Long Term Care Market: Is the Industry Missing the Potential?
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Long Term Care Market: Is the Industry Missing the Potential?

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This white paper looks at the common assertion that the industry is not seeing the full potential of the market right now, due to the aging US population.

This white paper looks at the common assertion that the industry is not seeing the full potential of the market right now, due to the aging US population.

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  • 1. 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 fruition.”
  • 2. 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 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 Care 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. Hospices 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 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.
  • 3. 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 factors. Kalorama’s full study – Long Term Care Market – is essential for market watchers. $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 2008 2009 2010 2011 2012 2013 $224,332 235,382 245,980 256,106 266,279 276,758 Long Term Care Market 2008-2013 ($ billions)
  • 4. 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:  Nursing Care  Home Care  Hospice Care  Assisted Living 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  Patient Statistics  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: http://www.kaloramainformation.com/Term-Care-Nursing-8057118/