Despite the sector continuing to grapple with staffing shortages, rising operational costs, and regulatory uncertainty, emerging trends have skilled nursing leaders gearing up for a positive 2025, with fewer challenges and more opportunities on the horizon.

As we look ahead, several key trends are expected to shape the sector from regulatory shifts to financial turbulence, all set against a backdrop of political change and evolving health care policies.

Overall, the sector’s ongoing recovery will continue, with operational and financial challenges stemming from staffing, low occupancy rates and tightening regulations dissipating. However, providers still face significant hurdles. Smaller operators continue to struggle, with their bottom lines pinched and their workforces stretched thinly. And for larger operators – including several industry giants – 2025 is shaping up to be a crucial year and a possible inflection point for their future direction and success.

The Skilled Nursing News team anticipates that the following trends and predictions will have the greatest impact in 2025.

Death of the staffing mandate

Federal minimum staffing standards were the Biden administration’s most hotly debated policy in 2025 for nursing homes, and we predict that Donald Trump’s ascendancy to the presidency is a death knell for that policy.

Republicans are eyeing $22 billion in savings if the mandate is delayed or stopped, Michaela Sims, founder of Sims Strategies and a member of the ADVION Policy Council, told SNN.

The demise of the mandate would be cheered by nursing home providers and industry associations. Ever since the Centers for Medicare & Medicaid Services (CMS) finalized the controversial rule in April of 2024, nursing home advocates have been fighting it.

One of the most consequential responses to the minimum staffing mandate was the American Health Care Association’s (AHCA) lawsuit, accompanied by a scathing report on a crisis of access brewing if the staffing mandate were to be implemented. The organization, along with several providers, staged a legal challenge to the staffing mandate following attempts to convince federal authorities to drop the mandate. And, more recently, 20 state attorneys general joined the battle to derail the mandate, with a federal court in Iowa hearing arguments on whether to issue a preliminary injunction to temporarily halt the mandate. The judge seemed to question the federal government’s authority over nursing home staffing levels, pledging to “work as quickly as I can” in issuing his decision while the legal and legislative challenges continue.

All signs indicate that the federal staffing mandate will not see the light of day, at least in its current form, and if it does get implemented, the requirements will end up being significantly weakened.

But the success of the legal and legislative challenges against the Biden Administration’s key reform for the sector notwithstanding, the problem of increasing the workforce will remain a challenge in 2025 and beyond, as efforts continue to improve the labor situation.

Convincing people to work in nursing homes is a tough job, Scott Heichel, director of clinical reimbursement at LeaderStat, a national health care recruitment and consulting firm, told SNN.

“[It] is a huge mountain to climb when we know that people going into our field are declining over time,” he said.

So staffing – even as it improves – will continue to be a challenge, and the saga of the federal staffing mandate will shape providers’ approach to building out the workforce in the months and years to come. Already, new facility assessments that were part of the mandate have taken effect. As nursing home providers follow these new protocols, they should have more detailed information about the needs of residents and patients, as well as greater insight into what appropriate staffing levels are for their particular populations.

Meanwhile, the mandate battle has at least set a new baseline for what hypothetical staffing minimums would look like, while elevating this issue among consumer advocates and the public at large. So, even if a regulatory requirement falls by the wayside, providers must be doing everything in their power – including investing money into their labor force and pursuing innovations in staffing – to attract and retain the best talent, and in sufficient numbers to ensure the highest quality of care.

‘Last gasp’ for other Biden-era policies

While the staffing mandate is the biggest regulatory matter at stake in 2025, expect other Biden administration policies to be watered down or dismantled by the incoming Republican trifecta – a reference to all branches of government being under GOP control.

Recent changes to surveys and Medicare revalidation paperwork are essentially a “last gasp from the outgoing administration,” while a lot of Biden-era regulation is likely to be “ditched or scaled back,” according to Fred Bentley, managing director for the post-acute and long-term care and senior living practice at ATI Advisory.

Many of the survey changes, set to take effect in late February 2025, are a reflection of the Biden administration’s broader policy priorities in health care. These changes include a focus on the safety of COVID vaccines and infection control, antipsychotic medication reduction and ownership transparency.

But the actions of the previous Trump administration, as well as the appointees that Trump is trying to put in place, presage a very different stance on several of these key issues that will likely prevail in Washington, D.C. in 2025.

Vaccine-related requirements could be in the crosshairs, given the vaccine skepticism that Robert F. Kennedy Jr. – Trump’s pick to head HHS – has expressed in the past.

