The Centers for Medicare & Medicaid Services (CMS) released 2023’s Medicare national discharge and utilization data at the end of last month. Below, we outline a few observations related to the inpatient rehabilitation facilities (IRFs): 

1. IRF Utilization Surged in 2023

IRF utilization among Medicare beneficiaries has increased dramatically over the last few years, especially from 2022 to 2023. From 2022 to 2023 (one calendar year), IRF stays per Medicare beneficiary increased by approximately 12%.

 

From 2021 to 2023, the total incremental IRF discharges are estimated at about 200,000 discharges, which equates to an incremental 7,000 average daily census (ADC) nationally. At a 70% implied occupancy rate, this equates to about 10,000 more utilized or developed beds in only three years.

Summary for graphic:

  • 12% increase in IRF stays per Medicare beneficiary from 2022 to 2023 (only one year)
  • 6% increase in the number of Medicare beneficiaries from 2022 to 2023
  • Approximately 14% total increase in IRF Medicare discharges in one year

2. State-by-State Utilization Varies Tremendously

As shown in the chart below, state-by-state IRF utilization shows significant variation, with the top IRF utilizers discharging about 14% of all Medicare acute-care patients to IRF settings and the lowest utilizers below 2%. The national average of 6% is up from about 5% in 2021. Gray represents non-certificate of need (CON) states and teal represents CON states.

3. Non-CON Have Higher IRF Utilization Than CON States

Similarly, the chart below shows variation between CON and non-CON states and includes the trends over time. IRF utilization is increasing in both CON and non-CON states. We also included specific trends for Florida, which highlight changing utilization following Florida’s removal of the IRF CON laws in 2019.

IRF utilization has surged in recent years. With an aging population and increased demand for post-acute rehabilitation services, many of our health system clients are actively exploring strategies such as de novo development, joint ventures, or other partnerships to meet this growing market opportunity. VMG Health understands the complexity of this unique and specialized service line, offering a breadth of services related to inpatient rehabilitation, such as: 

  • Business valuation 
  • IRF market demand studies  
  • FP&A/scenario analysis on returns for de novo or other IRF opportunities 

As the inpatient rehab landscape evolves, having the right expertise and support is critical to navigating challenges and seizing opportunities. Whether you’re focused on enhancing patient outcomes to keep more care local, improving your unit’s contribution margin through greater efficiency, or exploring innovative partnership opportunities, VMG Health’s experienced team is ready to offer the support your organization needs. Connect with an expert to strengthen your IRF program and maximize its impact within your community. 

Contributors:
Lance Whitty & Sydney Richards