Vermont’s Nursing Home Bailouts: Understanding the Millions Invested to Sustain Care Facilities

Vermont, home to the second-oldest population in the United States, faces a critical challenge in its long-term care system. Over the past two decades, the state has lost approximately 900 nursing home beds, significantly reducing its capacity to care for its aging residents.

To address this crisis, Vermont has allocated around $38 million in state and federal Medicaid funds over the last five years to provide extraordinary financial relief to nursing homes. This practice, which has not been widely reported until now, has come under scrutiny from lawmakers who are demanding comprehensive reports and payment records regarding the bailout program.

State health officials emphasize that nursing homes are essential to the eldercare landscape in Vermont. They argue that without this financial assistance, the state would have lost even more critical bedspace. However, efforts to tackle the root causes of the financial crises, such as the state’s heavy reliance on traveling nurses, have received far less support.

Approximately half of the extraordinary financial requests since 2020 cite rising staffing costs, particularly for contract staff, which account for about 50% of nursing homes’ budgets. Vermont’s nursing homes depend more on traveling staff than any other state, according to federal data from the Centers for Medicare and Medicaid Services.

Helen Labun, executive director of the Vermont Health Care Association, acknowledges that while extraordinary financial relief is necessary, it should not become a standard solution. “We don’t want EFR to be a standard option,” she said. “It really is meant to be an extraordinary measure.”

An old program meets an urgent need

Vermont’s extraordinary financial relief program has been in place for over 20 years but has only recently become a recurring lifeline for nursing homes, particularly since the onset of the COVID-19 pandemic. The program involves multiple departments within Vermont’s Agency of Human Services, with the Department of Vermont Health Access reviewing requests for financial relief.

Nursing homes that receive this relief provide the highest level of care, catering to individuals whose needs cannot be met in assisted living or residential care homes. To qualify for financial assistance, these facilities must serve Medicaid patients.

As of July, Vermont had 33 nursing homes with a total of about 2,847 beds, reflecting a decline of nearly 900 beds over the past two decades. Jill Bowen, commissioner of the Department of Disabilities, Aging, and Independent Living, expressed concern over this trend, noting that it may partly stem from a shift toward at-home care.

Angela Smith-Dieng, director of DAIL’s Adult Services Division, highlighted the importance of extraordinary financial relief as a tool to prevent nursing home closures, given the state’s aging population.

One significant factor driving the need for emergency funding is the “rebasing” of Medicaid reimbursements. This process adjusts reimbursement rates based on historical cost data, which may not reflect the current financial pressures faced by nursing homes. In July, the state adjusted these rates to better align with 2023 costs, aiming to reduce the reliance on extraordinary financial relief.

In some cases, the state has advanced funds to nursing facilities to help them meet payroll, although it typically provides less than requested. The state has successfully recouped all advanced funds or is in the process of doing so.

As part of the funding review, the state examines a facility’s financial health and compliance with regulations. If a request is approved, the funds are restricted for specific uses, ensuring they cannot be used for penalties or excessive administrative fees.

Labun noted that nursing home owners must demonstrate a lack of alternative funding sources to qualify for relief, preventing companies from shifting investments to out-of-state facilities while seeking bailouts in Vermont.

‘Outlier state’

Traditionally, nursing homes utilized extraordinary financial relief for one-off cash flow emergencies. However, the current financial landscape has shifted, with rising costs driving the need for ongoing support.

Contract staff are often more expensive than permanent employees, exacerbating the financial strain on nursing homes. Although the use of contract staff in Vermont has slightly decreased, it remains significantly higher than the national average. In 2024, Vermont nursing homes had the highest rate of contract staff employment, peaking at 31% in the first quarter.

Richard Mollot, executive director of the Long Term Care Community Coalition, pointed out that high attrition rates among permanent staff often lead to increased reliance on contract workers, which can stem from poor working conditions and low pay.

Staffing costs are the largest expense for nursing homes, and many facilities find themselves trapped in a cycle of hiring temporary staff, leaving little room for investment in long-term recruitment.

Vermont’s demographic challenges are a significant factor in the high use of contract staff. In response, the Legislature has allocated funds to rebuild the nursing workforce, including a half-million dollars aimed at attracting and retaining licensed nursing assistants.

While this investment is a step in the right direction, it falls short of the extraordinary relief funds. However, some lawmakers argue that prioritizing workforce development is essential for the long-term sustainability of nursing homes.

Kuiper, Vermont’s long-term care ombudsman, acknowledges the necessity of temporary staff but advocates for a shift away from their frequent use. She emphasizes the importance of developing strategies to reduce reliance on contract staff as the new norm.

Former VTDigger reporter Peter D’Auria contributed reporting.

This story was originally published by VTDigger and distributed through a partnership with The Associated Press.

