By Amy Stulick
A recent report from Fitch Ratings highlights the challenges that skilled nursing beds have posed for continuing care retirement communities (CCRCs) this year. The report notes that labor challenges have eased for skilled nursing providers, with many CCRCs shifting their focus towards assisted living, memory care, and home health care services, which are primarily private pay.
While some CCRCs have reintroduced skilled nursing beds in response to improving occupancy rates, operational stress remains a significant issue for CCRCs where skilled nursing beds make up more than 20% of total units. These CCRCs face challenges such as labor costs, inflation, tighter reimbursement, and heightened government oversight, all of which impact skilled nursing expenses and revenues.
CCRCs with a higher proportion of independent living units have shown stronger performance, as they are able to spread costs across their business lines to cover skilled nursing expenses. The trend of reducing the number of skilled nursing beds continues among CCRCs, as some have limited external admissions to focus on existing residents.
Despite the challenges, CCRCs are recognizing the importance of maintaining skilled care as part of their continuum, while also acknowledging the need for long-term sustainability in the face of changing reimbursement and regulatory environments.