Greater transparency over nursing home ownership has been another pillar of the Biden administration’s regulatory reforms, and a goal that has been embraced by many nursing home industry leaders, as well. But Trump’s first-term White House did not make ownership transparency a policy priority, and Seema Verma – who headed CMS at the time – blasted Biden’s efforts to target private equity ownership in particular.

“The president is using the nursing home crisis to unleash federal investigators on facilities owned by private equity investors who help fund groundbreaking innovation across the healthcare industry,” Verma wrote shortly after the Biden reform agenda was first announced in 2022. “Their investments may one day lead to improving the quality of care in nursing homes.”

But while the regulatory waters will churn in 2025, providers should not expect a wholesale reversal of the tides.

That’s because some of the actions undertaken by the outgoing administration relate to issues that are perennial concerns or are updates that occur on a routine basis regardless of who controls the levers of power in D.C.

Indeed, CMS makes major changes to nursing home survey processes every two to four years, Amy Greer, director of quality innovations with Zimmet Healthcare Services Group, told SNN. And goals like antipsychotic medication reduction have been pursued across numerous election cycles.  

Meanwhile, industry advocates in 2025 will have to keep pushing for changes or clarifications to some policies that are rooted in the evolving health care landscape – including the growing recognition of the prevalence of behavioral health needs among nursing home patients and residents, and the changing approach to medications to treat these conditions.

In particular, provider advocates are concerned about the reclassification of psychotropic medications, to be cited under tag F605, chemical restraints, versus F757, unnecessary drugs.

“LeadingAge strongly opposes the use of chemical restraints. However, it seems that this guidance could result in a reluctance to admit residents with any psychotropic medications, including antidepressants or antianxiety medications,” noted Jodi Eyigor, director of nursing home quality and policy with LeadingAge.

Medicare Advantage, Medicaid whiplash

While the change in political power could bring regulatory relief to skilled nursing providers, they should be gearing up for a fight to protect their reimbursement streams, particularly related to Medicare Advantage and Medicaid.

Medicare Advantage has grown by leaps and bounds over the last few years, bringing a host of troubles for the skilled nursing sector, from administrative burdens to denials of care, as well as lower payment rates than traditional Medicare, which has eaten into margins.

But recently, momentum has been building to check the power of the insurance companies – at least, the largest ones – and limit their capacity to grow.

Congressional efforts have focused on the problematic prior authorization process, with the three largest health insurance providers in the crosshairs. Their use of AI tools, coinciding with a high rate of denials, has drawn a lot of criticism from lawmakers, who allege that these insurance providers, namely Humana, UnitedHealthcare and CVS, have been prioritizing profits over care.

And the Department of Justice (DOJ) in November sued to stop the $3.3 billion acquisition of home health giant Amedisys (Nasdaq: AMED) by Optum, the health care services arm of UnitedHealth Group (NYSE: UHG). The suit is intended to “check unlawful consolidation and monopolization in the health care market,” the DOJ stated. United is among the health care companies pursuing a “payvider” strategy, in which a single enterprise offers both insurance plans and provides the health care services that are often covered under those plans.

But 2025 could bring whiplash on the MA front. Already, some experts and health care industry leaders are predicting that the Trump White House will be more favorable to corporate interests, including on antitrust enforcement. This could pave the way not only for the Amedisys deal to be completed but for even more dealmaking that leads to the growth – and market power – of payviders.

Indeed, the incoming administration almost surely will be more supportive of Medicare Advantage providers and may supercharge their expansion in the interest of creating a more privatized health care system. Many news outlets have cited experts making this prediction; a report from KFF Health News quoted Urban Institute Senior Fellow Robert Berenson as saying, “Traditional Medicare will wither on the vine.”

Such predictions are bleak for skilled nursing providers that have been decrying the effects of MA expansion – and the SNF sector’s reimbursement whiplash could be exacerbated by Medicaid trends.

Recent years have seen positive Medicaid headlines, with nursing homes seeing some big wins with rebasing at the state level, including in some states where rates had not been rebased in many years. But the Republican-controlled federal government could pursue Medicaid cuts. The GOP needs to find “some major places to cut spending” to fund an extension of Trump’s 2017 tax cuts, and Medicaid could be one of those places, STAT’s John Wilkerson reported. However, he pointed out that Medicaid, like Medicare, has increasingly become privatized, with insurance companies managing states’ Medicaid programs. These private insurers would almost certainly push back on cuts and could wield influence in the new administration.

Regardless of potential pushback from the private sector, there are strong signals that Medicaid cuts could be coming. A trifecta of policy proposals put out by prominent conservative groups all called for steep Medicaid cuts, as summed up by Edwin Park, research professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.

