Nursing Care Facilities in the US Industry Market Research Report Now Available from IBISWorld

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Although revenue dropped during the recession, an aging population will increase demand for industry services. However, recent legislation will likely influence consumers to use at-home nursing care to reduce costs. In addition, decreasing Medicaid and Medicare reimbursement rates and tougher pricing negotiation from private insurance companies will hamper profitability over the next five years. To stay afloat, operators will diversify services to attract customers and buoy profit margins. For these reasons, industry research firm IBISWorld has updated its report on the Nursing Care Facilities industry.

IBISWorld Market Research

IBISWorld Market Research

Demand will pick up slightly as the population ages, but growth will remain modest

The Nursing Care Facilities industry has remodeled itself to accommodate a tough economy, unstable reimbursement rates and costly professional liability insurance. During the five years to 2012, industry revenue has increased 1.8% per year on average to $110.7 billion. According to IBISWorld Industry analyst Anna Son, “Due to an aging US population and the necessary nature of services provided in nursing care facilities, the industry was able to thrive even while the economy struggled.” However, despite favorable demographic trends, operators have had to make adjustments to boost occupancy rates while maintaining profitability, including progressive acquisition strategies and cost mitigation techniques. Furthermore, revenue growth was hindered as private health insurance coverage and per capita disposable income fell during the recession, decreasing nursing care affordability for many individuals. Additionally, reduced Medicare and Medicaid reimbursements are expected to hamper industry growth in 2012, with an estimated revenue decline of 0.2%.

In response to changing consumer preferences, unfavorable government policies, uncertain reimbursement rates and a down economy, many operators have exited the industry or closed underperforming locations. This trend has caused the number of companies to decline at an annualized rate of 0.6% to 8,288 firms in the five years to 2012. Additionally, says Son, “nursing care operators are changing their business models and offering supplementary services to reduce costs, attract residents and help offset lower Medicare reimbursements.” Labor, supply and malpractice expenses have stabilized recently, helping firms maintain profit margins at 3.1% in 2012.

Despite recent mergers in the Nursing Care Facilities industry and the wave of consolidation over the past five years, the industry is still highly fragmented, characterized by a number of local and regional providers. IBISWorld estimates that the top four firms account for 9.8% of industry revenue and the largest operator, HCR Manor Care, makes up less than 5.0% of total revenue. A majority of the businesses in the industry are single facilities and privately owned. Based on data from the Centers of Medicare and Medicaid Services, for-profit operators of nursing home facilities account for about 65.0% of nursing homes, 30.0% are operated as voluntary not-for-profit facilities and the remaining 5.0% are owned by the government and other facilities. The fragmented nature of the industry provides opportunity for aggressive and complementary healthcare companies to acquire smaller facilities to begin establishing a foothold or dominating the industry. Some of the industry's largest chains have been divesting beds during the past five years. States with high liability costs have led to many national chains selling facilities in those states, as operating these imposes a higher cost and restricts profit potential. The strong competition for patients has caused diversification and specialization of services. This increases the likelihood that facilities will develop subacute and other specialty care units.

Demand is forecast to pick up slightly starting in 2014 and going forward as the economy recovers and the population continues aging. However, recent healthcare legislation will continue to encourage individuals to use at-home nursing care to cut costs. This trend will shift demand away from the industry's facilities and into patients' homes. Furthermore, Medicare and Medicaid reimbursements, which account for more than 75.5% of revenue, are expected to decline over the next five years. Both factors will place downward pressure on revenue and profitability and somewhat offset the benefits of an improving economy and an older population. As a result, IBISWorld forecasts that revenue will grow at a slow rate over the five years to 2017 to $115.5 billion.

For more information, visit IBISWorld’s Nursing Care Facilities in the US industry report page.

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IBISWorld industry Report Key Topics

This industry provides living quarters, inpatient nursing and rehabilitation services for people with a chronic illness or disability. The care is usually provided for an extended period to individuals who require help with day-to-day activities, but who do not need to be in a hospital.

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 or call 1-800-330-3772.

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Gavin Smith
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