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A report by 3G Healthcare Real Estate found that nursing homes with at least 15% of nursing hours supplied by agencies had a higher rate of Medicare ownership changes within two years than buildings with under 2% agency use. The report describes agency use as a screening signal, not a prediction of a sale, and says the association varies by market.
Nursing homes relying heavily on agency staff were more likely to have a Medicare change of ownership within two years than facilities using little agency labor, according to a report by 3G Healthcare Real Estate. The finding links a workforce measure to ownership transitions, but the report cautions that agency use is a screening signal, not a forecast, and that a change of ownership does not necessarily mean a real estate sale.
Facilities where 15% or more of nursing staff hours came from agencies had a Medicare change of ownership within two years 11.8% of the time, the report found. Among buildings with less than 2% agency hours, the rate was 7.5%. The figures are based on individual buildings’ payroll filings to the Centers for Medicare and Medicaid Services, said Stan Klos III, founder of 3G Healthcare Real Estate.
A Medicare change of ownership, or CHOW, refers to a change in who holds a facility’s license. It can accompany a sale, but it is not synonymous with a property transaction. Klos said high agency use can appear before other indicators of operating pressure. He told Skilled Nursing News that operators may turn to agency labor when regular staffing schedules fail, sometimes months before survey results, cost reports or lender concerns signal trouble.
The report also says buildings with heavier agency use tend to have more citations and higher staff turnover, even when occupancy is similar. Those observations are attributed to Klos and should not be read as proof that agency staffing itself causes ownership changes. The supplied report describes a correlation drawn from two publicly available federal datasets; it does not provide enough detail here to establish causation or rule out other factors.
Why Staffing Costs Matter to Buyers
The findings may give operators, lenders and prospective buyers another measure to examine when evaluating a nursing home’s financial and workforce position. Agency labor can fill shifts, but the report and its interviewees describe it as a recurring expense that may put pressure on cash flow. An Ohio-based skilled nursing provider and 3G client said unpaid agency invoices can compound operating difficulties, making the issue more than a staffing-ratio question.
For buyers, agency use could point to costs they may hope to reduce after acquiring a facility. Meda Health CEO Thomas Miller told Skilled Nursing News that lenders want a credible labor plan as part of financing and that buyers should determine why agency staff are being used. A vacancy problem, unreliable staffing and deliberate use of temporary labor can have different implications for a new owner.
Miller also warned that cutting agency shifts immediately after a sale, before replacement staff are ready, can force a facility to buy agency coverage again at emergency rates. Heavy reliance on agency workers in leadership positions, such as a director of nursing, is another concern he identified. These are industry perspectives, not evidence that every high-agency building is financially distressed or headed for a transaction.
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Agency Staffing After the Pandemic
Klos reported that agency staffing rose from 3% in early 2019 to 10.52% in late 2022, then declined to 5.31% in the latest financial quarter cited in the report. The supplied material does not give the exact quarter or explain the precise measure behind those national percentages. Klos said the latest level remains above the pre-pandemic figure.
Miller attributed the decline to more workers returning to the field, employers raising wages and improving benefits, and more disciplined staffing practices. He also said the federal nursing home staffing minimums were struck down, placed under a moratorium and repealed, removing that policy as a source of demand for additional staffing. The report says agency firms’ gross margins also fell: the SIA NATHO Travel Nurse Benchmarking survey put them at 25% before the pandemic and just under 20% in 2025.
The pattern is not uniform across the country. Klos said heavy-agency facilities in North Carolina and Pennsylvania changed hands at rates two to three times those of operators using agency staff sparingly. The source does not provide the underlying state counts or explain how the comparison was calculated, so the figures should be understood as the report’s market-specific finding rather than a national rate.
““[Using more agency labor] is the first thing an operator does when the schedule breaks.””
— Stan Klos III, founder of 3G Healthcare Real Estate
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Limits of the Ownership Link
The analysis shows an association, not a demonstrated cause. The supplied report does not specify the full study period, the number of facilities analyzed, or how it accounted for factors such as local labor markets, facility finances and operator practices. Those limits make it difficult to assess how widely the percentages apply or whether agency use independently raises the likelihood of a CHOW.
It is also unclear how many reported ownership changes involved an actual sale, since CHOW can reflect a licensing change without a property transaction. The source does not say whether the findings have been reviewed by an independent researcher or how the report defines the latest financial quarter. Nor does it establish whether state or federal agencies use facility-level agency staffing data when deciding ownership approvals.
Klos said he had not found a state using a building’s agency staffing number in licensing or ownership approvals, while describing state rules aimed at staffing agencies, including registration requirements and rate caps in Minnesota and Massachusetts. The report does not assess the effects of those policies.
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What Buyers and States May Track
For now, the report’s practical implication is that buyers and lenders may add facility-level agency hours to their diligence, then investigate the reasons behind the number, staffing stability and leadership coverage. Miller’s comments suggest that a transition plan should account for recruiting and retention before agency shifts are cut, rather than treating agency costs as an expense that can be removed immediately.
The source material does not identify a scheduled policy change, a follow-up report or a next regulatory decision. Klos said states have focused on agency companies rather than incorporating a building’s agency use into licensing or ownership approvals. Miller said tighter labor supply could make agency hours an indicator to watch, but whether regulators will use the data remains unknown.
Further evidence would be needed to test the relationship across more markets and clarify which ownership changes involve sales. Until then, the reported rates offer a risk-screening comparison, not a forecast for any individual nursing home.
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Key Questions
What did the report find?
Facilities getting 15% or more of nursing hours from agencies had a 11.8% rate of Medicare change of ownership within two years. Buildings below 2% agency use had a 7.5% rate, according to the report.
Does a change of ownership mean a nursing home was sold?
No. A CHOW refers to a change in who holds the facility’s license. It may accompany a sale, but it does not necessarily involve a real estate transaction.
Does high agency use mean a facility will change owners?
No. The report calls agency use a screening signal, not a forecast. It reports a correlation and does not establish that agency staffing causes a change of ownership.
Why might buyers look at agency staffing?
Agency hours can point to workforce instability and recurring labor costs. Meda Health CEO Thomas Miller said buyers should examine why agency workers are being used and make a staffing plan before reducing coverage.
Are regulators using agency staffing data to approve ownership changes?
Klos said he had not found a state using a facility’s agency staffing number in licensing or ownership approvals. The report does not identify a planned change to that approach.
Source: rss
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