‘Perfect storm’ of inflation, low reimbursement to drive mergers and acquisitions: 2023 Outlook Survey

Nearly 40% of skilled nursing owners, top executives and administrators expect they will sell some or all of their nursing home holdings in the coming year, the McKnight’s 2023 Outlook survey reveals.

Among all respondents, including nurse supervisors, that number declines to 36.3%. But parsing the numbers in any manner shows the sector is likely to see more significant merger and acquisition activity in the coming year, a prediction seen among healthcare M&A experts, as well.

And respondents were firm in their responses. Last year, providers were largely uncertain of their future plans for skilled nursing holdings, with 42% reporting they were “not sure” whether they would sell some, sell all or merge, hold all, acquire some or sell and acquire facilities. This year, just 12% were uncertain.

In this year’s survey, the share of all respondents who think their organization is likely to sell all or merge more than quintupled — from 3.8% to 19.2%. And the share likely to sell some jumped from 7.6% to 17.1%.

“They see what’s ahead,” John R. Washlick, a healthcare M&A attorney and transactions specialist at Buchanan, Ingersoll & Rooney told McKnight’s after reviewing survey data. He said he was unsurprised by the findings, expecting already strong mergers and acquisitions activity to ramp up as financial pressures catch up with nursing home owners who have been struggling to sustain operations and withstand the pressures of escalating costs.