The aging population and expensive alternative care options have fueled demand.
New York, NY (PRWEB) September 26, 2014
The Adult Day Care industry has performed well over the past five years. The steadily aging population and expensive alternative long-term care options (nursing homes, for example, can cost five times more than adult day care) fueled demand for industry services. “Growth slowed over the period, though, as state and local governments faced budget shortfall stemming from the recession,” according to IBISWorld Industry Analyst Dmitry Diment. Households also had difficulty paying for services due to slow disposable income growth. As the economy eventually recovered and disposable income increased, the industry began to rebound. In the five years to 2014, revenue is estimated to increase at an annualized rate of 3.8% to $6.4 billion. In 2014, federal government healthcare funding is expected to continue growing and private health insurance is expected to increase as the Patient Protection and Affordable Care Act (PPACA) is implemented, resulting in revenue growth of 6.6% over the year.
Despite revenue growth, profit has grown more moderately 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,” says Diment. According to research from MetLife, government funding is estimated to contribute 55.0% of funding for industry programs. Consequently, profit growth has been constrained. Nonetheless, many operators have entered the industry to meet the steadily growing demand for adult day care. In the five years to 2014, the number of enterprises increased an estimated 3.2% per year on average.
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 PPACA is anticipated to increase private health insurance coverage over this period, resulting in greater funding for this industry. Disposable income will also grow as economic growth accelerates, allowing households to better afford adult day care services.
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.
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