“The Project 2025 blueprint, the fiscal year 2025 Republican Study Committee budget plan, and the fiscal year 2025 House budget resolution all propose draconian Medicaid cuts, with a centerpiece of capping and cutting federal Medicaid funding through block grants and/or per capita caps,” he wrote in August 2024. “Together, they signal that radically restructuring Medicaid would likely be a high priority if there is a second term of the Trump Administration and if Congressional Republicans win House and Senate majorities next year.”

Block grants would allocate a set amount of federal Medicaid spending per state, while per-capita caps would allocate a set amount of federal Medicaid spending per enrollee. If fewer federal dollars flow to the states, the states could cut Medicaid spending, “leading to reductions in coverage and benefits,” according to Larry Levitt, KFF’s executive vice president for health policy.

A big year for big operators

 Large operators underwent some noteworthy changes in 2024, setting up 2025 to be a pivotal year for the future of several of the biggest skilled nursing operators in the nation. 

In April 2024, PACS Group (NYSE: PACS) debuted on the New York Stock Exchange, raising $450 million in an upsized initial public offering. But the company ended the year by delaying the release of its third quarter earnings results, as it is undergoing a federal investigation and conducting an internal audit for its billing practices during the Covid-19 pandemic – concerns raised in a Hindenburg Research report, which PACS’ leadership described as “misleading.”

Meanwhile, PACS has continued to gain scale, including as one of the operating companies working with CareTrust REIT (NYSE: CTRE) to take over management of a large portfolio. With the addition of those communities closing on Dec. 1, PACS had acquired 38 facilities since Oct. 31, 2024. The company’s footprint now encompasses 17 states, with its independent subsidiaries operating more than 300 post-acute and senior living facilities. So, 2025 will be a crucial year for this industry giant, with the spotlight on the outcome of the investigation and audit, as well as the company’s ability to integrate new acquisitions and continue its growth strategy.

Life Care Centers of America – which operates 200-plus facilities across 28 states – is another nursing home giant entering 2025 with major questions to be answered about the future. In late November, a judge made Aubrey B. Preston the emergency conservator for his father, Life Care Centers CEO Forrest Preston. Court documents in that case described turmoil within the company related to the elder Preston’s alleged inability to make executive decisions, including related to crucial financial matters. For the moment, Aubrey Preston can make such decisions in consultation with Life Care Centers’ executive leaders, and a hearing on a permanent conservatorship for Forrest Preston is expected to occur in mid-January 2025. Whatever the outcome of that hearing, the coming 12 months will clearly be crucial for solidifying the leadership of Life Care Centers, steadying the very large enterprise and setting its future course.

While PACS and Life Care Centers are particularly noteworthy examples of big companies on the cusp of a crucial year, 2025 will be important for other large skilled nursing operators and owners as well.

In terms of operators, Genesis HealthCare, with a portfolio of nearly 180 skilled nursing centers and senior living communities across 17 states, comes into the new year with a new COO, as Lauren Murray succeeded Melissa Powell in that role in Aug. 2024. 

And on the REIT side, 2025 could be a big year for investment, with CareTrust being on the leading edge of such activity: The REIT recently announced its largest-ever acquisition, in the form of a $500 million portfolio of 31 SNFs. This was followed in December with the $97 million acquisition of 46 facilities. And then CareTrust announced a renewed and doubled revolving credit facility at $1.2 billion, positioning the REIT for a big 2025.

“Today’s announcements bolster a historically strong position from which to build on this year’s momentum,” CEO Dave Sedgwick said in announcing the credit facility. “We currently have an investment pipeline of approximately $350 million, not including larger portfolio opportunities we are reviewing.”

Distress widens the nursing home access gap

There are plenty of reasons for providers to be optimistic heading into 2025, but the sector is still under significant strains. Distress will continue to be a major theme in the year ahead, with rural operators hit hardest.

At the start of 2024, the nursing home sector witnessed a concerning uptick in the abrupt closure of nursing homes all across the nation, with facilities in New Jersey, Missouri, California and Vermont shutting down with little to no notice and displacing residents. And, closures continued to mount in states across the nation, including Minnesota, Wisconsin, Oklahoma, Texas, Maine and Pennsylvania.

Unfortunately, the trend is continuing as the calendar flips to 2025. Rural facilities are facing particularly daunting challenges and are almost certainly going to be hit hardest by closures in the next 12 months. This trend will lead to a widening gap between rural and more densely populated markets.

The plight of rural providers was described in a November 2024 report from Minnesota’s Center for Rural Policy and Development.

