Nursing Homes & Assisted Living

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 9,000 nursing homes in the US provide inpatient nursing and rehabilitative services to the elderly and patients with chronic conditions or prolonged illness. Primary services include skilled nursing care, assistance with activities of daily living, rehabilitation, and hospice care. The industry includes group homes for the disabled and convalescent homes and hospitals.

Dependence on Government Funding

Nursing homes receive the majority of revenue from Medicaid and Medicare.

Nursing Shortage

The shortage of nurses has been an ongoing problem for nursing homes.

Industry size & Structure

The average nursing home company employs about 175 workers and generates between $10 million and $15 million annually.

    • The nursing home industry consists of about 9,000 firms that employ over 1.5 million workers and generate almost $20 billion annually.
    • The industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for 25% of industry revenue.
    • The nursing home industry includes chains, non-profit organizations, and independent operators. No truly national companies exist; even some of the largest firms operate regionally.
    • Large companies include Genesis Healthcare, The Ensign Group, Life Care Centers of America, and ProMedica Senior Care.
    • About 80% of firms are for-profit entities, while about 20% are non-profit tax-exempt organizations.
                                Industry Forecast
                                Nursing Homes & Assisted Living Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Mar 7, 2023 - Facility Inspections Still Behind Schedule
                                • About 4,500 of the nation's more than 15,000 nursing homes were reported overdue for an inspection as of mid-February, according to data from the Centers for Medicare and Medicaid Services (CMS), which contracts with state health departments to oversee the industry. Of those, more than 1,500 facilities' last documented inspection occurred before COVID-19 was declared a national emergency. Federal law requires nursing homes to be inspected at least every 15 months. Many state health departments say they can't retain or recruit enough surveyors to catch up, according to CNN. State officials blame a mixture of retirements, employee burnout, lingering fears of COVID-19, and uncompetitive wages caused by stagnant federal funding.
                                • Nursing home closures totaled 129 across the US in 2022, according to the Centers for Medicare & Medicaid Services. The actual count was significantly higher, according to Mark Parkinson, president of the American Health Care Association, but the federal reports tend to lag what’s happening on the ground. Experts say that the lack of open nursing home beds is leaving some patients in hospitals for weeks while social workers seek placements. More people are winding up in care facilities far from their hometowns, especially if they have dementia, obesity, or other conditions that require extra attention. Owners say the closures largely stem from a shortage of workers, including nurses, nursing assistants, and kitchen employees. The problem could deepen as pandemic-era government assistance dries up and care facilities struggle to compete with rising wages offered by other employers, industry leaders and analysts predict.
                                • The annual Inpatient Prospective Payment System final rule issued by the Centers for Medicare and Medicaid Services (CMS) includes a 2.7% year-over-year increase in Medicare Part A payments to skilled nursing facilities for fiscal year 2023. The federal government fiscal year begins on October 1 and ends on September 30 of the following calendar year. CMS is also finalizing a permanent 5% cap on annual wage index decreases to mitigate instability in SNF prospective payments due to significant wage index decreases that may affect providers in any given year. The cap is intended to smooth year-to-year changes in providers’ wage index payments.
                                • About 98% of nursing home operators are having trouble hiring, 59% said they are losing money, and 73% said staffing issues could force them to close, according to an American Health Care Association survey. Nearly all nursing homes are asking staff to work more and 61% are limiting new admissions.
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