The state that could be foretelling the nation’s future
Within the year, 46% of members of the Pennsylvania Health Care Association (PHCA) say they will close or sell at least one skilled nursing facility (McKnight’s). Nursing home outcomes in a state with a minted staffing mandate and the nation’s fifth oldest population could have implications for the rest of the country — as demographics continue to shift and federal staffing minimums take effect.
What’s behind PA’s high number of nursing home closures and sales?
Though Pennsylvania has been having a moment in the press, the state isn’t exactly an outlier. From February 2020 to July 2024, 774 of 15,000 U.S. nursing homes (about 5%) shuttered completely (KFF). Reductions in care are also affecting the industry — 20% of skilled nursing facilities have reduced the number of beds, 46% have limited admissions and 57% have waiting lists for new admissions (AHCA).
Citing KFF’s 2024 report on nursing home trends between 2015 and 2023, Gravity Healthcare Consulting COO Melissa Brown stated that without “major changes,” 25% to 50% of U.S. nursing homes would close in the next five to 10 years (McKnight’s).
The factors contributing to Pennsylvania nursing home closures and sales aren't so different from those impacting nursing homes nationwide. Here's a breakdown:
1. Regional dynamics
For nursing homes in rural PA, securing the workers needed to deliver care or the resources needed to remain open can be difficult. CMS’s Pennsylvania Rural Health Model aims to overcome those challenges in the acute care sector by paying hospitals a fixed amount, regardless of how many patients they serve. There is no analog for post-acute care. There is some support available through The Pennsylvania Civil Money Penalty Grant Program, which provides funding for long-term care organizations that have incurred compliance penalties with Medicare/Medicaid.
Pennsylvania’s population skews older, and its rural residents are older than their urban counterparts: 20% are aged 65 and over. The urban population is aging, too — between 2010 and 2020, it increased by 20%. But in urban centers, skilled nursing facilities are challenged by competition for workers and residents. As new players enter the market, the older establishments that can’t compete either close or are assimilated.
2. The workforce shortage
The workforce shortage is, perhaps, the largest contributor to Pennsylvania nursing home closures and sales.
In a PHCA survey, nonprofit, for-profit and government-run skilled nursing facilities all reported denying admissions, and 75% of them attributed their empty beds to a lack of workers. Each respondent cited the need to hire additional direct care workers, and 80% had 11 or more positions open.
The Hospital Healthsystem Association of Pennsylvania expects that, by 2026, Pennsylvania will have the worst healthcare workforce shortage nationwide.
To help draw qualified professionals to the state, Pennsylvania joined the Nursing Licensure Compact (pa.gov) in 2023, enabling nurses from 40 states to practice in the state without additional licensing requirements. It is unclear whether there are more RNs and LPNs practicing in Pennsylvania as a result of the change.
3. COVID-19 recovery
COVID-19 exacerbated healthcare professional burnout and existing weaknesses in the delivery of care in the skilled nursing industry. During the pandemic, Pennsylvania, along with the rest of the nation, suffered a mass exodus of direct care workers. Healthcare workforce levels are returning to pre-pandemic levels, but recovery is slow and will not solve the industry's long-standing issues, highlighting the need for sustainable, flexible workforce solutions.
4. New regulations
In July 2023, the Pennsylvania Legislature increased minimum direct care hours and ratios in skilled nursing facilities (McKnight’s). According to a LeadingAge PA survey, these required ratios led 52% of 400 respondents to limit admissions between July 1 and October 6, 2023 — a 34% increase from March 2023. On July 1, 2024, Pennsylvania increased its minimum HPRD again (ShiftKey).
As these regulations were implemented, industry leaders called for more funding. The state has delivered, at least partially. According to Zach Shamberg, president and CEO of PHCA, Pennsylvania has “made long-term care a priority” by allocating an extra $120 million per year to the state’s nursing home Medicaid program” (PHCA). Marc Feldman, chief financial officer of Transitions Healthcare, says the Medicaid reimbursement increase is “not sufficient” to cover the true cost of care (Trib Live), while Shamberg says it will “help cover the cost of Pennsylvania's increased nursing home staffing mandate.” The extra funding will be available in 2025.
