Industry Analysis & Industry Trends
Although revenue dropped during the recession, an aging population will increase demand for industry services. However, recent legislation will likely influence consumers to use at-home nursing care to reduce costs. In addition, decreasing Medicaid and Medicare reimbursement rates and tougher pricing negotiation from private insurance companies may hamper profitability over the next five years. To stay afloat, operators will diversify services to attract customers and buoy profit margins... purchase to read more
Industry Report - Industry Investment Chapter
Capital Intensity in the Nursing Care Facilities industry is low. The industry requires relatively high amounts of labor input and only moderate levels of capital input. For every $1.00 spent on labor, only $0.07 is spent on capital equipment. This figure has remained relatively unchanged over the past five years. Total labor costs represent about 42.3% of industry revenue. Significant levels of personal and nursing care are provided to patients. In addition, recent years have seen a rise in patient acuity, increasing the number of staff hours required per patient.
Depreciation represents about 2.8% of total revenue in the industry. Capital expenditures can be volatile and are affected by the extent to which facilities are owned (rather than rented) and levels of profitability... purchase to read more