July 13, 2022 – The demand for home care is growing, sparking a wave of consolidation by private equity firms, payers and big health systems. It’s a busy and challenging environment for local providers of home-based medical services as well as their suppliers.
“The pressure being applied by higher costs, difficulty finding qualified people, and stagnant reimbursement has resulted in many [providers of home-based medical care] looking for a way to survive or get out with minimal losses,” says Jay Butler, vice president of extended care, IMCO. “Integrated health systems can navigate the difficult market and realize savings that standalone providers simply can’t.
For home health and hospice providers, the aging population provides significant tailwinds for patient volume and continuing growth, according to Precedence Research, which recently published a report on home care. “By 2030, all baby boomers will have reached the age of 65, causing one out of every five Americans to be categorized as retirees. The home health business is primed for expansion, thanks to the high frequency of disease, the need for assistance among the elderly, and the desire to receive care in the comfort of one’s own home.”
Based on a survey of physicians who serve predominantly Medicare fee-for-service (FFS) and Medicare Advantage (MA) patients, consulting firm McKinsey estimates that up to $265 billion worth of care services (representing up to 25% of the total cost of care) for Medicare FFS and MA beneficiaries could shift from traditional facilities to the home by 2025 without a reduction in quality or access. “That number represents a three- to fourfold increase in the cost of care being delivered at home today for this population, although how the shift will affect reimbursement rates is not yet clear,” says the firm.