The global health care market is projected to be worth almost $350 billion by the year 2020, an increase of almost $125 billion over the $227 billion value in 2015. This growth represents a 9 percent compound annual growth rate over the five-year period, according to research firm MarketsandMarkets.
Home health and hospice care figure prominently into the staggering equation.
In a survey of 150 private equity investors, senior-level executives and other professionals attending the recent Capital One’s Healthcare Services Conference, 53 percent of respondents said they felt the home health and hospice sector is likely to see strong growth in the next 12 months.
According to the Bureau of Labor Statistics, approximately 1.3 million home care jobs will be added through 2020. In fact, they report that those working in home health positions will see a 69 percent growth through 2020, while those in personal care aide positions will see a 70 percent growth. This will mean great opportunities for employment for both clinical and non-clinical home health care workers.
Reasons for Growth
Many factors have contributed to this growth, including the global aging of the population, the growing need and regulatory requirements to provide cost-effective health care due to increasing costs, the rising emphasis on preventive medicine, and availability of enhanced medical devices due to technological advancements.
Millions of seniors in need of assistance are finding that home care is much more affordable than many other assisted living options. The convenience of receiving care in the familiar environment of home rather than having transport elderly people to multiple health-related appointments is also a positive.
Even with home health care’s upward trend, certain other factors have presented industry challenges, such as changing reimbursement policies, limits to insurance policy coverage and a lack of qualified healthcare workers.
Regulatory scrutiny is the most concerning aspect of the health care industry, according to 41 percent of survey respondents. Pay-for-performance, and the implementation of and changes to the Affordable Care Act (ACA), also worry respondents; 23 percent of respondents said pay-for-performance is their primary concern, while 22 percent said that of the implementation of and changes to the ACA.
Further, the rapid growth of home health care coincides with growing shortages of the clinicians needed for it to thrive. Demand for nurses, allied practitioners, physicians and support staff is growing in every sector of the health care industry, even in hospitals, where employment is projected to rise by nearly 400,000 jobs by 2024.
Home health care agencies will be competing for quality practitioners with numerous other health care industries, including many well-established enterprises. The competition for registered nurses may be particularly acute.
Using Technology Effectively
Home care providers who know how to take effectively implement the latest technologies and are prepared for the projected upcoming regulatory changes will be in the best position to take advantage of opportunities in the coming years.
As the technology landscape grows, we will continue to see an emerging range of devices that can instantly transmit vital health data and other feedback between patient, family, doctors, nurses and home care providers. Learning to correctly and effectively use these technologies takes considerable time and effort, so agencies leading the charge will be best positioned to benefit.
The Medicare Factor
Home health care services in the U.S. account for nearly $20 billion per year in Medicare expenditures. While much of the money spent on home care ultimately reduces, overall health care expenditures it can provide over institutionalized medicine. Therefore, the bigger a budget item you become, the more political scrutiny you will invite.
This scrutiny has led to payment cuts and increased regulatory hurdles, a trend we are like to see continuing. More than ever, home care providers need to work closely with legal counsel, plan administrators and other regulatory advisors in order to ensure they remain in compliance of all federal, state and local rules and regulations.
The introduction of Medicare’s new bundled payments model for both joint replacement and cardiac care will add to the complexity of the services, but will also incentivize hospitals and other acute care providers to work closely with home health care providers, resulting in reduced hospital readmissions while improving patient outcomes.
This is expected to drive down costs and at the same time improve the accountability of the provider. Not all home healthcare providers are equal, so providing high-quality care is still of the utmost importance.
Consult an AdvisorWhile opportunities abound for both investors and providers in the home health care arena, each must be aware of the dangers and pitfalls that may await them.
For more information on the changing landscape of home health care and how to make the best decisions for the future of your home health care business, please contact Phil O’Hara at firstname.lastname@example.org