A CLA report finds national SNF median occupancy reached 84.8% in 2025, but growth has slowed to 1.9 points from 6.3 in 2024, and operating margins climb from 1.8% at one-star homes to 4.7% at five-star homes. Rehinged's data shows 5,977 scored facilities, 40.7% of the field, rated two stars or below, and 1,929 of them also run under 75% filled beds. Separately, MedPAC commissioners signaled closer scrutiny of coding and ownership incentives in Medicare SNF payment, with first results due in fall 2027.
Why it matters for vendors: With occupancy gains fading and Medicare Advantage already 32.4% of admissions, the 1,929 low-rated, under-filled facilities are the operators with the most to gain from anything that lifts quality or referrals, and Texas alone holds 396 of them. Quality, clinical-outcome and census-building vendors should lead with Texas, Illinois and Missouri; vendors selling to ownership-heavy chains should note that 74.0% of scored facilities are for-profit and carry 84% of cumulative fines.
Quality & RatingsMarket TrendsReimbursement
Occupancy Growth Slows to 1.9 Points as CLA Finds Star Ratings Now Drive Margins
What happened
A CLA report puts national median SNF occupancy at 84.8% in 2025, with nearly half of facilities at 85% or higher and about 32% still below 75%. The pace of recovery has slowed sharply, rising 1.9 points in 2025 after 6.3 in 2024 and 10.3 in 2023. Managed care made up 42.3% of admissions, including 32.4% Medicare Advantage, where median stays run 25 days against 41 under traditional Medicare, so a Medicare Advantage bed has to turn over roughly 64% more often to produce the same occupied days. Operating margins rise from 1.8% at one-star facilities to 4.7% at five-star facilities, with most of the gain coming between three and five stars, and contract labor use fell from 10.3% of labor in 2022 to 5.2% in 2025.
Why it matters
The report frames quality as an economic flywheel: better ratings bring referrals, payer access and occupancy, which fund the staffing that protects the rating. It also suggests four stars may be a threshold for stronger referral and payer access. For vendors, the buying motive shifts from compliance to revenue. Operators on the wrong side of that flywheel have a financial reason to buy anything that moves ratings, readmissions or length of stay.
Rehinged Intelligence analysis of 14,690 scored facilities finds 5,977 facilities rated two stars or below, 40.7% of the field, against 5,766 rated four or five stars. The flywheel risk sits where weak ratings meet empty beds: 1,929 facilities, or 13.1% of the field, are both rated two stars or below and filled below 75%. They average 1.43 stars, run 123 beds on average and carry $134.4 million in cumulative federal fines. At the other end, 3,324 facilities are rated four or five stars and filled at 85% or better.
1,929
low-rated and under 75% filled
3,324
four or five stars and 85%+ filled
748
three-star facilities under 75% filled
Facilities by overall rating
Two stars or below
5,977 facilities
Four or five stars
5,766 facilities
Low-rated facilities under 75% filled, by state
The three-star group is the one to watch if four stars really is the threshold. 748 three-star facilities are filled below 75%, 145 of them in Texas, and they are one rating step from the band the report associates with better referral and payer access. Together with the 1,929 low-rated, under-filled homes, that is about 2,700 facilities where a census or quality gain converts directly into margin. Vendors selling clinical-outcome programs, rehospitalization reduction, admissions and liaison support, or Medicare Advantage-ready transitions should start in Texas, Illinois and Missouri, which hold 707 of the 1,929, and frame the pitch around occupied days rather than compliance.
Watch for: Whether the next round of operator results confirms the margin gap between three-star and four-star homes, and how Medicare Advantage share keeps shifting length of stay.
RegulatoryReimbursementM&A / Ownership
MedPAC Commissioners Press for Scrutiny of Coding and Ownership Incentives in Medicare SNF Payment
What happened
At its October meeting, MedPAC discussed a research plan to assess payment accuracy in fee-for-service Medicare's SNF and home health systems, covering 2021 through 2025, with initial results expected in fall 2027. Commissioner Scott Sarran said nursing facilities have become increasingly for-profit, often with private equity involvement and complex ownership, adding, "We see more and more that the care responds to the incentives." Commissioner Kenny Kan raised concern that providers may be ahead of health plans in using AI to raise reported patient complexity, and Cheryl Damberg urged comparing for-profit and nonprofit providers. The research team said the goal is to identify trends rather than prove cause, and the work will also look at patient selection and whether payment-to-cost gaps relate to closures and bed reductions.
Why it matters
This is a research plan, not a rule, and nothing changes for payment today. But it shows where the analytic attention is heading: coding intensity, case mix, ownership structure and which operators avoid high-cost admissions. Vendors whose products touch documentation, coding support, assessment accuracy or admissions decisions should expect operators to ask for audit-ready evidence, and the analysis window means data from 2021 onward will be examined.
Rehinged Intelligence analysis of 14,690 scored facilities finds 10,877 for-profit facilities, 74.0% of the field. They average 2.80 stars against 3.50 for nonprofit and government facilities, and 4,964 of them, or 45.6%, are rated two stars or below, compared with 26.6% of the rest. For-profit facilities also carry $383.6 million of the $456.8 million in cumulative federal fines across all scored facilities, about 84%.
10,877
for-profit facilities
113
changed ownership in the last 12 months
97
with a private equity owner on record
Average overall rating by ownership
For-profit facilities
2.80 stars
Nonprofit and government
3.50 stars
Facilities that changed ownership in the last 12 months, by state
Recent ownership changes are where the scrutiny and the sales opportunity overlap. Of the 113 facilities that changed ownership in the last 12 months, 58 are rated two stars or below, averaging 1.40 stars, with nine each in Texas and Missouri. Of the 97 facilities with a private equity owner on record, 57 are rated two stars or below and 27 are in Pennsylvania. These flags capture only owners disclosed in the data we hold, so treat them as a floor. Vendors selling to newly acquired homes should read a new owner's first 12 months as a re-papering window, and those selling documentation or coding-accuracy tools should lead with evidence that holds up under an outside payment review.
Watch for: Further MedPAC sessions on the payment accuracy work ahead of the fall 2027 results, and whether commissioners ask for ownership structure to be analyzed alongside coding trends.