Declining SNF Utilization

There is increasing evidence that either (1) utilization of nursing homes is rapidly diminishing, or (2) utilization of nursing homes has reached saturation, and competition is closing less competitive operations.  One would like to think that seniors and their families are implementing "Aging in Place" planning in order to avoid institutionalization. The issue is complicated, however, and although what is occurring is demonstrable, the underlying causes are unclear. 

The New York Times recently published an article discussing the phenomenon entitled "In the Nursing Home, Empty Beds and Quiet Halls,"explaining that a once vibrant facility now stands closed due to a drop in demand.  According to the article, "[t]he most recent quarterly survey from the National Investment Center for Seniors Housing and Care reported that nearly one nursing home bed in five now goes unused. ... Occupancy has reached 81.7 percent, the lowest level since the research organization began tracking this data in 2011, when it was nearly 87 percent."  

The occupancy rate for skilled care nursing homes has been trending downward, and as a result facilities close.  According to the article, somewhere between 200-300  close annually.  The article  offers some possible explanations for the phenomenon given the number of baby boomers that one might think would cause an increase in demand.  The article suggests the decreasing utilization is caused by:  

• Increased regulations and more financial belt-tightening;
• Hospitals' use of observation status,which affects Medicare coverage for subsequent SNF care;
• More surgeries on an out-patient basis;
• Increasing number of Medicare Advantage plans;
• Increased competition through other housing options;
• The shift to Medicaid covering care in the community, with "Money Follows the Person [having] moved more than 75,000 residents out of nursing homes and back into community settings."

The article speculates whether this trend will reverse itself once the boomers start reaching age 80 and beyond. The article also discusses whether the lower demand provides more options for those in need of nursing home care.