STATEN ISLAND, NY — A Staten Island nursing home has warned that inadequate Medicaid reimbursement rates may force the facility to close, joining a growing chorus of long-term care providers across New York facing financial crisis as state funding fails to cover the actual cost of resident care.
The warning comes as nine nursing homes have shuttered across New York in the past two years, eliminating more than 1,000 beds from the state's long-term care system, according to CBS6 Albany. Among the recent closures was St. Peter's Nursing and Rehab Center in Albany, which ended operations after 68 years, citing $60 million in needed infrastructure improvements that proved financially impossible under current reimbursement structures.
The Math Behind the Crisis
Nonprofit nursing homes across New York are losing an average of $150 per resident per day, according to Jason Santiago, President and CEO of Good Shepherd Communities, as reported by WBNG Binghamton. For a typical 100-bed facility, this shortfall translates to approximately $5.5 million in annual losses.
The fundamental problem lies in the gap between what Medicaid pays and what care actually costs. Stephen Hanse, President and CEO of the New York State Health Facilities Association, told the New York Amsterdam News that Medicaid reimbursement covers only 75 to 80 percent of actual expenses, creating a shortfall of roughly $100 per resident per day. The situation is particularly acute in New York, where Medicaid covers 85 percent of nursing home residents, compared to 63 percent nationally.
"Medicaid reimburses at $9 per hour for 24/7 care while the state minimum wage is $16 per hour," Santiago explained to WBNG, illustrating the impossible arithmetic facing providers.
According to WBNG, operating costs for nursing homes have increased 51 percent since 2007, while Medicaid reimbursement has risen only 12.8 percent during the same period. Making matters worse, current reimbursement rates remain based on 2007 cost structures, according to analysis published in City & State New York by industry leaders Stephen B. Hanse and Sebrina Barrett.
Statewide Impact
Sebrina Barrett, President and CEO of LeadingAge New York, told CBS6 Albany that 70 to 80 percent of New York nursing homes are currently operating at a deficit. The organization represents nonprofit providers across the state.
The crisis extends beyond individual facilities to threaten the state's capacity to serve its aging population. By 2030, New York's population aged 80 and older will exceed 1.2 million, and older adults will comprise 25 to 30 percent of residents in many counties, according to City & State New York.
State Senator Lea Webb has proposed a $750 million budget allocation for nursing homes, an increase from $445 million the previous year, as reported by WBNG. Governor Kathy Hochul included $1.5 billion for hospitals and nursing homes combined in her proposed budget, though advocates are seeking $750 million specifically dedicated to long-term care facilities.
Unfunded Mandates
The financial pressures have intensified following New York's implementation of a 3.5-hour minimum staffing mandate, which was enacted without corresponding funding increases, according to City & State New York. Federal regulations also impose staffing requirements, creating additional costs that current Medicaid rates do not adequately support.
Industry Responses
Some providers are pursuing consolidation rather than closure as a survival strategy. ArchCare, led by President and CEO Scott LaRue, previously acquired a Staten Island health system and continues integration efforts, as reported by Skilled Nursing News. The publication noted that Wartburg's Mount Vernon campus features a 34-acre facility with 50 rehabilitation beds and plans for affordable housing opening in 2027.
However, integration options remain limited for many independent nonprofit facilities facing immediate financial pressure. The New York Amsterdam News highlighted Riverside Premier Rehabilitation & Healing Center as an example of facilities struggling under current reimbursement structures.
The broader healthcare system in New York faces related pressures. Hospitals project an $8 billion negative impact from federal budget legislation, according to Skilled Nursing News, underscoring systemic financial challenges affecting the entire continuum of care.
What This Means for Families
Families with loved ones in New York nursing homes should monitor their facility's financial health and understand their options if closure becomes necessary. Residents have rights to adequate notice and assistance with relocation if a facility closes.
State law requires nursing homes to provide residents and family members with advance notification of closure and to work with the Department of Health to ensure safe transitions. However, the pace of closures has raised concerns about whether sufficient alternative placements exist, particularly in areas where multiple facilities serve Medicaid-dependent populations.
Resources for Families
Families concerned about nursing home closures or quality of care can contact:
- New York Long-Term Care Ombudsman Program: 1-800-677-1116 - National Long-Term Care Ombudsman Resource Center: Available at ltcombudsman.org - New York Department of Health: Maintains inspection reports and complaint procedures
The ombudsman program provides free, confidential assistance to nursing home residents and their families, including advocacy during facility transitions and complaint resolution.
As the funding crisis deepens, families should stay informed about their facility's financial status, understand their rights, and know where to turn for assistance if their loved one's nursing home announces closure plans.
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