What’s driving system investments in rehab care?
So far in 2026, about half a dozen U.S. hospitals and health systems have said they plan to expand rehabilitation services as organizations aim to ease capacity strains and meet rising demand.
In January, Springfield, Ill.-based Hospital Sisters Health System and Brentwood, Tenn.-based Lifepoint Health said they are partnering on a 40-bed inpatient rehabilitation hospital under construction in Howard, Wis. The freestanding facility will double inpatient rehabilitation capacity currently at HSHS St. Vincent Hospital in Green Bay, Wis., allowing the hospital to repurpose its existing rehab unit to support acute care demand.
A few weeks later, Birmingham, Ala.-based Encompass Health said it is planning a freestanding 50-bed inpatient rehabilitation hospital in Flowood, Miss., set to open in 2027. With 173 hospitals across 39 states and Puerto Rico, Encompass is the largest owner and operator of rehabilitation hospitals in the U.S.
Other health systems that have recently opened or announced plans to expand rehabilitation services include Jacksonville, Fla.-based Baptist Health, Birmingham, Ala.-based UAB Medicine, Oakland, Calif.-based Kaiser Permanente, Sarasota (Fla.) Memorial Health Care System and Winston-Salem, N.C.-based Novant Health.
Relieving hospital capacity pressure
Many of these projects are tied to broader operational challenges, as hospitals report elevated inpatient volumes and longer lengths of stay, driven in part by higher-acuity patients and limited post-acute capacity. Skilled nursing facilities in many markets remain constrained by workforce shortages, reducing discharge options for patients who no longer require acute care but need intensive therapy.
Expanding inpatient rehabilitation facilities allows systems to move appropriate patients out of acute beds more efficiently while keeping them within their networks. In some cases, as with HSHS St. Vincent Hospital, rehab expansion enables hospitals to convert space back to higher-demand acute services.
Growing clinical demand
Demand for rehabilitation services is also increasing.
Industry projections show the global rehabilitation market is expanding, driven by population aging and a growing number of patients with neurological, musculoskeletal and cardiologic conditions.
Additionally, advances in stroke, trauma and cardiac care mean more patients are surviving complex events but require intensive care from health systems.
A market-specific strategy
Not all hospital systems are expanding their rehabilitation footprint, though. Kaleida Health’s Buffalo (N.Y.) General Medical Center, for example, plans to reduce beds in its medical rehab unit from 34 to 16 as part of a broader $200 million strategic plan.
“The remaining 18 beds from the MRU will be repurposed to much-needed inpatient capacity,” Kaleida Health said in a statement. “Patients who require MRU-level care beyond the remaining 16 beds have access to several other MRUs within the community, ensuring continuity of care.”
The variation underscores that rehabilitation strategy depends on local market dynamics. In markets facing post-acute shortages and rising acuity, however, inpatient rehab is increasingly viewed as both a clinical necessity and an operational pressure valve.
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