As the population ages, demand for adult day-care services will rise
Los Angeles, CA (PRWEB) January 17, 2013
The Adult Day Care industry has performed well over the past five years. The steadily aging population and expensive alternative long-term care options fueled demand for industry services. “Growth slowed over 2010 and 2011, though, as state and local governments faced budget shortfall stemming from the recession,” says IBISWorld industry analyst David Yang. “Households also had difficulty paying for services due to stagnant disposable income growth.” Still, other care options, like nursing homes, can cost five times more than adult day care. As a result, this industry quickly returned to strong growth in 2012 as the economy recovered and disposable income grew. In the five years to 2013, revenue is estimated to increase at an annualized rate of 2.0% to $6.2 billion.
Despite growth, profit has slightly declined since 2008 due to a slowdown in Medicaid funding for adult day care. Due to the recession, many states, such as California, attempted to cut or reduce adult day-care programs over 2010 and 2011. According to research from MetLife, government funding is estimated to contribute 55.0% of funding for industry programs. Consequently, profit declined. Despite the decline, many firms have entered this industry to meet the steadily growing demand for adult day care. In the five years to 2013, the number of enterprises increased an estimated 2.9% per year on average. “The majority of industry operators are relatively small companies,” according to Yang, “so the Adult Day Care industry is highly fragmented.” The two largest companies in the industry are Senior Care Centers of America and Easter Seals, a prominent nonprofit. Over the past five years, market share concentration has increased slightly due to Senior Care's merger with Active Day, previously the largest company in the industry.
Over the next five years, the percentage of people aged 65 and older in the United States is projected to increase. As the population ages, the prevalence of Alzheimer's and other physical and mental diseases will increase, bolstering demand for adult day-care services. The Patient Protection and Affordable Care Act is anticipated to increase private health insurance coverage, resulting in greater funding for this industry. Disposable income will also recover as the economy returns to growth, allowing households to better afford adult day-care services. As a result, IBISWorld forecasts that industry revenue will continue to grow in the five years to 2018. For more information, visit IBISWorld’s Adult Day Care in the US industry report page.
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IBISWorld industry Report Key Topics
This industry provides social and basic health assistance, including transportation, meals, personal hygiene and therapeutic activities, to the elderly and individuals with mental or physical disabilities. Services are typically provided during normal business hours through adult care centers. This industry does not include home care.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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