Nursing facilities are an integral part of the health care system. This chapter provides a history of the development and growth of nursing facilities in the United States. It describes the structural characteristics of current nursing facilities, including ownership characteristics, location, and staffing levels. The chapter discusses the common payment mechanisms for receiving nursing facility care. It addresses the challenges and opportunities for nursing facilities of payment reform, health care reorganizations, and changing demographics. The chapter provides a brief history of the development of nursing homes, review operation of nursing homes today, and elaborate on current and future challenges and opportunities nursing homes face. The Health Care Financing Administration (HCFA) became responsible for the certification process required for nursing homes as well as the creation of certification standards. Nursing facilities continue to play a vital role in the provision of long-term care services for the elderly.