In This Report

As spending in the U.S. healthcare sector increases rapidly and quality of care remains stagnant, post-acute care has assumed an important role in countering erosive trends by mitigating hospital readmissions, reducing acute care length of stay, and bridging care delivery gaps.

Post-acute care’s growing importance in the care delivery continuum is demonstrated by the segment’s growth. Since 2005, annual Medicare spending on post-acute care has grown an average of 5.7%, accounting for 11% of total program spending in 2011. Comparatively, annual hospital care spending increased only 1.6% over the same period.1 This rapid growth has led the Centers for Medicare and Medicaid Services (CMS) to curb spending in the sector. Stagnant health outcomes and misaligned incentive structures, coupled with high-profile cases of fraud and high provider margins, have also led to regulatory reform initiatives from CMS which are collectively squeezing post-acute care providers.

Reimbursement and regulatory reform initiatives have created a new model that rewards providers that efficiently deliver medically appropriate care and drive quality health outcomes. This new model:

  • More closely matches payments to provider costs
  • Increases the use of innovative bundled reimbursement programs
  • Adjusts reimbursements to case mixes
  • Penalizes providers with sub-par outcomes
  • Increases reporting requirements
  • Pushes patients to receive care in the lowest possible acuity setting



To adapt to these changes and succeed in the marketplace, providers will need to implement new technological infrastructures, develop innovative partnerships and care coordination structures, and extend their service lines.

This report will analyze the regulatory and reimbursement pressures confronting the post-acute care marketplace, with a particular focus on the home health and skilled nursing segments, where approximately 80% of the total post-acute care spending occurs. It will also illustrate the strategies and technologies providers will utilize to support ongoing success.