Background: Alternate level of care (ALC) patients are those who reside in acute hospital beds but can be managed in non-hospital settings. They contribute to high occupancy levels in Canadian hospitals. Between 2017-18, Ontario spent 1.1 billion dollars on hospitalized patients waiting for alternate level of care (ALC) beds. To improve value for care, Ontario Ministry of Health (MOHLTC) invested into reintegration units which are designed to transfer ALC patients out of hospital and transition them back into the community or long-term care (LTC). Given today’s healthcare budget pressures, it is unclear if reactivation units are feasible. In 2018, the MOHLTC funded a reintegration unit, Pine Villa with an operational partner, Sunnybrook Hospital and community service providers (SPRINT Senior Care, LOFT) in Toronto, Ontario. The objective was to determine averted costs for ALC-patients and impact on Sunnybrook patient flow-through if ALC-patient Pine Villa transfers occurred on the day of ALC readiness. Methods: Retrospective, observational analysis of Sunnybrook ALC-patients discharged to Pine Villa between January 9, 2018 to February 4, 2019. From the healthcare payer’s perspective (MOHTLC), cost analysis was modelled for ALC patients designated for 1) LTC and 2) home with supports. Avoided costs at time of ALC readiness were determined by case-costing. Averted hospital ALC days were established. Results: If ALC patients were transferred to Pine Villa at time of ALC readiness for LTC, the healthcare system could have averted 5.4 million dollars from Sunnybrook. If the patients were transferred for home, 2.3 million dollars could have been averted. Both models increased acute Sunnybrook Hospital capacity by 34 beds. Conclusion: There is a business case supporting reintegration units if ALC-patients are discharged from the hospital on the day of ALC-readiness.