2025 Shifts in Skilled Nursing: Deregulation, Funding Cuts, and Market Dynamics

The skilled nursing sector in the U.S. underwent significant changes and challenges throughout 2025, driven by deregulation initiatives, financial stresses, policy shifts, and changing reimbursement models. Early in the year, the Trump administration's regulatory freeze led to expectations of broad deregulation, which industry leaders initially welcomed as relief from the previous administration's regulatory burden. However, the reality included sudden terminations of Medicare and Medicaid certifications for Special Focus Facilities (SFFs) without opportunities for corrective actions, resulting in facility closures and legal concerns. The budget reconciliation bill, particularly the One Big Beautiful Bill Act (OBBBA), introduced Medicaid cuts and altered provider tax structures, sparking concerns about disrupted funding and care coordination across nursing homes and hospitals. The bill's cuts are projected to increase the federal deficit substantially and may contribute to increased uninsured populations, impacting hospital and nursing home dynamics. Nursing home valuations rose midyear due to scarcity and Medicaid rate changes, fueling competitive acquisition activity despite ongoing financing and regulatory challenges. Experts highlighted that phased-out hospital provider tax increases could strain healthcare funding, potentially diverting Medicaid resources away from nursing homes to hospitals, thereby weakening both sectors. Studies pointed out underutilization of the Patient Driven Payment Model for palliative care in nursing homes, calling for policy clarification to prevent excessive rehabilitation near end-of-life and to improve hospice access. The bankruptcy of Genesis Healthcare spotlighted private equity's role in nursing home financial instability, with lawmakers attributing part of the distress to leveraged buyouts and ownership restructuring. Looking ahead, sector analysts emphasize the need for technological innovation, data-driven operations, and value-based care alignment to meet the aging population's needs and succeed amid growing pressures. CMS's December decision to rescind the staffing mandate was broadly supported within the industry, citing reductions in administrative burdens and protection of patient access, particularly in rural areas, while some regulatory requirements remain. Overall, 2025 was marked by substantial regulatory and market shifts, underscoring the complex interplay between policy, finance, and care delivery in skilled nursing.