There is a perfect storm brewing in healthcare with trends that have combined to form tailwinds that are now poised to drive massive expansion in the home healthcare market.
Even in the fast-growing healthcare sector, the home health industry stands out for its explosive growth. Home health spending is expected increase at a faster rate through 2027 than all other categories of care, according to a recent analysis from the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary.
At an annual growth rate of 7 percent, home health spending is expected to reach more than $186 billion in 2027, according to the report. That rate of expansion far outpaces other categories of care, such as hospital care, physician and professional services, nursing facilities, prescription drugs, retail sales of medical products and others.
Major drivers fueling the surge:
The Silver Tsunami: By 2035, and for the first time in U.S. history, people over the age of 65 will outnumber those under 18, according to projections from the U.S. Census Bureau. By 2030, all Baby Boomers will be older than 65, and 20 percent of the population will be retirement age.
Needless to say, America is graying rapidly. But that aging population provides healthcare organizations (HCOs) with new opportunities to serve them as an expanding market – particularly through home care solutions. About 70 percent of people who seek home care are over the age of 65, meaning that the already fast-growing home care industry will see even greater demand as the population ages.
In-home technology Advancements: Future advances in home health technology have the potential not only to facilitate the role of home care within the overall healthcare system, but also to help foster community-based independence for individuals, according to an article from the National Academies Press. Indeed, greater independence is among the most valuable gifts that in-home healthcare technology can deliver to patients.
There’s been no shortage of innovation in the home care industry that help seniors to age-in-place by avoiding unnecessary emergency room visits or costly nursing home stays, for example. Perhaps the most familiar scenario is remote patient monitoring (RPM), in which in-home devices transmit key patient information such as vital signs to their providers. RPM can happen via a number of means – cameras, GPS services, patches, implants, even smartphone apps that use the device’s sensors.
Nonetheless, there’s much more to in-home technology than RPM. Some solutions are aimed at more common problems – ride-share services for patients without access to transportation and medication management services for seniors who have a high number of prescriptions, for example. Fueled by high patient demand, in-home technology will undoubtedly continue to evolve rapidly and in fascinating, unexpected ways.
Transition to Value-Based Care: The healthcare system is currently undergoing the most significant change in how we pay for care in a generation: the transition from volume under fee-for-service (FFS) to outcomes under value-based care. This shift – in which providers generally share more financial risk with payers than they did under FFS – has generated strong motivation for providers to experiment with new methods of controlling costs.
Much like cost-conscious consumers, many providers are turning to home health solutions in search of savings. For example, the U.S. has slowly begun emulating other countries that are further along in developing hospital-in-home programs that heavily utilize RPM, according to the Commonwealth Fund.
Substituting home care for hospital care when possible, could produce dramatic savings for Medicare and private payers, primarily by eliminating the fixed costs associated with operating brick-and-mortar hospitals. Indeed, applications of this model have already achieved savings of 30 percent and more per admission, while delivering equivalent outcomes and fewer complications than traditional hospital care, according to Commonwealth.
The Consumerism of Healthcare
Often a euphemism for the idea that patients are increasingly stuck shouldering a larger portion of their own health costs, healthcare consumerism is not going away. The patient is, indeed, the new payer, and along with this more significant financial responsibility comes a greater role in decision-making related to their own care.
This more empowered, more engaged consumer now demands the same convenience from the healthcare industry that they’ve come to expect from more traditionally consumer-oriented businesses. And there is no more convenient setting to receive care than the patient’s own home.
The Future is Bright
Clearly, the future looks bright for players in the home healthcare market as several major factors have combined to create strong demand and opportunity for home care in the years to come. But home health stakeholders should not be merely content to ride on the coattails of demographic changes and industry trends. They must continue to innovate, remaining focused on the central function that will determine home healthcare’s success – creating happier, engaged, and satisfied consumers with better health in a more convenient setting.