The Dilemma of Nursing Home Closures: A Case Study of Rural Maine Nursing Homes

(three-minute read)

Policy in Brief:

Mary Helen McSweeney-Feld and Nadine Braunstein note that nursing home closures in the United States have accelerated in the past five years. They examine the premise that low Medicaid reimbursement is the primary reason for the closures of Maine nursing homes and argue that the problem is much more complex. They recommend that changes in service diversification and better care coordination to build occupancy and financial stability can help solve the closure dilemma in Maine.

Fascinating Features:

Nationwide nursing homes face closures due to several reasons:

  1. inadequate Medicaid reimbursement;
  2. increased emphasis on short-term rehabilitative stays for Medicare residents;
  3. geographic locations of nursing homes;
  4. presence of hospital swing bed programs;
  5. changes in Center for Medicare and Medicaid Services regulatory requirements;
  6. increased minimum wage rates and lack of on-the-job training causing staffing shortages and bed reductions.

Closure of a nursing home can have a devastating impact on a local community, creating loss of employment and loss of access to long-term care services close to home. Residents experience relocation stress when they move to another location that may be a long distance from family members and loved ones.

In 2008, Maine experienced a surge of eight nursing home closures, which displaced 250 people and resulted in the loss of 400 jobs.

Growing acuity rates of nursing home residents combined with low Medicaid reimbursements led to a recent acceleration in nursing home closures in Maine, Nebraska, South Dakota, Texas, Wisconsin, and other states with rural populations.

Although Maine’s minimum wage increased, Maine’s calculations for MaineCare reimbursement for nursing homes were not updated.

Maine’s population is the oldest in the nation, with the median age of 45.1 years compared to US median age of 38.1 years. As baby boomers continue to age, it is estimated that Maine’s median age will continue to increase.

Maine also has some of the neediest nursing home residents in the country, with 56 percent diagnosed with dementia. Diagnosis and treatment of neurological, cognitive, mental health, and substance-use disorders in old age is especially difficult in Maine given the rurality of the state and the scarcity of specialists.

It can be said that Maine’s nursing homes have been affected by the following perfect storm of conditions:

  1. small nursing homes that serve large numbers of Medicaid residents;
  2. challenges and competition from rural hospital swing bed programs;
  3. contending with federal regulations that provide incentives for potential residents to return home after a hospital stay.


There are several policy considerations that can address Maine’s nursing home closures:

  • revise regulations to introduce new services requiring the use of specialized technology;
  • offer adult day services to take advantage of long-term services and support opportunities for residents resistant to moving into a nursing home;
  • change regulations to allow MaineCare to pay for bed hold when a nursing home resident uses a hospital;
  • adjust the reimbursement case mix calculation for nursing homes, which will lead to higher profit margins and build goodwill and trust among families and their loved ones in the surrounding area;
  • change occupancy standards calculations for nursing homes;
  • coordinate critical access hospital swing bed programs with rural nursing homes through rigorous determination of need or certificate of need provisions;
  • address nursing staff shortages through local apprenticeship programs and contracts with foreign-born and foreign-trained nursing staff;
  • create learn and earn programs to attract workers from other industries, with tax incentives for sponsoring organizations.

Dig Deeper:

McSweeney-Feld, Mary Helen, and Nadine Braunstein. “The Dilemma of Nursing Home Closures: A Case Study of Rural Maine Nursing Homes.” Maine Policy Review 29.1 (2020): 9-18.

From MPR’s Archive:

Fralich, Julie. “Shaping the Health and Long-Term-Care Infrastructure Serving Older Adults: Historical Trends and Future Directions.” Maine Policy Review 24.2 (2015): 99-110.

Saucier, Paul, and Julie Fralich. “The Changing Nature of Long-Term Care in Maine.” Maine Policy Review 12.2 (2003): 24-35.

Singer, Cliff, and Roger Renfrew. “Maine’s Initiatives in Geriatric Medical Care: Commentary from the Front Lines.” Maine Policy Review 24.2 (2015): 89-98.

Related Resources:

Castle, Nicholas G., John B. Engberg, Judith Lave, and Andrew Fisher, 2009. “Factors Associated with Increasing Nursing Home Closures.” Health Services Research 44(3): 1088-1109.

Edelman, T., and D. Valanejad. 2019. “What’s Causing Nursing Home Closures?” Center for Medicare Advocacy.

Gale, John A., Zachariah T. Croll, Walter Gregg, and Andrew F. Coburn. 2012. “Why Do Some Critical Access Hospitals Close Their Skilled Nursing Facility Services While Others Maintain Them?” Flex Monitoring Team Policy Brief #31.