Rising costs force nursing home downsizing: facility changes may mean big savings. Nurse managers who make an attempt to be "cost-effective" by closing nursing homes can save substantial funds if a cost-effective alternative isn't available in the area. A survey of seven states, a state agency and a nursing home trade group showed that more than half of the nursing homes surveyed had actually gone out of business, the average cost of closing or relocating a nursing home is $100,000 per bed, and the average closing or relocating cost for nursing home staff members is $9,500 per person. Although closing a nursing home might be cost-effective, not all nursing homes can be closed for many reasons. For example, one large majority of states have regulations that stipulate that the occupancy rate for the next 12 months cannot be reduced below 90 percent of capacity. Additionally, the relocation costs may be prohibitive if other areas do not have the needed staff and services or if there is a lack of financial resources to pay relocation costs. If nursing homes in the area are financially unsound, or if alternative facilities have not been fully assessed or do not appear likely to be financially feasible, relocation may be unlikely. A decision on what to do with the residents and the staff is one of the most difficult decisions that a provider will make, and one of the most important decisions. Providing quality services to meet the needs of residents is imperative to success, as well as to the success of the closure decision. This article provides information that will assist facilities in being cost-effective when they consider closing or relocating a nursing home.