Latest Takeaways
December 20, 2024
"The skilled nursing industry continued its recovery from the ill-effects of the COVID-19 pandemic in 2024 and is poised for stronger Medicare profit margins in 2025, according to a congressional advisory commission.
The Medicare Payment Advisory Commission, which advises Congress on Medicare policy, said in a Dec. 13 report that occupancy at nursing homes reached 84% in October 2024 from a pandemic low of 69% in the first quarter of 2021.
However, that’s still below the 86% pre-pandemic occupancy rate. Fee-for-service Medicare profit margins are expected to improve over the next several months, MedPAC said.
The commission projects fee-for-service Medicare profit margins will increase to 23% in 2025. With that anticipated tailwind, MedPAC again called for the Centers for Medicare and Medicaid Services to cut Medicare payment rates by 3% to skilled nursing facilities for the 2026 fiscal year. The commission called for a similar cut for 2025, but CMS increased Medicare reimbursements to nursing homes by 4.2%."
The Medicare Payment Advisory Commission, which advises Congress on Medicare policy, said in a Dec. 13 report that occupancy at nursing homes reached 84% in October 2024 from a pandemic low of 69% in the first quarter of 2021.
However, that’s still below the 86% pre-pandemic occupancy rate. Fee-for-service Medicare profit margins are expected to improve over the next several months, MedPAC said.
The commission projects fee-for-service Medicare profit margins will increase to 23% in 2025. With that anticipated tailwind, MedPAC again called for the Centers for Medicare and Medicaid Services to cut Medicare payment rates by 3% to skilled nursing facilities for the 2026 fiscal year. The commission called for a similar cut for 2025, but CMS increased Medicare reimbursements to nursing homes by 4.2%."
Executive Summary
Updated: August, 2024
- Overall median net patient revenue increased 10.6% in fiscal 2023, to $9.7 million, compared with $8.8 million in fiscal 2022. Median operating expense rose only 8% in fiscal 2023 and the median operating margin improved to -4%, compared to -7.2% in fiscal 2022.
- Payments from facilities to related organizations increased only slightly in fiscal 2023. Related organizations are people or business entities with some relationship to the nursing home that are required to be listed in cost reports due to costs or adjustments as a result of transactions. As a percentage of total patient revenue, the median payment of 8.25% was less than a quarter percentage-point increase over fiscal 2022. Among facilities, 78% reported a payment to related organizations in fiscal 2023.
- For a breakdown of these measures by detailed ownership types, see the Trend Selector below.
- The July 2024 release of skilled nursing facility cost reports provides a very complete picture of fiscal 2023. About 24% of facilities' cost reports were included as of the April 2024 data release. In July, that percentage grew to 89%. For-profit facilities make up about 71% of all homes in the fiscal 2023 reports, followed by nonprofit at 20% and government-owned facilities at 9%. Among for-profit homes, corporations own 58% of facilities while partnerships own 16%. The rest are categorized as "other" in the cost reports, including about 1% identified as owned by individuals.
- Median net margin is no longer included in the Modern Healthcare trend selector. This measure depends on a complete and accurate report of financial information on worksheet G3 of the cost reports. No facility reported non-operating expenses in a reliable way and they are not required to report the measure. Total non-operating expenses and net income as reported are available on each individual facility's data page.
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Modern Healthcare Data & Insights is produced by Tim Broderick, Sam McBroom, Michael Palazuk, and the Modern Healthcare editorial staff. All data and information are the property of Modern Healthcare and other sources where cited and are protected by copyright and other intellectual property laws. All rights are reserved by Modern Healthcare. Data and information may not be resold, republished, redistributed, sublicensed, or publicly displayed without the permission of Modern Healthcare.