LeadingAge PA released a report May 8 documenting workforce shortages and Medicaid underfunding that have forced nearly half of Pennsylvania nursing homes to turn away hospital discharges, according to findings published on the association’s website.
The report, titled “Crisis in Pennsylvania’s Aging Services Sector,” shows 49 percent of nursing homes declined hospital admissions in the 90 days leading to January 2026, while 68 percent report more than five open direct care positions. The state’s population aged 84 and older is projected to triple by 2050, according to LeadingAge PA.
Senior living providers generate $6.2 billion in economic impact and support 24,500 jobs statewide, the report states. LeadingAge PA senior vice president Chuck Quinnan said inadequate Medicaid reimbursement combined with workforce shortages has created an access crisis. “We’re not approaching the cliff, we’re already over the cliff,” Quinnan said.
Budget Adjustment Factor Driving Per-Diem Losses
The Budget Adjustment Factor, a quarterly calculation determining nursing home reimbursement percentages, stood at 80 percent in the first quarter of 2026, according to Quinnan’s testimony before the Pennsylvania Senate Democratic Policy Committee April 9. The 80 percent BAF level translates to a $63 daily loss per Medicaid resident, the report shows.
LeadingAge PA is requesting a $274 million state investment to establish an 84 percent BAF floor for fiscal year 2026-27, stabilizing nursing home Medicaid funding after flat funding in the current fiscal year. Jonathan Hollinger, president and CEO of Pleasant View Communities in Manheim, said Medicaid reimbursement runs about half the rate of private pay.
Mary Kay McMahon, president and CEO of Fellowship Community in Whitehall, testified that 45 to 50 percent of the facility’s skilled nursing residents rely on Medicaid. Fellowship Community faces a $125.62 per-resident, per-day funding shortfall, she said. “We continue to operate this service because of our mission and our commitment to the community, but doing so is becoming increasingly difficult,” McMahon told the committee.
Workforce Gaps Compound Funding Challenges
The report’s finding that 68 percent of facilities carry more than five open direct care positions mirrors workforce patterns documented in other states, where burnout and training pipeline gaps have driven unprecedented turnover. Providers declining hospital admissions face a dual constraint: insufficient staff to meet care ratios and Medicaid rates that fail to cover labor costs for the residents most dependent on public funding.
The combination leaves nursing homes unable to expand capacity precisely when demographic projections show surging demand. Facilities that accepted every referral a decade ago now screen admissions based on payor mix and acuity levels their current staffing can support, according to testimony presented at the April hearing.
Quinnan said the unpredictability of quarterly BAF adjustments prevents long-term planning. Facilities cannot commit to caregiver recruitment investments or retention programs when reimbursement formulas shift every 90 days, he said.
What This Means for Owners
Nursing home operators in Pennsylvania face immediate revenue pressure as the state’s BAF methodology erodes per-diem margins below operational costs. The $125.62 daily shortfall Fellowship Community documented represents the gap between mission-driven admissions policies and financial sustainability—a tension that will force more facilities to cap Medicaid census or close beds outright.
Workforce recruitment becomes a circular problem under these funding constraints. Agencies investing in alternative recruitment channels or career advancement systems compete for labor while absorbing losses on every Medicaid resident. The 68 percent of facilities reporting five-plus open positions cannot fill roles when reimbursement prevents competitive wages.
Operators marketing to families must now explain why beds sit empty despite waiting lists. Transparency about Medicaid funding shortfalls positions agencies as advocacy partners rather than gatekeepers—families researching options need context that declining a discharge reflects systemic underfunding, not care quality.
