As Nursing Home Occupancy Growth Slows, Quality Emerges As An ‘Economic Flywheel’ Amid Managed Care Shift – CLA Report

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CliftonLarsonAllen’s 2026 nursing-home industry report says national median occupancy reached 84.8% in 2025, but growth slowed sharply from the two prior years. Its data link higher five-star quality ratings with higher occupancy and operating margins, while shorter Medicare Advantage stays and lower daily charges increase the need for efficient admissions and patient turnover.

National nursing-home occupancy reached a median 84.8% in 2025, but its rate of growth slowed, according to CliftonLarsonAllen’s 41st annual skilled nursing industry report. The report, which includes managed-care data for the first time, argues that providers may need to focus less on filling every bed and more on care quality, referral relationships and efficient patient flow as payer mix shifts.

Occupancy rose by 1.9 percentage points in 2025, compared with gains of 6.3 points in 2024 and 10.3 points in 2023, CLA reported. Over five years, the national median increased by almost 12 percentage points. Nearly half of facilities recorded occupancy of at least 85%, while about 32% remained below 75%.

The report says managed care accounted for 42.3% of skilled nursing admissions in its 2025 data: 32.4% from Medicare Advantage and 9.4% from Medicaid managed care. Median stays were 25 days for Medicare Advantage residents, compared with 41 days for traditional Medicare fee-for-service. CLA also reported that Medicare Advantage median gross daily charges were about 79% of traditional Medicare charges.

Given those shorter stays and lower daily charges, CLA says providers need to manage admissions, authorizations, care transitions and revenue-cycle work alongside occupancy. Its analysis estimates that a Medicare Advantage bed must turn over about 64% more frequently to generate the same number of occupied days as a traditional Medicare bed. The report translates this into roughly 1.6 Medicare Advantage admissions for every traditional Medicare admission to produce equivalent census.

Quality Links to Occupancy and Margins

CLA’s findings suggest that occupancy alone is an incomplete measure of financial performance as facilities handle more managed-care admissions and shorter stays. Operators must coordinate clinical capacity and staffing with payer rules and faster patient turnover, while still addressing residents’ needs.

The report found that facilities with higher five-star quality ratings generally had higher occupancy, lower nurse turnover, less contract labor use and stronger operating margins. Median occupancy ranged from 77.2% at one-star facilities to 87.6% at five-star facilities. Median operating margins ranged from 1.8% to 4.7% across those rating groups.

These are associations in the report’s data, not proof that a higher rating alone causes better financial results. Still, the pattern matters to providers because quality, workforce stability and referral access may reinforce one another. CLA suggests the relationship may become more pronounced at four stars, where stronger ratings could improve access to referrals and payer networks; that interpretation is not a guarantee of a particular financial outcome.

Managed Care Changes the Admission Mix

Medicare Advantage and Medicaid managed care have become important parts of the skilled nursing payment environment. CLA notes that more than 51% of Medicare-eligible Americans, or over 35 million people, are enrolled in Medicare Advantage, while many states also use managed care in Medicaid. Those arrangements can affect both reimbursement and the pace of care.

The 2026 report is the first in CLA’s annual series to include managed-care data, giving providers additional information on admission sources and operating demands. Its comparison of Medicare Advantage and traditional Medicare shows why two facilities with similar occupancy may face different staffing, authorization and revenue-cycle workloads.

Staffing indicators form part of the quality picture. CLA reported that contract labor use fell from a 10.3% high in 2022 to 5.2% in 2025. Among five-star facilities, median contract labor use was 4%, about half the rate at one-star facilities. The report also flags potential Medicaid reimbursement pressures tied to provisions of the One Big Beautiful Bill Act, including possible effects on provider taxes, state-directed payments and eligibility redeterminations.

“Financial sustainability increasingly depends not only on filling beds, but on efficiently moving residents through them.”

— CLA report researchers

Limits of the Report’s Findings

The report describes relationships across facility rating groups; the supplied findings do not establish that higher star ratings by themselves cause higher occupancy or margins. Other factors, including location, payer mix, staffing capacity and referral networks, may also affect results.

CLA also identifies possible Medicaid funding effects from the One Big Beautiful Bill Act, but the material provided does not quantify their impact on individual facilities or state budgets. The degree of exposure will depend on state policies and how reimbursement programs change. The report’s national medians also do not show how conditions vary across local markets.

Providers Face Payer and Funding Shifts

Providers will need to track occupancy, payer mix, length of stay and operational throughput together, rather than relying on a single census target, as managed care continues to shape admissions. CLA says facilities must match workforce and clinical capabilities to resident needs and payer requirements while maintaining quality outcomes.

State Medicaid reimbursement updates and federal policy changes will be important developments to watch. CLA says states that regularly adjust rates to reflect costs, resident acuity, staffing and quality measures may be better positioned to manage funding pressure. The full effects of possible changes to provider taxes, state-directed payments and eligibility rules remain unsettled in the information supplied.

Key Questions

What did CLA report about nursing-home occupancy?

Median occupancy was 84.8% in 2025, but the annual increase slowed to 1.9 percentage points, down from 6.3 points in 2024 and 10.3 points in 2023.

How did Medicare Advantage stays compare with traditional Medicare?

CLA reported a 25-day median stay for Medicare Advantage residents and 41 days for Medicare fee-for-service residents. It also reported lower median gross daily charges for Medicare Advantage.

What did the report find about quality ratings and financial performance?

Higher-rated facilities generally had higher occupancy and operating margins, along with lower nurse turnover and contract labor use. These are associations in the report’s data, not proof that ratings alone cause better performance.

Why does patient turnover matter to providers?

Shorter stays can require more admissions, authorizations, transitions and billing work. CLA estimates that a Medicare Advantage bed must turn over about 64% more often to produce the same occupied days as a traditional Medicare bed.

What Medicaid-related pressures does the report flag?

CLA points to possible effects from the One Big Beautiful Bill Act on provider taxes, state-directed payments and Medicaid eligibility redeterminations. The supplied material does not quantify how those changes will affect particular states or facilities.

Source: rss