Demand will pick up slightly as the population ages, but growth will remain modest.
Los Angeles, CA (PRWEB) October 28, 2013
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 2013, IBISWorld estimates that industry revenue has increased. Due to an aging US population and the necessary nature of services provided in nursing care facilities, the industry was able to grow even while the economy struggled. Operators also made adjustments to boost occupancy rates while maintaining profitability, including progressive acquisition strategies and cost mitigation techniques during these tough economic times. Regardless of these measures and favorable demographic trends though, 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 constrain industry growth. Consequently, industry revenue is expected to rise moderately through 2013.
In response to changing consumer preferences, unfavorable government policies, uncertain reimbursement rates and a down economy, some operators have exited the industry or closed underperforming locations. According to IBISWorld Industry Analyst Anna Son, “Because of these conditions, the number of companies have marginally increased in the five years to 2013.” Additionally, nursing care operators are changing their business models and offering supplementary services to reduce costs, attract residents and offset lower Medicare reimbursements. Labor, supply and malpractice expenses have stabilized recently, helping firms maintain profit margins.
Despite recent mergers in the Nursing Care Facilities industry and consolidation during the past five years, “the industry is still highly fragmented, characterized by a number of local and regional providers,” says Son. IBISWorld estimates that the top firms in the industry (HCR ManorCare, Genesis HealthCare Corporation, GGNSC Holdings LLC and Kindred Healthcare Inc.) account for more than 10.0% of industry revenue (see IBISWorld report 62311 for major player market shares). 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 government and other facilities own the remaining 5.0%.
Demand is forecast to pick up slightly starting in 2014 as the economy recovers and the population continues aging, although recent healthcare legislation will continue to encourage at-home nursing care to cut costs, shifting demand away from the industry's facilities. Furthermore, Medicare and Medicaid reimbursements, which account for more than half of revenue, are expected to decline during 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 moderately in the five years to 2018.
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IBISWorld industry Report Key Topics
The Nursing Care Facilities 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 do not need to be in a hospital.
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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