Nursing and Residential Care Facilities (U.S.) — NAICS 623

A Histometrics subsector rollup primer for public-market and private investors.

What this level is. In the North American Industry Classification System (NAICS, the U.S. government's official industry taxonomy), code 623 — Nursing and Residential Care Facilities is a three-digit subsector: the slice of health care where people live around the clock and receive personal care, as distinct from hospitals (acute medical treatment, in the separate 622 subsector) and from doctors' offices or home health (non-residential, elsewhere in sector 62). It bundles four very different four-digit industries — skilled nursing, disability and behavioral residential care, senior living, and a youth/other catch-all. Their contrast is this page's point: one is paid mostly by private families, three mostly by government; one is built of a few thousand large facilities, another of tens of thousands of tiny group homes. We lead with that comparison, then cover the subsector as a whole. For leaf-level detail, follow the child links.

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1. Overview

NAICS 623 is where the U.S. care economy houses people who cannot fully live on their own — frail elders, adults with intellectual and developmental disabilities, people in mental-health or addiction treatment, and vulnerable youth. It is a roughly $284 billion industry by measured private receipts, employs about 3.3 million workers, and runs across 94,771 establishments.[2][3]

Four traits run through every corner of it and define the investment case:

• Bed-based and labor-heavy. Revenue is fundamentally occupied beds × a daily or monthly rate, and wages eat close to half of every revenue dollar. This behaves more like a hotel-with-caregivers than a physician practice.[2][3]
• Government sets much of the price. Medicaid (the joint federal-state health program for low-income and disabled people), Medicare (federal insurance for those 65+ and the disabled), and other public programs pay for most of the subsector — but how much varies enormously by child, and that is the single biggest fault line inside 623.
• Demand is durable and largely non-cyclical, driven by aging demographics, disability prevalence, the behavioral-health crisis, and child-welfare caseloads — and in every child the binding constraint is funding and workforce, not need.
• Extraordinarily fragmented. No operator comes close to dominating nationally; competition is local.

What separates the four children is who pays, how big the facilities are, who owns them, and how you can invest — so that is where we start.

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2. What's inside — the four children and how they differ

NAICS 623 contains four industry groups. Two of them (6231 and 6233) are "pass-through" levels that each contain a single lower industry, so their economics are those of one business; the other two (6232 and 6239) aggregate distinct sub-industries. Below, share of the level is by 2022 receipts unless noted.

Tickers/acronyms in the table, defined once here and expanded in Sections 4 and 10: SNF = skilled nursing facility; REIT = real estate investment trust (a landlord that owns the buildings); PE = private equity. Operators — ENSG Ensign Group, PACS PACS Group, NHC National HealthCare, BKD Brookdale, SNDA Sonida, ACHC Acadia Healthcare, UHS Universal Health Services. Landlord REITs — OHI Omega Healthcare, CTRE CareTrust, SBRA Sabra, NHI National Health Investors, LTC LTC Properties, WELL Welltower, VTR Ventas, DOC Healthpeak, AHR American Healthcare REIT, UHT Universal Health Realty. Payers — CNC Centene, MOH Molina, ELV Elevance.

The one contrast to remember: private-pay seniors vs. government-funded everything-else, and big facilities vs. many small homes

Two divides organize the whole subsector.

1. Payer. Senior living (6233) is overwhelmingly private-pay — six-figure CCRC entrance fees and ~$6,200/month assisted-living rents paid out of pocket, with only a minority on Medicaid.[7] The other three children are government-funded: skilled nursing leans on Medicaid (custodial base) and Medicare (short-stay); IDD is near-single-payer Medicaid; youth/other residential is paid by Medicaid, federal foster-care dollars (Title IV-E of the Social Security Act), and state/county contracts.[1][4][11] So 623 contains, in effect, a real-estate-and-hospitality business (6233) stapled to a government-reimbursed human-services business (6231/6232/6239) — different economics, different risks, different ways to invest.

