A rapidly aging society presents important challenges to care homes. Faced with increasingly elderly residents and progressively more complex clinical and social care needs, nursing and residential homes will have to address a number of issues. These include: how to maintain residents’ quality of life as well as quality of care; how to integrate health and social care provision; how best to manage their interface with hospitals in order to prevent avoidable hospitalizations and facilitate early discharges; and how to utilize new technology in a cost-effective manner. This review examines evidence from across the world on how care home placements can evolve to meet these challenges, with discussion largely adopting a UK perspective. The evidence on innovative ways of working to achieve such aims is growing, although slowly. The potential for new technologies to maintain quality and contain costs is significantly under-developed. More research is now needed.