Should the nursing home tell Dad he should stay?

In answer to your question, it's not the facility's responsibility to tell your father that he should remain in the nursing home. The physician may be willing to recommend this See also:
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See all 126 questions about Housing Decisions to him if asked to do so, but perhaps not even then.

What the facility is responsible for is planning a safe discharge. If you and others don't think that a discharge to home would be safe for your father because he needs more care than is available, does not have the funds for that care, would not accept that care, etc. then my advice would be to speak with the physician at the nursing home and explain this situation. If you don't share they won't know and may assume that with a big family, your father will have ample care. If this is not the case, then clarify this asap.

However, something else is important to keep in mind here too and that is that if your father does not have any cognitive impairment, no one can make the decision about what's next but him. This means that if he decides he'd like to go home (even if the physician recommends otherwise), no one has the right to make him stay in the facility. And if he falls and returns to the hospital and then to rehab again, he has every right to go through these systems like a revolving door unless someone can prove that he isn't competent to make these decision for himself.

However, if your father is cognitively impaired, then whomever has been designated as Power of Attorney would be the person to make the decisions about his care and whether it should take place at home or in a facility.

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