This story is part one of a series by MinnPost reporter Matthew Blake on Minnesota’s efforts to stabilize its nursing home workforce, which has long struggled with high turnover. Part two looks at the exhausting work performed by nursing home employees. Part three delves into nursing homes’ complicated financial situations, and part four explores the revival of workforce standards boards.
Vikki Knigge begins her workday at 10 p.m.
A licensed practical nurse, she’s worked the night shift for eight years at the Shores of Worthington, a nursing home in southwest Minnesota, doling out medications, bathing and feeding residents, and coordinating care with a constant procession of new colleagues.
“We have 40 people on staff, but 22 of them are casual people like school-age kids that come in and work occasionally,” Knigge said. “People do get burnt out. And the one thing that we find is a lot of people, especially the new ones coming in, don’t know what to expect.”
Minnesota’s end-of-life care economy has long been lauded as providing relatively comprehensive services, and its staff turnover rate — around 36%, according to data self-reported to the state — is lower than the national industry average of around 50%.
Nonetheless, replacing more than a third of the workforce each year is a persistent challenge, particularly in rural communities. State officials are now preparing to implement a plan two years in the making to stabilize the industry’s workforce. However, nursing home operators and some Republican lawmakers warn that the changes — including higher minimum wages for all employees — could be the final, wobbly Jenga block that knocks the entire precarious industry down.
“I suspect that we are going to see a tremendous amount of nursing homes close,” said state Rep. Natalie Zeleznikar, R-Fredenberg Township, and a former nursing home administrator.
The state reforms, brought about by legislation passed during Democrats’ 2023 trifecta, mark a first-of-its-kind state approach to rewrite workplace rules for a specific industry, and perhaps the most ambitious attempt nationally to set new labor standards for the essential end-of-life care sector. Legal challenges, complicated financial relationships, and a diminishing rural workforce make it difficult to predict how the changes will affect workers, patients and the industry overall.
Why was the nursing home workforce board created and what has it done?
Nationally, 72% of the country’s nearly 15,000 nursing facilities are for-profit operations, according to an analysis by KFF, a nonprofit health care research organization. Twenty-one percent are nonprofit, and 6% are government owned.
In Minnesota, the numbers are almost reversed. Sixty-two percent of Minnesota’s 329 facilities are nonprofit, including many faith-based nursing home chains that envelop the state. About 30% are for profit, and 8% are government-owned.
These nonprofits may be a reason why Minnesota’s nursing home worker turnover is actually lower than the national average, but even this rate creates pressure on remaining workers, hiring managers, and patients and families who depend on the facilities for care.
To labor unions and their DFL allies the reason for this turnover is simple: workers do not make enough money. The median salary for nursing home workers without nursing certificates, and whom there is no state-required training for, ranges from $16.06 to $19.68 an hour, according to the Minnesota Department of Labor and Industry (DLI).
The median pay for a certified nursing assistant, workers who typically bathe, dress and feed patients, check for vital signs and record concerns under the supervision of a registered nurse, is $20.30. A certified nursing assistant must complete a state-approved 75-hour training program and pass a written exam. (Considered a managerial position, a registered nurse must earn at least an associate’s degree in nursing at a state-approved educational institution.)
In 2023, the Legislature worked with labor unions on a bill that created the Nursing Home Workforce Standards Board, which now has the power to issue binding state regulations.
Unions zeroed in on nursing homes “because the nursing home industry is the lowest paid segment of our membership universe,” said Jamie Gulley, president of SEIU Health Care Minnesota and Iowa and chair of the workforce board.
According to data reported to the Minnesota Department of Human Services, 101 of the state’s 329 nursing facilities have a collective bargaining agreement. But even among unionized nursing homes, employees — many teenagers in their first job or seniors in their last — are said to ineffectively bargain. “The negotiations tend to be lopsided,” said Rep. Esther Agbaje, DFL-Minneapolis, and sponsor of the workforce board legislation.
The concept is an old one, designed to set industry-specific standards for pay and working conditions, regardless whether they are unionized or not. The boards were common across the country in the 1940s but went away as part of a deal President Harry Truman cut with a Republican-controlled Congress in 1949 to raise the minimum wage to 75 cents an hour.
Organized labor in recent years has successfully renewed the model in six states, including California, which created one for fast food employees, and Nevada, which established a body for home care employees.
Agbaje designed Minnesota’s board to have three representatives from state government agencies, three representatives from labor, and three nursing home operators.
The Department of Labor and Industry hired Leah Solo as the board’s first executive director.. A Mankato native whose mother is a nurse, Solo is a former Walz campaign staffer who lobbied the Legislature for the workforce standards board in 2023 as an executive for the Minnesota Association of Public Employees, the state’s largest public worker union.
