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

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CliftonLarsonAllen’s annual skilled nursing report says national median occupancy reached 84.8% in 2025, but growth slowed sharply from the prior two years. Its first inclusion of managed-care data highlights shorter Medicare Advantage stays and lower daily charges, while higher quality ratings were associated with stronger occupancy, workforce measures and operating margins.

National nursing-home occupancy reached a median 84.8% in 2025, but gains slowed to 1.9 percentage points, according to CliftonLarsonAllen’s 41st annual skilled nursing industry report. Released Friday, the report includes managed-care data for the first time and argues that providers may need to focus on efficient admissions, quality and operations—not simply filling beds—as payer mix changes.

Occupancy rose nearly 12 percentage points over five years, but the year-over-year pace cooled markedly: growth was 10.3 points in 2023 and 6.3 points in 2024, before reaching 1.9 points in 2025. Nearly half of facilities were at or above 85% occupancy, while about 32% remained below 75%, CLA reported.

The report’s new managed-care figures show that these plans accounted for 42.3% of skilled nursing admissions in its 2025 data: 32.4% from Medicare Advantage and 9.4% from Medicaid managed care. CLA reported a median stay of 25 days for Medicare Advantage patients, compared with 41 days for traditional Medicare fee-for-service patients. Median gross daily charges for Medicare Advantage were about 79% of traditional Medicare charges.

CLA says the combination of shorter stays and lower daily charges puts a premium on patient throughput, including admissions, care transitions, authorization processes and revenue-cycle work. The report estimates a Medicare Advantage bed would need to turn over about 64% more frequently to produce the same number of occupied days as a traditional Medicare bed. That is an estimate in the report, not a guarantee of equivalent revenue or profit.

Why Bed Turnover Matters More

Slower occupancy growth limits the extent to which providers can rely on adding residents to improve performance. At the same time, the report’s payer figures point to an operating challenge: facilities serving more managed-care patients may have to coordinate more admissions and shorter stays while working within lower median daily charges. Occupancy alone may not capture whether a facility is using beds effectively or managing the demands attached to each admission.

CLA also found an association between higher quality ratings and stronger financial and workforce measures. Median occupancy ranged from 77.2% at one-star facilities to 87.6% at five-star facilities. Operating margins ranged from 1.8% to 4.7%, and five-star facilities had median contract labor use of 4%, compared with about twice that level at one-star facilities. These comparisons describe relationships in the report’s data; they do not establish that a higher rating by itself caused better financial results.

For residents and families, quality ratings and staffing stability can help inform questions about care. For operators, the findings suggest that quality, referrals, payer mix and efficient processes may reinforce one another. CLA calls this a potential “economic flywheel”, while the data does not establish that every facility will see the same benefits.

Managed Care Changes the Mix

The report reflects a sector in which managed care has become a major source of skilled nursing admissions. CLA notes that more than 51% of Medicare-eligible Americans, or more than 35 million people, are enrolled in Medicare Advantage. Many states also use managed care in Medicaid. Those enrollment figures help explain why CLA added managed-care data to its annual comparison, but the report’s admission figures describe its 2025 data rather than every facility’s payer mix.

The occupancy figures also show that the market is not uniform. Although the national median was 84.8%, roughly one in three facilities had occupancy below 75%. The gap matters because a strategy suited to a high-occupancy facility may not fit one with lower demand, different staffing capacity or a different mix of payers.

CLA also flags possible Medicaid funding pressure from provisions in the One Big Beautiful Bill Act, including potential effects involving provider taxes, state-directed payments and eligibility redeterminations. The report says states that update reimbursement rates to reflect costs, resident acuity, staffing and quality measures may be better positioned to manage pressure. The source material does not quantify the effect for individual states or facilities.

Limits of the Report’s Findings

The report describes associations, not proof of cause and effect. The supplied findings do not show whether higher quality ratings lead to better margins, whether stronger finances enable quality improvements, or whether other factors influence both. They also do not establish that a four-star rating is a firm threshold for better referrals or payer access; CLA presents that as a possible pattern.

It is also unclear from the available material how specific facilities will respond to changes in managed-care contracts or the potential Medicaid effects of the OBBBA. The report excerpt provides no state-by-state estimates, projections of future occupancy, or facility-level forecasts. Its managed-care findings add a new comparison to the report, but should not be treated as identical to conditions at every nursing home.

What Providers Will Watch

Providers will need to track whether occupancy continues to rise, how the payer mix shifts, and whether their staffing and administrative systems can handle shorter stays and more frequent patient turnover. Referral relationships, authorization timing and revenue-cycle performance are among the operational factors CLA says take on greater importance as managed care shapes admissions.

Facilities and state officials will also be watching reimbursement decisions and the practical effects of federal Medicaid changes. The report does not give a timetable or quantify those effects. Further state policy decisions and future industry data will be needed to show whether the quality and financial patterns CLA observed persist.

Key Questions

What did CLA report about nursing-home occupancy?

CLA reported a national median occupancy of 84.8% in 2025. The increase was 1.9 percentage points for the year, slower than increases of 6.3 points in 2024 and 10.3 points in 2023.

How much of skilled nursing admissions came from managed care?

In CLA’s 2025 data, 42.3% of admissions came from managed care: 32.4% from Medicare Advantage and 9.4% from Medicaid managed care.

What did the report find about Medicare Advantage stays?

CLA reported a median stay of 25 days for Medicare Advantage, compared with 41 days for traditional Medicare fee-for-service. Its reported median gross daily charges for Medicare Advantage were about 79% of traditional Medicare charges.

Did CLA prove that higher quality ratings cause better financial results?

No. The report found that higher ratings were associated with higher occupancy, lower nurse turnover, less contract labor and stronger operating margins. Those comparisons do not prove that ratings alone caused the differences.

What Medicaid pressures does the report flag?

CLA points to potential effects of the One Big Beautiful Bill Act involving provider taxes, state-directed payments and Medicaid eligibility redeterminations. The supplied report material does not quantify the effects for particular states or facilities.

Source: rss