5. Rising costs
Rising costs in nursing homes are not just due to inflation, although spending increased 8.3% between March and April of this year, according to SNN. In Pennsylvania, as in other states, workforce costs are increasing faster than revenues. From 2017 to 2021, employee wages increased between 18.1% and 27.5%, while nursing home revenues increased 16.6% (NLM), though SNN reports that wage inflation is down.
6. Aging population
With the fifth oldest population in the country (AXIOS), Pennsylvania is facing an increased demand for care as more of its population reaches 65+. The number of 80+ year old individuals is also expected to rise sharply over the next few years, and with it, the need for skilled nursing services.
Simultaneously, a significant portion of the healthcare workforce is reaching retirement age, which may further contribute to the workforce shortage. The Bureau of Labor Statistics reports that in the U.S., the average age of an RN is 43.6 years. Physicians are older, with 47% at age 55 and above (HRSA.) This industry-wide retirement is slated to happen as care needs crest in Pennsylvania — by 2030, there will be 38 dependent older adults for every 100 working adults (Penn State University).
To prepare for the influx of people needing assistance, Governor Shapiro created the Pennsylvania Department of Health's Long-Term Care Transformation Office and the Department of Aging's "Master Plan on Aging," which takes into account the ways in which people need support and prefer to age.
Bankruptcy and selling vs. closure
Bankruptcy does not equal closure — sometimes, facilities sell instead of shuttering their doors. Whether nursing homes that have been sold can continue to provide residents with adequate care depends on many factors, but the sale itself is not a guarantee of this care. There have been post-sale successes and failures throughout the country.
The implications of closure
When skilled nursing facilities close, people are forced to find alternative care. Much of the conversation at a national level has been focused on the delivery of quality care, but as the State of Pennsylvania shows, there is a growing risk of older Americans being displaced. Over the past four years, 28,421 U.S. skilled nursing facility residents have had to find alternative care. In 2024, 40 counties became skilled nursing care deserts, and lack of proximity to healthcare has been correlated to negative health outcomes (AHCA).
Nursing home closure trends: Have more nursing homes been closing lately?
Anecdotal evidence would say yes, but a 2023 study examining nursing home closures over the past decade (2011 to 2021) says no. The study determined that national nursing home closures have gone down but caveats their findings by noting that pandemic-era financial pressures may cause increased future closures. The study also links closures to care issues, although AHCA reports that nearly half of nursing homes that closed during the pandemic had 4- or 5-Star Ratings from CMS. Of note regarding closure trends in Pennsylvania, facilities were found to be more at risk of closure when serving Medicaid recipients. About two of every three PA skilled nursing facility residents receive Medicaid (PHCA).
Closures aren’t the only reason residents are being displaced. AHCA found that in 2023, only three new nursing homes opened nationwide. From 2020 to 2022, the number was 64 per year on average. This lack of new nursing homes makes closures all the more impactful.
Minimizing nursing home closures in the coming years
Though some data shows that nursing home closures have not increased, past data alone cannot forecast future closures. The extra demand for care that the coming “Silver Tsunami” will place on our nursing homes must be considered.
Burnout is already an issue: 62% of healthcare workers report that they are burned out right now (ShiftKey). As more nursing homes close, our healthcare workforce will likely face increased caregiving responsibilities at work and at home, further contributing to the prevalence of burnout.
Without a holistic view of the industry and the people who comprise it, nursing home closures will continue to happen. And the country clearly needs to bring people back into the healthcare workforce. The question is, how?
ShiftKey offers a viable solution to the workforce shortage by helping healthcare professionals return to work. With more control over how and when they deliver care, professionals who need or want more flexibility (like semi-retirees and the 81% of healthcare workers with personal caregiving responsibilities) can use the app to create their own schedules. Facilities that need to accept more admissions or want to give internal staff more of the flexibility that prevents burnout can use it to deliver quality care as needed. However, it’s just one of the many multifaceted solutions that will be needed as the population continues to age.
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