2. Facility size. Rank the children by revenue and by number of buildings and the order inverts:

Shares computed from the ground-truth totals in Section 3; per-establishment figures divide 2022 receipts by 2023 establishments and are directional only (see vintage caveat). Skilled nursing produces nearly half the revenue from under a fifth of the buildings — a few large, capital-intensive facilities. Residential disability/behavioral care is the mirror image: nearly half the buildings but a fifth of the revenue, because a six-person IDD group home books a fraction of a 100-bed nursing home. This is why "how to invest" differs so sharply — you can buy a national nursing-home landlord REIT, but a residential IDD portfolio is thousands of small, license-by-license private assets.

Full leaf detail: 6231, 6232, 6233, 6239.

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3. Size (this level's rollup figures)

These are our ingested ground-truth federal statistics for NAICS 623 (stats-623.md). Establishments, employment, and payroll are County Business Patterns (CBP) 2023; receipts, firm count, and concentration are the 2022 Economic Census. The two blocks are different vintages — do not divide 2022 receipts by 2023 employment to derive a margin.

These are genuine aggregates, and they add up. Establishments (18,126 + 44,134 + 26,523 + 5,988 = 94,771) and employees (1,426,754 + 769,808 + 963,870 + 118,478 = 3,278,910) sum exactly from the four children; receipts sum to the reported total within rounding (~$283.7B); payroll matches to the tenth of a billion.

One number that does not add up: firms. The children list 10,663 + 11,654 + 18,102 + 3,601 = 44,020 firms, but the subsector shows 42,994 — because roughly a thousand companies operate in more than one child (a Sevita in both disability and youth residential; a National HealthCare in both nursing and senior living) and the Economic Census counts each such firm once at the 623 level.[2]

Concentration: about as fragmented as a U.S. industry gets. The four largest firms hold just 3.8% of subsector revenue and the HHI is 8.6 (the HHI runs to 10,000 for a monopoly; anything under 1,500 is "unconcentrated"). Strikingly, the subsector's CR4 (3.8%) is lower than any single child's (6.3–9.4%) — because the biggest firms in nursing, disability, senior living, and youth care are mostly different companies that do not compete with one another, so pooling them dilutes concentration further. Competition is fundamentally local: patients and families choose facilities near home and hospitals refer to nearby beds, so a chain with a trivial national share can still dominate a county.

Undercount caveat (important here). The $283.7B receipts figure is an employer-business floor, not total care activity. Both CBP and the Economic Census cover employer businesses (nonprofits included) but generally exclude government-run establishments — so county and municipal nursing homes (~5–6% of nursing homes), state developmental centers, public psychiatric/addiction residences, and government juvenile homes are largely absent.[1][4][5] They also miss a long tail of tiny nonemployer arrangements with no paid staff — family/host homes, adult foster care, small faith-based sober-living and residential-care homes — which matters most in the small-operator-heavy disability (6232) and senior-living (6233) tails, and in paid individual foster families (not "establishments" at all) on the 6239 side. For scale: the Centers for Medicare & Medicaid Services (CMS) reports ~$211 billion of national spending on nursing-care facilities alone in 2023 — a broader, later measure than this subsector's $135B nursing-home receipts line.[5] Treat the federal totals as a conservative baseline.

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4. Investable universe (where value concentrates)

The blunt fact spanning all four children: there is no large, clean, U.S.-listed pure-play for the 623 subsector as a whole, and none at all for two of its children. Public investors reach 623 through a few concentrated channels, and where along the 623 map you can buy tracks the payer divide from Section 2 — the private-pay senior-living half is far more investable than the government-funded human-services half.

Public exposure sorts into four buckets:

