U.S. nursing homes see relief as staffing rule repeals — Fitch Ratings
NEW YORK, UNITED STATES — The repeal of federal minimum staffing standards for nursing homes is expected to ease operating pressures on continuing life plan communities (LPCs) across the United States, according to an analysis by Fitch Ratings.
The move, reversing a Biden-era mandate, could provide financial breathing room for facilities with skilled nursing components, though staffing challenges remain an ongoing concern.
Under the federal minimum staffing standards, nursing homes must provide a minimum of 3.48 hours of direct care per resident per day, including 0.55 hours from registered nurses (RNs) and 2.45 hours from certified nurse aides, underscoring the continuing pressure to meet care quality benchmarks amid workforce shortages.
Relief for skilled nursing facilities
The Centers for Medicare and Medicaid Services (CMS) proposed repeal of the staffing rule, adopted in 2024, marks a turning point for nursing home operators facing wage and workforce strains.
“LPCs with significant SNF services have limited ability to raise rates given their exposure to government payors. Government reimbursement rates, particularly Medicaid rates, have not kept pace with heightened expenses related to staffing SNFs,” Fitch Ratings said in its report.
Unlike independent living communities that can adjust costs more flexibly, LPCs with large skilled nursing components often lack room to maneuver.
“LPCs with large SNF components also have less flexibility to remove portions of their SNF beds from service compared to traditional LPCs, as they typically rely on external admissions for core operations,” Fitch Ratings explained.
This has contributed to weaker credit ratings and, in some cases, defaults since the onset of the pandemic.
Fitch noted that LPCs, which consist primarily of independent living units, benefit from the ability to spread expenses across their resident base or temporarily reduce the number of skilled nursing beds. This flexibility enables them to control costs and staffing more effectively compared with SNF-heavy providers.
Outsourcing sustains U.S. nursing homes
Despite the regulatory relief, labor shortages continue to cast a shadow on the sector. Fitch noted that changes to immigration policy, including adjustments to H-1B visa fees, are unlikely to have a significant impact on nursing home staffing.
“H-1B visa fees would have a limited direct impact on bedside SNF nursing, as most bedside registered nurse recruitment in long-term care uses EB-3 visas rather than H-1B visas,” the agency reported.
Foreign-trained nurses employed via visa sponsorships exemplify the close intertwinement between healthcare labor and global workforce outsourcing.
Nursing homes, particularly those with high-level skilled care needs, are highly dependent upon international recruitment channels, an outsourcing safety net that helps bridge U.S. staffing deficits.
The Fitch Ratings analysis suggests that while the repeal of the staffing rule reduces immediate regulatory pressure, LPCs remain vulnerable to rising wage demands and a competitive labor market.
Ultimately, the repeal provides momentary budgetary relief. However, the long-term stability of U.S. nursing homes will hinge on balancing cost containment, outsourcing tactics, and the ongoing struggle to attract and retain highly trained caregivers.
