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CliftonLarsonAllen’s 2026 nursing home industry report says occupancy continued to rise in 2025, but growth slowed, while managed care accounted for 42.3% of skilled nursing admissions. The report associates higher five-star quality ratings with higher occupancy, lower nurse turnover and stronger operating margins; it does not establish that quality alone caused those outcomes.
Occupancy gains slowed at U.S. skilled nursing facilities in 2025, while higher-rated facilities reported stronger occupancy and operating margins, according to CliftonLarsonAllen’s 41st annual industry report. The report, released Friday, includes managed care data for the first time and argues that providers’ financial performance increasingly depends on quality and efficient patient flow, not simply filling beds.
The report puts national median occupancy at 84.8% in 2025, up 1.9 percentage points from the prior year. That annual gain was smaller than the 6.3-point increase in 2024 and 10.3-point increase in 2023. Over five years, occupancy rose by almost 12 percentage points, but about 32% of facilities remained below 75% occupancy. Nearly half operated at 85% occupancy or above.
Managed care represented 42.3% of skilled nursing admissions in the report’s 2025 data: 32.4% came from Medicare Advantage and 9.4% from Medicaid managed care. CLA reports a median stay of 25 days for Medicare Advantage residents, compared with 41 days for traditional Medicare fee-for-service residents. Median gross daily charges for Medicare Advantage were about 79% of traditional Medicare charges.
CLA says those differences put a premium on handling admissions, authorizations, care transitions and billing efficiently. Its analysis estimates that a Medicare Advantage bed must turn over about 64% more often to generate the same number of occupied days as a traditional Medicare bed. The report also finds that five-star facilities had median occupancy of 87.6%, compared with 77.2% at one-star facilities, and operating margins of 4.7%, versus 1.8%.
Quality and Patient Flow Shape Margins
The findings point to a change in what occupancy alone can tell operators and investors about a facility. With growth slowing and a large share of admissions coming through managed care, bed count and census do not capture the full economics: shorter stays and lower daily charges can require more admissions and faster administrative work to sustain revenue.
CLA describes quality as a possible “economic flywheel” because higher ratings were associated with stronger occupancy, lower nurse turnover, less contract labor and better operating margins. These are relationships in the report, not proof that raising a star rating by itself will improve finances. Still, the pattern matters to providers making staffing and clinical investments, and to referral partners weighing where to send residents.
Workforce figures add to the picture. Contract labor use fell from a high of 10.3% in 2022 to 5.2% in 2025. Five-star facilities had median contract labor use of 4%, about half the rate at one-star facilities. Lower reliance on temporary labor may ease cost and continuity pressures, though the report’s data do not establish the reasons for the difference.
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Managed Care Enters CLA’s Analysis
The report’s new managed care data reflect the growing role of plans outside traditional Medicare in skilled nursing admissions. CLA notes that more than 51% of Medicare-eligible Americans, or over 35 million people, are enrolled in Medicare Advantage. Many states also run Medicaid programs through managed care arrangements.
For nursing homes, payer mix can affect both how long residents stay and the amount billed per day. CLA’s comparison of Medicare Advantage and fee-for-service stays helps explain why operators may need to focus on throughput and revenue-cycle processes as well as occupancy. The report also notes that the relationship between quality ratings and operating margins widened at higher ratings: the margin difference was 40 basis points between one- and three-star facilities and 250 basis points between three- and five-star facilities.
On Medicaid, CLA flags possible funding pressure from the One Big Beautiful Bill Act, including potential effects involving provider taxes, state-directed payments and eligibility redeterminations. The report says states that regularly update reimbursement rates to reflect costs, resident acuity, staffing and quality measures may be better positioned to manage pressure. The supplied report excerpt does not detail the effects by state.
Causation and State Funding Effects
The reported links between quality ratings and financial performance do not show whether better care drives stronger margins, whether facilities with more resources can achieve higher ratings, or whether other factors shape both. The findings are comparisons across facility ratings, not a test of cause and effect.
The available report material also does not specify how possible OBBBA-related changes will affect individual states or providers, or the timing and scale of any reimbursement changes. The 2025 data describe a recent industry snapshot; they do not establish whether occupancy growth will continue to slow or how payer mix will change in the next reporting period.
Operators Face a Throughput Test
Providers will need to monitor occupancy alongside payer mix, length of stay, referral access, staffing and operating margins as managed care shapes more admissions. CLA’s report points to efficient patient movement and sustained care quality as areas for operators to manage, but it does not prescribe a single strategy that applies to every facility.
Further clarity will depend on later industry data and state-level decisions about Medicaid reimbursement and payment arrangements. The next report cycle can show whether the 2025 slowdown persisted and whether the associations between star ratings, staffing and financial performance remain visible across new data.
Key Questions
What did CLA report about nursing home occupancy?
CLA reported median occupancy of 84.8% in 2025. It rose 1.9 percentage points from 2024, slower than the gains reported for 2023 and 2024.
How much of skilled nursing admissions came from managed care?
In the report’s 2025 data, managed care made up 42.3% of admissions: 32.4% from Medicare Advantage and 9.4% from Medicaid managed care.
What does the report mean by quality as an economic flywheel?
CLA uses the phrase for observed associations: facilities with higher quality ratings generally had higher occupancy, lower nurse turnover, less contract labor use and stronger operating margins. The report does not prove that ratings alone caused those differences.
What remains uncertain about Medicaid funding?
CLA flags possible effects of OBBBA on provider taxes, state-directed payments and eligibility redeterminations, but the available report material does not quantify effects or provide a state-by-state timeline.
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