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A report by 3G Healthcare Real Estate found that nursing homes with at least 15% of nursing hours supplied by agencies had a Medicare change of ownership within two years 11.8% of the time, compared with 7.5% for facilities below 2%. The analysis identifies agency use as a possible screening signal for operational pressure, not a forecast that a facility will be sold. The report does not establish that agency staffing causes ownership changes.
A report by 3G Healthcare Real Estate found that nursing homes relying on agency staff for at least 15% of nursing hours had a Medicare change of ownership within two years in 11.8% of cases, compared with 7.5% among facilities where agency staff accounted for less than 2% of hours. The analysis links heavy agency use with a higher likelihood of an ownership change, but its author describes the pattern as a screening signal, not a forecast that a building will be sold.
The figures are based on each facility’s payroll filings with the Centers for Medicare and Medicaid Services and an analysis of two publicly available federal datasets, according to Stan Klos III, founder of 3G Healthcare Real Estate. The report looks at agency nursing hours and whether a Medicare change of ownership, or CHOW, occurred within two years. A CHOW can involve a change in who holds a building’s license; it does not necessarily mean the real estate itself was sold.
Klos told Skilled Nursing News that agency use can rise when an operator struggles to fill shifts, and may appear before other signs of operational stress. He said facilities with heavier agency use also tend to have more citations and higher staff turnover, even when occupancy is similar. Those observations are his interpretation of the analysis, not evidence that agency staffing itself causes a sale or a licensing change.
The pattern varies by location. Klos said that in North Carolina and Pennsylvania, facilities with heavier agency use changed hands at rates two to three times those of operators using agency staff sparingly. The report does not provide a single national rate that can be applied to every market. High agency use may reflect vacancies, reliance on flexible labor, staff reliability problems or other local factors, each with different implications for a prospective buyer.
How Staffing Costs Shape Ownership Risk
Agency labor matters to nursing home finances because it can carry costs that weigh on cash flow, and buyers and lenders may scrutinize whether a facility can maintain reliable staffing after a transaction. Thomas Miller, chief executive of staffing company Meda Health, said buyers may see high agency costs as an opportunity to reduce expenses after a purchase. But a planned reduction is not automatically sustainable: cutting agency shifts before replacement staff are in place can leave facilities short-handed and force them to buy labor back at crisis rates.
The findings may help lenders and potential buyers identify facilities that warrant closer review, but they do not establish that an ownership change is imminent. The distinction matters for workers, residents and families as well as investors: a staffing plan that looks adequate on paper may still depend heavily on agency coverage, including on weekends or in leadership roles. The report argues that retention and workforce reliability can affect operations, survey results and financial performance, though it does not quantify those effects in the ownership-change figures.
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Agency Staffing After the Pandemic
Agency staffing rose from 3% in early 2019 to 10.52% in late 2022, then fell to 5.31% in the latest financial quarter covered by Klos’s analysis. The figures show a decline from the pandemic-era peak but remain above the pre-pandemic level. Miller attributed the drop to more workers returning to the field, providers improving wages and benefits, and some operators managing labor more closely.
Miller also cited the SIA NATHO Travel Nurse Benchmarking survey, which found gross margins for staffing agencies fell from 25% before the pandemic to just under 20% in 2025. He said the sector has adjusted and expects agency labor to settle near current levels as a flexible staffing tool. The source also notes that federal nursing home staffing minimums were struck down, placed under a moratorium and repealed; it does not establish how that policy sequence affected the facility-level ownership rates.
The report distinguishes agency use from other staffing measures. Klos said state health departments publish agency data, but staffing star ratings should distinguish temporary workers from permanent staff. He said states have focused on rules for staffing agencies, including registration requirements and rate caps in Minnesota and Massachusetts. According to Klos, no state was using a facility’s agency-use figure in licensing or ownership approvals at the time of the report.
“It’s a screening signal, not a forecast, and it changes a lot by market.”
— Stan Klos III, founder of 3G Healthcare Real Estate
What the Ownership Data Cannot Show
The reported percentages show an association between agency-use categories and a Medicare ownership change within two years. They do not show that agency staffing caused the change, that every ownership change involved a real estate sale, or that a facility with high agency use is about to change hands. The source does not report the number of facilities in each group, confidence intervals or a detailed account of how other factors were controlled, limiting what can be inferred from the percentages alone.
Agency use also has different possible explanations, and the report does not identify the reason for each facility’s reliance on temporary staff. The source material ends before completing a further discussion of how operators might respond to agency use, so no additional recommendation or outcome can be attributed to the report. It also remains unclear whether any state will adopt agency-use figures in licensing or ownership reviews; Klos said no state was doing so at the time.
Questions for Buyers and Regulators
For prospective buyers and lenders, the next step described by Miller is to examine why a facility uses agency staff and whether its labor plan can support operations after a transaction. That review may include the source of vacancies, staff retention, weekend coverage and agency use in leadership posts such as the director of nursing. A credible plan would need to explain how staffing can be maintained, rather than relying only on a target for reducing agency hours.
Whether the analysis affects regulation remains unsettled. Klos said current state approaches focus on agency registration and, in a few states, rate limits rather than facility agency-use levels in licensing or ownership approvals. Miller said tighter labor supply could make agency hours an early sign of workforce strain. The report offers no announced regulatory change or follow-up date; the data and any policy response will need to be watched as conditions evolve.
Key Questions
What is a nursing home change of ownership?
A change of ownership (CHOW) refers to a change in who holds the facility’s license. It does not necessarily mean the building’s real estate was sold.What were the two ownership-change rates in the report?
Facilities with agency staff providing at least 15% of nursing hours had a Medicare ownership change within two years in 11.8% of cases. The rate was 7.5% for facilities below 2% agency hours.Does high agency use mean a nursing home will be sold?
No. The report describes agency use as a screening signal, not a forecast. It reports an association and does not establish that agency staffing causes an ownership change or predicts one for a particular facility.Why might a buyer examine agency staffing?
Agency costs and workforce reliability can affect a facility’s operating plan. Miller said buyers should find out whether agency use reflects vacancies, staff reliability issues or flexible labor, and should avoid cutting coverage before replacement staff are available.Are states using agency-use figures to approve nursing home ownership changes?
Klos said the report found no state using a building’s agency-use number in licensing or ownership approvals at the time. He described state efforts as focused on agency registration rules and, in some places, rate caps.Source: rss
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