Mr Poots said 180 beds are to be axed as part of the plans, while the number of statutory residential homes is expected to be cut by around 50% over the next five years.
The proposals would mean more emphasis is put on treatment taking place in the home and more nurses working in the community.
Mr Poots said 17 new integrated care partnerships will be in place across NI by this time next year, with local health professionals and voluntary organisations working more closely.
"ICPs will enable local health and social care professionals and the voluntary and community sector organisations to work more closely together on a collaborative basis to improve efficient and effective service delivery," the DUP minister told the Assembly on Tuesday.
Our focus is on delivering better, targeted care for older people closer to home, which will enable them to stay at home and remain independent where possible
"These multi-sector collaborative networks will include statutory, independent and voluntary and community practitioners and organisations in their membership and will come together to respond innovatively to the assessed care needs of local communities, provide support for service users closer to home; and avoid unnecessary visits to hospital.
"I expect the HSCB to establish the first nine ICPs over the next few months and for all 17 ICPs to be in place by this time next year, providing full regional coverage."
The minister added that the department will invest £3.2m in social care reform over the next three years and an extra 479 supported living places will be provided.
One million pounds will be put into training staff in nursing homes to support people at the end of their lives.
Sandra Spence, who looks after her mum at home in Newtownards, welcomed the changes but told UTV there could be more financial support for carers.
"For looking after my mum, I really don't think it's that high for the hours that I do," she said.
"We're also keeping my mummy out of nursing homes and hospitals which is saving the government loads of money and we're getting less for doing it.
"And we're one-to-one care so we're giving mum more care than what she would probably get in nursing homes, where there are more people."
Sue Ramsey, who is chair of the Health Committee at Stormont, said any proposed closures must be based upon care in the home being in place to meet the demand.
The Sinn Féin MLA continued: "The announcement by Health Minister Edwin Poots that 180 beds, mainly in the care home sector, are to close needs to be balanced with the need for nurses to ensure that the standard of care is not diminished.
While I am in favour of Transforming Care strategy I am also concerned that this is not privatisation through the back door.
"Many patients in homes need reassurance that the standard of care will be available in the community. Whatever changes come through this strategy the fundamental principle of the health service, healthcare free at the point of delivery, cannot be altered.
"There needs to be accommodation through the NHS for care homes as we cannot have a situation where individuals who don't have family support fall between the cracks and are left neglected in their final years."
Meanwhile the union Unison has strongly criticised the Health Minister over the plans.
Regional Secretary Patricia McKeown said: "Today the Minister for Health unveiled a disastrous plan for cuts, closures and privatisation. This follows a public consultation which he claims was a 'ringing endorsement'. This is an extraordinary distortion of reality.
"If we were looking at a real plan to move the delivery of care near to the community and nearer to home then this would require a multi-million pound investment.
"No such money is forthcoming. The closure of 180 beds in a health system which is already reeling from too many bed closures is designed to reduce nurses and other health care staff.
"It will throw A&E departments into deeper crisis."
South Down MP Margaret Ritchie called for increased levels of clinical networking between the Downe Hospital and the Ulster Hospital.
"It is crucial, in order for both the Downe and the Ulster to provide an effective health service that there are increased levels of clinical networking between junior and middle grade doctors at both hospital sites," said the SDLP representative.
"Last week I received figures from the Trust confirming that waiting times in the Ulster Hospital have increased since the out of hours A&E service at the Downe began.
"This is distressing for both staff and patients alike."