In FY2024 the figure was 298. In two years, the penalty population has grown nearly 8x.
The mechanism is bureaucratic, not clinical: facilities lose two percentage points off their annual market basket update for failing to meet QRP reporting thresholds. The cumulative reporting burden on the industry now runs to roughly a million staff hours a year, per a McKnight's analysis published April 6.
Whether the surge reflects real reporting failures or a moving compliance target is the more interesting question — and the one nobody at the buy-side has the data to answer cleanly. We're working on it.
Five months post-repeal, staffing is doing nothing dramatic
The federal minimum staffing mandate was repealed in December 2025. The press has framed the months since as a deterioration story. Looking at PBJ daily staffing data through Q3 2025, the data isn't cooperating with that frame.
Three things stand out:
- Heavy contract staffing dependency has not increased. The share of facilities deriving more than 20% of nursing hours from agency labor was 9.1% in Q1 2025. In Q3 2025 it was 7.7%. That's a slight decline, not a spike. The repeal didn't break the labor model — facilities that could afford to staff in-house kept doing it, and facilities trapped on agency labor remained trapped.
- Weekend coverage gaps are statistically flat. The lowest-quartile facilities by Staffing Stability Score posted weekend HPRD averaging 79.4% of weekday levels in Q3 2025, versus 79.2% a year earlier. The gap nobody could fix when there was a federal mandate is the same gap nobody can fix without one.
- The tail risk is real but contained. 91 facilities (0.6% of the universe) sit in our CRITICAL contract dependency tier — more than 50% of nursing hours from agency labor. These are the facilities that should worry capital allocators. The other 99.4% are essentially where they were before December.
The takeaway for capital allocators: the deterioration narrative is, at least so far, a narrative. Facilities that were structurally distressed in November are structurally distressed today, in roughly the same numbers, with roughly the same staffing patterns. The acquisition thesis hasn't moved because the underlying conditions haven't moved either.
Methodology note: All figures above are computed from CMS Payroll-Based Journal data and SeniorIndex workforce dependency scores at quarterly granularity. Q3 2025 (work dates July–September 2025) is the latest publicly released quarter as of this issue.
The chains that own America's nursing homes
14,710 certified facilities. 616 named chains. The top 10 of those chains operate 1,691 facilities — 11.5% of all certified nursing home inventory in the United States. The top 5 alone operate 1,129, or 7.7%.
The headline number from the table below isn't the size. It's the 1.7-star spread between the highest- and lowest-rated chain in the top 10. Trilogy Health Services averages 4.00 stars across 125 facilities. Simcha Hyman & Naftali Zanziper averages 2.30 stars across 94. Both are operating at similar institutional scale. Brand is not destiny.
| # | Chain | Facilities | Avg Rating |
|---|---|---|---|
| 1 | The Ensign Group | 329 | 3.20 |
| 2 | PACS Group | 264 | 2.90 |
| 3 | Life Care Centers of America | 194 | 3.50 |
| 4 | Genesis Healthcare | 193 | 2.40 |
| 5 | Creative Solutions in Healthcare | 149 | 2.70 |
| 6 | Saber Healthcare Group | 126 | 3.00 |
| 7 | Trilogy Health Services | 125 | 4.00 |
| 8 | Communicare Health | 122 | 2.80 |
| 9 | PruittHealth | 95 | 2.80 |
| 10 | Simcha Hyman & Naftali Zanziper | 94 | 2.30 |
The top-10 average rating is 2.96 — statistically identical to the national average of 2.98. Scale alone does not predict quality. For lenders underwriting against chain-level portfolios, this is the table that matters: knowing the chain name is the start of the question, not the answer.
CMS data does not flag private equity backing directly — that requires manual cross-referencing against firm portfolios. But the chain table above is the starting point for any such exercise. The Take Back Our Hospitals Act, covered in the next section, would make any PE-controlled facility ineligible for Medicare entirely.
Three things capital allocators should be tracking
Federal — Take Back Our Hospitals Act
Senator Chris Murphy (D-CT) and Rep. Mary Gay Scanlon (D-PA) introduced bicameral legislation on March 23 that would make any hospital or skilled nursing facility "owned or controlled" by a private equity firm ineligible for Medicare. The bill would affect more than 400 PE-owned facilities nationwide. Passage odds this Congress are low — the sponsor list is all Democrats — but the bill marks the first concrete federal proposal to tie Medicare certification to ownership structure rather than quality. Buy-side underwriting models should start carrying a non-zero probability for some version of this becoming law.
Federal — QRP burden
McKnight's reported April 6 that the cumulative QRP reporting burden across the industry now exceeds one million staff hours annually, with 2,285 facilities currently penalized. AHCA has begun pushing for streamlining; CMS has not signaled openness.
State — Minnesota HF 2771
A bill introduced March 2 would require 120 days' advance notice and Attorney General approval for any private equity acquisition of a nursing home or assisted living facility in the state. Minnesota would join California and Oregon among states using the AG approval pathway as a brake on PE roll-ups. Worth watching as a template other state legislatures are likely to copy.
Texas: Where the enforcement gap is widest
Texas runs 1,177 certified nursing facilities — the largest state inventory in the country and one of the most fragmented ownership pools. It is also where the gap between national enforcement averages and on-the-ground reality is widest.
Three signals from this month's data:
- Average overall CMS star rating: 2.77 — versus a national average of 2.98. Texas sits in the bottom quartile.
- 55.0% of Texas facilities have received a civil monetary penalty in the past 24 months. The national rate is 31.8%. Texas facilities are 73% more likely than the national average to have received an enforcement penalty since the spring of 2024.
- 80 Texas facilities meet our Distressed Asset criteria (overall rating ≤ 2 stars, 60+ certified beds, no ownership change in the past 5 years). Concentration is in the major metros and the Panhandle: Bexar (7), Dallas (6), Harris (6), Tarrant (5), and Lubbock (4).
Full county-level breakdown with facility detail
Every certified Texas SNF, scored on the same Distressed Asset criteria above, with staffing, financial, and ownership overlays. The starting point for any Texas acquisition screen.
View Texas Report →What shipped this month
This month we launched the Facility Staffing Opportunity Report at $199 — a staffing-agency-focused product that ranks every facility on a five-factor Opportunity Score (gap, revenue, regulatory exposure, size, violations). Sample report available on the staffing page.
We also shipped a data vintage transparency endpoint so buyers can verify the freshness date of every data layer in every report before purchase. PBJ staffing currently runs through Q3 2025; HCRIS financials through FY2024; CMS deficiencies, penalties, and ownership refreshed monthly.