Average skilled nursing values have dropped by 20% since the market peak in 2016, and by this time next year we will have a new Medicare reimbursement protocol. How will that figure into valuing skilled nursing facilities today?
Is the skilled nursing market approaching a bottom? We know when it peaked in terms of acquisition values, and that was in 2016 at $99,000 per bed. But pricing has dropped by 20% since then, despite continued strong demand for nursing facilities.
Now, after a few years of Medicare Advantage plans squeezing cash flow by cutting rates and shortening lengths of stay, a new reimbursement system will become effective a year from now. While the industry has responded well to it, no one really knows what the full impact will be on all providers.
The dilemma for buyers and lenders will be to figure out how to model this change into their forecasts. Not an easy task. Will cash flow be higher, and for which providers? Lower? And how will Medicaid, which still funds about 65% to 70% of SNF patients, fit into this future picture?
Join me tomorrow on our webinar, “Pricing Skilled Nursing Facilities After a Market Peak,” when you will have a chance to ask our expert panel questions about the future of skilled nursing values, and how to make investment decisions today