Copyright 2026 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Vermont, home to the second-oldest population in the United States, faces a critical challenge in its long-term care system. Over the past two decades, the state has lost approximately 900 nursing home beds, significantly reducing its capacity to care for its aging residents.

To address this crisis, Vermont has allocated around $38 million in state and federal Medicaid funds over the last five years to provide extraordinary financial relief to nursing homes. This practice, which has not been widely reported until now, has come under scrutiny from lawmakers who are demanding comprehensive reports and payment records regarding the bailout program.

State health officials emphasize that nursing homes are essential to the eldercare landscape in Vermont. They argue that without this financial assistance, the state would have lost even more critical bedspace. However, efforts to tackle the root causes of the financial crises, such as the state’s heavy reliance on traveling nurses, have received far less support.

Approximately half of the extraordinary financial requests since 2020 cite rising staffing costs, particularly for contract staff, which account for about 50% of nursing homes’ budgets. Vermont’s nursing homes depend more on traveling staff than any other state, according to federal data from the Centers for Medicare and Medicaid Services.

Helen Labun, executive director of the Vermont Health Care Association, acknowledges that while extraordinary financial relief is necessary, it should not become a standard solution. “We don’t want EFR to be a standard option,” she said. “It really is meant to be an extraordinary measure.”

An old program meets an urgent need

Vermont’s extraordinary financial relief program has been in place for over 20 years but has only recently become a recurring lifeline for nursing homes, particularly since the onset of the COVID-19 pandemic. The program involves multiple departments within Vermont’s Agency of Human Services, with the Department of Vermont Health Access reviewing requests for financial relief.

Nursing homes that receive this relief provide the highest level of care, catering to individuals whose needs cannot be met in assisted living or residential care homes. To qualify for financial assistance, these facilities must serve Medicaid patients.

As of July, Vermont had 33 nursing homes with a total of about 2,847 beds, reflecting a decline of nearly 900 beds over the past two decades. Jill Bowen, commissioner of the Department of Disabilities, Aging, and Independent Living, expressed concern over this trend, noting that it may partly stem from a shift toward at-home care.

Angela Smith-Dieng, director of DAIL’s Adult Services Division, highlighted the importance of extraordinary financial relief as a tool to prevent nursing home closures, given the state’s aging population.

One significant factor driving the need for emergency funding is the “rebasing” of Medicaid reimbursements. This process adjusts reimbursement rates based on historical cost data, which may not reflect the current financial pressures faced by nursing homes. In July, the state adjusted these rates to better align with 2023 costs, aiming to reduce the reliance on extraordinary financial relief.

In some cases, the state has advanced funds to nursing facilities to help them meet payroll, although it typically provides less than requested. The state has successfully recouped all advanced funds or is in the process of doing so.

As part of the funding review, the state examines a facility’s financial health and compliance with regulations. If a request is approved, the funds are restricted for specific uses, ensuring they cannot be used for penalties or excessive administrative fees.

Labun noted that nursing home owners must demonstrate a lack of alternative funding sources to qualify for relief, preventing companies from shifting investments to out-of-state facilities while seeking bailouts in Vermont.

‘Outlier state’

Traditionally, nursing homes utilized extraordinary financial relief for one-off cash flow emergencies. However, the current financial landscape has shifted, with rising costs driving the need for ongoing support.

Contract staff are often more expensive than permanent employees, exacerbating the financial strain on nursing homes. Although the use of contract staff in Vermont has slightly decreased, it remains significantly higher than the national average. In 2024, Vermont nursing homes had the highest rate of contract staff employment, peaking at 31% in the first quarter.

Richard Mollot, executive director of the Long Term Care Community Coalition, pointed out that high attrition rates among permanent staff often lead to increased reliance on contract workers, which can stem from poor working conditions and low pay.

Staffing costs are the largest expense for nursing homes, and many facilities find themselves trapped in a cycle of hiring temporary staff, leaving little room for investment in long-term recruitment.

Vermont’s demographic challenges are a significant factor in the high use of contract staff. In response, the Legislature has allocated funds to rebuild the nursing workforce, including a half-million dollars aimed at attracting and retaining licensed nursing assistants.

While this investment is a step in the right direction, it falls short of the extraordinary relief funds. However, some lawmakers argue that prioritizing workforce development is essential for the long-term sustainability of nursing homes.

Kuiper, Vermont’s long-term care ombudsman, acknowledges the necessity of temporary staff but advocates for a shift away from their frequent use. She emphasizes the importance of developing strategies to reduce reliance on contract staff as the new norm.

Former VTDigger reporter Peter D’Auria contributed reporting.

This story was originally published by VTDigger and distributed through a partnership with The Associated Press.

Copyright 2026 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.