As Medicaid Falls Short for Nursing Homes, Some Providers Turn to Integration Over Selling or Closing
•February 10, 2026
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Why It Matters
The deal illustrates a scalable, mission‑centric alternative to for‑profit takeovers, highlighting how integration can sustain affordable long‑term care amid Medicaid cuts. It signals a shift in how nonprofit providers may respond to fiscal pressures while maintaining quality and access.
Key Takeaways
- •Medicaid reimbursement gaps strain nonprofit nursing homes.
- •ArchCare integrated Wartburg to preserve mission and expand services.
- •Integration adds private‑pay revenue and clinical resources.
- •Larger system enables shared staff, capital, and quality programs.
- •Ongoing Medicaid cuts threaten sector sustainability.
Pulse Analysis
Medicaid’s declining reimbursement rates have become a chronic crisis for nonprofit nursing homes, eroding their ability to cover operating costs and retain staff. As state budgets tighten, many facilities face a stark choice: sell to for‑profit operators, who prioritize shareholder returns, or shut down entirely. This financial pressure has sparked a wave of consolidation, but not all mergers sacrifice mission. Integration—where two nonprofit entities combine operations while retaining their charitable focus—offers a middle path that preserves community‑based care and protects vulnerable residents from market‑driven disruptions.
The ArchCare‑Wartburg partnership exemplifies this model. By folding Wartburg’s extensive continuum of services—nursing, rehabilitation, assisted living, and upcoming affordable housing—into ArchCare’s regional network, the combined system gains economies of scale and a broader payer mix. Private‑pay residents now supplement traditional Medicare and Medicaid streams, cushioning the impact of rate cuts. Clinically, a unified medical directorate and shared nursing resources raise care standards, while centralized procurement and capital planning enable upgrades that smaller operators could not afford alone. Residents benefit from smoother transitions across care levels, leveraging ArchCare’s hospice, PACE, and other programs.
Industry observers see this integration as a potential blueprint for other nonprofits confronting similar fiscal headwinds. However, the underlying policy challenge remains: without meaningful Medicaid reform, even consolidated entities will struggle to sustain operations. Advocacy for higher reimbursement, streamlined regulations, and targeted state investments is critical to prevent a systemic collapse of affordable long‑term care. As the senior population swells, the demand for high‑quality, mission‑driven facilities will only intensify, making strategic partnerships like ArchCare‑Wartburg a pivotal factor in the sector’s resilience.
As Medicaid Falls Short for Nursing Homes, Some Providers Turn to Integration Over Selling or Closing
Navigating crumbling Medicaid rates, compliance challenges and slow-to-improve staffing can leave a lot of operators, especially nonprofits, backed into a corner.
It can feel impossible for a nonprofit to preserve its mission when faced with either selling to a for-profit organization or closing. However, depending on the presence of other nonprofit care providers nearby, care integration may offer a third path forward.
That’s exactly what happened when Wartburg, a senior care and housing provider in New York, agreed to integrate operations for its Mount Vernon campus into ArchCare, a nonprofit provider of continuing care, including nursing homes, ArchCare President and CEO Scott LaRue told Skilled Nursing News.
LaRue discussed how Wartburg aligns with ArchCare’s long-term strategy to provide end-to-end care for residents all within the same system while also helping ArchCare diversify its revenue streams to include more private pay in the face of a widening Medicaid gap.
“We’re the largest post-acute system in this geographic area. There aren’t many nonprofits, if any, that have the financial wherewithal to be able to do this,” said LaRue. “They’re all struggling due to the inadequacy of Medicaid reimbursement. I applaud Wartburg – the path they chose was to find another nonprofit to partner with, versus either closing or selling. Unfortunately, many nonprofits have taken the path of selling versus maintaining their nonprofit status, history and mission.”
Wartburg’s Mount Vernon site is a 34-acre campus offering a full continuum of senior care, including nursing and rehabilitation, assisted and independent living, adult day programs and memory care, with more affordable housing being built for a 2027 opening date.
LaRue sat down with SNN to discuss the merits of care integration, Medicaid cuts and much more.
This conversation has been edited for length and clarity.
SNN: How did the agreement come about between ArchCare and Wartburg?
LaRue: It’s more than operational integration – Wartburg will be part of the ArchCare system. Wartburg was having difficulties meeting their financial obligations, driven by inadequate Medicaid reimbursement for the nursing home that they had, which they eventually downsized. They continue to operate 50 rehabilitation beds.
