How the inpatient to post-acute transition affects system performance
A trifecta of forces—higher-acuity inpatients, an aging population and rising utilization—is increasing pressure on post-acute care (PAC) demand. The case mix index rose 3% between 2019 and 2024, and PAC growth is not expected to slow, with Sg2 projecting a 31% increase over the next decade. As demand accelerates, capacity, performance and strategic alignment of PAC assets are becoming increasingly essential to managing overall health system performance.
PAC has evolved from care after hospital discharge to care settings that serve medically complex patients across multiple entry points. Defining which patients require facility-based care versus home-based services, as well as assessing quality performance for the inpatient to PAC transition, are critical inputs for operational effectiveness across the system.
This report examines patterns of inpatient discharges to PAC as well as upstream PAC utilization across diverse prior care settings by leveraging the most recent Vizient Clinical Data Base data, Centers for Medicare & Medicaid Services Medicare fee-for-service claims data and the Sg2 Impact of Change® forecast. The findings reveal that inpatient discharges compete with a predominantly non-inpatient-discharged population, who are often medically complex and resource intensive. These dynamics highlight the need for health systems to align post-acute access and capacity with demand that extends well beyond inpatient discharges.
Home-based services drive PAC growth
As inpatient utilization has increased 7% over the past three years and care has continued to shift toward outpatient services, a greater share of discharges requires PAC. Figure 1 shows that almost two-thirds of inpatient discharges return home with self-care, while 14% are discharged to home-based PAC and 12% to facility-based PAC, with both settings growing faster than home/self-care.
Most PAC utilization originates outside the inpatient setting, with 95% of PAC encounters not preceded by an inpatient hospitalization within the prior 30 days. These encounters largely reflect patients who require ongoing, longitudinal postacute services. Inpatient discharges, by contrast, account for a relatively small share of total PAC utilization. Over the next decade, overall PAC volume is projected to increase by 31%, driven primarily by home-based services, while skilled nursing remains the dominant but slower-growing facility-based PAC setting.
As post-acute demand increasingly originates outside of the inpatient discharge process, planning strategies centered on hospital volume alone risk understating future post-acute capacity requirements.
An aging, Medicare population shapes PAC demand
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A substantial majority (83.7%) of PAC volume is attributable to patients aged 65 and older, compared with 46.6% of overall inpatient discharges, underscoring the central role of skilled nursing and hospice services in caring for this population. Older adults are more likely to be discharged to facility-based PAC, while younger patients more frequently utilize home health services. In addition, long-term care and rehabilitation serve a relatively higher share of patients aged 18 to 64, reflecting different post-acute utilization patterns among younger populations.
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Consistent with this age distribution, nearly 85% of PAC patients are covered by Medicare. Notably, 4.5% of self-pay and charity-care patients are discharged to home or self-care, a higher share than overall, suggesting that discharge patterns for this population may reflect access limitations to PAC or home health services rather than clinical need alone.
Brianna Motley; Catherine Maji and Jeremy Miller, MD, FACOG
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Higher-acuity patients transitioning to and from PAC services
Patients transitioning to and from PAC services tend to have different quality outcomes. Average length of stay (ALOS) during the initial hospital admission is significantly higher for patients discharged to PAC (8.9 days) compared with those discharged home or to self-care (3.7 days). Readmission rates are approximately 20% for patients discharged to PAC facilities and home health, more than double the rate observed for patients discharged home for self-care (8.8%). Among patients readmitted from PAC to the same hospital, readmission ALOS remains consistent with the initial stay and is substantially higher than for patients initially discharged home.
These differences reflect the higher baseline acuity and clinical complexity of patients requiring PAC. Discharge patterns are also influenced by local access to appropriate post-acute services and vary by market and hospital.
Hospital patients admitted from PAC facilities exhibit higher mortality and readmission rates, reinforcing that patients moving to and from PAC represent a clinically complex, high-acuity population. These patients are often older, sicker and more likely to have limited social support. The outcomes shown in Table 3 underscore the need for strong operational alignment at the inpatient to post-acute transition to ensure timely access, appropriate placement and adequate support for this vulnerable population.
Higher-impact conditions drive PAC growth
The top five clinical conditions discharged to PAC facilities and home health account for 34% of total post-acute discharges, highlighting the concentration of demand within a relatively small set of diagnoses. Most of these conditions represent common, morbid illnesses among older adults, for whom advancing age strongly correlates with both the likelihood of requiring PAC and the intensity of post-acute support. Overlap in leading conditions across PAC facilities and home health is expected, since discharge planning first determines the need for post-acute care before selecting the care setting.
Among these conditions, septicemia represents the largest share of discharges to both PAC facilities and home health, and it is associated with higher ALOS and readmission rates prior to discharge. Notably, four of the top five conditions exhibit higherthan-average readmission rates—with hip and femur fracture as the exception—highlighting the burden of medical conditions rather than procedural episodes within post-acute pathways.
Looking ahead, these same high-impact clinical conditions are projected to grow at faster rates than overall inpatient services over the next decade. This suggests that future post-acute growth will be driven by increasing volume and complexity within already dominant conditions.
As patients enter PAC from a wide range of upstream settings, not solely after hospital inpatient stays, it is critical to look beyond the clinical conditions for IP utilization that led to PAC services. To explore the upstream encounters, clinical conditions were analyzed by Sg2 CARE Family for skilled nursing facility (SNF) and hospice stays.
The CARE Families highlighted in Table 5 are the only ones that also rank among the top clinical conditions shown in Table 4, underscoring the limited overlap between discharge-driven and upstream PAC demand. Collectively, the top five CARE Families account for just 14% of SNF stays and 22% of hospice stays, which emphasizes the broad range of clinical conditions supported by post-acute care services.
Why it matters
Integrated insights across multiple data sources reveal outcomes from the inpatient to post-acute care transition that, if unaddressed, will negatively affect clinical performance and exacerbate both inpatient and PAC capacity constraints. As health systems reexamine their PAC strategies, several considerations emerge:
- Improved consistency and quality across the System of CARE remain critical given the high utilization, readmissions and mortality observed among patients moving to and from post-acute care.
- Targeting high-impact clinical conditions will be essential to manage future post-acute demand and outcomes, as these conditions span both PAC facilities and home health and are projected to grow faster than overall PAC volume.
- Septicemia drives disproportionate post-acute utilization, reflecting high acuity, long stays and increased discharges as the population ages and medical complexity rises. While improvements in early detection and outcome management may temper length of stay, rising discharges will continue to increase pressure on post-acute and home health services.
- Risk-prediction artificial intelligence and remote patient monitoring will increasingly shape home health delivery, enabling earlier identification of declining patient condition and more proactive intervention. Health systems should evaluate these capabilities and partnership opportunities as part of a broader PAC strategy.
- Operational misalignment at the inpatient to post-acute care transition can create bottlenecks that increase readmissions and cost, underscoring the need for payer strategies aligned with improved post-discharge outcomes.
Source: American Hospital Association. New Analysis Shows Hospitals Improving Performance on Key Patient Safety Measures Surpassing Pre-pandemic Levels. 2024.