Home Healthcare Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 27,400 home healthcare service providers in the US offer skilled nursing and other types of health-related services in the home. Major service categories include traditional home healthcare services (with or without rehabilitative services), home hospice care, home nursing care, homemaker and personal care, home infusion therapy, and the rental or lease of goods and/or equipment. Companies may specialize in a particular service, such as respiratory therapy or hospice care.
Dependence On Third Party Payers
Home healthcare services providers are dependent on third party payers, including Medicare, Medicaid, private insurance companies, and managed care organizations, as sources of revenue.
Risk Of Malpractice
The inherent risk in providing healthcare outside a traditional setting exposes companies to the risk of malpractice.
Industry size & Structure
The average home healthcare services provider operates out of a single location, employs about 58 workers, and generates $4.1 million in annual revenue.
- The home healthcare services industry consists of about 27,400 firms that employ 1.6 million workers and generate $113 billion annually.
- The industry is fragmented; the top 50 firms account for 33% of industry sales.
- Large companies include Apria Healthcare, Lincare Holdings, Amedisys, and Kindred at Home (formerly Gentiva Health Services).
Industry Forecast
Home Healthcare Services Industry Growth
Recent Developments
Nov 3, 2024 - Medicare Payment Increase Finalized
- Medicare home health payments will increase 0.5% in 2025 under final rules issued by the Centers for Medicare and Medicaid Services (CMS). The increase is slight but CMS had proposed a 1.7% cut in June. The home health prospective payment system final rule reflects the continued implementation of the Patient-Driven Groupings Model. This formula bases reimbursements on patient characteristics rather than therapy hours and sets payments based on 30-day episodes instead of 60 days.
- Home healthcare merger and acquisition (M&A) volume is lower in 2024 than in the past few years, according to Cory Mertz, managing partner at healthcare M&A advisory firm Mertz Taggart. Key reasons for lower volume include buyers’ limited access and higher cost of debt. Valuations are still historically strong, not reaching the peak levels of 2021, but stronger than any period prior. This is influenced by robust multiples of public companies and demand from private equity, according to Mertz.
- Home health workforce shortages and rising wages are key reasons for rapidly-increasing home healthcare costs, according to Marc Cohen, co-director for the Leading Age Long Term Services and Supports Center at the University of Massachusetts-Boston. Costs for home healthcare for the elderly and bed-ridden have increased 14.2% during the 12-month period ending in March 2024, according to the US Bureau of Labor Statistics (BLS). That's the largest percent increase in home healthcare costs during a 12-month period since the BLS began collecting data on such costs in 2005. The median cost for a home health aide in 2023 was $33 an hour and that for a homemaker aide was $30 an hour, according to insurance company Genworth. The direct care sector is expected to add over 1 million new jobs by 2031, according to health care data analytics firm KFF, but those additional jobs will not be enough to meet the country’s rising eldercare needs.
- Home healthcare industry employment increased moderately during the first nine months of 2024 while and average wages for nonsupervisory employees increased slightly, according to the US Bureau of Labor Statistics (BLS). Home healthcare services increased prices slightly during the first nine months of 2024, according to the BLS. Industry sales are forecast to increase at a 6.44% compounded annual rate from 2024 to 2028, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
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