Data Points the Way: Trends in Campus Right-Sizing

Last year, SFCS started investigating the changes occurring in long-term care and the increasing number of communities downsizing or eliminating skilled nursing units. To better understand these trends across the industry, SFCS analyzed data from the LeadingAge/Ziegler listings for not-for-profit, single-campus providers and incorporated data from our own projects to compare the years before and after 2020.

We are observing a significant shift in the senior living industry: the widespread reduction of skilled nursing (SN) beds in senior living communities nationwide. This trend is reshaping our communities and the entire care landscape. Amy Carpenter, a Principal at SFCS, presented these findings alongside Jennifer Schwalm, a Business Strategist and Consultant with Baker Tilly, at By Design 2024.

The Data Speaks: Key Findings

In the senior living industry, anecdotal evidence and gut feelings often drive decision-making. However, to truly understand the scale and impact of these changes, hard data is necessary.

This wasn’t just a surface-level analysis. It delved deep into the data. The researchers compared the most recent data from 2022 with historical data going back to 2011, providing a decade-long view of the changes in our industry.  

Let’s dive into the key findings from this study:

1. Widespread Reduction: Analysis of over 100 communities, primarily focusing on the largest, single-site, non-profit providers, shows a clear trend of reducing skilled nursing beds. The Mid-Atlantic region, particularly Pennsylvania, saw the most significant drop, with a reduction of 345 beds. Arizona followed with a reduction of 259 beds.

2. Changing Ratios: The ratio of SN beds to Independent Living (IL) units has changed. Pre-COVID, the average ratio was 1 SN bed to 4.40 IL units. By 2022, this ratio had shifted to 1:4.74. By 2040, that ratio will be 1:6+ of SN beds to IL units if the trend continues the same trajectory, but we predict it will rise at a greater rate.

3. Communities Without SN: In 2013, only two out of 100+ surveyed communities had no skilled nursing beds. By the time of this study, that number had increased to eight communities spread across different states.  

4. Average Unit Changes: On average, communities increased their IL by 7.4 units and Assisted Living (AL) units by three while decreasing SN units by 17.7 for an average of 113.8.

These findings show an industry transitioning from traditional skilled nursing models to alternative care approaches. This is not just a trend but a fundamental shift in how senior care is approached. The reduction in skilled nursing beds is occurring alongside an increase in independent and assisted living units, suggesting a recalibration of the continuum of care within communities.

Moreover, regional variations highlight this change is not happening at a uniform pace across the country. Some areas, particularly in the Mid-Atlantic, seem to be leading this transformation, potentially serving as a bellwether for the rest of the industry. The emergence of communities with no skilled nursing beds represents a radical departure from the traditional CCRC model, indicating that some providers are reimagining their approach to long-term care.

As this data is interpreted, it’s crucial to consider the broader context. These changes are occurring against a backdrop of evolving resident preferences, financial pressures, staffing challenges, and regulatory changes. The data provides a quantitative foundation for understanding these shifts. A deeper dive into the driving forces behind them and their far-reaching effects on our industry is required to grasp their implications fully.

The Driving Forces

The reduction in skilled nursing beds isn’t happening in a vacuum. It’s a response to a complex interplay of factors that have been building for years if not decades.  

These forces are reshaping the industry from financial, operational, regulatory, and market-driven perspectives. They represent challenges that must be overcome and opportunities for innovation and differentiation. By examining each of these factors, we can better understand why so many communities are choosing to reduce or eliminate their skilled nursing beds and what this means for the future of senior care.

Listed below are the key drivers behind this seismic shift in our industry:

1. Financial Pressures: Many communities are losing money on their SN units due to high operational costs and inadequate reimbursement rates and coverage.

2. Staffing Challenges: The persistent shortage of qualified staff and the challenge of providing a competitive wage are straining resources.

