Skilled Nursing Facilities

Skilled Nursing Facilities (SNFs) are the oldest senior’s housing/health care product and one step below hospitals on the acuity spectrum. They are for residents needing 24-hour care and supervision by on-site nursing personnel. They contain smaller, more institutional rooms without cooking facilities. Many older SNFs have a high ratio of semi-private (double resident) rooms. Newer SNFs are trending toward more private rooms to target profitable short-term rehab residents. Most SNF revenue comes from The Centers for Medicare and Medicaid Services (CMS). This heavily reliance on subsidies means any changes in reimbursements can directly impact a SNF’s profitability.

In recent decades, SNFs turned their focus to more profitable short-term rehab residents reimbursed by Medicare. Many buildings were redesigned to create more private rooms, bigger physical therapy spaces, and dedicated common areas for short-term residents. This was driven by concerns about lower reimbursement levels for long-term care and the growing trend of long-term care residents moving to ALRs and home health settings. However, following the Affordable Care Act, more rehab residents are now being discharged directly to residential settings with support from home health agencies, sometimes bypassing a short-term stay in a SNF.