The FHA loans required only small downpayments, so the operators were very highly leveraged with weak balance sheets. The low downpayments and generous terms, "guaranteed" reimbursement from the government in payment for services, and income tax benefits available to real estate operators made nursing homes attractive tax shelters for physicians and other individuals with personal wealth, drawing more for-profit operators into the field.
Not all the activity was in new construction. FHA funds could be used for remodeling as well as constructing new buildings. A number of nursing homes were created from buildings built for other purposes, like homes, motels, or old hospitals abandoned when newer hospital buildings were built with Hill-Burton financing.
At the same time that all these new nursing homes were being added, older facilities were closing down, particularly the small home-based or "mom and pop" operations. Because of these closures, comparisons of the number of total facilities at the beginning and end of the decade understate the number of new facilities that were being added.
There are really no statistics on how many facilities closed and opened in those years, but we can draw some very general conclusions about the level of activity by combining data from a few sources. It is possible that about 3,000 nursing homes may have disappeared in the 1950's and about 4,000 additional facilities may have disappeared in the 1960's. If that is correct, the following table shows the high level of turnover that may have been taking place in the 1950's and 1960's: (IOM, NCHS)