Nursing home operators are facing financial realities few anticipated. Loans taken at 3–4% just a few years ago are now maturing into 7–9% rates, doubling debt service overnight. For many operators, that means hundreds of thousands in added annual costs, at a time when operating margins are already under pressure.
Since 2020, more than 465 nursing homes have closed, displacing over 18,000 residents, and another 579 facilities are considered at elevated risk of closure if state and federal funding pressures intensify. Closures don’t just affect ownership — they impact job stability for staff and leave communities scrambling for care options.
The Financial Reality
- Shrinking margins: Skilled nursing operators are expected to see margins continue contracting through 2026, according to industry forecasts.
- HUD loans: While HUD 232 financing provides stability at roughly 5.8%, many operators can’t meet the requirements to qualify.
- Bridge loans: Facilities that borrowed at 3–4% in 2019–2020 are now rolling into 7–9% rates — if not higher.
- Mixed relief: Medicare Part A rates increased 4.2% in FY 2025, offering some cushion, but not enough to offset rising debt service, labor costs, and inflation on supplies.
The math is clear: higher debt service plus higher operating costs equals thinner margins — or in some cases, no margin at all.
Where Operators Have Control
Interest rates may be unpredictable, but operators do have levers to pull. On the financing side, some are turning to HUD 232 loans, REIT-backed debt, or creative strategies such as interest rate caps, swaps, and lower-leverage financing. These options can provide stability — but they aren’t available to everyone, and they often take time to structure.
Procurement, on the other hand, is an immediate area of control. Supply chain management can deliver tangible savings right now:
- Cut Supply Costs: Even a 10–15% reduction in purchasing can offset the added costs of rising debt service.
- Build Flexibility: Just as lenders are demanding agility, operators should demand the same from vendors — no restrictive contracts.
- Reduce Risk: Streamlined sourcing across categories ensures more predictable budgets and smoother operations.
How SupplyLine Helps
At SupplyLine, we know financial strain doesn’t just show up in spreadsheets — it affects employees, residents, and the broader community. That’s why our model delivers stability where facilities need it most:
- Sharp Pricing Across Core Categories — PPE, diagnostics, equipment, furnishings, and more.
- No-Contract Flexibility — Order what you need, when you need it, with no long-term obligations.
- One-Stop Coverage — Consolidate essential supplies with a trusted partner who understands the pressures operators face.
By controlling procurement spend, operators can preserve margins, keep staff secure, and maintain care standards — even when debt markets are unforgiving.
Bottom Line
High interest rates are reshaping ownership, forcing difficult refinancing decisions, and placing hundreds of facilities at risk. But while financing markets are volatile, procurement savings are immediate and achievable.
👉 Click here to see how SupplyLine is helping facilities nationwide create margin relief, safeguard staff and residents, and stay resilient in today’s high-rate environment.
From 3% to 9% - How Rising Rates are Squeezing Nursing Homes
Neil Stern |