Q: Covid has clearly impacted the market nationwide, how has it affected your facilities and are you seeing recovery across the state or is it still impacting the skilled business?
A: We are still seeing the effects of COVID-19 in the state. We have noticed that people in outlying communities are still not frequenting the hospital as often as they did prior to the pandemic and local hospital beds are less occupied. Metro areas seem to be rebounding much faster than the outlying secondary markets.
Q: Development in the skilled space in Arizona has primarily been in the short term rehab space, what are your thoughts on development in AZ for skilled nursing for a traditional model, is it feasible and do you see that happening in the near future?
A: I think people have stayed away from building true LTC SNFs due to the fact that state Medicaid rate still lags behind most of the other western states. The average Medicaid rate in the state is still less than $200 per day which is probably 10-20% lower than some of the neighboring states. I am not sure that developers will be excited to build a LTC SNF until Medicaid rates approach those of other nearby states. Construction costs probably need to stabilize as well before people will look to build expensive traditional SNF buildings.
Q: What advice would you give to someone interested to grow in the Arizona skilled nursing market?
A: Make sure you are comfortable with a managed care environment for all of your payer sources as it is a care model that is much more nuanced with payers dictating levels of service far more than they did in the past.
