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Many nursing homes have closed in recent months throughout the country.  The nursing home industry instinctively claims that the cause is Medicaid rates that are low,[1] too low even to cover nursing home costs (See our joint letter, below).

The New York Times’ recent article about the closure of a rural South Dakota nursing facility pointed largely to Medicaid rates as the cause.[2]  In fact, the facility was closed by Court order. The facility was one of 17 in South Dakota that New Jersey-based Skyline HealthCare had taken over from Golden Living on January 1, 2017. By May 2018, Skyline had stopped meeting payroll and paying vendors, abandoning residents in more than 120 facilities nationwide. The Court-appointed receiver in South Dakota sought and received Court approval to close two of South Dakota’s Skyline facilities, including the facility cited in The Times,[3] as have receivers of Skyline facilities in other states.

Closures are not a new phenomenon and they occur for a variety of reasons. A study published 10 years ago looked at prior research on closures and at the 1,789 nursing facilities (two percent) that closed between 1999 and 2005.[4]  The researchers identified multiple factors leading to closures and determined that facilities closed when they:

  • Were small (had relatively few beds);
  • Were part of a chain;
  • Had higher than average numbers of quality of care deficiencies;
  • Had low occupancy rates;
  • Were hospital-based;
  • Had high Medicaid occupancy and low Medicaid rates.

Closures occur today for many of the same reasons, which often occur simultaneously. A facility with an overall rating of one star may claim that its Medicaid rate is low, but so is its occupancy rate and its one-star overall rating reflects large numbers of deficiencies. Medicare may terminate Special Focus Facilities that have not improved after a period of years.

Three Maine nursing facilities closed recently.  One claimed that the state’s Medicaid rates were low and that it could not afford to pay salaries after the state increased the minimum wage.[5] A second facility, with 22 residents, cited declining occupancy rates and the increase in the minimum wage as the reasons for its closing.[6] A third Maine facility cited decreased admissions, the increased minimum wage, and an inability to recruit staff. Now, its waterfront property in Bar Harbor is slated for a new hotel.[7]

Additional factors lead to closures. Lengths of stay in nursing facilities are declining, particularly for residents in Medicare managed care plans.[8] Further, public policy has supported helping people remain in their homes. Nationwide, Medicaid now spends more on non-institutional care than on nursing home care.[9] People may choose alternative congregate living arrangements, such as assisted living.

Yes, Medicaid rates are lower than Medicare and private-pay rates. Yes, Medicaid rates may be a factor in some nursing home closures. But to claim that closures are a new issue and that Medicaid rates are the cause of closures is too simplistic – and not true.

Joint Advocacy Organizations' Letter Regarding Nursing Home Closures

The Center for Medicare Advocacy has joined with other advocacy organizations in responding to the nursing home industry’s claim that more Medicaid reimbursements are needed to improve resident care. Our one-page statement makes it clear that before giving nursing homes more public money, greater oversight of public payments for care and stronger enforcement of the nursing home standards of care are needed.

April 4, 2019 – T. Edelman, D. Valanejad


[1] See American Health Care Association’s letter to President-Elect Trump, Dec.15, 2016,
[2] Jack Healy, “Nursing Homes Are Closing Across Rural America, Scattering Residents,” The New York Times (Mar. 4, 2019),
[3] “Receiver of 19 Skyline South Dakota Skilled Nursing Facilities Proposes Plan to Close Two Facilities,” Business Wire (Nov. 14, 2018),
[4] Nicholas G. Castle, John Engberg, Judith Lave, and Andrew Fisher, “Factors Associated with Increasing Nursing Home Closures,” Health Services Research 44(3): 1088-109 (Jul. 2009).
[5] Matthew Daigle, “West Paris nursing home plans to close in 60 days,” Press Herald (Aug. 10, 2018),
[6] A.J. Higgins, “Patten Nursing Home Is Closing, And Residents Aren’t Sure Where They Will Go,” Maine Public Radio (Aug. 2, 2018),; “Sudden closure of Patten nursing home leaves residents, staff in limbo,” WAGMTV (Aug. 2, 2018),
[7] Jackie Mundry, “Songee Rehabilitation & Living Center sold,” WCSH-TV (Feb. 25, 2019),
[8] Plante Moran, Make the mark. Skilled nursing facility/Benchmarking report (Based on 2017 data) 7,
[9] Kaiser Family Foundation, “Distribution of Fee-for-Service Medicaid Spending on Long-Term Care” (FY2017),,%22sort%22:%22asc%22%7DSee, e.g., Suzanne Adams-Ockrassa, “State shifts away from nursing homes to assisted-living care for Medicaid patients,” The Register-Guard (Dec. 22, 2018),

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