Encompass Health is the largest owner and operator of inpatient rehabilitation hospitals (IRFs) in the U.S., operating 173 hospitals across 39 states and Puerto Rico. Encompass treats patients recovering from strokes, hip fractures, brain injuries, spinal cord injuries, and other neurological conditions — nondiscretionary medical events requiring intensive, hospital-based therapy. IRF patients must tolerate at least three hours of therapy per day, five days per week, distinguishing Encompass's care from lower-acuity settings like skilled nursing facilities. About 92% of patients transfer directly from acute-care hospitals via physician referrals. Encompass generates revenue through fixed per-discharge payments from Medicare (65% of revenue) and negotiated rates from Medicare Advantage (16%) and managed care (11%). Because Medicare pays a fixed rate per discharge, Encompass benefits directly from operating efficiently. This fixed-payment model also creates operating leverage — as volume and occupancy rise, incremental patients require little additional fixed overhead. Encompass grows by opening 6–10 new hospitals annually, adding beds to existing hospitals at high occupancy, and increasingly pursuing joint ventures with health systems, which deepen referral relationships. Over a third of Encompass hospitals already operate as JVs. Bed additions to existing hospitals generate the highest returns by leveraging existing infrastructure. Underlying demand is structural, driven by a 75+ population growing roughly 4% annually against a largely static licensed IRF bed supply. Key regulatory risks include CMS's Review Choice Demonstration audit program and the Medicare Advantage prior authorization friction, where conversion rates run well below traditional Medicare levels.