On matters like data security and workplace training, the board has reached consensus, Solo said.
But on the two biggest decisions, industry has fought tooth and nail.
The board crafted a $19 minimum wage for workers without nursing credentials such as housekeepers, chefs and dietary aides. This wage floor climbs to $20.50 in 2027.
For certified nursing assistants, the minimum wage is $22.50 per hour, jumping to $24 an hour in 2027.
Trained medication aides, which are certified nurses with additional training to administer medicines, get $23.50 beginning in January and $25 in 2027.
The highest wage floor is for licensed practical nurses, who can also administer medications as well as advise patients and families on care options. They are set to make at least $27 in 2026, and $28.50 the year after that.
These salaries are the same across the state, a source of tension among rural nursing home operators, who claim that urban DFLers hammered out these laws without sensitivity to urban vs. rural cost-of-living.
“It’s going to pretty disproportionately affect the rural population of the state,” said Joe Zeutenhorst, administrator at the Shores of Worthington.
The wage floors go into effect in January. Subsequent legislation created a $36 million money pot that nursing homes can apply to access in order to help pay wage hikes.
The board also mandated that, starting this year, nursing homes pay employees time-and-a-half for working on 11 state-recognized holidays. The three industry representatives abstained from the vote on holiday pay. Then, Care Providers of Minnesota and LeadingAge Minnesota sued in federal court to invalidate the law.
The nursing home lobby claimed they were being forced to choose between following a new state law or a preexisting collective bargaining agreement enforceable by the National Labor Relations Act. In May, U.S. District Court Judge Laura Provinzino dismissed the industry’s lawsuit, writing that the holiday pay rule “is more akin to a minimum labor standard than an impermissible overreach into the bargaining process.”
That same month, an argument spilled out onto the Minnesota House floor about the plan to raise the minimum wage of all nursing home workers.
“What’s happened to our nursing homes is that they are closing,” said Rep. Patricia Mueller, R-Austin. “They are unable to operate.”
According to the Center for Rural Policy and Development, there were 31 nursing homes in “entirely rural” areas in Minnesota (What counts as a rural area is defined by the U.S. Department of Agriculture). In 2024, there were 23.
Republicans did not address policy specifics, like whether $36 million over the next two years, half of which is the federal government’s Medicaid match, is a sufficient subsidy. And because the money was part of the elephantine Human Services budget compromise that legislative leaders hammered out behind closed doors, the appropriation passed, along with a 4% cap on the growth of Medicaid reimbursement rates.
What are the challenges facing nursing home operators?
Nursing home owners say the wage subsidy neither addresses an incredibly shrinking labor pool nor a state law that handcuffs their revenue ceiling.
For example, Sharlene Knutson, who runs McIntosh Living in McIntosh in rural northwest Minnesota, said that she will have to cut the hours of workers in charge of feeding patients and staff due to the higher wages.
Meanwhile, the industry’s regulator, DHS, has almost no idea about the financial health of nursing facilities.
“DHS does not know the extent to which nursing homes in Minnesota may be losing money,” an agency spokesperson said. Over weeks with communications with DHS, the agency provided MinnPost written answers to questions made attributable to the state agency.
The only thing workers, executives and state government officials can agree on is that it is hard to work in a nursing home, a position that can demand the empathy of a therapist and the stamina of a truck driver.
“Caregiving is a profession that is undervalued in our society,” said Kari Thurlow, president and CEO of LeadingAge Minnesota, a lobbying group for nursing home operators. “Their work is extremely difficult and requires so much of themselves.”
A study last year by the Center for Rural Policy and Development, a Mankato-based nonprofit, used the Minnesota Department of Employment and Economic Development’s job vacancy survey to show that there are thousands of openings for nursing aides, personal care aides and registered nurses. Job openings in these three occupations alone “make up between 10% and 15% of job openings across all occupations,” the study found.
Paying a better wage might seem like a good way to address the worker shortage. But nursing home operators are skeptical.
“I think it is more of a demographic question,” said Toby Pearson, CEO of Care Providers Minnesota. “Are there even bodies out there that would do the work?”
Kelly Asche, author of the Center for Rural Policy and Development paper, agreed. Asche noted how he had recently driven past a McDonald’s in Willmar with a banner promising entry-level employees $18 an hour and $2,500 toward school tuition. Under the new law, all nursing homes workers must make at least $19 per hour.
“The demand for workers in rural Minnesota is really high,” Asche said.
Asche’s paper is the best evidence available that paying workers must be balanced with the threat of closure. The study found that nursing facility beds throughout the state declined by 33% between 2005 and 2024, from about 38,000 to 25,000.
The Minnesota Department of Health independently confirmed those figures. But a department spokesperson added that the end-of-life care economy has shifted to assisted living facilities “many of which simply did not exist 20 years ago” or are converted nursing homes.
