Tuesday’s recommendation by the Centers for Disease Control and Prevention that long-term care residents and staff receive priority for COVID-19 vaccinations is a credit positive for the senior living and care sector, according to commentary released Thursday by Fitch Ratings.
Although CDC Director Robert Redfield, M.D., still needs to approve the recommendation, it is expected to be broadly followed by state governors.
The ratings agency noted that the availability and distribution of the vaccine would be an immediate stabilizing factor for skilled nursing facilities, which have experienced “dangerously low” occupancy declines since March, pressuring operating budgets. Lower occupancy levels have been driven by several factors, including a reduction in post-acute care referrals from hospitals, beds being kept offline for the isolating or quarantining of coronavirus positive residents, and patients avoiding SNFs due to concerns such as family members not being able to visit, Fitch noted.
The ratings agency revised its outlook to negative in March on the continuing care retirement community sector — the vast majority of which include SNFs. Fitch since has downgraded two CCRCs and moved five outlooks to negative as a direct result of the COVID-19 pandemic. No CCRCs have been upgraded during this time.
Fitch also noted that despite the pandemic’s stress on skilled nursing occupancy, the overall financial performance for CCRCs remained largely stable due to steady levels of independent living occupancy and a marked increase in independent living sales in the third quarter.
“The Coronavirus Aid, Relief and Economic Security Act funding directed at SNFs helped offset the effects of lower SNF occupancy on revenues,” the ratings agency wrote. “The vaccinations for SNF residents and staff should provide further velocity to financial recovery by increasing safety and confidence, and therefore admissions, in SNFs, as well as by reducing employee expenses related to quarantining or coronavirus-positive employees.”
