Surviving the Next Five Years: What Senior Care Leaders Need to Know

The next five years will be critical for senior living and nursing home providers. Shifts in health system consolidation, CMS programs, and hospital partnerships are already reshaping how skilled care is delivered and funded. For senior care community leaders, understanding these external forces is essential to long-term success.

The Growing Influence of Health Systems

Independent hospitals and clinics are rapidly disappearing. Today, more than 600 health systems operate across the U.S., with some spanning multiple states. Research shows that as health systems grow, they are far more likely to formalize relationships with nursing homes.

• Health systems with one hospital: only one-third maintain formal nursing home relationships.
• Health systems with four or more hospitals: nearly three-quarters have contractual agreements.
• Health systems operating in more than three states: 94% maintain strong nursing home partnerships.

For providers, this means your skilled beds—especially short-term rehab beds—are directly tied to how hospitals hit cost and quality benchmarks.

Why Hospitals Need You

Hospitals are under pressure to reduce costs and prevent readmissions. A hospital stay can cost $2,500 per day compared to $500–$600 in a skilled nursing facility. Skilled care is no longer a side option; it’s a cost-saving strategy that health systems need to meet CMS target pricing models.

But hospitals want more than lower costs. They want:

• Clear communication: Poor handoffs are still a leading cause of readmissions.
• Standardized care: Hospitals are investing in joint ventures and medical director integration to ensure continuity.
• Accountability: Under value-based models, patients remain the hospital’s responsibility even after discharge.
  The Rise of Alternative Care Models

Two CMS initiatives are worth watching closely:

• Hospital at Home allows hospitals to admit patients into their homes with 24/7 virtual monitoring. While it was initially designed as a pandemic relief measure, expansion could reduce skilled nursing utilization.
• TEAM Program (Transforming Episode Accountability Model), launching in 2026, mandates bundled payments across hundreds of hospitals. Skilled nursing will play a key role in hitting episodic cost and outcome targets.

These programs signal a shift. Hospitals are exploring “skilled-equivalent” options. Nursing homes that fail to integrate risk losing volume.

Steps Senior Care Leaders Should Take Now

• Strengthen hospital relationships: Don’t wait for health systems to approach you. Be proactive in positioning your facility as a preferred partner.
• Invest in communication systems: Explore technologies like AI-powered scribing or diagnostic tools that streamline provider handoffs.
• Focus on quality ratings: Many insurers won’t contract with facilities under 3–4 stars. Star ratings and readmission scores now directly impact your marketability.
• Educate hospital liaisons: Demonstrate how your team safely manages complex patients, reducing unnecessary readmissions and ED visits.
• Plan for the future resident: Frail elders will remain your core base, but facilities must also be prepared for patients with multiple chronic conditions who cannot return home immediately.

The future of skilled care depends on collaboration. Independent providers who cling to the “no relationship” model will see margins shrink. Those who lean into preferred partnerships, joint ventures, or integration will protect census and strengthen their role in the care continuum.

Senior care leaders should see the next five years not as a threat, but as an opportunity to prove why skilled nursing is indispensable. Hospitals need you to succeed in value-based care, and the communities you serve need you to adapt.

Contact our senior living team to discuss how we can support your senior care community with customized risk management and insurance solutions.