Excessive length of hospital stay is among the leading sources of inefficiency in healthcare. When a patient is clinically fit to be discharged but requires support outside the hospital, which is not readily available, they remain hospitalized until a safe discharge is possible —a phenomenon called bed-blocking. I study whether the availability of subsidized nursing homes and home care teams reduces hospital bed-blocking. Using individual data on the universe of inpatient admissions at Portuguese hospitals during 2000-2015, I find that the entry of home care teams in a region reduces bed-blocking by 4 days per episode, on average. Nursing home entry only reduces bed-blocking among patients with high care needs or when the intensity of entry is high. Reductions in bed-blocking do not harm patients’ health. The beds freed up by reducing bed-blocking are used to admit additional elective patients.