The Math has Stopped Mathin’ in Post-acute Care

Post-acute care is the part of healthcare that’s supposed to save the system.

It is where you send a patient after the hospital to recover without burning expensive acute beds. It is where you keep grandma stable at home instead of bouncing her between the ED and a facility. It is the “lower cost setting,” the “right care, right place,” the great efficiency promise.

And yet, the math is failing.

Not in a hand-wavy way. In a literal, spreadsheet way.

Because three curves are converging. All of them are grounded in history, and they tell a very clear story

Curve 1: The demand curve is bending upward, and it accelerates in the 2030s

We do not need a futuristic model to see it. We can just follow the Census.

Between 2025 and 2035, the 65+ population is projected to grow ~20%, while the 85+ population grows ~59%¹ based on Census decade projections.

The 85+ cohort is where post-acute becomes not “a service” but “a lifestyle.” More falls. More neurodegenerative disease. More multi-morbidity. More caregiver burnout. More “can’t safely discharge home without support.”

Even if per-capita utilization stayed flat, the system still has to absorb a much larger, much frailer population.

MedPAC’s data show per-patient post-acute costs have been largely stable since the mid-2010s². That steadiness is exactly why demographics matter so much. If the spending per person does not magically drop, total demand rises with the number and mix of people.

Curve 2: The labor curve is snapping, not stretching

Post-acute is labor. Labor is post-acute.

You can buy software, sensors, and workflows, but at the end of the day somebody has to show up, touch the patient, transfer them, bathe them, mobilize them, do wound care, coach meds, document everything, and try not to miss something that turns into a fall, a sepsis readmission, or a lawsuit.

HRSA projects demand for direct care workers to grow 40% between 2023 and 2038³. But PHI data show the nursing assistant workforce in nursing homes has already been shrinking, down from 617,000 in 2014 to 459,000 in 2023⁴ , even as home care and residential care workforces grow. Meanwhile, the system bleeds labor through a hole called turnover. Home care turnover is hovering near 75%⁵. And since 2020 to 2021 alone, nursing homes lost more than 56,000 nursing assistant jobs, the largest single-year decline in a decade⁶. 

So the story isn’t “we need to hire more.” The story is:

• We need to hire more and replace more and we cannot keep the people we already have.

That is not a shortage. That is a structural inability to stabilize.

Curve 3: The margin curve is already at the floor

If margins were fat, you could brute-force the problem. Pay more. Staff more. Invest in training. Offer career ladders. Eat the volatility. Keep beds open.

But margins are not fat. They are thin enough to see through.

MedPAC reports SNF all-payer total margin ~0.4% in 2023⁷. And costs per day have been rising faster than payments per day.

MedPAC data show hospice FFS Medicare margins have declined from ~20% in 2020 to ~10% in 2022, with a projected 8% in 2025. Still positive, but compressing⁸.

Home health sits in the weirdest place of all: policy discussions about “high Medicare margins” exist at the same time that the market experiences closures and access strain, with ongoing pressure and volatility in payment rules.

So the industry is asked to do three things at once:

1. serve a rapidly aging population,
2. pay more to attract scarce labor,
3. while operating on margins that cannot fund the first two.

That’s the punchline. That’s the irony.

Post-acute is one of the fastest-growing needs in the economy, and it is becoming operationally unsustainable.

When does it “go under”?

“Go under” does not mean a single crash. It means the system quietly stops clearing.

Here is what that looks like in real life:

• More agencies stop taking certain payers or geographies.
• Facilities close wings because they cannot staff them.
• Hospitals cannot discharge, so lengths of stay rise.
• Families become the default workforce.
• Readmissions rise, and the “lower cost setting” becomes a choke point that pushes cost back upstream.

The most dangerous period is the early-to-mid 2030s, when the 85+ cohort is climbing fast and the labor market is still competing for the same workers. The demographic acceleration is baked in. If margins remain near-zero and turnover remains extreme, access will degrade before anyone declares a formal “crisis,” because the crisis will show up first as capacity that exists on paper but not in staffed reality.

This is not prophecy. It is just arithmetic.

