The Future of Skilled Nursing Finance in the United States: Trends and Predictions Through 2035

Nearly two out of three healthcare organizations now use some form of AI in their revenue cycle. Only 15% have actually seen a return on it. That gap, between adoption and results, is the real story of where skilled nursing finance is headed over the next decade, not a single technology, but a widening split between facilities that execute well on the trends reshaping this sector and facilities that just buy the software.

Key Takeaway: Skilled nursing finance over the next decade will be shaped by six converging forces: value-based reimbursement tied directly to staffing and quality data, Medicare Advantage growing past half the market at lower reimbursement, a structural workforce shortage that federal data projects will keep intensifying through at least 2037, an active but selective M&A market, a compliance environment enforcing more aggressively than it has in years, and an AI adoption curve where most organizations have started but few have actually captured returns. Facilities that treat these as one connected system, not six separate initiatives, are the ones positioned to come out ahead.

Table of Contents

• Trend 1: Reimbursement Ties Directly to Performance, Not Just Volume
• Trend 2: Medicare Advantage Becomes the Dominant, and More Demanding, Payer
• Trend 3: The Workforce Shortage Is a Multi-Decade Structural Problem
• Trend 4: Consolidation Continues, Selectively
• Trend 5: Compliance Enforcement Intensifies, Not Eases
• Trend 6: AI Moves From Pilot to Production, Slowly and Unevenly
• What This Means for SNF Finance Leaders
• How LTCPro Supports the Next Decade of SNF Finance
• FAQ

Skilled nursing finance is not undergoing one transformation, it’s undergoing six simultaneous ones, and most industry commentary treats them as separate stories: a reimbursement story, a staffing story, a technology story. They aren’t separate. A facility’s ability to manage its workforce, meet CMS’s quality measures, and adopt technology effectively all roll up into the same number: whether that facility can actually collect what it’s owed and stay financially viable through 2035.

This guide walks through each of the six forces reshaping skilled nursing facility (SNF) and assisted living facility (ALF) finance across the United States, grounded in current data rather than generic prediction.

Trend 1: Reimbursement Ties Directly to Performance, Not Just Volume

CMS has been moving SNF reimbursement toward value-based payment for years, but the shift became concrete and measurable heading into 2026. The SNF Value-Based Purchasing Program now bases performance on measures that include Total Nurse Staffing Hours per Resident Day and Total Nursing Staff Turnover, meaning staffing decisions directly affect what a facility gets paid, not just how it operates (CMS, Nursing Home Quality Measures). Facilities with strong Star Ratings are already seeing this translate into real financial performance: 5-Star facilities average 2.6% operating margins, compared to just 0.4% at 1-Star facilities, a gap tied partly to the stronger Medicare Advantage and hospital referral relationships that follow higher-rated facilities (ACPlus, Skilled Nursing Facility Industry Outlook for 2026).

Over the next decade, expect the number and weight of these performance-linked measures to keep expanding, following the same trajectory CMS has already set with hospital value-based purchasing, where the program started with a handful of measures and grew steadily more sophisticated over its first decade.

For SNFs, that means the finance function and the clinical/staffing function can no longer be managed as separate budgets reporting to separate leaders. A facility that treats quality measures as a compliance checkbox rather than a direct revenue lever will find itself increasingly behind facilities that build staffing and documentation decisions around what CMS is actually measuring and paying on.

Trend 2: Medicare Advantage Becomes the Dominant, and More Demanding, Payer

Medicare Advantage covers 55% of eligible Medicare beneficiaries as of 2026, and the Congressional Budget Office projects that share will reach 63% by 2034 and hold at that level through at least 2036 (KFF, Medicare Advantage in 2026: Enrollment Update and Key Trends). For SNFs, this has real financial teeth: MA plans generally reimburse 10% to 20% below traditional Medicare fee-for-service rates, while requiring prior authorization for virtually every stay, 99% of MA enrollees are in plans that require it, compared to limited requirements under traditional Medicare (Skilled Nursing News, Top Trends That Will Shape the Skilled Nursing Sector in 2026) (Plante Moran, cited via HIDA).

