United States nursing home capacity declines amid rising demand

The United States is experiencing a decline in nursing home capacity just as the oldest baby boomers reach age 80, a demographic shift that significantly increases the demand for long-term care. A study published in JAMA Internal Medicine found a 5% decrease in national nursing home capacity between 2019 and 2024. Nationally, the number of certified facilities has dropped by more than 900 since 2015.

In New York, the shortage is particularly evident. ArchCare, a nonprofit under the Archdiocese of New York, has seen a nearly 12% decline in usable beds across its eight facilities in just 18 months. Statewide, 24 nursing homes have closed since 2020, resulting in the loss of over 3,000 licensed beds. Operators cite inadequate Medicaid reimbursement rates, which often fall below the daily cost of care, as a primary driver of these closures.

Simultaneously, healthcare policy changes are shifting the landscape for skilled nursing facilities (SNFs). Under the Transforming Episode Accountability Model (TEAM), the Centers for Medicare and Medicaid Services (CMS) is increasing accountability for hospitals regarding post-discharge costs and patient outcomes. This pressure is expected to drive hospitals toward high-quality SNF partners that can effectively manage costs and reduce rehospitalizations.