Orphanages and Group Homes in the US Industry Market Research Report from IBISWorld has Been Updated

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Changing preferences and a shift to foster homes rather than group homes will constrain the Orphanages and Group Homes industry's growth over the five years to 2017. For these reasons, industry research firm IBISWorld has updated a report on the Orphanages and Group Homes industry in its growing industry report collection.

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Demand is expected to decline over the next five years as demand continues to fall

The Orphanages and Group Homes industry contracted over the past five years, as demand for foster care fell. Revenue is generated from federal government social services funding, grants, state and local government contributions and private donations. The Department of Health and Human Services also provides aid through Medicaid funding, which covers healthcare costs for children and disabled individuals in the care of this industry. “Since 2007, the number of children in foster care has declined at an annualized rate of 3.7%, from 488,000 in 2007 to an estimated 403,249 in 2012,” says IBISWorld industry analyst David Yang. Consequently, the government reduced funding for this industry. Furthermore, during the recession, falling disposable income discouraged private donations, which further reduced revenue. As a result, in the five years to 2012, IBISWorld expects industry revenue to fall on average 1.3% per year to $8.3 billion. However, revenue is expected to increase 0.1% in 2012 as the economic recovery slightly bolsters private donations.

The majority of operators are nonprofit organizations. According to census data, only 24.7% of industry organizations operate on a for-profit basis. Over the past five years, falling donations and government funding reduced profit margins, causing some firms to consolidate or exit the industry. Additionally, government legislation and polices such as the Fostering Connections to Success and Increasing Adoptions Act of 2008 focused on placing children with relatives instead of in foster care, which reduced demand for this industry's services. Furthermore, this industry has closed down large group homes in favor of smaller facilities, as this allowed for more individualized care for children. Consequently, in the five years to 2012, the number of enterprises is expected to fall on average 0.9% per year to 8,121. In the five years to 2017, this industry is anticipated to decline as demand falls. Similar to the previous five years, foster care participation is projected to continue its decline from 2012 to 2017, though at a slower average rate. Additionally, the steady economic recovery will partly mitigate falling demand for foster care. According to Yang, federal funding for Medicaid is also anticipated to increase strongly and private donations will increase as disposable income recovers. Consequently, IBISWorld forecasts that revenue will fall on average 0.9% per year to $7.9 billion by 2017, a slower decline than the previous five years.

In 2012, the top four companies in the Orphanages and Group Homes industry are expected to generate 7.4% of industry revenue, indicating a low level of market share concentration. While large organizations like ResCare and Boys Town operate across the country, most industry firms are small local organizations. This is because this industry provides residential care facilities primarily through group homes, children's villages, halfway homes and boot camps, which tend to be operated in a local sphere. In 2012, there are an estimated 8,121 organizations (enterprises) in this industry, of which 56.8% have less than 20 employees. For more information, visit IBISWorld’s Orphanages and Group Homes in the US industry report page.

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IBISWorld industry Report Key Topics

This industry includes foster homes, group homes, halfway homes, orphanages and boot camps. The industry does not include substance abuse facilities, retirement homes, correctional institutions or temporary shelters. While the industry provides some services to adults, these facilities are primarily for children and youth.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
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