What has to change for it to start mathin’ again

If post-acute is going to “math” again, the system needs structural edits, not vibes.

1) Pay for workforce stability, not just visits, days, and notes

We keep reimbursing units of service while praying for staffing. That’s backwards.

If turnover is the tax, then stabilization is the investment.

• retention incentives,
• funded training,
• wage floors tied to local labor markets,
• immigration pathways for care roles,
• and reimbursement that recognizes hard-to-staff geographies.

You cannot regulate your way to staffing. You have to finance your way to staffing.

2) Reduce the labor required per outcome through real operational automation

Not “AI to write notes.” Actual throughput changes:

• automated intake and eligibility,
• automated scheduling and backfill,
• automated referral triage,
• automated documentation capture from the workflow,
• automated patient and family comms that prevent avoidable escalations.

The goal is not to replace clinicians. The goal is to remove the 30–40% of the job that is not related to care.

3) Align incentives across hospital, post-acute, and payer so discharge is a shared problem

Right now, post-acute capacity risk sits downstream while acute care throughput depends on it upstream.

If hospitals and MA plans depend on post-acute capacity, they need to co-own it:

• preferred networks that actually invest in providers,
• shared savings that reaches the bedside workforce,
• and contracting that rewards acceptance, speed-to-start, and outcomes, not just denial management.

4) Fix rate volatility

When providers cannot predict next year’s rates, they cannot confidently raise wages this year.

Volatility pushes the system toward consolidation, risk avoidance, and thinner coverage. Stability enables investment.

5) Make “care at home” real infrastructure, not a slogan

The demographic curve is pushing care out of institutions. PHI’s projections also show growth concentrated in home and community-based segments.

But “home” only works if the system funds:

• caregiver support,
• respite,
• remote monitoring plus response,
• and wraparound services that prevent the spiral.

The math is not a mystery. It is three lines on a graph, and they are converging. The system does not need another pilot program, another innovation challenge, or another white paper about "reimagining care delivery." It needs structural changes to how we pay, staff, and organize post-acute care, and it needs them before the early 2030s turn arithmetic into emergency. 

Citations

1. U.S. Census Bureau, Population Division. (2023). 2023 National Population Projections Tables: Main Series, Table 2. Projected Population by Age Group and Sex [Data file]. U.S. Department of Commerce. https://www.census.gov/data/tables/2023/demo/popproj/2023-summary-tables.html
2. Medicare Payment Advisory Commission. (2024). A Data Book: Health Care Spending and the Medicare Program, Section 8: Post-Acute Care, Chart 8-2. MedPAC. https://www.medpac.gov/wp-content/uploads/2024/07/July2024_MedPAC_DataBook_Sec8_SEC.pdf
3. National Center for Health Workforce Analysis, HRSA. (December 2025). Long-Term Services and Support: Demand Projections, 2023–2038. U.S. Department of Health and Human Services. https://bhw.hrsa.gov/sites/default/files/bureau-health-workforce/data-research/ltss-projections-factsheet.pdf
4. PHI. (September 2024). Direct Care Workers in the United States: Key Facts 2024. https://www.phinational.org/wp-content/uploads/2024/09/PHI_Key_Facts_Report_2024.pdf
5. PHI. (September 2025). Direct Care Workers in the United States: Key Facts 2025. https://www.phinational.org/wp-content/uploads/2025/09/PHI-DCW-Key-Facts-Report-2025.pdf
6. PHI. (September 2022). Direct Care Workers in the United States: Key Facts 2022. https://www.phinational.org/wp-content/uploads/2022/08/DCW-in-the-United-States-2022-PHI.pdf
7. Medicare Payment Advisory Commission. (March 2025). Report to the Congress: Medicare Payment Policy, Chapter 6: Skilled Nursing Facility Services (p. 202). MedPAC. https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch6_MedPAC_Report_To_Congress_SEC.pdf
8. Medicare Payment Advisory Commission. (March 2025). Report to the Congress: Medicare Payment Policy, Chapter 9: Hospice Services (p. 269). MedPAC. https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch9_MedPAC_Report_To_Congress_SEC.pdf