Exploring Ownership Trends and the Positive Influence of REITs on the Long Term Care Industry:

Real estate investment trusts (REITs) have emerged as influential stakeholders in the Long Term Care (LTC) industry, and their involvement is yielding positive outcomes. ?

REIT Leased Skilled Nursing Facilities: Elevating Quality Measures:

According to an analysis conducted by Nareit[1], skilled nursing properties leased from REITs tend to exhibit superior quality measure ratings compared to properties leased from non-REIT entities[2]. This analysis focused on Centers for Medicare & Medicaid Services (CMS) quality measure ratings, revealing a higher prevalence of 4 and 5 Star SNF providers among REIT-owned properties (65%) and a lower occurrence of 1and 2 Star SNFs (17%) in 2022.

Furthermore, these REIT-leased facilities demonstrated a smaller proportion of residents experiencing adverse outcomes, such as the misuse of antipsychotic medication, complications arising from catheter use, falls resulting in major injuries, increased dependency in daily activities, decreased mobility, pressure ulcers, and urinary tract infections.

These findings underline the positive impact of REIT involvement in nursing homes, ensuring better overall quality of care for residents.

Ownership Trends and the Influence of REITs:

As of 2021, REITs owned approximately 12% of all skilled nursing assets, encompassing around 1,870 facilities[3]. This ownership trend holds significant implications, particularly considering the limited research on REIT involvement in the nursing home industry. The landscape of REIT ownership is currently undergoing transformation, characterized by a shift towards smaller, more regionally focused portfolios being acquired and divested. While pure play REITs, such as Omega Healthcare, adapt to these changes, diversified REITs like Welltower exhibit less consistent investment in skilled nursing facilities due to the relatively smaller scale of prospective portfolios compared to their overall balance sheets. Additionally, the structure of skilled nursing facility financing and rising interest rates present challenges for the traditional triple net business model, potentially influencing REITs' future engagement.

Government Scrutiny and the Need for Further Research:

The Biden administration and the Centers for Medicare & Medicaid Services (CMS) have intensified their scrutiny of nursing home ownership, specifically focusing on REIT and private equity involvement. While concerns have been raised about potential diversion of funds away from clinical and operational investments, there remains a lack of research quantifying the association between REITs and the quality of care, patient costs, and financial security of healthcare operators. Policymakers and facility operators must ensure that REIT investments in the healthcare industry remain healthy, fostering optimal delivery of care. As the landscape of ownership trends continues to evolve, further research is essential to comprehensively understand the implications of REIT involvement in terms of care quality, patient costs, and financial stability.

[1] https://www.reit.com/nareit

[2] https://www.reit.com/news/blog/market-commentary/reit-skilled-nursing-tenants-have-high-quality-measure-ratings

[3] https_skillednursingnews.com/?url=https%3A%2F%2Fskillednursingnews.com%2F2022%2F05%2Freits-owned-12-of-us-skilled-nursing-assets-in-2021-ownership-trends-changing%2F

Welltower? Inc. (NYSE:WELL) Sabra Health Care REIT, Inc. CareTrust REIT Omega Healthcare Investors Ventas, Inc. LTC Properties, Inc. (NYSE: LTC) HCA Healthcare