Transcript Generated by AI 00:05 Hey, Mark Parkinson back with Park Place. 00:07 And we're here today in the actual headquarters of Park Place and we're here 00:11 with Marc Zimmet. 00:13 We're doing our analysis of Texas. 00:15 And Marc, good to be here with you. 00:17 We've been at this now for over a year. 00:19 We survived a year and it's, it's been fun and it's the, 00:23 the this damn thing is actually working. 00:25 It's it's amazing. 00:26 It's been a great ride and only getting started and we're just getting started. 00:30 So, OK, so let's go, let's go back to Texas. 00:33 Texas is historically being considered a horrible state owned nursing home zone. 00:37 You've developed an objective way to grade the reimbursement system of every 00:43 state. 00:43 And I know you could give grades of A, B, C or D. 00:47 Where is Texas at right now? 00:49 Well, you know the first thing I'll say about 00:51 Texas, You know, historically there's only been three 00:53 nursing markets in the United States: New York, Texas and the other 48 states. 00:57 You know, Texas and New York were always different. 01:01 Texas is unique because of the size and the way that facilities were reimbursed 01:07 and and frankly the the, the occupancy. 01:12 So Texas has historically been challenging with low reimbursement rates 01:16 that weren't consistent with the types of residents that were coming in. 01:21 So grade was a D out of A, B, C the the lowest, 01:25 the lowest in terms of favorability towards facilities. 01:29 But but the good news is and we've talked about this is that although it's been a D 01:33 and it's still right now a D, it looks like it's getting better. 01:36 And that's certainly consistent with what we've heard as we've talked to providers 01:41 there Texas is, is, is structurally put things in place that 01:45 have improved the market that improved for facilities. 01:48 So while that that we call the anchor, the anchor year '22, '23, '24: D. 01:54 What we call the signal years, the '25 to '26 much, much better. 01:59 And the, and the outlook is, is very strong. 02:02 The, the system has gotten, they put a, the structures has gotten stronger 02:08 underneath the industry and that's consistent with the, well, 02:13 let's just say they'll be only two markets, New York and the other 49 states, 02:19 you know, soon that that would be good news. 02:22 So what's what's happened to, to make Texas better and for the outlook 02:26 to be better? 02:27 So when we talk about skilled nursing facilities, first of all, 02:30 we're only talking about, we call it the standard set. 02:32 So we're not counting, you know, transitional care units, 02:36 hospital based units, CCRCs we take out of the equation. 02:40 But if you look at the number of beds, Texas has a tremendous amount of beds, 02:43 but 11% of them, 12% of them are inactive, they're not active. 02:48 That has created, it's created a positive impact on 02:51 occupancy And, and Texas is one of those states where 02:55 believe it or not, occupancy, higher occupancy doesn't necessarily help 03:00 in every state. 03:03 It doesn't change as much. Texas, it it does. 03:06 Texas also changed it to the PDPM system or modified version, which was a big, 03:11 big improvement in terms of how their direct care will be reimbursed. 03:17 All I can say is it went from a system that wasn't very, you know, 03:21 rational or traditional to one that is much more in line with the economics of 03:26 skilled nursing today. 03:28 And providers who have been doing, you know, 03:32 a lot of work for a few dollars in the past will get reimbursed no more 03:39 appropriately. 03:40 So it's been a D. 03:41 It feels like it's on the cusp of maybe becoming a C. 03:44 Is it possible it could even be a B in the future? 03:47 Yeah. 03:47 So. 03:47 So I would definitely not put it in D territory now. 03:51 The numbers of the '25 numbers are in are in the '26 numbers are coming in. 03:56 It is it is strongly in C, you know, probably like my high school, grade point 04:03 average. 04:03 It's just about a C now it's, it's, it's, it's a C plus, you know, 04:07 it's getting better. 04:08 And yes, it absolutely has the potential to to 04:11 keep to keep rising modestly to where it should be. 04:15 That's great. 04:16 Well, this certainly consistent with what we 04:18 heard from providers in Texas that as hard as it's been including an entire 04:22 decade without a single Medicaid inquiries, 04:24 Texas is definitely on the rise. 04:27 Congratulations for the success to them that they've had in Texas. 04:30 Thank you for watching this segment and thank you for your continued support of 04:33 Park Place.