The skilled nursing sector is under pressure, especially those facilities built 40 years ago. But buyers continue to see opportunity.
There are some people who believe skilled nursing facilities are dinosaurs and will continue to see declines in census and profitability. There are others who believe they are part of the solution to contain healthcare costs and will see census increases in the future as demographics evolve and the SNF bed inventory continues to decline.
Within both sides of the debate, there is concern for the large number of skilled nursing facilities that were built 40 years ago. Can they be part of the solution? Is it worthwhile to invest capital in an outdated design? Can an investor or provider earn a reasonable return on that design change if the census mix does not change?
Despite the naysayers, there are plenty of buyers lined up to buy these older nursing facilities. Some will invest a lot of capital, others a minimal amount. But what do they see that others don’t?
Join me tomorrow on our webinar as we dissect these issues with three panelists who have seen their share of 40-year old SNFs, and even bought some of them. You may come to understand how a certain segment of the markets thinks, and acts.
The sad reality to how these antiquated physical plants keep retrading is the same sad reality why people are continually housed in them; deals are still done on old valuation methods. If the reimbursement and historical 3-5 year occupancy trends support a multiple the deal moves to get done. It’s the provider of services that eventually get squeezed; and the patient care will then follow.
Joe, very well said. Look at what is happening with Skyline. Food and meds for two days with no money?