The aging population and the prevalence of chronic diseases underpin industry growth
Los Angeles, CA (PRWEB) August 23, 2013
The Home Care Providers industry is becoming one of the fastest growing healthcare industries in the United States. Home care saves patients billions of dollars every year by treating them in their homes instead of in hospitals. “An aging population, the prevalence of chronic disease, growing physician acceptance of home care, medical advancements and a movement toward cost-efficient treatment options from public and private payers have all fostered industry growth,” IBISWorld industry analyst Anna Son says. Over the five years to 2013, these factors have contributed to an estimated average annual revenue growth rate of 4.8%. In 2013, revenue is expected to increase 4.2% to $74.2 billion.
Despite strong growth, industry profitability has been under pressure. The largest payers for home care services are government programs, including Medicare and Medicaid. Over the past five years, federal and state budgets have been shrinking, and the recession only exacerbated this decline. Decreasing federal funding has thus resulted in reimbursement cuts for the industry and has suppressed operating profit. “Industry operators have increased consolidation activity in an effort to combat lower profitability,” Son says. Larger companies are better able to negotiate with suppliers and can acquire the medications and materials that are used in home care at lower prices. Since 2008, the number of firms in the industry has grown at a slower annualized rate of 3.8%, relative to the previous five-year period. In 2013, the number of home care companies is expected to reach about 303,440 in the United States.
The Home Care Providers industry is highly fragmented. Market share concentration for home care providers tends to vary across segments. The largest four firms in this industry include Apria Healthcare Group, Lincare Holdings , Gentiva Health Services and Amedisys. Although concentration is still low, the big players have been getting bigger. The Blackstone Group, a prominent private equity and investment management firm, acquired Apria Healthcare Group for nearly $1.6 billion in 2008, making it one of the largest transactions in the industry.
Consolidation is forecast to continue in the five years to 2018 in light of reimbursement cuts that are expected to persist, and a shortage in skilled personnel. These factors will strain operating profit further, pushing margins in 2018. In an effort to spur new demand and maintain pricing, industry operators are expected to focus more on chronic disease management, which is a system of coordinated healthcare interventions and communications with the emphasis on patient self-care. This area of healthcare is anticipated to grow in upcoming years, which will provide the industry with the opportunity to compete effectively with institutional care providers, such as hospitals. Industry revenue is forecast to grow in the five years to 2018. For more information, visit IBISWorld’s Home Care Providers in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes companies that primarily provide services in the home. These services may be medical or nonmedical and include skilled-nursing care, personal care, homemaker and companion services, physical therapy and medical social services.
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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