Recently exposed in The Wall Street Journal, Senior housing, medical-office buildings and hospitals all have generated big gains for commercial-real-estate investors in recent years, but skilled-nursing facilities have gotten short shrift.
A revenue squeeze stemming from a change in medical billing practices suggests that corner of the health-care sector could continue to face pressure.
The problem: Payments from Medicare and other government insurance programs make up the bulk of the revenue at skilled nursing facilities. Landlords say their tenants are battling with shorter lengths of stay and lower rates as billing practices focus more on the value of care delivered than earlier models based on the volume of services the facility provided. Now, some big real-estate investment trusts that focus on health care are starting to pare their skilled-nursing holdings.
Chicago-based Ventas Inc. in August 2015 spun off 355 skilled nursing facilities and outpatient recovery centers into a new REIT. Irvine, Calif.-based HCP Inc. is carrying out its own separation, while Sabra Health Care REIT Inc.is trimming its exposure and is now in the process of selling 29 of these assets.
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The Wall Street Journal- Health-Care REITs Back Off Nursing