An upswing in occupancy in Brookdale Senior Living (NYSE: BKD) facilities could bode well for the company’s hospice and home health business, which will soon transition to hospital system HCA Healthcare following completion of a $400 million transaction. HCA will assume 80% ownership of the segment with Brookdale retaining a 20% stake.
Senior living occupancy and move-ins declined precipitously industry-wide during the COVID-19 pandemic. Many seniors avoided or postponed moving into senior living due to fears of contracting the virus. The inability to see family members due to safety restrictions during the outbreak was also a factor. This trend in turn reduced hospice referrals, admissions and length of stay for many providers.
Brookdale’s senior living occupancy hit 71.1% by the end of April, up 100 basis points from February, and many of their facilities have resumed social activities and are admitting more visitors. A key contributor to this recovery is the availability of COVID-19 vaccines.
“I believe our relentless focus on making vaccines available as quickly as possible saved many lives,” Brookdale CEO Lucinda Baier said in an earnings call. “The benefit of the vaccine clinics is already reflected in the 97% decline of resident COVID-19 cases in our communities since the peak in December .”
During the past four months Brookdale has secured vaccinations for more than 125,000 people, achieving a rate of 93% among residents. The company set up vaccination clinics within its facilities to provide easier access.
“We expect the vaccine to lift roadblocks to resident move-ins and health care provider referrals, which provides a nice setup for continued improvement through the year,” Analyst Frank Morgan of RBC Capital Markets indicated in a note shared with Hospice News.
The rise in occupancy will likely lead to increased hospice referrals. While Brookdale is divesting the majority stake in that business, the company will remain its largest customer following the HCA Healthcare deal. The transaction is expected to close in the middle of this year, providing a $300 million infusion to Brookdale’s liquidity.
Nashville-based HCA Healthcare operates 185 hospitals, surgery centers, freestanding emergency rooms, urgent care centers, and physician clinics in 20 states and the United Kingdom, seeing about 32 million patients each year.
The transition to HCA could give patients access to a wider range of health care services, according to Baier.
“What has really changed over the last several years is the integration of health care and the ability to offer our residents a better integrated health care experience through this partnership with HCA,” Baier said. “By being part of the HCA Healthcare network, they’ll have improved access to physicians, hospitals, and lab services. Being able to have a strategic relationship with such a high quality health care provider is so encouraging for our business.”
Brookdale’s health care services segment brought in $86.6 million during the first quarter of 2021, an 8.4% decline from $94.8 million during the prior year’s period.