New York, NY (PRWEB) February 25, 2014 -- Prior to December 2013, the Home Care Providers industry was quickly becoming one of the fastest growing healthcare industries in the United States. Home care saves billions of dollars every year by allowing patients to avoid high-cost healthcare settings, such as hospitals. According to IBISWorld Indsutry Analyst Jocelyn Phillips, “An aging US 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 during the past five years, contributing to an annualized 3.6% revenue increase to $74.5 billion in 2014.”
However, despite strong past growth, industry funding from government sources has come under intense pressure in recent years. “Government programs (including Medicare and Medicaid) generate an estimated 80.0% of industry revenue,” says Phillips. Over the past five years, federal and state budgets have been shrinking, and sequestration only exacerbated this decline. Decreasing federal funding has resulted in reimbursement cuts for the industry and has suppressed profitability. Healthcare reform expanded access to insurance for some industry patients, but many states chose not to expand access to federal healthcare.
Moreover, to help pay for other provisions of the recent healthcare legislation, the Centers for Medicare and Medicaid Services announced the implementation of a four-year 3.5% annual reduction to the Medicare base payment for home healthcare services beginning in January 2014. The National Association for Home Care and Hospice estimates that the magnitude of these reductions will likely render three-quarters of all industry operators unable to run profitably by 2017. According to the Partnership for Quality Home Healthcare, the industry experienced its largest job loss in more than a decade in December 2013; although the Medicare reductions were not officially implemented until 2014, CMS's announcement was enough to spur industry operators to begin cutting costs. The industry is aggressively lobbying Congress to reconsider or revoke these reductions, but unless that happens, IBISWorld expects industry revenue to decrease in the five years to 2019. Spurred by slow revenue growth in 2014, IBISWorld also anticipates significant profit losses across the industry, with average margins decreasing by 2019.
For more information, visit IBISWorld’s Home Care Providers in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in the Home Care Providers industry 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. This industry also includes in-home hospice care providers.
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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Gavin Smith, IBISWorld 2, +1 (310) 866-5042, [email protected]