Nursing Homes That Lean on Agency Staff Get Sold More Often. A New Report Shows by How Much.

Tallahassee, Florida — Nursing homes that lean heavily on agency workers change hands far more often than their peers, and the pattern shows up well before any “for sale” sign goes up. That’s the core finding of a new analysis from 3G Healthcare Real Estate, which mined federal payroll records to see what staffing choices say about a building’s future.

The numbers are striking. Facilities that pulled 15% or more of their nursing hours from staffing agencies experienced a Medicare change of ownership within two years 11.8% of the time. Buildings that kept agency use under 2%? They changed hands just 7.5% of the time over the same window.

“It is the first thing an operator does when the schedule breaks,” said Stan Klos III, the firm’s founder. “That shows up months before survey findings, cost reports or a lender problem.”

Why agency use matters to buyers

Klos calls agency reliance a screening signal rather than a forecast. Even among facilities with solid occupancy and strong federal star ratings, heavy agency use still tracked with more sales, more citations and higher staff turnover. In North Carolina and Pennsylvania, big agency users changed hands at two to three times the rate of operators who used temps sparingly.

The math is simple: agency labor is expensive, and the bill compounds. An Ohio operator who works with the firm put it bluntly — when a building is bleeding cash and the agency is chasing overdue invoices, no scheduling tweak fixes the problem.

Buyers, for their part, often see those staffing costs as an opportunity. Lenders now want a credible labor plan before financing a deal, and Thomas Miller, CEO of staffing firm Meda Health, said heavy-agency buildings that cut their reliance from 28% to 17% in the first year after a sale prove a buyer can deliver. But he warned that transitions go badly when new owners slash agency shifts overnight before permanent staff are in place — “then, they buy it back at crisis rates.”

A leading indicator worth watching

Agency staffing industry-wide jumped from 3% of nursing hours in early 2019 to a peak above 10% in late 2022. It has since fallen to about 5.3%, though that remains well above pre-pandemic levels as wages rise and operators lean on more disciplined scheduling. The pattern echoes the financial pressures facing operators industry-wide, where labor costs increasingly decide which buildings survive and which end up on the market.

Klos suggested a rule of thumb for the industry: treat 15% agency use for four straight quarters as an alarm bell. One bad quarter is noise. The trend, not the level, is what tells you where a building is headed.