Nursing home industry representatives were out in force in Washington last week, talking about the devastating effects of Medicare's prospective payment system on their bottom lines and talking up the legislative and regulatory fixes they hope will ease the situation.
But this time they weren't talking to members of Congress.
They were talking to perhaps the one audience more important: the bankers and investors who finance their operations.
The occasion was the ninth annual meeting of the nursing home and assisted-living industry sponsored by the National Investment Center for the Seniors Housing and Care Industries.
About 1,200 attendees, roughly half operators and half lenders, gather each year to trade tips on new businesses, find new financing mechanisms and most of all to talk deals. Color-coded name tags-red for providers and blue or green for investors-were designed to facilitate partner identification.
And with reductions in budgeted federal spending on subacute care in nursing homes, operators need to court investors more than ever.
But a new study conducted by the NIC shows widespread cooling of lender interest, even among those with a history of financing the long-term-care industry.
Some 24% of 131 financiers surveyed said they expected to increase lending to the nursing home industry, a large drop from the 42% in last year's survey. And 40% of lenders expected to increase lending to assisted-living companies, compared with 56% last year.
"Although credit is available for long-term care . . . our research indicates that lenders may be more selective in the deals they pursue," according to the NIC report.
Most of the lower interest in nursing homes stems from Medicare payment changes that have cut nursing home revenues.
Speaking at the conference, Edward Kuntz, chairman and chief executive officer of Vencor, said that the industry could not recover without help from the government.
"This industry is not something that can reinvent itself," he said. Kuntz said that only legislation that changed new payment rules could spell relief.
The Louisville, Ky.-based nursing home company filed for bankruptcy last month, placing most of the blame on the PPS.
The fall-off in interest in the assisted-living industry reflected new recognition of operating difficulties in the sector, investors at the conference said.
At last year's meeting many investors believed that the sheer numbers of elderly would fuel demand for assisted living and keep occupancy high.
But recent news at two publicly traded assisted-living companies shows that hasn't been the case.
Both Assisted Living Concepts and Sunrise Assisted Living last week said they would report lower-than-expected earnings in coming quarters.
Sunrise, based in Fairfax, Va., reported lower-than-expected occupancy and higher-than-expected costs at the 39 facilities it acquired earlier this year.
Assisted Living Concepts, based in Portland, Ore., also said a decline in occupancy rates has hurt its bottom line. The company expects to report its third-quarter results next month.