Skilled Nursing National Report

Demand and supply on converging paths. The skilled nursing sector’s recovery continued into late 2023, as the national occupancy rate ended the third quarter at 82.2 percent, 850 basis points above the pandemic nadir. Improving occupancy is backed by consistently positive net absorption, with over 12,000 net enrollments so far this year. In the decade preceding the health crisis, only one year recorded positive absorption, at slightly over 1,000 beds in 2014. Strong demand for care is further reflected in climbing rents. The nation’s average rate rose 3.4 percent year-over-year in September, its fastest gain since 2010. This notable progress is still somewhat undercut by the ongoing contraction of inventory. Since the end of 2019, more than 25,000 beds have been removed from the market. While this trend has been underway since 2017, it accelerated after the onset of the pandemic. Rising operating costs have likely led to more closings among some lower-performing facilities. Some properties are also shifting to more private rooms, which is lowering the bed count. A third factor may be insufficient labor, an ongoing sector challenge.