The Post-Acute Care Crisis: Why 70% of PAC Facilities Struggle to Scale Operations in 2025

Dhruva Sareen

05 May 2025 — 5 min read

The post-acute care landscape in 2025 looks nothing like it did even two years ago. Patient volumes are surging across all demographics, yet facilities face unprecedented scaling challenges, with nearly 70% reporting inability to meet demand due to prohibitive staffing costs and operational inefficiencies.

The perfect storm hitting different post-acute care segments in 2025

According to Nanonets Health's 2025 State of Post-Acute Care Survey, which polled 432 PAC administrators across all 50 states, different segments of the industry face unique scaling challenges:

Long-Term Acute Care Hospitals (LTACHs): These facilities, specializing in complex medical cases requiring extended hospitalization, report the highest FTE costs at an average of $87,500 per clinical position annually. With 64% of LTACHs unable to scale operations despite increasing referrals, these facilities lose an estimated $1.2M annually in unrealized revenue.
Inpatient Rehabilitation Facilities (IRFs): Focused on intensive rehabilitation services, IRFs face a 41% increase in referrals for neurological and orthopedic cases, yet 58% report inability to expand capacity due to prohibitive costs of adding specialized therapists at $95,000+ per position.
Skilled Nursing Facilities (SNFs): The largest PAC segment reports the most severe scaling challenges, with 72% unable to accept all qualified referrals. With average FTE costs of $72,000 annually for licensed staff, SNFs are spending 34% of revenue on staffing while facing Medicare reimbursement cuts.
Home Health Agencies: Despite lower facility overhead, home health providers struggle with geographic scaling, reporting that each new coverage area requires approximately $325,000 in additional FTE costs, making market expansion prohibitively expensive.

The financial burden of FTE-dependent scaling

The Nanonets Health 2025 Financial Impact Assessment reveals the extensive costs of traditional staffing models:

Your operational costs prevent linear growth: For every 20% increase in patient volume, facilities report needing 22-25% more clinical staff, creating a negative scale economy. With clinical positions averaging $76,500 annually, each new bed requires approximately $127,500 in additional staffing costs.
Your administrative staff costs are unsustainable: Despite not providing direct care, administrative staff account for 31% of total personnel expenses, with each full-time administrative role averaging $52,000 annually plus benefits.
Your overtime expenses are eroding margins: The average PAC facility spends 14% of its payroll budget on overtime premiums, with 66% of these hours dedicated to administrative documentation rather than direct patient care.
Your hiring and onboarding costs limit agility: Each new clinical hire costs approximately $18,500 in recruitment, credentialing, and onboarding expenses, with most facilities reporting 5+ months from identification of need to productive employment.

The RCM Crisis Draining Post-Acute Care Resources

The Nanonets Health 2025 Financial Impact Assessment also reveals the devastating impact of traditional staffing models other than the higher costs:

Claim denial rates are skyrocketing: The average PAC facility now faces a 24% initial denial rate, with each denied claim costing $118 in administrative rework and delaying payment by an average of 47 days.
Verification bottlenecks create admission delays: Insurance verification now takes 2.4 hours per patient on average, with 31% of verifications requiring multiple phone calls or portal logins, directly impacting admission speed and capacity.
Documentation gaps trigger payment reductions: 27% of PAC claims receive payment adjustments due to documentation deficiencies, with the average facility losing $213,000 annually to preventable downcoding.
Prior authorization complexity limits census: With payers requiring prior authorization for 74% of PAC admissions and changing requirements quarterly, facilities spend over 42 staff hours weekly navigating authorization portals and phone systems.
Billing cycles consume critical resources: The average facility dedicates 3.7 FTEs exclusively to billing functions, costing $219,000 annually in direct salary expense while still experiencing an average 43-day payment cycle.

The compounding effect of these RCM inefficiencies has created an unsustainable financial model, with facilities essentially funding payers through administrative waste and delayed reimbursements – all while clinical needs go unmet due to resource constraints.

How the top 30% of PAC providers are scaling without proportional FTE increases

The Nanonets Health 2025 Financial Impact Assessment shows a clear divide in performance metrics between technology leaders and laggards. While most facilities struggle with FTE-dependent growth, the top performers have reimagined their operations using AI and automation to achieve non-linear scaling:

Breaking the linear FTE-to-patient ratio: Top performers maintain a 19% lower staff-to-patient ratio while achieving better clinical outcomes, using AI-powered systems that automate routine tasks and monitoring.
Implementing centralized service models: Leaders are centralizing administrative functions across multiple facilities, using AI to handle documentation, billing, and verification processes at scale without proportional staff increases.
Automating intake and eligibility verification: Their systems process referrals 24/7, automatically checking insurance benefits and clinical appropriateness, reducing response time to under 15 minutes while enabling handling of 3.7x more referrals with the same staff.
Creating virtual capacity through operational efficiency: By optimizing care transitions and discharge planning, leading facilities reduce average length of stay by 1.3 days while maintaining quality metrics, effectively creating 12% more capacity without facility expansion.

Nanonets Health's Post-Acute Care AI Suite: The Non-Linear Scaling Solution

What's the real result? The Nanonets Health 2025 Benchmarking Report shows the top-performing PAC facilities have achieved 32% revenue growth with only 7% increase in staffing costs, while increasing clinical face time with patients by over 35%.

Their secret isn't endless hiring in an impossible labor market – it's deploying AI solutions that break the linear relationship between patient volume and staff size, allowing facilities to scale operations without proportional increases in personnel costs.

The path forward for your facility

The post-acute care sector is at a crossroads. Facilities that continue to operate with traditional staffing models and paper-based processes will continue to struggle with profitability and scaling limitations.

The most successful PAC providers have recognized that technology isn't just a nice-to-have – it's the only viable solution to the fundamental economic challenges facing the industry. They've embraced AI not as a replacement for human care, but as a scaling multiplier that allows their clinical teams to handle greater volume without proportional cost increases.

This analysis is based on Nanonets Health's 2025 Post-Acute Care Outlook Report and nationwide facility survey data.

Nanonets Health has built AI agents specifically for post-acute care that handle the documentation burden, streamline intake processes, and support clinical teams – without requiring you to hire additional staff.