“The landscape for older Minnesotans seeking long-term-care options has evolved dramatically over the last 20 years,” emailed Garry Bowman, a spokesperson for the Minnesota Department of Health.
Asche acknowledged that the decline of nursing homes coincides with a rise in assisted-living facilities. But his report noted that nursing homes remain a better residential option for more serious conditions like memory care and terminal illnesses.
Indeed, while the state definition of a nursing facility is a place of five more residents receiving nursing care, an assisted living facility does not necessarily entail medical care. Bowman acknowledged that the Health Department did not even begin to license assisted-living facilities in 2021.
In a study of Minnesota nursing home data, Zachary Hass, an associate professor at Purdue University’s School of Nursing, found that “nonprofits tended to have 5-8 percentage points higher direct care work retention, and that stability of the workforce can have a big impact on quality of care.”
In fact, according to AARP’s most recent long-term care and support services scorecard, Minnesota ranked first in overall performance. The report cited the state’s opportunistic Medicaid spending and mandatory paid sick days for employees.
But while Minnesota nursing home operators enjoy a relatively sterling reputation, they complain of the government controlling their revenue flow.
“The biggest payer for us is Medicaid,” Thurlow said. “The second biggest is Medicare.”
Medicare only covers a few days after a patient is hospitalized, Thurlow explained, while Medicaid pays for long-term stays.
The federal government, specifically the Centers for Medicare and Medicaid Services (CMS), determines Medicare payments. DHS, with input from the Legislature, sets the Medicaid reimbursement rate.
To generate additional revenue, many nursing homes across the country seek private payers, that is people who can pay for so-called luxury services not covered by Medicare or Medicaid.
But Minnesota (and North Dakota) have “rate equalization.”
Rate equalization means a nursing home must charge a private payer the same it does a patient on Medicaid. The law has been around since 1976, and DFLers and labor unions champion it as preempting a hierarchy of nursing home care.
“It prevents ‘rich people nursing homes’ and ‘poor people nursing homes,’ one nursing home where people cherry pick the residents who are financially well off and the other who gets the rest,” Gulley said.
But rate equalization arguably paints nursing homes into a corner separate not just from facilities in other states, but senior care providers in other industries.
“Nursing facilities in Minnesota are not allowed to charge more to privately insured patients, unlike assisted living facilities, to help make up for some of the financial loss from inadequate reimbursements,” Asche wrote.
Will nursing homes comply with the new wage rule?
In May, DHS published a report prepared by consulting firm Myers and Stauffer finding that all payer revenue, which includes Medicare, Medicaid and private patients, generated $97 dollars to every $100 of expenses.
So, unless nursing homes have a profit-making enterprise outside of patient care, DHS’s own report bolsters the idea these facilities are losing money.
“They are mandating the wage increase without a similar rise in the reimbursement rate,” Zelezinakar said.
But nursing homes might have revenue DHS does not track.
An unknown number of nursing facilities have business contracts with “related-parties.”
What this means is that a nursing facility may partly or entirely own a pharmacy, or outpatient treatment center or even staffing agency for health care facilities. The nursing home marks payments to these related-parties as an expense. But it does not have to disclose that part or all of that cost is coming back to nursing home owners as revenue. (For a more complete explanation of this accounting practice and how it affects Minnesota nursing home finances, see accompanying sidebar.)
An unknown number of nursing facilities contract with related-parties, that is companies partly or wholly-owned by nursing homes. For example, an expense they report as “staffing service” could generate revenue if the nursing home is invested in the employment services agency.
DHS said that it does not track such revenues. The agency added that they plan to set up a related-party payment reporting requirement.
Meanwhile, nursing homes have not abandoned the arguments made in the holiday pay lawsuit. In August, SEIU Healthcare filed a grievance with DLI alleging that Cassia Life has not followed the paid holiday rule.
Cassia responded that they are in a dilemma about whether to follow the state’s rules or their collective bargaining agreements.
“It’s been difficult to comply with the state’s new nursing home mandates while also complying with the federal labor law at our union sites,” emailed Angela Brown, Cassia’s chief human resources officer.
DLI has not issued a ruling on the grievance.
In conversations with other nursing home operators about their compliance, many vacillated between fear and a more practical response, reflecting both the anxiety of their industry and the exhaustiveness of its everyday tasks.
Sharlene Knutson was a social worker in 2009 when McIntosh Manor, perennially one of the most poorly rated nursing homes in the state, was on the brink of bankruptcy. She has since become an administrator at McIntosh, and she said she’s concerned for the future.
“I am truly worried about 2026,” Knutson said. But Knutson also said that she applied with DHS for money to help pay workers, and wants to work with the agency. “I have got my spreadsheet ready.”