• Health-care real estate (REITs) — the single biggest and cleanest public route. Seniors-housing and skilled-nursing landlords own the buildings and lease them to operators, earning rent (triple-net lease) or a share of property income (a SHOP / seniors-housing operating portfolio, enabled by the REIT Investment Diversification and Empowerment Act, RIDEA). This route spans 6233 and 6231 at once: Welltower (WELL), Ventas (VTR), Healthpeak (DOC) on the senior-living side; Omega (OHI), CareTrust (CTRE), Sabra (SBRA), National Health Investors (NHI), LTC Properties (LTC) spanning skilled nursing and senior housing; American Healthcare REIT (AHR).[7][8][9]
• Listed operators — thin, and clustered at two ends. Skilled-nursing operators Ensign Group (ENSG), PACS Group (PACS), National HealthCare (NHC); senior-living operators Brookdale (BKD) and Sonida (SNDA). That is nearly the entire listed operator set for a $284B subsector — most operating companies are private.
• Tax-exempt municipal bonds — the most direct public route into the CCRC half of 6233, because ~80% of CCRCs are nonprofit with no equity to buy; a credit-selection game (debt-service coverage, liquidity, entrance-fee liabilities).
• Indirect proxies for the government-funded children (6232, 6239) — Medicaid managed-care payers Centene (CNC), Molina (MOH), Elevance (ELV); diversified behavioral operators Acadia (ACHC) and Universal Health Services (UHS) (whose beds skew to hospitals/outpatient, not the residential codes); and, for youth/other, subsegment slivers inside prison operators GEO Group (GEO) and CoreCivic (CXW). None is a clean read on its 623 child.

The real ownership is private and nonprofit. The marquee operators — Genesis and Life Care (nursing); Sevita, Dungarvin, RHA (disability); Discovery, Newport, Hazelden Betty Ford (behavioral); LCS, Erickson, Atria and the LeadingAge nonprofit systems (senior living); Boys Town, Devereux (youth) — are overwhelmingly private companies, PE platforms, or nonprofits. Net: the more government-funded the child, the more private the ownership and the thinner the listed exposure. For full ticker-by-ticker tables, see each child primer's Section 4.

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5. How the money works

Every child runs the same core equation:

Revenue ≈ occupied bed-days (or units) × the rate per resident-day, minus a labor-heavy, largely fixed cost base.

Because staffing and rent are mostly fixed once a building is open, occupancy (census) is the earnings lever, and labor is the business — the subsector's $136.6B payroll against $283.7B of receipts means wages alone consume roughly half of every revenue dollar (vintages differ, so read this as a structural fact, not a precise ratio).[2][3] Owning the real estate separately from the operating company (the "opco/propco" split) is the standard way to layer a lower-risk, income-oriented investment (rent) on top of the operating profit.

Where the four children diverge is who sets the price and who pays it — the same payer divide from Section 2, now as economics:

• Skilled nursing (6231) is a payer-mix game: Medicare and managed-care days pay far more than Medicaid custodial days, so a facility can be full and still lose money if its "skilled mix" is too low. The Medicare Payment Advisory Commission (MedPAC) has reported a ~22% fee-for-service Medicare margin against a ~0.4% all-payer margin — thin, and rate-driven.[1]
• Disability (6232 IDD) is a pure rate-taker: states set a Home- and Community-Based Services (HCBS) waiver rate or an institutional per-diem, so operators cannot price up; the defining squeeze is the rate-to-wage gap — fixed reimbursement against rising Direct Support Professional (DSP) wages — which pins margins in the low single digits.[4][6]
• Behavioral (6232 rehab/RTC) has a payer-mix lever too: commercial and out-of-network rates beat Medicaid, so profitability turns on how many beds are filled by private insurance vs. Medicaid vs. self-pay; insurance-dependent centers often need 85–90%+ occupancy.
• Senior living (6233) is the private-pay outlier: assisted living earns occupancy × a monthly market rate (median ~$6,200/month), and CCRCs add a six-figure entrance fee (avg ~$400,000, often partly refundable, booked as deferred revenue and a liability) with insurance-like actuarial risk on lifetime-care contracts.[7]
• Other residential (6239) runs on an administratively set per-diem, and the gradient is the whole game: the same child draws ~$30/day in an ordinary foster home but $275–$800+/day in a residential treatment center — with essentially no ability to raise rates to cover wage inflation.

The common thread: none of these operators can freely price, and none escapes the labor ceiling. For-profit returns come from scale (centralizing billing, compliance, HR), owning the real estate, and — where the payer mix allows — tilting toward higher-paying census.

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6. Demand drivers

Demand across 623 is large, chronic, and largely disconnected from the business cycle — but in every child the binding limit is funding and workforce, not underlying need.

