This research focuses on elderly patients who have been hospitalized, are ready to be discharged but must remain in the hospital until a bed in a geriatric institution becomes available; these patients "block" a hospital bed. Bed-blocking has become a challenge to healthcare operators due to its economic implications and quality-of-life effect on patients. Indeed, hospital-delayed patients, who cannot access their most appropriate treatment (e.g., rehabilitation), prevent new admissions. Moreover, bed-blocking is costly since a hospital bed is more expensive to operate than a geriatric bed. We are thus motivated to model and analyze the flow of patients between hospitals and geriatric institutions in order to improve their joint operation. 2. Academic/Practical Relevance: The joint modeling we suggest is necessary in order to capture blocking effects. In contrast to previous research, we address an entire time-varying network by explicitly considering blocking costs. Moreover, our fluid model captures blocking without the need for reflection, which simplifies the analysis as well as the convergence proof of the corresponding stochastic model. 3. Methodology: We develop a mathematical fluid model, which accounts for blocking, mortality and readmission-all significant features of the discussed environment. Then, for bed allocation decisions, we analyze the fluid model and its offered-load counterpart. 4. Results: The comparison between our fluid model, a two-year data set from a hospital chain and simulation results shows that our model is accurate. Moreover, our analysis yields a closed-form expression for bed allocation decisions, which minimizes the sum of underage and overage costs. Solving for the optimal number of geriatric beds in our system demonstrates that significant cost reductions are achievable, when compared to current operations. 5. Managerial Implications: Our model can help healthcare managers in allocating geriatric beds to reduce operational costs. Moreover, we offer two new capacity allocation approaches: a periodic reallocation of beds and the incorporation of setup cost into bed allocation decisions.