The next decade will likely bring two counter-pressures at once. On one side, federal oversight is tightening: two HHS-OIG reports released in June 2026 found MA plans overturn 95% of appealed SNF admission denials, but only 18% of denials get appealed (HHS-OIG, Medicare Advantage Organizations Overturned Nearly All Appealed Prior Authorization Denials for SNF Admission), and CMS’s Interoperability and Prior Authorization Final Rule (CMS-0057-F) now requires MA plans to respond to standard prior authorization requests within 7 days and expedited requests within 72 hours, with a full electronic Prior Authorization API mandatory by January 1, 2027 (CMS, Interoperability and Prior Authorization Final Rule Fact Sheet).

On the other side, provider pushback is having a real effect: a 2026 survey of nursing home executives found 35% who walked away from a bad MA contract secured better terms as a result, and MA enrollment growth actually stalled to its slowest pace in years (Skilled Nursing News, Hospital Partners, Data Sharing or Simply Walking Away). The next decade of SNF-MA relationships will likely be defined by this tension, tighter federal rules on one side, more assertive provider negotiating posture on the other.

Trend 3: The Workforce Shortage Is a Multi-Decade Structural Problem

Health Resources and Services Administration’s National Center for Health Workforce Analysis projects overall demand for long-term services and support (LTSS) professionals to grow 39% between 2022 and 2037, from 2.42 million to 3.37 million full-time equivalent workers, with direct care workers, nursing assistants, home health aides, personal care aides, making up 67% of that workforce by 2037.

(HRSA, Long-Term Services and Support: Demand Projections, 2022-2037) Separate analysis projects a shortage of 151,000 direct care workers by 2030, growing to 355,000 by 2040 (Council of State Governments, Expanding the Pipeline). Growth in demand isn’t uniform across roles either, HRSA’s data shows it ranging from 28% for physical therapist assistants in LTSS settings up to 131% for psychiatric aides, reflecting how much resident acuity and care complexity is shifting over the same period.

The financial mechanism connecting this to SNF finance is now direct, not indirect. CNA turnover ran 42.34% in 2025, the highest of any role in a nursing home, and wage costs have outpaced revenue growth across the sector for years (Skilled Nursing News, citing the 2025-2026 Nursing Home Salary & Benefits Report).

With CMS now tying reimbursement to staffing hours and turnover through the VBP program described above, the workforce shortage isn’t just an operating cost problem anymore, it’s a revenue problem with a federal payment formula attached to it. Facilities that spend the next decade treating retention as a soft HR initiative rather than a financial strategy will be managing both a staffing gap and a reimbursement gap at the same time.

Trend 4: Consolidation Continues, Selectively

Real capital is moving into skilled nursing. A 2026 survey of 147 sector leaders found 39.5% plan to purchase SNF assets this year (Skilled Nursing News, Skilled Nursing Outlook 2026), and actual deal volume backs that up: CareTrust REIT closed a roughly $142 million, six-facility acquisition in January 2026, and Omega Healthcare reported $326 million in year-to-date acquisition investment (Skilled Nursing News, Omega’s Gourmand Sees Nursing Home Sector Investments as Long-Term Plays).

But this isn’t a uniform boom. Brokers report financing certainty, not enthusiasm, as the top factor determining whether a deal actually closes (Skilled Nursing News, Financing Is Top Factor Behind Stalled Nursing Home Deals). New 2026 legislative activity is also adding scrutiny specifically to private-equity-backed transactions in several states.

The decade ahead will likely see continued consolidation, but increasingly concentrated among facilities with clean, defensible financial records. Messy financials are consistently what kill deals or trigger valuation discounts during buyer due diligence (BPM, 4 Reasons Why Deals Fall Apart in Due Diligence), meaning administrative and financial discipline is becoming a competitive advantage in the M&A market, not just an operational nicety.