• The demographic engine (drives 6231 and 6233). The U.S. 65+ population reached 61.2 million (18.0%) in 2024, all baby boomers will be 65+ by 2030, and the core 80+/85+ cohort that consumes senior living and nursing care is set to grow sharply — the 80+ group up ~27–28% by 2030, and the 85+ group roughly doubling by 2040. New senior-housing construction sits near a century low, so demand is running ahead of supply and favoring existing, filled communities with pricing power.[7][8]
• Disability and aging caregivers (6232 IDD). More than 710,000 people sit on Medicaid HCBS waiting/interest lists (average wait ~50 months), and roughly a million households include an adult with IDD supported by an aging caregiver whose adult child will eventually "age into" paid care.[4]
• The behavioral-health crisis (6232 behavioral). In 2023, 20.4 million U.S. adults had a co-occurring substance-use disorder and mental illness, and millions received no treatment; overdose deaths, though down in 2024, remain structurally elevated. Parity law and Medicaid waivers keep converting unpaid need into reimbursable volume.[6]
• Child welfare and youth behavioral need (6239). A shortage of foster families pushes systems toward congregate care, and despite federal efforts to reduce it, the congregate-foster population has held near ~40,000 — sticky, defensive demand.

The universal governor is the workforce. DSP turnover runs near 40% at a median wage around $14.50/hour, and most Americans live in a designated mental-health workforce-shortage area — so staffing, not demand, keeps beds empty across all four children.[6]

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7. Regulation

Government rules effectively create these markets. The shared spine is CMS plus state Medicaid agencies, which fund, license, certify, and police most of 623; state licensing and incident-reporting apply throughout. Each child then leans on different levers:

• Skilled nursing (6231): CMS sets Medicare rates and certifies facilities; states set Medicaid rates; quality is enforced via inspections and the Five-Star rating. The first-ever federal minimum-staffing mandate (finalized 2024) was partly vacated in court and formally repealed in December 2025, removing a major cost overhang; Certificate-of-Need (CON) laws cap new beds in many states.[1]
• Disability & behavioral (6232): the Olmstead decision and the CMS HCBS Settings Rule drive the shift from institutions to community homes; the "Institution for Mental Diseases" (IMD) Medicaid-payment exclusion and its Section 1115 waivers govern adult residential coverage; the Mental Health Parity and Addiction Equity Act (MHPAEA) requires behavioral coverage to be no more restrictive than medical. Antitrust has arrived: in January 2026 the Federal Trade Commission (FTC) forced Sevita to divest 128 facilities before clearing its ResCare acquisition.[4][11]
• Senior living (6233): assisted living is state-licensed with no federal regime (50-plus regimes), while CCRCs face an insurance/financial track for the lifetime-care contract plus CMS oversight for their skilled-nursing beds. Do not apply nursing-facility certification rules to this child wholesale.[7]
• Other residential (6239): state licensing is the license to exist; federal funding rules (Title IV-E, the Family First Prevention Services Act's Qualified Residential Treatment Program standard, Medicaid) shape the economics; and oversight is intensifying after the U.S. Senate Finance Committee's 2024 "Warehouses of Neglect" investigation and a Department of Justice referral.[12][12]

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8. Consolidation

A fragmented cottage subsector consolidating slowly from the top. At the 623 level the four largest firms hold just 3.8% of revenue, the top 50 under a fifth, and the HHI is 8.6 — far below any concentration concern, and, as noted, lower than any individual child because the leaders in each child are different companies.[2] A private-equity-led roll-up has run for a decade across every child — buying sub-scale homes and centralizing overhead — but three forces cap it in all of them: reimbursement is a hard price ceiling (especially where Medicaid is near-total), operators compete for the same scarce workers, and a large nonprofit-and-government majority is simply not for sale (≈80% of CCRCs, most youth and disability providers, many nursing homes). The 2026 FTC–Sevita intervention marks the arrival of antitrust as a real ceiling on the roll-up playbook. Where consolidation does happen, it looks different by child: REIT and operator M&A in senior living (Welltower announced ~$23 billion of transactions in 2025), PE platform roll-ups in disability, behavioral, and youth residential, and nonprofit affiliation in the CCRC half.[4][7][8]

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9. Risks

The four children share a risk core and differ at the edges.

