Private Duty Home Care Market

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Part
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Private Duty Home Care Market

One-third of industry professionals believe that the private duty home care will experience the greatest growth in the in-home care industry in 2019. Notable players include Bayada, BrightStar Care, Home Care Assistance, Home Helpers, and Homewatch Caregivers. Factors influencing operations include very high turnover of caregivers and poor communication by agencies. The private duty home care market segment makes up 25% of the $92.5 billion market size of home care industry.

PRIVATE DUTY HOME CARE MARKET ANALYSIS

  • According to a 2019 survey report, a third of industry experts view the private duty home care as the greatest growth segment of the in-home care industry in 2019.
  • The year is expected to experience changes in payment models and compliance with regulations which will drive the adaptation of new technology.
  • The fact that 40% of Americans aged 65 and above require daily assistance and 70% of Americans aged 65 and above would require assistance at some point is expected to drive growth in the private duty home care market.
  • While 90% of Americans aged 65 and above prefer to live in their homes, the base of family support is expected to decrease from 7:1 to 3:1 by 2050, thereby making home care a necessity.
  • The difference between home health and home care will remain blurred as personal care agencies are expected to boost their clinical capabilities.
  • This is because Medicare Advantage has gotten involved in home care payments, and consolidation is taking place to integrate home care and home health within the same ownership.

NOTABLE PLAYERS

  • The Best of Home Care Endorsed National Provider recognition by Home Care Pulse is awarded to agencies with the "highest overall client satisfaction scores".
  • They are the top home care franchises or membership networks with at least 50 active branch locations in North America.
  • They include Bayada, BrightStar Care, Home Care Assistance, Home Helpers, Homewatch Caregivers, Right at Home, Synergy HomeCare, The Senior's Choice, and Visiting Angels.

MARKET FRAGMENTATION

  • According to Future Market Insights, the non-health home care services is segmented into personal hygiene care and companionship. Personal hygiene is further segmented into cooking and housekeeping, shopping for groceries, and bathing and grooming.
  • The Home Care Association of America (HCAOA) and the Global Coalition on Aging segmented the market into companionship, wellness and safety, care coordination, daily living activities, transitional care, help in the home, and chronic care management.

FACTORS INFLUENCING OPERATIONS

  • The 2019 Home Care Benchmarking Study by Home Care Pulse showed that caregiver turnover has increased by 15% to 82% in 2019.
  • In 2018, turnover of caregivers was very severe that over half of the home care agencies involved in the study stated that they had to stop accepting new clients because there were no enough caregivers.
  • All indications point to the fact that the labor crunch will continue or worsen through 2019.
  • Home care agencies are expected to experience more aggressive poaching of workers and legal challenges as they deal with "noncompetes and other contract provisions".
  • Caregivers overwhelmingly prefer more hours, more stable hours each week, and the freedom to organize their schedule around other important commitments such as family, school, and alternative jobs.
  • The survey found that clients usually complained about poor communication by the home care agencies.
  • Factors that could induce agencies to change technology platforms within the year include regulatory compliance (53%), payment and reimbursement issues (51%), and the desire to cut operating costs (42%).

FINANCIAL HEALTH

  • The private duty home care market accounts for 25% of the $92.5 billion annual revenue of home care industry. The payment sources include long-term care private insurance (10.6%), out-of-pocket pay (10%) and other sources (4.4%).
  • Word of mouth remains the top revenue-generating source of referral for private-duty home care agencies.
  • In 2017, the national median hourly payment rates for private duty home care were $27.50 per hour for one to two hours, $23.50 for three to five hours, $23 for six to 11 hours, and $22 for over six hours.
  • The 2018 Home Care Pulse Benchmarking Survey showed that wages make up 52.4% of the expenses of home care agencies, and the median total cost of direct care worker was up to 60.9%.
  • Of the remaining median gross profit margin which is 39.1% of total revenue, 15.8% typically goes to overhead expenses, and non-operational expenses like interest and owners’ pay accounted for 3.3% of revenue.
  • On average, cash typically accounts for 24.6% of assets while net receivables make up an extra 28.1%.
  • Managing cash flow is highly important in the home care industry where poor revenue collection can lead to severe consequences.
  • While there are hurdles to raising funds for current and start-up cooperatives, there are opportunities exist in converting current home care agencies to cooperatives.
  • According to a national survey by the ICA Group in 2016, 33% of the owners of home care agencies are expected to sell their firms within the next five years while 58% would sell in the next 10 years.
  • ICA research also found that of the home care firms that can be converted to cooperatives (20-100 employees), an average of 40 of them have been sold or closed every year since 2000 (over 700 possible opportunities).

RESEARCH STRATEGY

To search for notable players operating in the market, we scoured through market research reports and credible news media. A research report by IBIS World included top home care providers in the US but the report was published in 2014 and the companies listed operate mainly in the home health care market rather than the non-skilled in-home care segment. So, we couldn't use the report.

We proceeded to look for notable players and we found that Home Care Pulse awards the Best of Home Care Endorsed National Provider recognition to notable players with at least 50 locations and high customer satisfaction records.

Part
02
of two
Part
02

Private Duty Home Care Market - SWOT Analysis

The strengths of private duty home care include positive public opinion and aging population, while weaknesses include limited insurance coverage and lack of healthcare provider referrals. Opportunities of the industry include partnering with healthcare organizations and the integration of medical technology, while threats include caregiver shortage and Amazon's entry into the industry.

Strengths

  • Earlier, private-duty home care was viewed as a luxury. Nowadays, private-duty home care is viewed by older adults and their families as a necessity.
  • Baby Boomers are aging, which means the market for home care services, including private-duty care, is expanding. Around 10,000 baby boomers are turning 65 each day.

Weaknesses

Opportunities

Threats


Research strategy

We were unable to thoroughly analyze strengths and opportunities of private duty home care. To start the search, we searched for pre-compiled SWOT analysis on the topic. We hoped to find this information on research databases such as Research Gate, EBSCO, National Institute for Biotechnology, however, these resources did not offer the strengths, weaknesses, opportunities, and threats of the industry. The available analysis focused on specific companies, including hospitals.

Next, we searched industry-specific publications such as Home Healthcare News and HomeCare Magazine, in order to manually gather relevant information to create an analysis. On these websites, information regarding threats and weaknesses of the industry were sufficient, however information regarding strengths and the opportunities of private duty care specifically, was not sufficient to create an analysis.

As a last resort, we searched for statements surrounding strengths and opportunities, directly from private duty home care providers. We consulted interviews and statements from private duty home care providers, including Right At Home, ComForCare, as well as statements from the Private Duty Homecare Association. Statements from companies in the field did not focus on the industry itself, but rather focused on company-wide accomplishments. On the Private Duty Homecare Association website, we were able to trace a statement that the industry is "growing", however no information specifically surrounding how the industry is growing was found.

Sources
Sources