Long Term Care Market: Is the Industry Missing the Potential?
W H I T E P A P E R
Long Term Care: Is
the Industry Missing
Potential Market?Some Say the Market Is Only Realizing Ten to Fifteen Percent
of Potential Market. Kalorama Weighs In.
There’s no doubt that Long Term Care is demonstrating growth. According to Kalorama
information’s latest report, The Long Term Care Market: Nursing Homes, Home Care, Hospice Care, and
Assisted Living, through 2013, the long term care industry overall experienced solid expansion, growing
by 4.3% per year, on average, to reach $276.7 billion. The strongest growth occurred in the home care
segment, which expanded by 7.2% per year through a combination
of price increases and expanded utilization.
A driving factor in the aging of the population is the increase in
life expectancy. In 1900, life expectancy was 47 years. In 1996, U.S.
life expectancy at birth was 76.1 years – 73.0 years for men and
79.0 years for women. By 2013, however, average life expectancy
had reached an all time high of 78.7 years, according to the Centers
for Disease Control and Prevention (CDC).
As the U.S. population as a whole becomes more ethnically
diverse, so will the elderly population. While only one in ten elderly
persons is now a race other than White, this proportion will
increase to two in ten by 2050. Men generally have higher death
rates than women at every age, resulting in women outnumbering men by almost three to two in the
over 65 age group.
“There are estimates
that the industry is
not capturuing its real
potential. With a
deeper view however,
it may take some time
for the bolder
estimates of potential
market to come to
Types of Long Term Care
Long term care involves a broad spectrum of services, ranging from daytime help with activities of
daily living (ADLs) to skilled nursing, specialty care, rehabilitation, and sub-acute care. It is typically
delivered for an extended period of time, during which a patient’s needs may change, usually to require
higher levels of care. Long term care patients have functional limitations and need ongoing assistance
with ADLs; they may also require ongoing health care or rehabilitative therapy.
Nursing homes include skilled nursing facilities (SNFs) and intermediate care facilities (ICFs), as well as
ICFs for the mentally retarded (ICFs/MR). Nursing and personal care facilities are primarily engaged in
providing inpatient nursing and health-related personal care, and generally care for persons with
relatively significant medical needs.
Home health care encompasses medical care services delivered in the home by non-facility-based
home health care agencies (HHAs). Home care can be appropriate for recovering, disabled, chronically
or terminally ill persons who need medical, nursing, social, or therapeutic treatment. It can also be
helpful for those requiring ongoing assistance with ADLs, particularly the elderly, especially when their
needs are low to moderate.
Hospice care provides medical, psychological, and spiritual care for terminally ill patients and their
families. It may be delivered in a freestanding hospice facility or in the home by a home health agency.
Hospice care is exclusively palliative, and is begun when a patient and his or her physician acknowledge
that a cure is no longer possible.
Assisted living communities help residents with activities of daily living, but do not always provide
round-the-clock access to skilled health care. Generally, assisted living programs provide and/or
arrange for provision of daily meals, personal services and health care for residents in the facility.
Assisted living may also be known as personal care, residential care, or domiciliary care, and generally
accept persons whose care needs are low to moderate.
Assessing the Potential Long Term Care Population
By one measure, the long term care market is well below its potential. Some estimates have the
potential market at 10 times the actual market, meaning there is 90% more revenue to be obtained by
companies if they can start up and provide services for older people who demand them. This is
somewhat true, in terms of population served. Such a measure tends to have one think that the market
could be sustainable for a very long time.
Kalorama estimates the long term care population at approximately 4 million in
nursing/assisted/hospice facilities in the United States. Home care varies a bit by state but add perhaps
another 3.5 million. That’s 15% of the US population that’s over 65. Thus, some industry observers say
the actual sales of long term care services are only 15% of what they could be right now.
With a deeper view however, that reverse statistic, that there is 85%-90% of a market to tap into
may not come to fruition in the way the estimates suggest. Long term care tends to reach not just the
population of 65+ but the population that will be needing help with one of many ADLs (activities of daily
living) Examples of ADLs are: dressing, bathing, grooming, going to the bathroom, eating, getting up
and out of a chair.
Many people over 65 have no serious
problems or are able to handle life at home,
thus they are not actually part of the potential
market for long term care services. It’s the 80
years+ population group that you start to see
ADL needs increase, and when an older citizen
reaches more than one ADL, you are a target
for long-term care. When you add
reimbursement challenges and the limited
customer base with long term care insurance,
we’d say this shrinks the boldest estimates of potential market a bit.
For the long term care industry however; there is no need for a fantastic potential market figure to
drive growth. Expected population trends will do that. For instance, the population of those turning 80
will continue to increase, and with it, the market for those needing assistance with ADLs is expected to
increase. So despite the potential market being a bit less than some estimates, the market has
demonstrated growth and will continue to do so; the Long Term Care market will continue to grow, with
the growth of the older population and the increasing use of long term care insurance policies as
Kalorama’s full study – Long Term Care Market – is essential for market watchers.
2008 2009 2010 2011 2012 2013
Long Term Care Market 2008-2013 ($ billions)
Kalorama’s full study of the Long Term Care Market is now available:
The Long Term Care Market:
Nursing Homes, Home Care, Hospice Care, and Assisted Living
The advancing age of the population makes long-term care an important consideration for health
marketers. This report, The Long Term Care Market: Nursing Homes, Home Care, Hospice Care, and
Assisted Living, covers the most important segments of the long term care industry, each of which
provide medical care and/or assistance with the activities of daily living (ADLs) on an ongoing basis:
For each of these critical markets, Kalorama provides a market size and forecast estimate.
Kalorama Information publishes its fifth edition of this detailed report on the long term care industry at
a time of growth but also increasing concern, particularly about payments, for the long term care
industry. The elderly must contribute a far greater amount towards care out of pocket than was once
the case. The economy has challenged the business strategies of key players, while the recent healthcare
legislation introduces changes that may affect revenues. Although a small segment of long term care
users are younger individuals with various mental and physical disabilities, most persons using long term
care services are senior citizens. This population will also drive industry growth over the forecast period.
Therefore, this report will focus on the elderly as the primary customers of long term care services. For
each of the segments of long term care the report provides:
Market Size and Forecast
Number of Facilities/Providers and Growth Trends
Forms of Payment and Reimbursement Levels
Trends Affecting the Marketplace
Competitors and Competitive Analysis
Sales estimates for each market segment represent U.S. revenues and are expressed in current dollars.
Estimates are provided for the historic 2005 to 2009 period and forecasts are provided through 2015.
FOR MORE INFORMATION OR TO ORDER: