for smaller size. In 2016, there was a near-perfect correlation between the average price per bed and size of nursing facility sold, with the smallest facilities under 80 beds selling for the lowest average price ($62,200) and the largest with more than 180 beds selling for the second-highest average price ($91,850). Facilities ranging from 120 to 179 beds sold for the highest average price of $108,750 per unit. In the past five years, there has in fact been just one year (2015) with a perfect correlation, so this isn’t off the norm. That is because most buyers prefer nursing facilities to be around 120 to 130 beds, unless it is one of the newer all-Medicare facilities, which tend to be smaller because of their high patient turnover.