This performance measure is important because occupancy levels are strong indicators of financial health. Low occupancy levels can indicate financial distress, which often correlates to quality of care issues.
Low occupancy levels mean that less revenue being earned by nursing facilities, which can result in financial difficulties. Financial difficulty is often linked to quality of care issues, as facilities may not be able to pay vendors for essential services including food, utilities and therapy provided to residents. Inability to pay vendors may lead to application for extraordinary financial relief or closure. Nursing facility rates are subject to a 90% minimum occupancy level; facilities with base year occupancies below 90% are penalized in their Medicaid rates. The Division monitors the financial health of nursing facilities and relates concerns to DAIL and DLP.
Pre-COVID, the average nursing occupancy was 83-84%, indicating that several facilities were being penalized in their rates due to low occupancy. In the time period during which COVID has been present, the average occupancy as decreased to 75%, indicating that (a) facilities are not making as much revenue from days of service provided and (b) the average occupancy to date in SFY21, which is a base year, that will impact rates in future years, is well below the 90% threshold and will result in large financial penalties to the facilities in the form of reductions in their Medicaid rates.
Narrative last updated: 11/06/2020