In hospitals, Step Down Units (SDUs) provide an intermediate level of care between the Intensive Care Units (ICUs) and the general medical-surgical wards. Because SDUs are less richly staffed than ICUs, they are less costly to operate; however, they also are unable to provide the level of care required by the sickest patients. There is an ongoing debate in the medical community as to whether and how SDUs should be used. On one hand, an SDU alleviates ICU congestion by providing a safe environment for post-ICU patients before they are stable enough to be transferred to the general wards. On the other hand, an SDU can take capacity away from the already over-congested ICU. In this work, we propose a queueing model of patient flow through the ICU and SDU in order to determine when an SDU is needed, what size it should be, and what are the main drivers influencing these decisions. Using first- and second-order analysis, we examine the tradeoff between reserving capacity in the ICU for the most critical patients and gaining additional capacity achieved by allocating nurses to the SDU due to the lower staffing requirement. We find that under some circumstances the optimal size of the SDU is zero, while in other cases, having a sizable SDU may be beneficial. Moreover, we identify two parameters which play a prominent role in the SDU sizing decision: p, which captures the demand for SDU beds, and ν, which captures the supply gains by moving nurses to the SDU. The insights from our work provide rigorous justification for the variation in SDU use seen in practice as well as highlight which factors should be considered when making such sizing decisions for critical care.