Spending More Revenue on Labor Not Guaranteed to Achieve ‘Adequate’ Nursing Home Staffing

Pushing nursing homes to allocate more money to increase staffing levels will not necessarily achieve the goals of the proposed minimum staffing standard unless aided by other regulatory interventions, according to a new study.

The study, published in Health Affairs, examined spending and staffing data from more than 12,000 nursing homes and looked at the proportion of revenues these nursing homes spent on nursing staff in 2019.

Facilities with higher shares of Medicaid residents spent a larger share of revenues on nursing staff but had lower staffing levels, the data revealed.


Median staffing levels in U.S. nursing homes that year amounted to 3.67 hours spent working per patient day. Facilities with a high government payer mix had lower staffing levels than the entire sample at 3.46 hours worked. However, the nursing staff expenditure ratios were similar to those of the entire sample, the study noted.

“It would seem intuitive that mandating minimum expenditures on nursing staff as a percentage of revenue could result in higher nursing staff levels and better quality at these facilities,” researchers wrote. “However, our results indicate otherwise: Nursing homes that were highly reliant on Medicaid revenue spent a greater proportion of revenues on nursing staff yet had lower nursing staff levels than other nursing homes.”

Researchers said this scenario results from resource constraints caused by lower Medicaid payments, which the nursing home industry has argued are below the cost of care.


“Any specific threshold for nursing staff expenditures that regulators might consider would have a varying degree of effectiveness in ensuring that any given nursing home was adequately staffed,” researchers further wrote.

Although many nursing homes would need to increase staff spending to meet any new mandates, there is “no guarantee” they would actually achieve higher nursing staff levels in raising their expenses by 25% to 45%, researchers said. And raising the wage rate or paying more for fringe benefits would increase the revenue spent, but may have little effect on staffing levels unless it was paired with other regulatory mechanisms.

On average, 33.9% of revenues at facilities in the sample went toward nursing staff expenses, with nursing homes spending $2.9 million in paying nursing staff in 2019, researchers said.

Meanwhile, fewer than 20 percent of nursing homes spent more than 40 percent of their revenues on nursing staff.

In July 2022, a report from accounting and consulting firm CliftonLarsonAllen (CLA) and the American Health Care Association (AHCA) found that implementing a staffing minimum of 4.1 hours per resident day (HRPD) – a number that has been widely modeled as the prospective federal requirement – would cost cost $10 billion a year and require hiring more than 187,000 certified nursing assistants, licensed practical nurses and registered nurses.

Of about 14,550 facilities analyzed, only 6% met the 4.1 HRPD requirement. Still, states like New York, New Jersey, and Massachusetts have already begun modeling minimum staffing requirements. New York, for example, implemented a 3.5 HRPD requirement for the state’s 600 nursing homes and that 70% of a nursing home’s revenue is to be spent on direct resident care and at least 40% spent on staffing.

Despite this, a few months after the law was enacted, it was revised to lower the penalty for noncompliance, with support from operators who felt the new minimums were out of reach in light of staffing shortages. “Having a minimum fine when a provider is doing everything they can to get workers makes no sense. That was a positive development,” to Stephen Hanse, president and CEO of the New York State Health Facilities Association (NYSHFA), told SNN.