A New Era for Skilled Nursing: Optimism, Workforce Challenges, and the Future of Care

Skilled nursing operators are stepping into 2025 with a fresh perspective, a marked shift from the uncertainty that clouded the industry just a year ago. According to McKnight's 2025 Outlook Survey, 40% of industry leaders report feeling more optimistic about the future—a sharp contrast to last year when nearly half of respondents felt less hopeful as they faced mounting regulations and staffing struggles.

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While there is a sense of relief in the air, the road ahead remains uncertain. The outlook is brighter, but the industry is still contending with persistent staffing shortages, financial pressures, and policy shifts that could reshape the landscape once again. What happens next will depend significantly on how providers navigate these challenges while adapting to a workforce that demands more than a paycheck.

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The Impact of a New Administration

The outcome of the 2024 election has profoundly affected the industry's outlook. Many leaders believe that the new administration will bring a rollback of some of the most burdensome regulations, particularly the federal staffing mandate that dominated conversations in 2024.

Nearly 57% of McKnight's survey respondents expect that mandate to be overturned—a logical assumption, given the administration's pro-business stance. However, unwinding a regulation of this scale takes time, and industry leaders recognize that change won't happen overnight. In the meantime, providers are left in a holding pattern, waiting to see what policy changes materialize and how quickly they will be implemented.

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Despite the lingering uncertainty, many executives see an opportunity. Carespring Health Care Management CEO, Chris Chirumbolo, expressed confidence in the potential for streamlined regulation, higher census levels, and a renewed focus on resident care rather than bureaucratic red tape. "It's not just about cutting back regulation," he noted. "It's about trying to allow us to provide care and services for the resident, which is why we exist."

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For many, clarity alone is a welcome relief. Last year's regulatory environment left providers in limbo, unsure how to plan for the future. Now, with a clearer picture of the road ahead, many feel they can finally make strategic decisions with confidence.

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Workforce Pressures Are Easing—But Not Enough

Staffing continues to be the number one concern for skilled nursing operators, though the situation is improving. In the 2024 survey, 82% of respondents named staffing as their top

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issue. This year, that number has dropped to 70%, a sign that the workforce crisis may be stabilizing.

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A key reason for this shift is the slow but steady return of workers to the sector. Nearly one-third of respondents say their staffing levels have returned to pre-pandemic norms or will by the end of 2025. That's a significant improvement over last year, but there's still a long way to go. More than 37% of providers believe they will never fully recover to pre-COVID staffing levels, acknowledging that the healthcare labor market has changed permanently.

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Industry leaders are beginning to embrace new staffing models, rethink job structures, and experiment with incentives that go beyond wages. Retention strategies have taken center stage, with an emphasis on professional development, flexible benefits, and workplace culture.

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Employee expectations are also evolving. The younger workforce values work-life balance, mental health support, and career growth just as much—if not more—than higher wages. "Job satisfaction isn't just about pay anymore," noted employee retention expert Cara Silletto. "Employers who assume otherwise are losing their best people to competitors who take a more modern approach to benefits and leadership."

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For skilled nursing operators, this means one thing: investing in employee well-being is no longer optional.

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The Medicaid Question Looms Large

While regulatory relief is expected, Medicaid reimbursement remains a significant concern for providers. Among CEOs, administrators, and C-suite executives, 39% named Medicaid funding as a top challenge heading into 2025, second only to staffing.

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The fear is that proposed funding changes—including the potential shift to a block grant system—could force states to make tough budget decisions. If federal support is reduced, states may cut reimbursement rates, putting even more financial pressure on facilities that are already struggling to break even.

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For operators, this means staying proactive in advocacy efforts while also preparing for potential funding shifts. Financial sustainability will require strategic workforce planning, cost-effective benefits solutions, and an emphasis on operational efficiency.

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The Future of Skilled Nursing: Where Do We Go From Here?

McKnight's survey paints a picture of an industry in transition—one that is moving away from the crisis mode of the past few years and toward a more strategic, long-term focus. While staffing remains a concern, job satisfaction among healthcare professionals has improved, rising to 7 out of 10 this year, up from 6.7 in 2024.

Retention is improving, new workforce models are emerging, and financial challenges—while still pressing—are being met with creative solutions.

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For skilled nursing operators, 2025 represents a chance to rethink traditional approaches. How can facilities structure benefits to better support employees? What professional development opportunities will make a meaningful impact? How can recruitment and retention strategies be modernized to reflect the changing workforce?

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At Compass Total Benefit Solutions, we help SNF operators navigate these questions with customized benefits solutions explicitly designed for the long-term care industry. If your facility is ready to build a benefits strategy that drives retention and long-term success, Compass TBS is here to help.

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Email: [email protected]

Phone: 860-416-5333

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Contact us today to discuss how we can help you create a benefits package that supports your workforce and strengthens your organization.

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