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 entry of subsidized nursing homes (NH) and home care (HC) teams reduces hospital bed-blocking. I use individual data on emergency inpatient admissions at Portuguese hospitals during 2000-2015. My empirical approach exploits two sources of variation. First, variation in the timing of entry of NH and HC teams across regions, originating from the staggered implementation of a policy reform. Second, variation between patients in their propensity to bed-block. I find that the entry of HC teams in a region reduces the length of stay of individuals at increased risk of bed-blocking by 4 days relative to regular patients. Reductions in length of stay upon the entry of NH occur only for patients with high care needs. The reductions in length of stay do not affect the treatment received while at the hospital nor the likelihood of a readmission. The beds freed up by reducing bed-blocking are used to admit additional elective patients. I also provide evidence on the mechanisms preventing the complete elimination of bed-blocking.