Los Angeles, CA (PRWEB) September 08, 2013
The past has been good and the future is bright for the Elderly and Disabled Services industry. Fueled by an aging population, demand for industry services is abundant. However, a significant portion of the market has been receiving services from institutional providers (i.e. nursing care and assisted-living facilities) rather than from the industry's formal noninstitutional providers. Declining disposable income during the recession encouraged elderly and disabled individuals to call on family and friends for care. The government has also supported institutional care over home- and community-based services (HCBS) through Medicaid reimbursement policies and other regulation. These factors have limited revenue growth; however, during the five years to 2013, industry revenue is still expected to increase an average of 4.7% annually to $37.7 billion. This includes anticipated growth of 5.8% in 2013.
Mounting demand from the aging population and a shift from institution-focused care is expected to drive employment for the Elderly and Disabled Services industry up 5.0% per year on average to 915,062 workers in the five years to 2013. Despite the prevalence of nonprofit entities, the growing entry of for-profit operators is projected to push profit upward. However, high labor costs and the level of available funding will constrain profit. According to IBISWorld Industry Analyst Anna Son, “Changes in government reimbursement policies can affect industry operators' revenue and profitability, as Medicaid accounts for a significant portion of industry revenue.”
The five years to 2018 are estimated to bring a stronger average annual growth as the population continues to age, disposable income rises, long-term care (LTC) insurance coverage increases moderately and government policies promote HCBS. The availability of family caregivers will continue to decline over the next five years, boosting demand for formal caregivers and driving industry operator numbers and employment up. As a result of a more favorable payment environment created by the moderate increase in LTC insurance, profit margins are forecast to improve. “Furthermore, healthcare reform will expand the Money Follows the Person program to more states, helping states rebalance their LTC systems to transition individuals with disabilities from institutional to community settings,” Son says.
The Elderly and Disabled Services industry is highly fragmented. Although the majority of funding for is from the federal government, a large number of small organizations at the local level actually provide this industry's services. As more baby boomers reach age 65, and the federal government boosts commitments to provide better facilities for the disabled, a growing number of small providers will enter the industry during the five years to 2018, maintaining a fragmented industry.
Some consolidation efforts have occurred due to the expanding prevalence of for-profit companies. During the five years to 2013, the percentage of nonprofit organizations is expected to drop. Mergers and acquisitions have been motivated by the benefits of size to securing government contracts and the effective use of funds and donations.
For more information, visit IBISWorld’s Elderly & Disabled Services in the US industry report page.
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IBISWorld industry Report Key Topics
The Elderly & Disabled Services industry provides outpatient social assistance services to improve the quality of life for the elderly, the mentally ill and people with disabilities. Operators provide services in such areas as day care, nonmedical home care or homemaker services, social activities, group support and companionship. The industry does not include companies that primarily provide medical services or companies that provide overnight housing (e.g. retirement homes).
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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