The Wave of Nursing Home Closures and Access in 2024
By Yasmeen Elhaj, Supervisor, Advisory Services
The American Health Care Association (AHCA) published a recent report revealing a growing number of nursing home closures. 774 nursing homes closed between February 2020 and July 2024, mainly due to financial pressures and staffing shortages. This has left 28,421 residents displaced, and unfortunately, the rate of new nursing homes has declined drastically. As of July 2024, there have been about 90% fewer new nursing homes opening in comparison to 2020.
Financial instability is one of the primary reasons behind the closure of nursing homes. Operating a nursing home involves significant expenses, including staffing, facility maintenance, medical supplies, and administrative overhead. Regulatory compliance requirements further amplify these costs. However, reimbursement rates from Medicare and Medicaid— a significant portion of nursing home revenue—often fall short of covering these expenses. With rising operational costs and stagnant or insufficient funding, many nursing homes find it financially unsustainable to continue operations.
The healthcare industry has been grappling with a shortage of qualified personnel, and nursing homes are particularly affected. Skilled nursing facilities rely heavily on registered nurses, licensed practical nurses, and certified nursing assistants to provide quality care. The COVID-19 pandemic exacerbated staffing challenges, with many healthcare workers experiencing burnout or leaving the profession altogether. Despite efforts to recruit and retain staff, nursing homes struggle to maintain adequate staffing levels, leading to compromised care and increased operational strain.
Access to long-term care for senior citizens is at risk. Within the United States, 40 more counties have become nursing home deserts. 85% of these nursing home deserts are in rural areas, and 20% of all seniors live in rural communities. 290,624 seniors are at risk for displacement as nursing homes may need to reduce their census to comply with the staffing mandate and economic pressures or close entirely.
Without immediate and effective action, the trend of closures will continue, further endangering access to essential long-term care services for the nation’s most vulnerable population. There are steps nursing home leaders can take now to help mitigate some of these factors. Those include increased staff recruitment and retention efforts, effective cost management, optimize revenue streams, and adopt patient-centered care models that prioritize residents. To understand what options are available to you, reach out to Marcum’s Healthcare team today.
