This paper examines changes in resident acuity and registered nurse staffing in all nursing homes in Pennsylvania before and after the introduction of the Medicare Prospective Payment System (PPS) in 1983. The analysis is based on 1980, 1982, 1985, and 1987 data from the Long Term Care Facilities Survey conducted by the State Health Data Center, Pennsylvania Department of Health. Although the acuity of nursing home residents has increased significantly since the introduction of PPS, full-time registered nurse staffing has remained unchanged, and part-time registered nurse staffing has declined. This alarming trend threatens the quality of care patients receive, yet remains largely unaddressed.