Will the Exploding Home Care Sector Kill the Nursing Home?
Following a banner year for Home Health M&A, the industry shows little sign of slowing down. Indeed, home care is poised for continued growth alongside the graying of the population. As 10,000 Americans turn 65 every day, 87% of them have stated their preference to age-in-place – that is, stay in their current home and community as they age. The healthcare industry is already feeling this shift in preference.
Northwestern-owned Lake Forest Hospital recently applied to permanently shutter its long-term care unit, Westmoreland Nursing Center, citing increased operating costs and failure to adequately fill 84 beds. What’s more, in a study released in December 2015, the U.S. Bureau of Labor Statistics (BLS) stated the compound annual growth rate for home care services from 2014-2024 would be nearly 5%, the highest among all industries.That will mean 760,400 new jobs. However, there are some limitations for growth associated with the changes in reimbursement policy and reduction of insurance payments.
Recently, the Centers for Medicare & Medicaid Services (CMS) has announced that the government may reduce reimbursement by 0.4% or $80 million in 2018. In 2019, CMS intends to change its payment policy thus bringing some kind of uncertainty to the industry. This was followed by a drop in the stock price of home care companies for a short period of time. However, in the long term, due to the demographic situation, these uncertainties will not seriously affect the performance of home care agencies and growth is all but assured. Westmoreland Nursing Center will by no means be the last nursing home to shutter its doors due to the shifting demographic trends. However, as the opportunity within home care increases, it’s important home care operators take stock of 3 key recommendations to ensure they take advantage of the growth in their sector.
Provide high quality, person-centered care. Take time and effort to develop well-defined care programs and protocols so caregivers are prepared to provide the best quality care in any given situation. Empowering staff with protocols and guidelines ensures high quality care, satisfied clients and competitive differentiation in a crowded market. It also gives you the opportunity to seek out partnerships with ACO and other health offices.
Staff is key. Staff shortages are already being felt nationwide and the problem is set to rise right alongside home care growth. Take time to evaluate, hire and train caregivers so they feel empowered to provide care and valued by family and the agency. The ability to distinguish your agency as a low turnover, high retention agency will also help you stand out from the pack.
Embrace technology to be part of the solution. Technology should become a key part of your strategy for growth. Use technology to capture and track data at the point of care, doing so will enable the home care agency to partner with post-acute providers to improve patient outcomes and prevent readmissions. On the flip side, using technology to communicate and engage families in their loved one’s day-to-day care will strengthen relationships, enhance satisfaction and increase referrals.
These recommendations will allow home care agencies to not only survive, but thrive in the ever-changing landscape. With the huge potential for growth and the rife M&A activity already taking place home care agencies would do well to consider speaking with a professional to explore their various options for growth.