• Reimbursement / Medicaid-policy risk (all four, dominant). Revenue depends on rates operators cannot set; federal or state Medicaid pressure — rate cuts, eligibility redeterminations, limits on provider-tax financing, the 2025 reconciliation-law tightening, FFPSA funding caps — squeezes an already thin-margin base hardest where Medicaid is near-total (6231 custodial, 6232 IDD, 6239).[1][4]
• Workforce shortage (all four). Chronic DSP and clinical staffing gaps cap beds and push wages up against fixed rates; many providers turn away referrals for lack of staff.[6]
• Occupancy against fixed costs (all four). A largely fixed cost base means low census flows straight to the bottom line.
• Leverage and real estate (concentrated in PE- and REIT-heavy corners). Debt-financed platforms and sale-leasebacks are exposed to rate and refinancing pressure on thin margins (Genesis HealthCare's 2025 nursing-home bankruptcy is the cautionary tale); the real-estate-heavy senior-living child adds interest-rate and capital-intensity risk, and the CCRC entrance-fee model has its own fragility (multiple Chapter 11 filings since 2020, with refund-owed residents ranking behind bondholders).[1][7]
• Quality, litigation, and headline risk (all four, sharpest in behavioral and youth care). Serving vulnerable populations invites incident, enforcement, and reputational exposure — the "Warehouses of Neglect" spotlight on youth facilities, large False Claims Act settlements in behavioral care, and Medicare Advantage steering that shortens nursing-home stays.[1][11][12]
• Emerging antitrust ceiling. The FTC's Sevita action shows the roll-up path now carries merger-review risk.[11]
• Measurement risk. Federal employer statistics understate government, nonprofit, and very-small-operator activity — a caution when sizing any of these markets from the figures above.[5]

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10. How to invest & outlook

Public routes are concentrated and tilt heavily toward the private-pay senior-living child and toward real estate:

• Broadest exposure: health-care REITs spanning senior living and skilled nursing — WELL, VTR, DOC (senior-heavy) and OHI, CTRE, SBRA, NHI, LTC, AHR (skilled-nursing and mixed). Rent-based income at lower operational risk than owning the operating company; watch tenant rent-coverage and interest rates.
• Operating leverage: the thin listed operator set — ENSG, PACS, NHC (nursing) and BKD, SNDA (senior living) — for direct exposure to the occupancy-and-rate recovery.
• Credit: tax-exempt CCRC municipal revenue bonds for the nonprofit senior-living half — analyze debt-service coverage, liquidity, and entrance-fee liabilities.
• Indirect only: Medicaid payers (CNC, MOH, ELV) and diversified behavioral operators (ACHC, UHS) as blended proxies for the disability/behavioral and youth children — not clean reads.

There is no ETF or listed pure-play that isolates the disability, behavioral, or youth-residential children — that capital enters privately: direct ownership and operation of licensed platforms, net-leased group-home and behavioral real estate, private credit against contracted public cash flows, and sale-leasebacks. Private routes dominate the government-funded three-quarters of the subsector and demand hands-on operating, licensing, and regulatory expertise, underwritten site-by-site on payer contracts, occupancy, and staffing coverage. Much of the field — the nonprofit-and-government majority — is not investable in the conventional sense.

Outlook. The demand case across 623 is about as durable as any in health care: an aging population that guarantees rising nursing and senior-living need, long IDD waiting lists and aging caregivers, high unmet behavioral demand, and sticky child-welfare caseloads — against constrained new supply. But this is a government-rate-influenced, labor-constrained, thin-margin subsector, so demographics support demand, not margins. The best-positioned child is senior living (6233) — private-pay pricing power plus the strongest demographic tailwind and the lowest supply — which is also why it is the most public-investable. The government-funded children (6231, 6232, 6239) offer equally durable demand but carry the full weight of Medicaid-policy risk and, increasingly, quality, PE-ownership, and antitrust scrutiny. Our ground-truth data contain no national growth forecast for this subsector, so none is supplied. Across all four, the winners pair a durable payer mix, clean compliance, reliable staffing, owned real estate, and local density — rewarding disciplined operators and landlords, and unforgiving to the over-leveraged. For the complete analyses, read the 6231, 6232, 6233, and 6239 primers.

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Sources

Synthesized from the four child primers (6231, 6232, 6233, 6239) and the subsector ground-truth stats; renumbered for this page.

