A court ruling striking down a federal nursing home staffing mandate brought a sigh of relief from nursing home operators even as the industry still faces financial uncertainty.
An end to the mandate could bring stability to nursing home budgets and valuations. However, some nursing homes still face challenges, such as tougher state staffing minimums, as well as the threat of potential Medicaid rate cuts.
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A federal judge in Texas on Monday tossed the controversial nursing home mandate the Biden administration rolled out last year that required nursing homes to have a registered nurse onsite 24 hours a day, seven days a week. The court also blocked a requirement that nursing homes provide at least 3.48 hours of care per resident, per day.
The Health and Human Services Department said in an email it does not comment on legal matters when asked about a possible appeal. However, many in the industry had been expecting the Trump administration to roll back the regulation.
Patient advocates, including the National Consumer Voice for Quality Long-Term Care, expressed disappointment in the ruling while the nursing home industry cheered it.
The staffing minimums that were scheduled to begin next year were expected to cost the nation’s nearly 15,000 skilled nursing facilities about $6.5 billion per year, according to the American Health Care Association, a nursing home trade group.
Removing that cost could stabilize nursing home values, which plummeted to $83,800 per bed in 2024 from $97,700 in 2023, according to healthcare research firm Irving Levin Associates.
A more stable industry could reignite investor interest in skilled nursing facilities. Sabra Health Care REIT CEO Rick Matros said in an email he had expected the court’s ruling — and he also called it the right decision. Matros told analysts during an earnings call in February the Tustin, California-based real estate investment trust would be increasing acquisition activity in skilled nursing facilities this year. Sabra owns and has investments in more than 200 nursing homes nationwide.
Nursing home operators said ending the mandate will allow them to direct their money to parts of their organizations other than staffing costs.
Evangelical Lutheran Good Samaritan Society is hoping to invest more in technology, President and CEO Nate Schema said. The nonprofit is a unit of Sioux Falls, South Dakota-based Sanford Health and operates nearly 100 nursing homes across seven states.
Good Samaritan Society has facilities in many rural communities where it is difficult to recruit and retain nurses, so Schema said the nonprofit has been deploying telehealth to support them. He said without the mandate, the organization can continue that strategy or even expand it.
“The virtual care strategy is one significant thing that we have done,” Schema said. “We need to evolve as a sector and I think that is where technology comes in.”
The elimination of the mandate will also allow skilled nursing facilities to staff in a way that works for them, according to Katie Lundmark, vice president of operations at Lifespark. The St. Louis Park, Minnesota-based company operates three skilled nursing facilities in Minnesota.
Lundmark said complying with the mandate’s around-the-clock requirement for registered nurses would have been difficult for many skilled nursing facilities due to the nurse shortage. She said the regulation might have forced some facilities to limit patient access. Without the mandate, Lifespark can continue its practice of using a combination of staff, including licensed practical nurses, nurse aides and others, to care for patients, Lundmark said.
"We try to create an interdisciplinary approach and there are different ways that our caregivers can assist,” Lundmark said. “We don’t always have to have a medical caregiver. Sometimes a server or a housekeeper can assist. That is where the mandate totally missed the mark."
While the federal court ruling removes one hurdle for nursing homes, others remain for nursing homes in states that set up their own staffing requirements.
Nursing home operators in Illinois, Rhode Island and New York face potential fines for violating state staffing mandates that were put on hold during the COVID-19 pandemic.
Illinois will begin collecting fines July 1 from nursing homes that violated its staffing mandate of 3.8 hours per resident, per day in the first quarter of 2025, according to the Illinois Health Care Association. Rhode Island nursing homes are still waiting for guidance on when fines could be assessed for homes violating the state's 3.81-hour staffing minimum, the Rhode Island Health Care Association said. The New York Department of Health said it will begin holding hearings for nursing homes that violated its 3.5-hour minimum staffing rule starting back in the second quarter of 2022.
ArchCare, a nonprofit that operates seven skilled nursing homes in New York, could face up to $1.5 million in fines because it has been unable to meet New York’s staffing mandate, ArchCare President and CEO Scott LaRue said. He estimated adding extra staff to comply with the 3.5-hour regulation would cost the nonprofit about $18 million annually.
“If I staffed to 3.5, we would be out of business. Between the inadequate Medicaid rate and the lack of funding for the staffing mandate, it is not a financially viable model,” LaRue said.
The prospect of the federal government cutting Medicaid rates to states could put New York nursing homes, such as ArchCare, even further underwater, he said.
“We have a very high level of anxiety and we’re trying to put plans in place to mitigate our risk," LaRue said.
