Home Health Giants Double Down on Diversion, as Nursing Home Numbers Normalize

Acute and post-acute patient volumes started to normalize in the early part of 2021, with hospitals, skilled nursing facilities (SNFs) and home health providers all hovering around their 2019 baselines.

The accelerated rollout of COVID-19 vaccines is largely responsible for the newfound stability, particularly in the SNF space. Following millions of inoculations across the U.S., the weekly rate of new infections at nursing homes fell by 89% from early December through the second week of February, federal statistics show.

Sabra Health Care REIT (Nasdaq: SBRA) has seen the value of mass vaccinations firsthand within its skilled nursing portfolio, according to Chief Investment Officer Talya Nevo-Hacohen. After watching occupancy rates decline by 1,200 basis points from the start of the pandemic to the end of 2020, the Irvine, California-based real estate investment trust has more recently seen numbers trend upward.


“After the launch of the vaccines, deaths in skilled nursing began to decline and have continued to do so dramatically, while deaths in the general population spiked and have plateaued since,” Tevo-Hacohen said last month during Sabra’s fourth-quarter earnings call. “With skilled nursing as a leading indicator of the impact of the vaccine in congregate living, we have reason to be optimistic.”

Sabra’s SNF stakeholders have made similar observations about recovering occupancy, too. Nationally, nursing home occupancy sat at 68.6% on Jan. 3, rising slightly to 69.2% by Jan. 31, with some geographic areas recovering faster than others.

“We projected that skilled would be back around the first quarter of 2022 — or pretty close to back,” Sabra CEO Rick Matros said on the Q4 call. “So we’ll see if we can actually beat that.”


Although it’s still too early to draw any long-term conclusions, the continued vaccine progress presents another chance to revisit emerging patient volume trends and the overall debate around future SNF-to-home diversions.

It’s typically best to begin that review by looking at in-patient volume and where patients are coming from prior to using post-acute care services, Tom Martin, director of post-acute care analytics at CarePort, a WellSky company, told Home Health Care News.

“That’s really where the story starts,” Martin said.

Hospital volumes rebounding

Financially, hospitals have been decimated by the pandemic since last spring, with a good chunk of financial losses tied to the delays and cancellations of elective surgeries. Even with those procedures back online, many Americans have still opted to forgo treatments that aren’t absolutely necessary.

Prior to COVID-19, hospital volumes were relatively stable, Martin explained. 

“We’ve seen amongst our customers a pretty steady rate of in-patient volume,” he said. “You can see there are sort of [dips] with holidays. Around Christmas and Thanksgiving, there are little like peaks and valleys, where volume will suddenly drop one week.”

A CarePort analysis of in-patient stays from 57 hospitals in 16 states shows that volume levels hovered around 100% or more of historic baselines from October 2019 through the very beginning of March 2020, apart from those expected holiday dips. Then COVID-19 cases started to spike — and hospital volume fell off a cliff.

During the first week of March 2020, in-patient volumes were 103% of 2019’s levels. By the end of last March, volume was down to just 80% of the previous year’s levels, dropping to as low as 72% toward the end of April.

Numbers started to steadily inch back to normal throughout 2020, even exceeding pre-pandemic baselines during some stretches of the year, Martin noted. 

“It was very much like a ‘V,’ shooting down with a slow transition back up to normal,” he said. “It goes right into the first few weeks of 2021. There’s a little fluctuation again for the holidays, but we’re basically seeing amongst our customers that in-patient volume is starting to return to normal.”

Yet CarePort data does show a mini-dip in early 2021. The company’s most recent data from the end of January shows in-patient volumes at 94% compared to pre-pandemic baselines.

The median hospital operating margin was at -0.6% for the first month of the 2021, not including federal CARES Act funding, according to health care management and consulting firm Kaufman Hall. With the funding, the median hospital operating margin was -0.1%.

Post-acute referral trends

Home health agencies and SNF operators have followed in-patient volumes closely. In recent years, roughly one-third of home health users have gone to the setting following an institutional stay.

In the past, hospital discharges were split pretty evenly between home health and SNFs, Martin said.

“We saw a very consistent and steady flow of referrals into the SNF and home health space,” he said. “It varies from customer to customer, but it was pretty close to half going to SNFs, half going to home health.”

While SNF volumes are returning, home health providers continue to see far more hospital referrals in the COVID-19 landscape, CarePort data from 389 hospitals in 36 states shows.

In April 2020, home health agencies and SNF operators sat at 68% and 69% of 2019 volume baselines, respectively. Home health providers reached 107% of 2019’s levels by July, but SNFs still sat at 80%.

“There was a very quick recovery in the referrals that went to home health,” Martin said. “Their volume of referrals actually spiked to levels we had not seen before, where we’re consistently seeing 5% to 10% above the average number of home health referrals we’ve seen in the past.”

As of this January, SNF volumes climbed up to 90% of pre-pandemic baselines. Home health volumes were up 108%.

“We are finally seeing it, maybe,” Martin said. “We’re starting to see some light at the end of the tunnel for the nursing home industry.”

Where the numbers go from here

CarePort is still collecting post-acute care referral data from February and early March. Looking beyond the early part of 2021, it’s probably too soon to say if the current SNF-to-home diversion wave will last, Martin said.

Home health providers are certainly trying to maximize the momentum, though.

During a recent fourth-quarter earnings call, Amedisys Inc. (Nasdaq: AMED) CEO Paul Kusserow said his home health heavyweight was close to unveiling a SNF-at-home partnership with a major health care player.

“We’re feeling good — lots of conversations with people, particularly on the convener-type space, where people want to reduce the cost of SNFs and the fear factor that are associated with SNFs,” Kusserow said on the call. “We’re getting a lot of interest from managed care plans.”

LHC Group Inc. (Nasdaq: LHCG) is similarly focused on SNF-to-home and advancing a new payment model known as “Choose Home.” While still a work in progress, “Choose Home” would combine home health and personal care services to care for high-needs patients over a 30-day episode, putting in-home care providers on a more equal footing with SNFs as direct hospital discharge options.

But even if home health providers are able to capture more referrals compared to previous years, that doesn’t mean SNF operators won’t recover and reach 100% of pre-pandemic levels, Martin said. 

“Patients, if they are able, would prefer to go home — and for the health care system, for Medicare, it’s to everyone’s benefit that they go home because it’s so much less expensive,” he said. “But there are always going to be people who are going to need skilled nursing care.”

Sabra’s Matros echoed that point as well. As the U.S. population with complex health needs increases along with the “silver tsunami,” the broader health care ecosystem will need both expanded home health options and a robust nursing home infrastructure to meet people’s needs.

“Frankly, we think it’s a good thing if home health can take more patients, because we do have a demographic crisis looming,” Matros said during the February earnings call. “We have a declining supply of skilled, and there are already access issues that are going to be exacerbated throughout the country, in terms of skilled nursing. So we actually, as a society and a country, need home health to be taking more than they’ve taken historically, from an acuity perspective.”

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