The home care provider sector is one of the fastest growing in healthcare and even when measured against other industries. This is particularly true in the US and around much of the rest of the western world. This is mainly because most governments have now recognized that home care can save considerable money every year by treating patients or dealing with high care need people (such as seniors) in their own homes instead of in hospitals and other institutional providers. Over the last five years, these factors have contributed to an annualized revenue growth rate in the sector of almost 5% per annum and a home care and home health sector with combined estimated revenues of around $90 Billion.
Before we go on to look at what the future potentially holds for this sector within the large healthcare industry, let’s distinguish what we mean by “home care” versus “home health”. Home health generally refers to agencies that provide a skilled service in a person’s home (in the US typically under a Government run Medicare payer source). Skilled services include those provided by a registered nurse, physical therapy, and occupational therapy. Home care, on the other hand, generally refers to mainly private pay services in a person’s home (mainly because there is little or no government or insurance coverage for it). Most home care agencies provide basic personal care and homemaker services. Personal care typically relates to bathing, personal hygiene, dressing, transportation, light housekeeping, and meal preparation.
Despite strong growth, particularly in the last decade or so, sector profitability (on both sides) has been under pressure. The largest payers for home health services are government programs. But these budgets have shrunk greatly, and decreased funding has thus resulted in reimbursement cuts for the industry and has suppressed operating profit. However, the numbers of adults aged 65 and older, as well as the fact that people are living longer means that home care and home health will continue to grow in both size and reach over the next 20 years. The question is therefore how will this growth occur and what major challenges will need to be overcome? In this article we want to describe six areas that need to be carefully considered.
In both home care and home health clients are not only highly varied in their needs (ranging from the young seniors to the “old-old” and with “light support” needs to a number of specialized and chronic “heavy support” needs) but they can readily switch from one agency provider to another. In addition, seniors are not the only ones to make the judgment call about whether or not they are satisfied with the service but their children (who often pay for home care) are also likely to take a view as well. The implications of these expectations, is that every home base care provider needs to take client satisfaction extremely seriously and seek to tailor their services as much as possible. This might be to offer specialized services, in areas like Alzheimer’s or COPD for example, or to better match a carer with a customer and his or her personal, social or health needs.
Access to greater numbers of high quality people to provide care
Since 2014, the so-called “baby-boomer” population has been retiring at the rate of 8-10,000 people every day. This is a situation that will continue for almost the next 20 years. Combined with the cost savings to be had from treating people at home and making sure patients are not re-admitted to healthcare intuitions, this has meant that there are many more home care agencies chasing more home care staff. This presents both a quantitative problem (there are not enough people to currently meet the demand) and a qualitative problem (the quality of people has declined on average). Both of these challenges can only by addressed by recruiting more people to come into the sector and training both existing and new recruits to operate at a high standard of care.
Developing and retaining home care and home health staff
Historically, home based care staff came into the sector with little or no direct qualifications or much in the way of experience. But in this fast-changing area, which is both growing in number and in terms of having more demanding clients, this is not sustainable. Home care and home health workers therefore need more and better training and even more importantly need to be nurtured to stay in the sector. This need for better retention strategies has many facets to it. Apart from regular and ongoing development it entails designing the work to be more interesting, giving the individuals chances to progress to more interesting/higher level work over time, learn about and use a wider range of technology and designing more creative reward and recognition approaches, just to name a few.
Navigating the law
Most western countries are starting to regulate the home care sector to a much greater extent. In the US, for example, the law has gone much further to create more rigorous licensing standards (although these vary by state)and to dictate employment conditions. The two most pressing of these employment condition changes relate to treating all staff that work almost exclusively for a given agency as a full-time employees (and not as contractors) and for all care employees and contractors to be given overtime pay when they go beyond minimum hour standards. Both of these stipulations add to agency costs and either squeeze relatively low margins in the sector or make the costs of care higher to the customer (whether they are paying cash or seeking reimbursement).
The home-based care market has two sides to it-cash revenues (around 10% of the population or 15% of the value) and reimbursable revenues, where insurance or government schemes operate). Home care is heavily cash pay based and home health is heavily reimbursement based. In both cases however, home based care organizations are under pressure to get paid for their services. At average rates of $20-$25 per home care non-overtime hour, service is only affordable to individuals and families that are typically earning above median wages (especially if a senior needs considerable care or has a chromic condition). Home health is more expensive (typically $30-$65 per non-overtime hour) but is often fully or heavily reimbursable. However, a provider still takes the risk of rendering the service and receiving the expected reimbursement, both in terms of time it takes and quantum (and it may fall considerably short of expectations thereby reducing profit margins).
Making the best use of technology
Healthcare in general has been slow to adopt technology compared to other industries and this is perhaps even more the case in home-based care. However, gradually this is changing with technologies such as the deployment of a variety of medical devices to monitor vitals, for example, sensors in the home, smart phone and tablet based applications and telemedicine all being increasingly used. Perhaps more interestingly, there are now several care platforms, which operate, that use web-based technology to better match carers and clients and to schedule service using a range of technology. This has helped to lower costs to clients in some cases although a determination of whether the quality of care has been improved has yet to be determined.
Home based care as a sector is growing rapidly due heavily to the “boomer” population retiring and living longer. This is also because it’s estimated to be anywhere from 30% to 60% cheaper to render the care that is needed in a home setting than in an institutional environment of any kind (such as hospital, skilled nursing home, assisted living facility, or hospice, for example). However, the industry faces many management-side challenges that need to be quickly addressed if it is to continue to grow and thrive in the future.
CEO-RX4 Group-The Business of Healthcare