The Connecticut market for Skilled Nursing Facilities (SNFs) is changing. We are seeing rising occupancy rates alongside steady industry consolidation. For SNF owners, this shifting landscape presents a window of opportunity. Understanding these market dynamics is the first step toward a successful sale, ensuring you can navigate the process on your terms and achieve your financial goals. This article provides the key insights you need to start planning.
Market Overview
The Connecticut market for Skilled Nursing Facilities is defined by consolidation and increasing demand. If you are an owner, understanding these numbers is the first step in positioning your practice for a potential sale.
Fewer Beds, Higher Demand
As of late 2024, Connecticut has 195 licensed nursing facilities, a small decrease from last year. More telling is the long-term trend. The total number of available beds has fallen by 24% since 2004. At the same time, average occupancy has climbed to 87%, a notable recovery from pandemic lows and significantly higher than the previous year. This tightening of supply and demand creates a favorable environment for established, well-run facilities.
Ownership Landscape
The market is primarily composed of for-profit operators. Today, there are 157 for-profit facilities compared to just 38 non-profits. This trend signals that sophisticated buyers and investment groups are active in the state, seeking valuable assets for their portfolios.
Key Considerations
Beyond general market trends, a buyer will look closely at your facility’s specific operational profile. A potential sale requires a deep dive into the details. Here are three areas that will be under scrutiny.
- Your Payer Mix. With Medicaid accounting for 73% of payments statewide, your facility’s dependence on government reimbursement is a critical valuation factor. Buyers will analyze the stability of this revenue and the potential for increasing higher-margin Medicare (16%) and private pay (9%) residents.
- Your Operating Costs. The cost of care is rising. The average private pay rate just increased by nearly 4% to $510 per day. Buyers will examine your expense structure, staffing efficiency, and ability to manage these escalating costs while maintaining quality of care.
- Your Resident Profile. The demographics of residents are also shifting. The number of residents over 75 has decreased since 2004, while the 55-74 age group has grown. A potential buyer will want to understand your facility’s ability to cater to the needs of this changing population, including post-acute care and specialized services.
Market Activity
The best way to understand the market is to look at recent deals. We saw significant movement in June 2024 when Athena Health Care Systems sold five of its Connecticut nursing homes to a larger, New York-based provider.
This transaction is a case study in what can happen when a sale is driven by financial distress. While the purchase price was not disclosed, the deal required the buyer to cover significant back taxes, vendor debts, and unpaid employee health claims. It highlights a critical lesson for any owner. The time to plan your exit is when your facility is thriving, not when you are forced to sell. Proactive planning allows you to negotiate from a position of strength and control the narrative, rather than having the market dictate your terms.
The Sale Process
Selling your practice is not a single event but a multi-stage process. Each step requires careful preparation to protect your interests and maximize value. Getting this process right is the difference between an average outcome and a great one. While every sale is unique, most follow a similar path.
| Stage | What It Involves |
|---|---|
| 1. Preparation | Organizing financials, addressing operational weaknesses, and defining your personal and financial goals for the exit. |
| 2. Valuation | Working with an advisor to determine a realistic and defensible market value based on financials, assets, and market comps. |
| 3. Marketing | Confidentially approaching a curated list of qualified strategic and financial buyers to create competitive tension. |
| 4. Due Diligence | The buyer thoroughly inspects your financial, legal, and operational records. This is where many deals face challenges. |
| 5. Closing | Finalizing the legal agreements, transferring ownership, and managing the transition for staff and residents. |
Valuation
How much is your Skilled Nursing Facility worth? It is the most common question we hear. It is not determined by revenue or a simple rule of thumb. Sophisticated buyers value a practice based on its true profitability, which we call Adjusted EBITDA.
This figure starts with your net income and then adds back interest, taxes, depreciation, and non-recurring or owner-specific costs. The goal is to show a buyer the practice’s true, ongoing cash flow. That Adjusted EBITDA figure is then multiplied by a specific number, or “multiple,” to arrive at your enterprise value. This multiple is not random. It is influenced by your facility9s size, payer mix, quality ratings, and growth potential. A professional valuation tells the story behind your numbers, ensuring you do not leave money on the table.
Post-Sale Considerations
The work is not over once the sale agreement is signed. A successful transition is defined by what happens next for you, your staff, and your legacy. Thinking about these elements early in the process is key to crafting a deal that meets all of your objectives.
Protecting Your Legacy
For many owners, a practice is more than a business. It’s a life’s work. Finding a buyer who respects your facility’s culture and is committed to caring for your long-time staff and residents is a critical, non-financial goal. We help you identify partners whose values align with yours, ensuring a smooth transition that protects what you have built.
Structuring Your Future
Your deal structure has major implications for your financial future. Some owners want a clean break, while others may want to stay involved. Structures like an equity rollover, where you retain a minority stake, allow you to benefit from the facility’s future growth. This is often called getting a “second bite at the apple” and can be a powerful wealth creation tool when planned correctly.
Frequently Asked Questions
What are the key market trends affecting Skilled Nursing Facilities sales in Connecticut in 2024?
The Connecticut market for Skilled Nursing Facilities in 2024 is characterized by rising occupancy rates, steady industry consolidation, and a decrease in the total number of available beds by 24% since 2004. Average occupancy has climbed to 87%, and the market is primarily composed of for-profit operators. These trends create a favorable environment for established facilities to sell successfully.
How does the payer mix impact the valuation of a Skilled Nursing Facility in Connecticut?
The payer mix is critical for valuation because Medicaid accounts for 73% of payments statewide, making government reimbursement stability important. Buyers also look for potential to increase higher-margin residents from Medicare (16%) and private pay (9%). A balanced and profitable payer mix can significantly improve your facility’s valuation.
What are the important operational factors buyers consider when purchasing a Skilled Nursing Facility?
Buyers scrutinize your facility’s operating costs, including expense structure and staffing efficiency, especially as care costs rise. They also assess your resident profile, particularly how well your facility caters to the shifting demographics, such as the growing 55-74 age group and specialized post-acute care services.
What steps are involved in the process of selling a Skilled Nursing Facility in Connecticut?
The sale process typically includes five stages: 1) Preparation – organizing financials and setting goals; 2) Valuation – determining market value based on profitability and market comps; 3) Marketing – confidentially approaching qualified buyers; 4) Due diligence – inspection of financial, legal, and operational records; and 5) Closing – legal transfer of ownership and transitioning staff and residents.
What post-sale considerations should SNF owners in Connecticut keep in mind?
Post-sale considerations include protecting your legacy by finding a buyer who respects your facility’s culture and caring for staff and residents. Structuring your financial future is also key, with options like an equity rollover to retain a minority stake and benefit from future growth. Early planning in these areas helps craft a deal that meets financial and personal objectives.