Trend 5: Compliance Enforcement Intensifies, Not Eases

Facilities planning for the next decade should assume more scrutiny, not less. HHS-OIG opened a new, ongoing audit series targeting SNF billing under PDPM in November 2025, and the first facility reviewed was flagged for $31.2 million in improper payments tied to coding and documentation gaps (Bryan Cave Leighton Paisner, False Claims Act: Recent Updates).

CMS’s own compliance data shows insufficient documentation already drives 75.5% of SNF improper payments nationally, a rate unlikely to improve without deliberate investment in documentation discipline (CMS, Skilled Nursing Facility Services compliance tips). HIPAA enforcement is active too: OCR closed 21 settlements in 2025, one of its busiest years on record, with penalties reaching up to $2.19 million per violation (HIPAA Journal, What Are the Penalties for HIPAA Violations? 2026 Update).

Separately, CMS tightened rules around admission agreements in November 2024, restricting facilities from holding family members personally liable for unpaid balances, with surveyors enforcing this since March 2025 (CMS, QSO-25-12-NH, cited via Hall Booth Smith). Across every one of these threads, the pattern is consistent: federal oversight of SNF billing, staffing, and financial practices is becoming more granular and better resourced, not less, and that trend shows no sign of reversing over the next decade.

Facilities that build compliance into their standing operational rhythm, rather than treating it as an annual review, will spend far less time and money responding to findings after the fact.

Trend 6: AI Moves From Pilot to Production, Slowly and Unevenly

This is where the gap between hype and reality matters most for financial planning. According to a 2026 HFMA and FinThrive survey of 101 healthcare organizations, 63% now use some form of AI or automation in their revenue cycle, with documentation and coding the leading application at 48%.

But only 15% have achieved positive ROI, while 38% are still in early pilot or groundwork stages (Assembly, State of AI in Revenue Cycle Management: 2026 Benchmarks). Notably, claim denial rates didn’t improve as AI adoption accelerated, they got worse: denial rates averaged 11.8% in 2024 and rose to roughly 12% in 2025, with net revenue leakage from denials growing 25% year-over-year (StealthAgents, AI Revenue Cycle Management Automation Statistics 2026).

That’s not an argument against AI adoption, early adopters deploying automation at scale, not in isolated pilots, are reporting a 27% reduction in cost-to-collect and a 6% increase in net patient revenue, according to a 2026 HFMA/AKASA survey.

It’s an argument for being honest about where the real returns come from: full-workflow deployment, not a single tool bolted onto an otherwise unchanged process. The next decade will likely widen the gap between organizations that make that distinction and those that don’t.

What This Means for SNF Finance Leaders

Pulled together, these six trends point to one underlying shift: the facilities that thrive through 2035 will be the ones that treat staffing, compliance, reimbursement, and technology as one integrated financial system, not five separate departments each optimizing on its own.

A staffing decision now has a direct line to a VBP payment. A documentation gap now has a direct line to both a denial and an OIG audit flag. An AI tool adopted in isolation, without full-workflow integration, is more likely to sit in the 38% “still piloting” category than the 15% seeing real ROI.

This connectedness also changes what “financial leadership” needs to look like in a SNF over the next decade. A CFO who only watches AR days and denial rates is missing half the picture if staffing turnover and documentation quality aren’t part of the same dashboard, since both now flow directly into reimbursement.

The facilities most likely to struggle over the next ten years aren’t necessarily the smallest or most under-resourced ones, they’re the ones where financial, clinical, and compliance functions still operate as separate silos reporting up through separate chains, each optimizing its own number without visibility into how the others affect it.

How LTCPro Supports the Next Decade of SNF Finance

LTCPro provides revenue cycle management, billing and accounts receivable, payroll, accounts payable, general ledger, and prior authorization support for SNFs and ALFs across the United States, structured around the six trends above, not adapted from a generic medical billing model.

