Market Turmoil And The Senior Care Market
With stock prices plunging, the impact on the senior care market will be mixed. Well, it’s been a rather interesting past week or so, with more volatility likely in the days ahead. But what does it all really mean, at least for the senior care market? Other than share prices tanking for the few remaining publicly traded providers, as well as the REITs which, at least until recently, were supposed to trade more like bonds, the one takeaway can be summed up in a word: caution. But we had sort of sensed this about two months ago, given the nature of the transactions in the market. But will a sense of caution curtail the vast development pipelines that we hear about? Too early to tell, and... Read More »Excessive Use Of Ultra-High Therapy in SNFs
A recent story highlighted the dramatic rise in ultra-high therapy use in SNFs, but are there legitimate reasons for it? Two days ago, The Wall Street Journal had a front page story about the sudden increase in the percentage of patient days in skilled nursing facilities using “ultra-high” therapy, which is a maximum of 720 minutes per week. Apparently, in 2002, nursing facilities gave ultra-high therapy to patients on 7% of the days they billed to Medicare, but this increased to 54% of patient days by 2013, with the percentage increasing every year. The gist of the story was that providers have been gaming the system to get the highest reimbursement. I had hoped we were getting beyond... Read More »SNF cap rates fall
The average price paid for skilled nursing facilities has largely leveled off at around $75,000 per bed, coming to rest at $74,100 per bed for the four quarters ending Q2:15, down from $76,600 per unit in 2014. But while prices have stayed largely the same, the average cap rate fell 40 basis points to 12.0%, a new record low. In the past 14 years (looking at calendar years), the previous record-low came at the top of the previous bull market in 2007 at 12.1%. And the rate at which the average cap rate has fallen is also stark, falling 100 basis points from 2013’s average. But if the overall trend this year has been that the market is cooling down from an especially frothy 2014, why are cap... Read More »The meaning of a move
So why does a successful CEO of a healthcare REIT leave to become the chief investment officer of a larger REIT? Since Justin Hutchens arrived at National Health Investors (NHI) in 2009, the REIT has posted positive returns in every year from 2010 on, including three years with total returns between 28.1% and 34.5%. And in 2010 it was the number one performing healthcare REIT. While we could joke that he yearned to return to the West Coast, the real reason had to be what his new employer, HCP, Inc., had to offer. He will be in charge of all the seniors housing and care portfolio, which is the majority of HCP and alone dwarfs the total NHI portfolio. Bottom line, it is a much bigger playing... Read More »Senior Care Market In Confused State
Stocks are gyrating wildly, sometimes for good reason and other times not so much. Okay, I have to admit that I am confused now. When Brookdale came out with poor second quarter results, its stock tanked, as it should have. But then Capital Senior Living came out with a very upbeat quarter, and its stock jumped 10%, as it should have, but then dropped by 15% over the next several days, for little reason, other than perhaps in sympathy with Brookdale shareholders. Genesis Health announced a good quarter, and its stock jumped by 10%, as it should have, and kept on rising to a 26% gain in a week when the market as a whole tanked. Hell, it didn’t even budge when China devalued its currency. ... Read More »Schedule a demo
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