Special Report
Skilled Nursing Outlook: Admissions, Occupancy, and Investment Trends in 2026
2026
Skilled Nursing Outlook: What Will Drive Performance as Inventory Stabilizes?
Skilled nursing performance is entering a period in which admissions and occupied-bed growth are becoming more important drivers of occupancy improvement. Bed counts remained nearly unchanged during the year ended September 2026 after declining by an average of more than 7,500 beds annually over the prior five years. At the same time, net absorption slowed to fewer than 300 beds in both the second and third quarters, compared with a quarterly average of nearly 2,500 over the prior three years. Long-term demographic trends may support stronger demand, but staffing constraints, moderating Medicare reimbursement growth, and shorter Medicare Advantage stays could limit occupancy gains in the near term.
Why Are Admissions Becoming More Important to Skilled Nursing Occupancy?
Skilled nursing inventory contraction has slowed considerably. Bed counts were nearly unchanged during the year ended September 2026, a notable shift from the average annual reduction of more than 7,500 beds during the prior five years. The construction pipeline has also stabilized.
This changes a key dynamic supporting occupancy recovery. When beds are removed from the market, occupancy can improve without substantial growth in occupied beds. With fewer beds now being removed, future occupancy gains will depend more heavily on generating admissions and expanding occupied inventory.
Recent absorption underscores that challenge. Net absorption totaled fewer than 300 beds in both the second and third quarters of 2026, versus a quarterly average of nearly 2,500 during the prior three years. Although longer-term demographic tailwinds should support demand, operational conditions could constrain occupancy improvement in the near term.
How Could Medicare Reimbursement Affect Skilled Nursing Operators?
Medicare skilled nursing payment growth is expected to moderate. Payment rates are projected to increase 2.4 percent in fiscal 2027, compared with 3.2 percent a year earlier.
The smaller adjustment could leave operators with less flexibility to absorb rising costs while expanding staffing. This is particularly relevant because skilled nursing employment growth is again trailing the broader healthcare sector. If operators cannot expand or stabilize their workforce sufficiently, their capacity to accommodate additional admissions may remain constrained even where demand is strong.
Shorter Medicare Advantage stays add another operational consideration. When patients remain in skilled nursing facilities for shorter periods, operators need a greater volume of admissions to maintain occupied-bed levels. As a result, workforce stability and efficient patient transitions are becoming increasingly important to property performance.
Is Skilled Nursing Rent Growth Holding Up?
Despite reimbursement and operational pressures, private-pay pricing trends remain supportive. Average rent growth reached nearly 4.7 percent for the year ended in June, compared with a roughly 3 percent average over the prior decade.
Medicare reimbursement and private-pay rents represent different revenue streams, but stronger private-pay rent growth indicates continued pricing power within that portion of the market.
Key Skilled Nursing Operating Trends
|
Indicator |
Current Trend | Why It Matters |
| Inventory | Nearly unchanged in the year ended September 2026 | Fewer bed removals increase reliance on occupied-bed growth |
| Net absorption | Fewer than 300 beds in 2Q and 3Q 2026 | Recent demand growth has slowed from prior years |
| Medicare payment growth | 2.4% expected in fiscal 2027 | Moderating reimbursement could constrain staffing flexibility |
| Private-pay rent growth | Nearly 4.7% | Growth remains above the roughly 3% decade average |
| Employment growth | Trailing broader healthcare | Staffing may limit capacity for additional admissions |
What Is Happening With Skilled Nursing Investment Activity?
Investment activity is improving from a subdued base. Skilled nursing transaction velocity increased nearly 50 percent during the year ended in June, although activity remained roughly 65 percent below the 2015-2019 annual average.
The Southeast and Southwest recorded especially strong increases in transaction count. Activity more than tripled in the Southeast and more than doubled in the Southwest, consistent with investor interest in regions benefiting from demographic momentum.
Pricing has also shown signs of stabilization following three consecutive annual declines. The average price per bed reached approximately $88,500 over the year ended in the second quarter, about 3 percent above the 2025 average. Recent interest rate volatility, however, could shift investment dynamics again.
Is Skilled Nursing Pricing Beginning to Stabilize?
Recent pricing trends indicate that stabilization may be emerging. Average pricing reached roughly $88,500 per bed over the year ended in the second quarter of 2026, approximately 3 percent above the 2025 average following three consecutive annual declines.
At the same time, interest rate volatility remains an important variable. Changes in financing conditions could affect both pricing and transaction activity, making the recent improvement a sign of stabilization rather than confirmation of a sustained pricing upswing.
What Does the Outlook Mean for Skilled Nursing Investors and Operators?
For Investors
As inventory contraction slows, operational execution may become increasingly important to investment performance. The ability to generate admissions, maintain staffing, and translate demand into sustained occupancy could play a larger role in property performance.
For Operators
Operators are increasingly reliant on admissions and workforce stability to support occupancy. Fewer bed removals mean supply contraction will provide less support, while shorter Medicare Advantage stays increase the number of admissions needed to maintain occupied-bed levels.Moderating Medicare reimbursement growth could further constrain operators' ability to absorb costs and expand staffing. At the same time, above-average private-pay rent growth provides a more supportive pricing trend within that revenue stream.
Together, these conditions make workforce stability, patient transitions, and consistent admissions increasingly important to skilled nursing performance.
Frequently Asked Questions
Is skilled nursing inventory still declining?
The pace of contraction has slowed substantially. Skilled nursing bed counts were nearly unchanged during the year ended September 2026, compared with an average annual decline of more than 7,500 beds during the previous five years.
What will drive skilled nursing occupancy growth?
With fewer beds being removed, occupancy gains will increasingly depend on admissions and growth in occupied inventory. Net absorption was fewer than 300 beds in both the second and third quarters of 2026.
How much are Medicare skilled nursing payment rates expected to increase?
Medicare payment rates for skilled nursing are expected to rise 2.4 percent in fiscal 2027, down from 3.2 percent a year earlier.
How fast are skilled nursing rents growing?
Average rent growth reached nearly 4.7 percent for the year ended in June, above the roughly 3 percent average recorded over the prior decade.
Is skilled nursing investment activity increasing?
Yes. Transaction velocity increased nearly 50 percent during the year ended in June, although activity remained approximately 65 percent below the 2015-2019 annual average.
Which regions are seeing stronger skilled nursing transaction activity?
The Southeast and Southwest stand out. Transaction counts more than tripled in the Southeast and more than doubled in the Southwest.
What is the average skilled nursing price per bed?
The average price reached approximately $88,500 per bed over the year ended in the second quarter of 2026, about 3 percent above the 2025 average.
Why do shorter Medicare Advantage stays matter?
Shorter stays require operators to generate more admissions to maintain occupied-bed levels, increasing the importance of staffing stability and efficient patient transitions.