1. Skilled-nursing child primer (NAICS 6231) and its sources — U.S. Census 2022 NAICS definitions; MedPAC Medicare/all-payer margins; CMS payment rules; the 2024–2025 federal staffing-mandate finalization, partial vacatur, and December 2025 repeal; Certificate-of-Need laws. See primer-6231-DRAFT.md.
2. U.S. Census Bureau, 2022 Economic Census — Concentration of Largest Firms, NAICS 623 and children (firms, receipts, CR4/CR8/CR20/CR50, HHI). https://api.census.gov/data/2022/ecnsize.html
3. U.S. Census Bureau, County Business Patterns: 2023 — NAICS 623 and children (establishments, employment, annual and Q1 payroll). https://www.census.gov/data/datasets/2023/econ/cbp/2023-cbp.html
4. Disability/behavioral child primer (NAICS 6232) and its sources — KFF on Medicaid IDD coverage and HCBS waiting lists; SAMHSA behavioral-health data; CMS HCBS Settings Rule and Olmstead; the IMD exclusion and MHPAEA parity rule. See primer-6232-DRAFT.md.
5. U.S. Census Bureau, CBP Methodology and Understanding NAICS / Economic Census coverage (employer-establishment scope; exclusion of government-operated establishments and nonemployers); and Centers for Medicare & Medicaid Services, National Health Expenditures 2024 Highlights (nursing-care facilities ≈$211B in 2023). https://www.census.gov/programs-surveys/cbp/technical-documentation/methodology.html; https://www.cms.gov/files/document/highlights.pdf
6. ANCOR, The State of America's Direct Support Workforce Crisis (2024–2025) (DSP turnover ~40%; median wage ~$14.50/hr) and SAMHSA, 2023 National Survey on Drug Use and Health (co-occurring disorders; untreated need). https://www.ancor.org/resources/the-state-of-americas-direct-support-workforce-crisis-2025/; https://www.samhsa.gov/data/report/2023-nsduh-annual-national-report
7. Senior-living child primer (NAICS 6233) and its sources — AHCA/NCAL assisted-living facts & figures; NIC on CCRC contracts and occupancy; CareScout 2025 Cost of Care (median AL ~$6,200/mo); SBA size standards; state assisted-living licensing and CCRC insurance/CMS regulation. See primer-6233-DRAFT.md.
8. NIC (National Investment Center for Seniors Housing & Care), Occupancy Rate for Senior Living Increased in 2025 as Construction Stalled, and Welltower Inc., Welltower Announces $23 Billion of Transactions, Oct. 2025. https://www.nic.org/news-press/occupancy-rate-for-senior-living-communities-increased-in-2025-as-construction-stalled/; https://welltower.investorroom.com/2025-10-27-Welltower-Announces-23-Billion-of-Transactions-and-Intensified-Focus-on-Seniors-Housing
9. U.S. Census Bureau, Older Adults Outnumber Children in 11 States (65+ = 61.2M, 18.0% of population, 2024) and By 2030, All Baby Boomers Will Be Age 65 or Older (2019). https://www.census.gov/newsroom/press-releases/2025/older-adults-outnumber-children.html
10. U.S. Federal Trade Commission, FTC Takes Action to Prevent Anticompetitive Healthcare Services Merger (Sevita / ResCare), January 2026, and U.S. Department of Justice behavioral False Claims Act settlements (Acadia 2024; UHS 2020). https://www.ftc.gov/news-events/news/press-releases/2026/01/ftc-takes-action-prevent-anticompetitive-healthcare-services-merger
11. Other-residential child primer (NAICS 6239) and its sources — CMS/Medicaid and Title IV-E foster-care funding; the Family First Prevention Services Act and QRTP standard; per-diem economics; congregate-foster population data. See primer-6239-DRAFT.md.
12. U.S. Senate Committee on Finance, "Warehouses of Neglect" investigation into youth residential treatment facilities (June 2024) and subsequent DOJ referral (October 2024); Child Trends, Older Youth in Congregate Foster Care (population held ~40,000). https://www.finance.senate.gov/chairmans-news/wyden-investigation-exposes-systemic-taxpayer-funded-child-abuse-and-neglect-in-youth-residential-treatment-facilities