Post-Acute Market Report 2024

Post-Acute Market Report 2024

Market At-A-Glance
The U.S. post-acute market is expected to reach $243.4 billion in 2024, a 3% increase from 2023 when the market was valued at $241.5 billion. Labor challenges, growing demand for at-home care, and fluctuating government
reimbursements drive market performance.

In 2024, occupancy rates for skilled nursing facilities (SNFs), continuing care retirement communities (CCRCs), assisted living facilities, and memory care facilities continue to inch toward pre-pandemic levels while SNFs could see full occupancy recovery in 2024.

Labor Shortages And New Federal Staffing Mandate Strain Nursing Homes
Despite raising wages, nursing homes continue to see slow employment recovery. Nearly half of nursing homes turned to staffing agencies in 2022 to fill labor gaps. Forty-six percent of nursing homes had to limit new admissions due to labor shortages in 2023.

The first-ever nursing home staffing mandate was finalized in April 2024 with requirements on the number of nursing care hours. More than 75% of nursing homes in the U.S. will need to increase staff to meet the mandate requirements or face financial penalties. The mandate went into effect on June 21, 2024, and the requirements must be incrementally implemented through May 2027.

SNFs Expand Services As The Older U.S. Population Grows
The post-acute market is facing a growing demand for services, as older Americans are projected to represent more than a quarter of the U.S. population by 2065. Nearly all Americans aged 60 years and older now have at least one chronic condition, which places higher burdens on SNF staff while creating opportunities to offer new specialty services to patients. More than a third of skilled nursing administrators indicated that in 2024, their organizations will likely become more involved with specialty services such as dialysis, memory care, and ventilator care.

Skilled Nursing Facilities Experience Negative Operating Margins And Fewer Mergers And Acquisitions
Forty-five percent of SNFs reported operating at a loss or negative total margin in March 2024, down from 54% in May 2023. Key factors impacting operating margins in 2024 include labor costs, interest rates, and inflation. Similar factors contributed to a decline in SNF mergers and acquisitions from 2022 to 2023, although merger and acquisition activity is expected to rise in 2024.

Medicare Changes Benefit Inpatient Rehabilitation And Skilled Nursing Facilities
Medicare spending on inpatient rehabilitation facility (IRF) stays rose from $8.5 billion in 2021 to $8.8 billion in 2022. For SNFs, Medicare revenue per patient day (RPPD) climbed 2.9% from $575 to $592 between 2022 and 2023. The Centers for Medicare & Medicaid Services (CMS) released the final fiscal year 2024 payment rule, increasing Medicare Part A payments to SNFs by an aggregated 4%, or $1.4 billion, compared to FY 2023.