The US Home Healthcare Market
In-home health and medical services in the U.S. are now an important part of the healthcare system. As the costs of hospital and nursing home delivered healthcare has skyrocketed, the consumption of a low-cost alternative in the form of home care for the elderly, sick, and disabled has also increased. Given the progression the market for the home healthcare industry
is expected to grow large.
At present home health agencies, hospices, and home care aid organizations make up most of the industry. About 20,000 organizations across the nation deliver healthcare to 8 million individuals with an acute illness, a long-term medical condition, a permanent disability, or a terminal illness.
The Medicare and Medicaid programs are the biggest sources paying for home healthcare agencies. During the period from 1967 to 1985, the number of agencies participating in the Medicare program grew from 1,753 to 5,983. However, this number declined from 1985 to 1990, as a result of Medicare paperwork and not so reliable payment policies.
Later, however, a lawsuit favored the National Association for Home Care, allowing it participation in framing of Medicare’s payment policies for home healthcare. As a consequence, and once again the number of Medicare participants swell from 5,793 in 1990 to a figure of 9,886 in 1996.
Amongst the different sources of funding, Medicare and Medicaid programs are the largest. For example, in 1996, while Medicare paid 38.7 percent, Medicaid paid 27.2 percent of the total home healthcare costs. The remaining sources included out-of-pocket expenses (20.5%), private insurance (12.2%), and nonprofit organizations (1.4%).
Further, between the years 1992–1996, Medicare payments for home health services jumped up from $8 billion to $18 billion and the number of visits more than doubled reaching 284 million from 132 million. The annual visits per user increased about 50 percent from 53 to 79, and the payments per user increased at a rate of 12 percent annually during the same period.
The US home healthcare industry comprising about 20,000 companies and agencies, generates a total annual revenue of $55 billion. The industry is characterized by fragmentation, consequently, the top 50 companies by size hold less than 25 percent market share.Other Home Healthcare Industry Facts & Trends
- The different kinds of services provided by home healthcare service companies include in-home skilled nursing services, counseling; personal care services; physical therapy; occupation & vocational therapy; homemaker & companion services; medical/hospital equipment & supplies; medical social services; drugs & medications; 24-hour home care; dietary & nutritional services; speech therapy; audiology; high-tech care viz. intravenous therapy, etc.
- A majority of in-home patients avail skilled nursing services (75 percent), followed by personal care ranked second (44 percent), while therapeutic services rank last (37 percent).
- Services offered include those short-term care (e.g. post hospital stay), as well as long-term care e.g. chronic obstructive pulmonary disease (COPD).
- The industry is labor-intensive, competitive and affected by advances in portable medical technologies, in addition the patients' requirements and likes for in-home care also affect it.
- Marketing and efficient operations have a direct impact on profitability of companies rendering home healthcare services.
- While bigger players benefit from economies of scale in sales and marketing, smaller ones do better by serving local markets.
- About 70 percent of those availing home healthcare services are age 65 and older, with the most common medical conditions requiring home care are heart diabetes, disease, and cerebral vascular diseases.
- Over one-third of the persons requiring in-home care are under age 60, availing assistance for rehabilitation, are disabled, or have chronic health conditions, often requiring patient aids for assistance.
- A majority, 80 percent, of those over age 60 choose to live independently, in comfort and with an enhanced quality of life.
- For the top performing companies (top 10%), the average revenue in 2007 was $17,340,702, a 30.1% change from 2004. These companies' average years in business was 16.4 years, and the average number of employees equaled 219, which was a 13.2% change from 2004.
- The life expectancy in the U.S. is continuously rising. For women it is 80 years, and for men, it is 74 years.
- In the coming thirty years, the American population over 65 years of age will double to 70 million.
- During the next decade a majority (about 75%) of baby boomers will retire.
- The costs to businesses due to lost productivity, absenteeism, work interruptions, and employee replacement has increased to about $11 billion on an annual basis.
- The rise in sport injuries, home, and vehicle accidents has increased the need for in-home care about 10 times.
- Over the past decade, people have come to spend about half the time less in hospitals following surgery, a lot of it has to do with increasing healthcare and insurance costs.
- About 8 million of the elderly population have some form of disability requiring assistance, and often some hospital furniture at home to help them. This number is projected to be 15 million by 2020.
Though the market for home healthcare services is competitive, it is growing, indicating an increasing market potential. As a result, the consumers in future, will demand a number of quality services from the US home healthcare service providers. At the same time, the 2009 financial crisis
poses its own challenges to the healthcare industry in general.