Skilled nursing facility occupancy rates have climbed to 79.2% nationally as of Q3 2025, marking the strongest recovery since the COVID-19 pandemic devastated the sector in 2020. The figure represents a 6.3 percentage point improvement from the pandemic low of 72.9% recorded in January 2021, though it remains below the pre-pandemic average of approximately 84%.
Regional Variations
The recovery has been uneven across markets. The Northeast leads with occupancy averaging 82.4%, driven by strong demand in densely populated metropolitan areas and relatively higher barriers to home-based care alternatives. The Midwest follows at 80.1%, benefiting from an older demographic profile and limited competition from home health agencies.
The South and West continue to lag, with occupancy rates of 77.3% and 75.8% respectively. Analysts attribute the gap to several factors: faster growth of home health and assisted living alternatives, newer housing stock that accommodates aging in place, and in some Sun Belt markets, an oversupply of beds built during the pre-pandemic expansion.
Drivers of Recovery
Several factors have contributed to the occupancy rebound. Hospital discharge patterns have normalized, with acute care facilities once again relying on SNFs for post-acute rehabilitation. The proportion of Medicare beneficiaries discharged to SNFs has returned to approximately 18% of eligible discharges, up from a pandemic low of 14%.
Demographic tailwinds are also accelerating. The 85+ population—the primary driver of nursing home demand—is projected to grow 4.1% annually through 2030, compared to 1.8% growth for the 65-84 cohort. This demographic shift is beginning to manifest in admission volumes, particularly for long-stay residents.
Financial Implications
Higher occupancy translates directly to improved financial performance. Industry data shows that each percentage point of occupancy improvement adds approximately $2.50-$3.00 per patient day to operating margins, given the high fixed-cost nature of SNF operations. Facilities that have reached or exceeded 85% occupancy report average EBITDA margins of 8-10%, compared to margins of 2-4% for facilities operating below 75%.
The occupancy recovery has also improved access to capital. Lenders report increased willingness to finance acquisitions and capital improvements for facilities demonstrating stable or growing census, reversing the credit tightening that followed the pandemic.
Challenges Ahead
Despite the positive trend, operators caution that full recovery to pre-pandemic occupancy levels may take several more years. Competition from home health agencies and Medicare Advantage plans that incentivize home-based post-acute care continues to pressure short-stay admissions. Staffing constraints also limit some facilities’ ability to accept new admissions even when beds are available.
Additionally, approximately 340 facilities closed in 2025, removing an estimated 28,000 beds from the market. While closures can support occupancy at remaining facilities, they also raise access concerns, particularly in rural areas where alternatives may be limited.