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Article Author:

Specialty Snapshot: Home Healthcare Services

There are approximately 33,000 home care providers across the US with combined total projected revenues in 2009 of approximately $72.2 billion. This industry is highly fragmented, and the 50 largest companies generate less than 25 percent of the total revenue associated with this business segment of the healthcare marketplace. The average revenue per worker is estimated at approximately $50,000. 

FTE - Full-time Equivalent
Click table to enlarge 

Services include traditional home health care, home hospice care, and home nursing care. Home healthcare services include medical and skilled nursing services; medical equipment, supplies, and medication services; personal care (such as bathing and transportation); therapeutic services (such as physical and respiratory therapy), and psychosocial services (including counseling and spiritual care). 

Items to keep in mind regarding the current home healthcare industry: 

1. The population of individuals who generally utilize the services provided by the home healthcare industry is going to expand over the next 20+ years by 50 percent or approximately 40 million more people entering this age segment of the population.
2. Pediatric home healthcare for pediatric patients with long-term conditions is preferred by both doctors and parents, and is more profitable than services to geriatric patients, as the required technical skill level and reimbursement rates are higher. 
3. With approximately 65 percent of reimbursements for services coming from Medicare and Medicaid, the significant cuts pending with the recent Patient Protection and Affordable Care Act of 2010 (Healthcare Reform) will have a negative impact on the industry. 
4. There are proposed measures to change Medicare’s reimbursement rules for home therapy visits that would alter the way providers are reimbursed, decreasing the number of allowed home visits and additionally negatively impacting revenues. 
5. The industry is labor intensive and the profitability of individual companies depends on effective marketing and efficient operations. 

With the population aging and the cost of home healthcare lower compared to hospitalization or institutionalization, opportunities for industry growth are significant through the expansion of additional services. The increased willingness of managed care organizations to pay for home care is an opportunity for home healthcare providers to expand their services.² The following example analyzes the costs associated with different types of healthcare services.

SNF - Skilled Nursing Faculty
Click table to enlarge 

Selected Benchmarking Data:

EBITBA - Earnings before interest, taxes, depreciation, and amortization
Click table to enlarge 

Industry websites:

• American Association For Homecare
• American Health Care Association
• American Nurses Association
• National Association for Home Care & Hospice
  • Hospice Facts and Statistics, November 2010 (PDF)
  • Basic Statistics About Home Care, 2010 (PDF)
• The Centers for Medicare & Medicaid Services (CMS) Home Health Agency (HHA) Center
• U.S. Department of Health & Human Services
• Visiting Nurse Associations of America

If you have any questions on home healthcare services, please contact Paul D. Smith, Jr. at psmith@BlackmanKallick.com or 312-980-2901 or your Blackman Kallick representative. Our thanks to Beth Carpenter of Beth Carpenter and Associates for her contribution to this article. For more information and resources visit bethcarpenterandassociates.com.

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¹Source - Hospice Salary & Benefits Report, 2009-2010, Hospital & Healthcare Compensation Service in cooperation with Hospice Association of America, October 2009.
²Data from Hoovers, Inc. FirstSearch Industry Profile and National Association of Home Care & Hospice, © 2011. All rights reserved. 
³Source - 2005-2007 are from the Annual Statistical Supplement, 2008, to the Social Security Bulletin, Social Security Administration. 2008-2009 are updated using the Bureau of Labor Statistics’ (BLS) General medical and surgical hospitals Producer Price Index (PPI). 
⁴Source - 2005 from the Annual Statistical Supplement, 2006, to the Social Security Bulletin, Social Security Administration. 2006-2009 are updated using the BLS Nursing care facilities PPI. 
⁵Source - 1999-2007 are from the Health Care Financing Review, Statistical Supplement, Centers for Medicare & Medicaid Services, 2008. 2008-2009 are updated using the BLS Home health care services PPI.
⁶Source - First Research - Averages and data for 14,371 agencies.

 

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.