Reimbursement infrastructure built for value-based measures. LTCPro’s revenue cycle management service is structured around Medicare, Medicaid, PDPM, and the staffing-linked measures now driving VBP payment.

Payroll and workforce data connected to financial reporting. Because payroll runs through the same system as billing and general ledger, facilities get one consistent view of staffing cost against the reimbursement it now affects.

Documentation and compliance built for current audit standards. LTCPro’s approach to billing and documentation is structured around what HHS-OIG’s current audit series is actually checking, not a static internal policy.

Back-office capacity to execute on technology, not just adopt it. Facilities can pair LTCPro’s software with LTCPro’s back-office staff, closing the gap between AI adoption and the full-workflow deployment that actually produces ROI.

The next decade of skilled nursing finance won’t be defined by any single trend. It will be defined by which facilities manage all six as one connected system, and which ones keep treating them as separate problems.

Key Takeaways:

• CMS now ties SNF reimbursement directly to staffing hours and turnover through its VBP program, making workforce management a revenue issue, not just an operating cost.
• Medicare Advantage will keep growing past half the Medicare market, but new federal rules and more assertive provider negotiation are both reshaping that relationship at the same time.
• Federal data projects sustained LTSS workforce demand growth of 39% through 2037, a multi-decade structural shortage, not a temporary crunch.
• M&A activity remains real but increasingly selective, favoring facilities with clean, audit-ready financial records.
• Compliance enforcement, from OIG’s PDPM audit series to HIPAA to admission agreement rules, is intensifying across every front.
• AI adoption in RCM has reached 63%, but only 15% of organizations have realized positive ROI, a gap that rewards full-workflow deployment over isolated tools.

FAQ

How is Medicare Advantage expected to affect SNF finance over the next decade?

MA’s share of the Medicare market will likely keep growing past its current majority, while reimbursing 10% to 20% below traditional Medicare. At the same time, new federal rules requiring faster prior authorization responses and more provider pushback on denials are both reshaping the relationship, so the next decade likely brings more negotiating leverage for SNFs alongside continued reimbursement pressure.

Is the long-term care workforce shortage actually going to get better or worse?

Federal projections point toward sustained growth in demand, not resolution. HRSA projects LTSS workforce demand to grow 39% between 2022 and 2037, and separate analysis projects a direct care worker shortage growing from 151,000 in 2030 to 355,000 by 2040. This is a structural, multi-decade dynamic rather than a temporary post-pandemic issue.

Is AI actually reducing healthcare claim denials?

Not yet, broadly. Claim denial rates rose from 11.8% in 2024 to roughly 12% in 2025 even as AI adoption in revenue cycle management accelerated to 63% of organizations. Only 15% of organizations have achieved positive ROI from AI in RCM so far, though early adopters deploying it at full workflow scale report a 27% reduction in cost-to-collect.

Will value-based payment eventually replace fee-for-service for SNFs?

The trend is clearly toward more value-based weighting, not full replacement in the near term. CMS’s SNF Value-Based Purchasing Program has expanded its measures to include staffing hours and turnover directly, and that pattern of adding performance-linked measures is likely to continue and expand over the next decade, following the trajectory already set in hospital value-based purchasing.

Do these SNF finance trends play out the same way across every U.S. state?

The federal trends, Medicare Advantage growth, CMS’s VBP measures, HHS-OIG audit activity, and AI adoption patterns, apply nationwide. What varies by state is the Medicaid layer: reimbursement rates, managed care structures, and staffing incentive programs differ significantly by state, so a multi-state operator needs to track both these national trends and each state’s specific Medicaid trajectory.

LTCPro provides revenue cycle management, billing, payroll, and back-office support for skilled nursing and assisted living facilities across the United States, pairing proprietary software with hands-on staffing support.