Opening a nursing home in Texas requires a state license from the Texas Health and Human Services Commission (HHSC), a licensed nursing facility administrator, compliance with federal staffing standards, and enrollment in Medicare or Medicaid if you plan to accept government reimbursement. The process involves multiple agencies, significant capital, and months of preparation before you admit your first resident.
Get a Licensed Nursing Facility Administrator
Texas requires every nursing facility to operate under a licensed Nursing Facility Administrator (NFA). If you’re not planning to serve in this role yourself, you’ll need to hire someone who holds this credential. Either way, the requirements are substantial.
An NFA candidate must hold a bachelor’s or master’s degree in any subject from an accredited college or university, with at least 12 semester credit hours in long-term care administration covering four domains: care services and supports, operations, environment and quality, and leadership and strategy. These domains align with the National Association of Long-Term Care Administrator Boards (NAB) framework.
After completing the education requirement, the candidate must finish a 1,000-hour internship in a nursing facility under an approved preceptor. A reduced 500-hour internship is available for candidates who hold a degree specifically in health administration, health services administration, health care administration, or nursing, provided they also have management experience in a nursing facility (three years with a bachelor’s, one year with a master’s). Once the internship is complete, HHSC provides access to two exams: the NAB national exam (which has a core section and a nursing facility line-of-service section) and a Texas state exam covering the Health and Safety Code provisions on nursing homes. Failing either exam three times means repeating the full 1,000-hour internship before retesting.
If you’re the owner but not the administrator, recruiting an already-licensed NFA is the faster path. This is one of the first hires to make, since the administrator’s license is tied to your facility’s ability to operate.
Apply for a Texas Nursing Facility License
All nursing facility license applications in Texas are submitted through the Texas Unified Licensure Information Portal, known as TULIP. You can reach the HHSC Licensing and Certification Unit at 512-438-2630 for guidance on forms and instructions specific to your situation.
The state charges a base application fee of $375 plus $15 per bed. A 60-bed facility, for example, would pay $1,275 in licensing fees alone. These fees apply at both initial licensure and each renewal. While the licensing fee itself is modest, it’s a small fraction of your total startup costs. Building or renovating a facility to meet Life Safety Code requirements, purchasing medical equipment, and covering payroll during the pre-admission period represent far larger expenses.
Before issuing a license, HHSC conducts an initial survey of your facility. Surveyors evaluate whether your building, staffing plan, policies, and clinical systems meet state and federal requirements. This includes fire safety, infection control procedures, resident rights protections, emergency preparedness, and your plan for delivering nursing care. Having your policies, staffing schedules, and physical plant fully ready before requesting the survey saves time and avoids costly re-inspections.
Meet Federal Staffing Standards
A final rule from the Centers for Medicare and Medicaid Services (CMS) sets minimum staffing levels that apply to all nursing facilities participating in Medicare or Medicaid. Your facility must provide at least 3.48 hours per resident day (HPRD) of total direct nursing care. That breaks down into specific minimums: at least 0.55 HPRD from registered nurses (RNs), at least 2.45 HPRD from nurse aides, and the remaining 0.48 HPRD from any combination of RNs, licensed vocational nurses (LVNs), or nurse aides.
In practical terms, for a 60-bed facility running at full occupancy, you’d need roughly 209 total nursing hours per day. That translates to a significant number of full-time nurses and aides working across three shifts. The rule also requires an RN on site 24 hours a day, seven days a week, which means you need enough RN staff to cover nights, weekends, and holidays without gaps.
Staffing is typically the largest ongoing expense for a nursing home, often consuming 60% or more of operating revenue. Building your recruitment pipeline early, especially for RNs who are in high demand across Texas, is critical. Many new facilities offer sign-on bonuses or partner with local nursing programs to secure staff before opening.
Secure Medicaid Bed Allocation
If you want to accept Medicaid residents, and most Texas nursing homes do since Medicaid is the dominant payer in long-term care, you’ll need more than just a state license. Texas requires that a nursing facility have an allocation of Medicaid beds or enter into a lease agreement with a facility owner who already has one. This bed allocation system means you can’t simply open a facility and start billing Medicaid. You need to secure your allocation through HHSC’s Medicaid/CHIP division, which handles nursing facility contracting.
This is a step that catches some new operators off guard. Without a Medicaid bed allocation, you’re limited to private-pay and Medicare residents, which significantly narrows your potential census and revenue. Start the Medicaid contracting process as early as possible, since it runs on a separate timeline from your state licensure.
Enroll in Medicare
Medicare enrollment requires a parallel set of paperwork. The primary document is CMS Form 855A, the Medicare Enrollment Application, which you mail directly to the Medicare administrative contractor for Texas. Several additional forms must be uploaded through your TULIP application:
- CMS Form 1561 (Health Insurance Benefit Agreement), signed by an authorized representative of your facility
- Two copies of your IRS tax ID verification (Form CP-575 or Letter 147C)
- Management company agreement, if a separate company will operate the facility
New facilities and licensed-only facilities seeking Medicare certification must also contact the HHSC regional director in their area regarding access to care before proceeding. Medicare certification requires that your facility be in full compliance with all nursing facility requirements at the time of your initial survey. You cannot retroactively bill Medicare for residents admitted before your certification date, so timing matters.
Choose Your Business Structure and Location
Most nursing homes in Texas operate as limited liability companies or corporations. Your business structure affects your tax obligations, personal liability exposure, and ability to attract investors. Work with an attorney experienced in healthcare facility ownership to select the right entity type. Many operators create separate entities for the real estate and the operating business, which provides additional liability protection and flexibility if you later want to sell one without the other.
Location decisions should factor in local demographics, competition, and proximity to hospitals. Texas is a large state with dramatically different long-term care markets. Rural areas may have fewer competitors but smaller labor pools and lower Medicaid reimbursement volumes. Urban and suburban areas offer stronger staffing pipelines but higher real estate costs and more established competitors. Review the HHSC Long Term Care Provider Search to understand what facilities already serve your target area and how they perform on state inspections.
Prepare for Ongoing Compliance
Once you’re open, Texas nursing facilities are subject to unannounced state surveys, typically on an annual cycle but sometimes more frequently if complaints are filed. Surveyors evaluate resident care outcomes, medication management, nutrition, infection prevention, staffing levels, and whether residents’ rights are being respected. Deficiencies can result in fines, mandatory corrective action plans, or in serious cases, loss of your license.
You’ll also need to maintain liability insurance. While the specific coverage requirements vary based on your facility type and certification, carrying adequate professional and general liability coverage protects both your residents and your business. Most lenders and Medicaid contracts require proof of insurance as a condition of participation.
Beyond surveys, you’ll file regular cost reports with HHSC if you participate in Medicaid, submit quality measure data to CMS, and keep your administrator’s license and facility license current through renewals. Building a compliance team or designating a quality assurance director from day one helps prevent the kind of operational drift that leads to survey deficiencies down the road.