NY Nursing Homes Face Funding Crisis, Closures Mount

BINGHAMTON, N.Y. — Healthcare providers and state lawmakers gathered at Good Shepherd Communities on Friday to draw attention to what they describe as a critical funding shortage threatening nursing home operations across New York, as inadequate Medicaid reimbursement rates contribute to facility closures and force families to travel significant distances for elder care.

Jason Santiago, President and CEO of Good Shepherd, stated that the facility receives approximately $9 per hour in Medicaid reimbursement for providing continuous care to residents, according to WBNG. With New York's minimum wage currently at $16 per hour, Santiago noted that the financial equation no longer works for facilities heavily reliant on Medicaid funding.

Sebrina Barrett, representing LeadingAge New York, reported that operational costs for nursing homes in the state have increased 51% since 2007, while Medicaid reimbursement rates have risen only 12.8% during the same period. "Our nonprofit nursing homes are losing an average of $150 per resident per day," Barrett said, according to the report. For a facility with 100 beds, this translates to annual losses approaching $5.5 million.

State Senator Lea Webb and Assemblywoman Donna Lupardo, both advocates for nursing home funding, are pushing to secure at least $750 million in this year's state budget specifically for nursing home support—a substantial increase from the $445 million allocated in last year's budget. "Expenses continue to go up. And if wages remain stagnant, you're just falling deeper and deeper into debt," Webb stated, as reported by WBNG. "When you put that in the health care system, those numbers jump astronomically, where people are literally filing for bankruptcy just to be able to have access to care."

Santiago noted that the funding crisis is forcing patients to relocate 50 to 100 miles from their homes to access available care, according to the local news report.

Statewide Impact and Bed Losses

The funding pressures have resulted in significant capacity reductions across New York's nursing home system. According to CBS6 Albany, nine nursing homes have closed over the past two years, eliminating more than 1,000 beds from the state's healthcare system. Barrett reported that 70% to 80% of nursing homes in New York are currently operating at financial deficits, with Medicaid covering only approximately 75% of the actual cost of patient care.

Earlier reporting from Spectrum Local News indicated that more than 5,600 nursing home beds have been lost statewide since 2019 across approximately 599 facilities. Mark Olson, Executive Director of Shaker Place Rehabilitation & Nursing Center, and Stephen Hanse, President and CEO of the New York State Health Facilities Association, described the scope of the crisis in a February 2025 report. Facilities are losing an estimated $56 per resident daily under current Medicaid rates while paying staff wages of $20 to $21 per hour with benefits, according to that report.

The closure pattern has created what healthcare officials describe as care deserts in some regions, with families required to travel 90 miles or more to visit relatives who have been placed in distant facilities due to lack of local options.

Budget Proposals and Industry Requests

Governor Kathy Hochul has proposed $1.5 billion in her budget for hospitals and nursing homes combined, according to CBS6 Albany. However, nursing home advocates are requesting that a larger portion be directed specifically to long-term care facilities rather than being split broadly across healthcare sectors.

Stephen Hanse, whose organization represents more than 450 member facilities, noted that 85% of New York nursing home residents rely on Medicaid—significantly higher than the 63% national average—creating disproportionate financial pressure on the state's facilities, as reported by the Amsterdam News. Hanse stated that Medicaid reimbursement covers only 75% to 80% of actual expenses, leaving a shortfall of nearly $100 per resident per day. The industry is requesting the $750 million as a "down payment" from the governor's proposed $1.5 billion allocation.

According to News10NBC, state lawmakers gathered at Jewish Home nursing home in Albany in late February, where President and CEO Michael King advocated for dedicating $750 million of the Medicaid allocation specifically to nursing homes. King cited emergency room backlogs caused by insufficient nursing home bed availability, a cascading effect that impacts hospital operations statewide.

Healthcare System Consequences

The shortage of nursing home beds has created ripple effects throughout New York's healthcare system. According to the Amsterdam News report, understaffing forces facilities to close beds or entire units, leading to emergency room backlogs and delayed elective procedures at hospitals statewide. When nursing homes cannot accept patients ready for discharge from hospital acute care, hospital beds remain occupied by patients who no longer require that level of care, preventing new admissions.

Michelle Mazzacco, Executive Vice President of Continuing Care at St. Peter's Health Partners, reported that infrastructure challenges compound the financial difficulties, with St. Peter's Nursing and Rehab Center in Albany facing $60 million in needed upgrades, according to CBS6 Albany. The organization's six remaining facilities serve nearly 700 residents.

Senate Bill S4275 has been proposed to strengthen oversight of nursing home closures, according to Spectrum Local News. The state previously planned a $285 million one-time investment for 2025 alongside a 10% Medicaid rate increase spread over three years, though advocates indicate these measures have proven insufficient to address the ongoing financial crisis.

News10NBC reported that 70% of nursing home residents rely on Medicaid funding, and that nursing home care costs rose 51% from 2007 to 2024 while Medicaid reimbursement increased only 12.8% during the same timeframe. Fourteen nursing home closures occurred over a five-year period leading up to February 2026, according to that report.

Resources for Families

Families concerned about nursing home quality or seeking assistance with long-term care issues can contact the National Long-Term Care Ombudsman Resource Center at 1-800-677-1116. The ombudsman program provides free advocacy services for residents of nursing homes and assisted living facilities. Additional information and resources are available at ltcombudsman.org.

Residents and family members who wish to report concerns about care quality or facility operations can also contact their local ombudsman office, which serves as an independent advocate for long-term care residents throughout the state.