3. Regulatory Burden: Increased regulatory oversight and paperwork for SN beds consume valuable time and resources.

4. Shifting Market Demand: Today’s seniors are seeking alternatives to traditional senior living care, preferring options that offer more independence and personalization.

5. Aging Infrastructure: Many SN units are housed in outdated, institutional-style buildings that no longer meet modern standards or resident expectations.

The Ripple Effect: Embracing Change and Exploring Solutions

The reduction in skilled nursing beds is not just a trend to be observed but a catalyst for necessary change. These challenges can be proactively addressed and leveraged with new approaches to create more sustainable, effective, and resident-centered communities:

1. Reimagining Care Models

Challenge: Traditional skilled nursing models are struggling to meet evolving resident needs and preferences.

Solutions:

• Develop flexible care models that can adapt to residents’ changing needs, potentially including options for temporary relocation during periods of intensive care.

• Investigate “small house” models or household-style groups that offer a more homelike environment while still providing skilled care.

• Implement technology-enabled care solutions, such as those used at Tiger Place, which can help predict health changes and prevent falls.

2. Addressing Financial Sustainability

Challenge: Many communities are facing financial pressures, especially those relying on entrance fees to subsidize healthcare operations.

Solutions:

• Diversify revenue streams by offering new services, such as home health care or wellness programs, to the broader community.

• Research value-based care arrangements and partnerships with health systems to create new revenue opportunities.

• Implement data analytics and predictive modeling to optimize resource allocation and pricing strategies.

3. Tackling Workforce Challenges

Challenge: Persistent staffing shortages and high agency costs are straining resources and impacting care quality.

Solutions:

• Produce robust career ladders and continuing education programs to attract and retain staff.

• Partner with local educational institutions to create pipeline programs for healthcare workers.

• Implement technology solutions, including AI and robotics, to support staff and improve efficiency.

4. Meeting Middle Market Needs

Challenge: A growing middle-income senior population cannot afford private-pay assisted living.

Solutions:

• Develop affordable housing models that integrate care services, potentially leveraging programs like PACE.

• Search for creative financing options, such as public-private partnerships or social impact investing.

• Advocate for policy changes to expand access to affordable long-term care options.

5. Enhancing Community Integration

Challenge: Seniors increasingly want to remain connected to their broader communities while receiving necessary care.

Solutions:

• Apply programs like CAPABLE (Community Aging in Place: Advancing Better Living for Elders) to support aging in place.

• Create partnerships with local organizations to provide community-based services and activities.

• Design intergenerational programs that connect seniors with younger community members.

6. Navigating Regulatory Changes

Challenge: Evolving regulations and reimbursement models are creating uncertainty and compliance challenges.

Solutions:

• Champion regulatory changes that support innovative care models and reimbursement structures.

• Engineer robust compliance programs that can quickly adapt to changing regulations.

7. Leveraging Technology

Challenge: Keeping pace with technological advancements while ensuring they enhance rather than detract from personalized care.

Solutions:

• Implement predictive monitoring technology to improve resident safety and reduce care costs.

• Explore telehealth solutions to provide access to specialized care and reduce hospitalizations.

• Use data analytics to personalize care plans and improve outcomes.

As these changes are navigated, it is crucial to remember that the ultimate goal is to enhance the quality of life for our elders while ensuring the sustainability of senior living communities. These challenges can be transformed into opportunities by embracing innovation, fostering partnerships, and staying attuned to residents’ changing needs and preferences.

The reduction of skilled nursing beds is more than just a trend—it is a call to action. It is pushing for a rethinking of current approaches, innovation in today’s models of care, and, ultimately, the creation of senior living communities better equipped to meet the diverse and evolving needs of older adults.  

This session was presented during By Design 2024. More sessions and topics like this one can be discovered during By Design 2025 on February 4-6th at Hotel Roanoke. To stay informed and get emails with By Design updates, please sign up for the newsletter here: https://bit.ly/45lUNcc.

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