Nursing Home Owners Hide 63% of Profits Amidst Understaffing Crisis
New analysis argues the industry's staffing woes are a deliberate choice, not a shortage, impacting elder care quality.
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Two weeks ago, a report from Dignity Alliance, citing the Michigan Elder Justice Initiative and The National Consumer Voice for Quality Long-Term Care, stated that nursing home owners are maximizing profits by under-resourcing and under-staffing facilities [c5]. Though they are paid to provide sufficient staffing, too many flout this requirement. I saw that headline and immediately thought about my mom’s medication schedule. I had to pull over into a grocery store parking lot just to re-read the article, my hands shaking slightly on the steering wheel. My complaint about how these stories usually get reported is that they focus on the 'staffing shortage' narrative, which makes it sound like an unsolvable problem beyond anyone's control. The standard industry defense, when they deign to give one, is that they simply can't find enough qualified staff, or that regulations are too burdensome. But here’s what kills that defense: Andrew Olenski, a researcher at Lehigh University, found that the nursing home industry may be hiding nearly two-thirds of its profits through opaque business practices [c6]. He explained it like this: 'Essentially, owners are moving money from their left pocket to their right, and then showing they have no money in their left pocket.' That means the 'shortage' isn't a lack of funds, but a choice to pocket those funds instead of investing them in care. This isn't about a lack of workers; it's about a lack of will from owners to pay them properly. The concrete, underreported move you can make this week is to ask your own parent's nursing home about their staffing ratios and compare them to national benchmarks. Don't accept vague answers; ask for the specific number of licensed nurses and certified nursing assistants per resident, per shift.
The direct answer
The mainstream narrative often frames nursing home understaffing as an unavoidable 'shortage.' However, a new analysis argues it's a deliberate 'choice' made by owners to maximize profits. Research indicates that the industry may be hiding as much as 63% of its profits through opaque financial practices
"The nursing home industry may be hiding nearly two-thirds of its profits through the use of opaque business practices... 'Essentially, owners are moving money from their left pocket to their right, and then showing they have no money in their left pocket,' Olenski said. 'Correctly accounting for this activity reveals that the industry is meaningfully more profitable than it appears: About 63% of industry profits are 'hidden' through this sort of activity.'"
. This suggests that the funds exist to hire adequate staff, but owners opt to retain them. For-profit facilities, in particular, have been shown to have lower nurse staffing ratios, with profit margins correlating to decreased staffing
"For-profit SNFs generally had lower nurse staffing ratios than did nonprofit and government SNFs... For example, for each percentage point increase in a for-profit SNF's margin in fiscal year 2014, GAO estimated that the SNF's total nurse staffing ratio... decreased by 4.1 minutes per resident day after controlling for other factors."
. This directly impacts the quality of care for older adults who rely on these facilities.
The Illusion of Scarcity
The narrative of a 'staffing shortage' in nursing homes is a convenient smokescreen for profit maximization. While headlines focus on the difficulty of finding workers, a deeper look reveals a systemic choice. For-profit nursing homes, specifically, have demonstrated lower nurse staffing ratios, with evidence suggesting that higher profit margins directly correlate with reduced staffing levels
"For-profit SNFs generally had lower nurse staffing ratios than did nonprofit and government SNFs... For example, for each percentage point increase in a for-profit SNF's margin in fiscal year 2014, GAO estimated that the SNF's total nurse staffing ratio... decreased by 4.1 minutes per resident day after controlling for other factors."
. This isn't a market failure; it's a feature of a business model that prioritizes financial returns over resident well-being. The industry actively obscures its true profitability, making it appear less solvent than it is, thereby justifying understaffing and underpayment of essential care workers.
Robots as a Distraction?
Discussions around the future of elder care often pivot to advanced robotics and AI, showcasing impressive technological advancements like those in Japan
Japan's advancements in ultra-realistic AI robots like AIREC are impressive, addressing their aging population by handling tasks like mobility aid and companionship. I think the future of elderly care will be hybrid: robots for efficiency and routine support, but human touch for…
— Grok link
. While robots might handle routine tasks, the human element remains crucial for genuine companionship and complex care [c2, c3]. However, the focus on futuristic tech can distract from the immediate, solvable problem of understaffing in current facilities. The argument that robots are the 'future of elderly care' can be used to sidestep the ethical imperative to adequately fund and staff human-led care today. As one post notes, the immense emotional and time cost of caregiving highlights a need that technology alone cannot fill
Robots Must Save Healthcare Do you know someone caring for a disabled child… or sitting beside an aging parent, watching them fade a little more each day? Do you know what that kind of love costs - in time, in sleep, in pieces of yourself quietly given away? We are asking… https://t.co/1nowrBvI1A
— Cern Basher link
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Who Really Pays for 'Quality Care'?
The primary beneficiaries of the 'understaffing is a shortage' narrative are the nursing home owners themselves. By strategically hiding profits – up to 63% according to one analysis
"The nursing home industry may be hiding nearly two-thirds of its profits through the use of opaque business practices... 'Essentially, owners are moving money from their left pocket to their right, and then showing they have no money in their left pocket,' Olenski said. 'Correctly accounting for this activity reveals that the industry is meaningfully more profitable than it appears: About 63% of industry profits are 'hidden' through this sort of activity.'"
– they create the illusion of financial constraint. This allows them to justify lower wages for staff and reduced care hours for residents, all while ensuring substantial returns for investors. The true cost is borne by the residents who receive subpar care and by the families who either pay more out-of-pocket or bear the burden of increased informal caregiving. The system is designed to funnel money away from direct care and into corporate pockets
"Though nursing homes are required – and paid – to provide sufficient staffing, too many flout this requirement to maximize profits."
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Common mistakes
- Framing understaffing as an unavoidable crisis.
This narrative allows the industry to avoid accountability by presenting a problem as a market or labor force issue, rather than a deliberate financial decision. - Focusing on technological solutions like robots as the primary future of elder care.
While technology has a role, it distracts from the immediate need to adequately fund and staff human care, which remains essential for quality of life and complex needs. - Accepting industry claims of financial hardship without scrutiny.
Research shows significant profits are hidden, meaning the financial capacity for better staffing exists, but is deliberately not allocated to direct care.
"The nursing home industry may be hiding nearly two-thirds of its profits through the use of opaque business practices... 'Essentially, owners are moving money from their left pocket to their right, and then showing they have no money in their left pocket,' Olenski said. 'Correctly accounting for this activity reveals that the industry is meaningfully more profitable than it appears: About 63% of industry profits are 'hidden' through this sort of activity.'"
, revealing that the financial capacity for adequate staffing is present. This deliberate under-resourcing directly harms the vulnerable population these facilities are meant to serve
"Though nursing homes are required – and paid – to provide sufficient staffing, too many flout this requirement to maximize profits."
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Frequently asked
How much profit do nursing homes hide?
Analysis suggests nursing home owners may hide as much as 63% of their profits through opaque business practices, making the industry appear less profitable than it is.
Is understaffing a real shortage or a choice?
Evidence suggests understaffing is often a deliberate choice by owners to maximize profits, rather than an unavoidable shortage of funds or staff.
What is the impact of understaffing on residents?
Understaffing directly leads to lower quality of care, increased risk of neglect, and poorer health outcomes for residents in nursing homes.
Sources
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