Nursing home beds are becoming more scarce

Nursing home beds are becoming increasingly scarce across the United States. The San Vicente de Paúl Nursing Home in the South Bronx, operated by ArchCare, has gone from 120 beds to just 53 since December 2024, with plans to reduce capacity further. Another ArchCare facility on Staten Island has shut down an entire floor. In Dutchess County, Ferncliff Nursing Home has seen its bed count drop from 309 to 196.

Overall, ArchCare's eight nursing homes have lost 269 beds, a 12% decline that has created waiting lists for long-term care patients. Across New York state, 24 nursing homes have closed since 2020, resulting in a loss of over 3,000 licensed beds. This follows a national trend: from 2015 to 2024, the Centers for Medicare & Medicaid Services certified a 900-bed reduction in nursing facilities nationwide.

As the oldest baby boomers reach 80 years old, the demand for long-term care is expected to surge. However, researchers warn that the current nursing home capacity is insufficient to meet this need. David Grabowski, a health policy researcher at Harvard Medical School, and co-author of a study in JAMA Internal Medicine, notes that nursing home capacity decreased by 5% from 2019 to 2024.

The primary cause of this shrinkage, according to ArchCare, is inadequate state reimbursement for Medicaid, which is the primary payer for nursing home care. With Medicaid providing less than the daily cost of care, nursing homes are struggling to stay afloat. Some facilities compensate by admitting short-stay patients covered by Medicare, which pays higher rates.

However, when this strategy fails, nursing homes face unsustainable losses. Staff shortages, long-standing issues in the industry, have also contributed to contractions and closures. Nursing home aides, who work stressful, low-paying jobs, often have high turnover rates and many rely on public assistance. Despite recent improvements in hiring and retention, there is still a significant gap between the demand for nursing home staff and the current workforce.

Occupancy rates have returned to a more typical 80%, but this figure can be misleading as it counts licensed beds, not actual available beds. Almost half of nursing homes are limiting admissions and 57% have waiting lists for new residents. Quality concerns also play a role, with 27% of nursing homes receiving Medicare inspectors' serious quality violation findings in 2023.

Alternatives such as assisted living facilities and home- or community-based services have emerged, with Medicaid expenditures for these services increasing from 10% in 1988 to over 60% in 2020. However, the geographic distribution of nursing homes, particularly in rural areas, exacerbates the problem. Bed shortages have also created bottlenecks in hospitals, as patients who cannot secure nursing home placements remain in hospitals for longer periods.