That puts them in a bad spot, in terms of their ability to continue being successful independently. They are currently sponsored by the Lutheran Church, and we had acquired under similar circumstances a health system on Staten Island that was also Lutheran sponsored, and the folks at Wartburg saw how we handled that, how respectful we were of its mission and traditions and how we treated the employees. That’s why they approached us about doing the same thing at Wartburg.
Was it this previous success story that prompted Wartburg to integrate into ArchCare?
The board at Wartburg put the sustainability of the mission above all else, and they made a choice that allows their mission and services to continue, versus choosing one of the other options – selling it or closing it. Selling is almost exclusively to proprietary operators, who have a different set of motivations … our job every day is to come to work and fulfill the mission that we have, not to generate revenue for an owner or a stockholder.
How might services change for residents moving forward? Will the integration translate into revenue for ArchCare?
Wartburg, from an ArchCare perspective, offers a lot of opportunities that are consistent with ArchCare’s strategic plans. Everyone is aware of the exponentially growing population of people over the age of 65 and what will soon be inadequate and limited services that are available for this population.
We’re looking toward the future, and I think the portfolio of Wartburg services, affordable housing, assisted living, memory care, are all things that are going to be in great demand as the demographics continue to evolve. We thought it was a great fit, and it also helps to diversify our revenue stream. Instead of being solely reliant on Medicare, Medicaid and managed care as payers, this puts us into a little bit of the private pay market.
Do you expect additional operational or clinical benefits from the agreement?
Being a larger system, we’re able to invest in things and have resources that smaller independent operators cannot have. I have a chief medical officer for the system that all the other medical directors at the homes report to, and he guides our clinical programming. That’s not something that an independent nursing home could afford.
I have regional nurses who travel between our nursing homes to make sure they’re on target in terms of quality and service expectations. Individuals on staff lead capital projects, purchasing and human resources. All of these things are going to be able to support and provide them with a higher level of service and resources than they would have ever been able to have on their own. It’s certainly a trend, but maybe not so much for nonprofits because I think there are very few that have the ability and resources to do that.
How does the integration help with the continuum of care for your residents?
Wartburg’s independent housing, affordable housing, has a lot of synergies with the other services we provide. We have a hospice program, we have a PACE program, and all of those things are benefits and services we could bring to bear for the population at Wartburg.
When they move from one level of care to another, or from one service to another, we’re already familiar with them. We know them. We have their history. We’re clinically aware of them, we’re socially aware of them, and it provides for a smoother transition, and I think a higher quality outcome.
What are the top challenges for ArchCare in 2026?
The number one challenge we have is the inadequacy of the Medicaid rate and attempting to compensate for a very significant shortfall. The only way to do that is to drive more Medicare fee-for-service business … that’s not what our mission is, but it’s a necessary thing that we have to do in order to be financially viable. We would not survive if we weren’t able to drive that Medicare business into our homes.
My number two challenge is the very complicated and evolving regulatory environment. Either from CMS or locally, there’s just so much going on as it relates to changes in regulations, new regulations, new compliance obligations, and all of that costs money. Reimbursement is never adjusted for the enhanced regulations.
How might cuts from OBBBA further exacerbate Medicaid issues in New York?
We’re obviously very concerned about it because the state of New York is taking a very significant hit from that bill. The hospitals alone are projecting an $8 billion negative impact, and there are other reductions that are going to have to happen at the state level that are not yet determined. We’re paying close attention to it and very concerned that they’re going to go to the long-term care sector to try to make up for some of that gap. But it isn’t at that granular level yet. The state of New York had very significant financial reserves, and we were fortunate enough that the managed care organization MCO tax was carried forward through March 30, 2027. That’s delaying the necessity of elected officials to have to make those hard decisions. And it’s an election year, so I think those things are going to happen after the election.
What gives you hope, looking ahead to the rest of the year?
I am most hopeful that we’re able to communicate the message to the people who can make a difference about the necessity of investing into long-term care services for the future. Right now, I would describe long-term care in NY as being in a crisis … at some point the demand for services is going to be so great, and the expectation for the level of the quality of those services and the type of facilities that they’re delivered in are not going to be available, and it’s going to create a public crisis, which will force people to address the inadequate reimbursement issues.
I’m working toward educating people, helping them understand the necessity of addressing this issue sooner rather than later.
The post As Medicaid Falls Short for Nursing Homes, Some Providers Turn to Integration Over Selling or Closing appeared first on Skilled Nursing News.
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