“Cost of supplies are up, wages are up, but payments have not increased enough … Lots of rural facilities are small and can’t cut anymore corners or scale down enough to make the finances work,” Kari Swanson, CEO of Cornerstone Nursing and Rehab Center, said in the report.

There are reasons for hopefulness, as rural providers are taking steps to maintain viability. Sioux Falls, South Dakota-based health system Sanford Health, parent company of nursing home giant The Evangelical Lutheran Good Samaritan Society, is one leading advocate for rural providers. Sanford hosts an annual summit on the future of rural health care and is pushing for innovations that can help address some of the care gaps that these markets are facing. The health system in 2024 announced plans for a $200 million continuing care retirement community in South Dakota. And since 2021, Sanford has been working on a $300 million initiative to transform rural health care, including through the creation of a virtual care center.

Efforts also are underway to construct a new nursing home in Grant, Nebraska. And the University of Nebraska Medical Center (UNMC) is investing in a facility to provide education and training to nurses and health care workers. 

“We have learned in health care, where students are educated, many times they stay,” Cathrin Carithers, assistant dean for the Kearney Division of UNMC’s College of Nursing, told Nebraska Public Media.

Still, the numbers paint a bleaker picture of the sector as a whole. Construction lending for nursing homes has been nearly nonexistent for multiple quarters. Meanwhile, the delinquency rate for nursing home loans rose for three consecutive quarters between late 2023 and mid-2024, according to a recent report from the National Investment Center for Seniors Housing & Care (NIC).

And at least 774 facilities shuttered between Feb. 2020 and July 2024, according to an August 2024 report from AHCA. Unsurprisingly, rural areas have been most affected. In fact, 40 counties have become nursing home “deserts” since 2020, with 85% of those in rural markets. Signs point to this trend continuing unless more drastic public policies are enacted to bolster reimbursement and labor markets.

Stricter guardrails on AI

The rise of artificial intelligence (AI) in health care has been among the most noteworthy trends over the last several years, but a growing recognition of pitfalls will make 2025 a key year for establishing guardrails on how AI is used across the sector, including in nursing homes.

Certainly, nursing home providers have been all too aware of the power and perils of AI with regard to how large insurance companies leverage the artificial intelligence tools to make coverage determinations – see the references above to provider pushback and Congressional scrutiny on this issue.

But with the federal government likely shifting to favor less regulation, the real action in 2025 is more likely to come at the state level. California – the heart of the U.S. tech sector and often a bellwether with regard to public policy moves – has already made a move in this regard. In Sept. 2024, the Golden State Gov. Gavin Newsom signed legislation placing conditions on insurers’ use of AI in making coverage decisions. He also signed a bill requiring health care providers to disclose when generative AI is used to create patient communications related to clinical information.

But California is not the only state that last year put guardrails on AI use in healthcare: Utah and Colorado did so as well.

There are also efforts among states to collaborate on AI regulation, Jennifer Geetter, a partner at law firm McDermott Will and Emery, told Axios. Such efforts could prove crucial – and federal action might ultimately be necessary – given the frequency with which data crosses state lines.

Still, Geetter anticipates more state-level activity in 2025.

“States do feel under some pressure to rise to the challenge … particularly around privacy, around security, to limit bias or any sort of discriminatory use of AI,” she said.

But while concerns over AI, and the rise of AI regulations, will be a big trend in 2025, future-focused skilled nursing providers also will continue to invest in AI and other forms of technology.

“Technology is evolving and the future will have skilled nursing operators adopting more technology,” Austin Steele, chief strategy officer of newly-formed Journey, told SNN, adding that the nursing home industry needs to play catch up with other sectors when it comes to a more widespread use of technology – particularly given the need for SNF providers to gain more efficiencies.

“While we’re seeing advancements, I’m not sure that the adoption rate for technology in skilled nursing is keeping pace with other sectors,” Steele said. “I’m also not confident that all of us operators are embracing these innovations. We tend to view skilled nursing as a ‘people space,’ and while technology will never replace human interaction at the bedside, it can be deployed to enhance that interaction.”

Indeed, data suggests that about one-third of the tasks that doctors and nurses perform in a nursing home – particularly repetitive tasks related to administrative duties – can be accomplished through AI, Tom Lawry, managing director of Second Century Tech, said at the LTC 100 conference in 2024.

“What if I could give you a third of your time back? What would you do differently? More time with patients? More time maybe doing research, or God forbid, as a physician actually getting home for dinner on time? That’s the value proposition that it offers and that’s the sort of thing you should be thinking about,” said Lawry.