Addressing the Nursing Home Crisis: A New Federal Proposal Makes Nurses Part of the Solution

Since 2020, nearly 600 nursing homes have closed. In 2023, only three new nursing homes opened — a major drop from the average of 64 new nursing homes per year from 2020 to 2022, according to an August 2023 report from the American Health Care Association and National Center for Assisted Living.

The nursing home industry faces a staffing crisis. But, a new federal proposal could put nurses at the center of the solution to the nursing home labor shortage, leading to more funding and job opportunities for RNs.

The COVID-19 pandemic hit nursing homes hard. In fact, nursing homes lost more workers than other healthcare sectors. The 250,000 jobs lost in nursing homes translates to about 15% of the workforce. While many other sectors have rebounded after the pandemic, projections estimate that nursing homes will not hit pre-pandemic staffing levels until 2026.

Due to chronic understaffing in nursing homes, residents receive substandard care. Labor shortages also mean that nursing homes cannot meet demand. In a June 2023 survey, 55% of nursing home providers say that they have turned away residents because of labor shortages.

Nearly half of nursing homes have downsized due to labor shortages. In addition, closures have displaced over 21,000 residents. The country’s aging population will increase the demand for long-term care services. Solving the nursing home crisis is an urgent issue.

The federal government plays a critical role in addressing the nursing home crisis. Over 70% of spending on long-term services and support in 2021 came from taxpayer-funded sources, primarily Medicare and Medicaid.

The Centers for Medicare & Medicaid Services (CMS), part of the U.S. Department of Health and Human Services (HHS), proposed new rules for nursing homes in September 2023. If implemented, the new rules would raise standards for staffing levels and expand the nursing workforce. The CMS proposal would also provide financial support for nursing students.

Higher staffing levels correspond to better patient health outcomes and higher quality. For example, increasing RN staffing translated to 22% fewer cases of COVID-19 and 26% fewer COVID-related deaths in a 2020 study of nursing homes in Connecticut.

The CMS proposal would set a federal standard for staffing levels. Nursing homes would need an RN on side 24/7 to meet the guidelines. The proposal also recommends that facilities provide at least 55 RN hours per 100 residents every day.

A significant number of nursing homes do not meet these standards. Currently, 22% of nursing homes do not have an RN on-site around the clock, and 36% fall short of the recommended staffing levels.

The proposal would also increase the number of nurse aides, exceeding the current standards in every state. If the proposal goes into effect, 68% of nursing homes would need to hire more nurse aides.

While increasing staffing can improve patient care and safety over time, HHS also announced changes that will have a more immediate impact. For example, CMS will increase its audits of staffing data to identify nursing homes that fall short.

CMS plans to improve its inspection process and closely monitor how nursing homes use taxpayer dollars. CMS also plans to give prospective residents and their families information about facilities by publicizing audits and inspections.

Meeting the proposed federal staffing levels will require trained, qualified nurses to work in nursing homes. CMS plans to invest more than $75 million in scholarships and tuition reimbursement for nursing students who agree to work in nursing homes.

The CMS investment will join several other federal programs designed to support the nursing workforce. For example, the Nursing Expansion Grant program offered by the Department of Labor provided $80 million in grants to expand the number of qualified nursing professionals.

The Health Resources and Services Administration has also funded nursing preceptors to supervise students during clinical rotations. The Nurse Corps program received $200 million through the American Rescue Plan to cover tuition costs for nursing students who agree to work at a critical shortage facility.

The federal government has made nursing home reforms a priority. CMS’s new proposal would build on previous steps, which include incentivizing quality with Medicare and Medicaid funding and increasing oversight of underperforming nursing homes. For example, CMS recently implemented higher penalties for the worst-performing nursing homes and expanded its program to help these facilities improve.

In addition, CMS has expanded the information it provides to families comparing nursing homes. For example, the government provides a quality rating system that now includes data on weekend staffing, staff turnover, and violations. CMS data will also disclose information about owners and management.

The proposed CMS rule has yet to be finalized. However, if the published rule matches the proposal, nursing homes will need to increase staffing levels within the next 2-3 years.

All nursing homes would need to create a plan to reach federal minimum staffing levels within 60 days of the final rule’s publication. Within two years for urban and three years for rural facilities, nursing homes will need an RN on duty 24/7 and meet new RN and nurse aide staffing requirements.

What would this new federal rule mean for nurses? If adopted, the rule would likely mean more openings for RNs, as long-term care facilities hire staff to comply with federal requirements.

Most nursing home facilities would need to hire staff, according to an analysis by KFF. Within the next three years, 90% of for-profit facilities would need to expand their staff. Among nonprofit and government facilities, 60% would need to hire nursing staff.

Demand for nurses would be higher in certain states. KFF determined that fewer than 1 in 4 nursing facilities currently meet the staffing requirement in over half of states, including every state in the South and Mid-Atlantic regions.

While the exact staffing requirements may change in the final version of the rule, nurses can expect increased demand for licensed RNs in long-term care facilities. The federal government will also likely continue to invest in scholarships, grants, and tuition reimbursement programs for nursing students.

Solving the nursing home crisis will require a significant investment. Based on the CMS proposal, nurses will be central to improving long-term care.