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

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

• In the US, private-duty home care is considered non-medical. This means that the services are not necessarily covered by Medicare, Medicaid or other forms of medical insurance. Across the United States, each state differs in terms of Medicaid regulations, particularly surrounding eligibility of patients and benefits.
• Medicaid coverage often does not sufficiently compensate for the cost of prescribed services, which discourages providers from caring for patients in home settings. Private-duty home care is most affected by these regulations.
• Due to insufficient Medicaid payments, private-duty care providers' abilities to offer sufficient staff are impeded, significantly affecting children who need private-duty care, in that they stay in hospitals or find themselves in inpatient facilities.
• Another weakness affecting private-duty home care agencies is that they rarely gain customers from healthcare provider referrals. Instead, most of their revenue comes from customer "word-to-mouth" referrals.

Opportunities

• In order to access more of the elderly population, private-duty home care companies need to establish partnerships with healthcare organizations, such as hospitals and nursing communities.
• Technology is expected to continue its entry into the industry. From telehealth to client identification software, the rapid evolution of technology will enable caregivers to effectively serve patients.

Threats

•  Caregiver shortage and wage increase are causing private-duty providers to struggle with workforce challenges. Amazon's pledge to increase the minimum wage to $15/hour, combined with caregiver shortage across the US, are presenting a large threat to American private-duty care providers.
• According to Home Health Care News, the main reason why caregivers leave home care providers is compensation. A potential wage increase might significantly amplify these difficulties, given that the private-duty care industry relies on scarce governmental funding and stagnant rates.
• Care providers offering lower wages are at the biggest risk of these threats, while those with higher worker compensation could see less unwanted effects of these changes.
• Amazon's expansion is also threatening the private-duty care industry. The retail giant is entering the home care industry, taking a share of caregivers and offering them better compensation rates. Around 10% of American caregivers have already been interviewed or hired by Amazon.

Research strategy