Due to an aging U.S. population combined with increased physician acceptance and patient preference for home-based medical treatment, the home healthcare market will experience sustainable top-line growth in the 10 to 15% range in the coming years.
According to a new report issued by Cochran, Caronia Securities LLC (Chicago), Home Healthcare: Fragmented Market Positioned for Growth, the entire home healthcare services sector achieved estimated revenues of more than $40 billion in 2003. Dominating the market were home nursing services (between $24 billion and $27 billion), followed by home respiratory therapy (between $5 billion and $8 billion), and home infusion therapy (about $5 billion). Services related to home medical equipment accounted for about $2.5 billion, or 6% of the sector's total.
Although the Cochran, Caronia Securities report focuses primarily on home healthcare services, its predictions for growth fall in line with forecasts for the home-care medical device market. For more information on the current state of the home-care device market, which is forecast to increase by more than 9% annually through 2008, visit www.devicelink.com/mx/archive/05/01/gandhi.html.
The home healthcare service expenditures of $40 billion in 2003 represented 9.5% growth over 2002. Although the report states that final 2004 figures were not yet available, it estimates that home healthcare expenditures last year overtook prescription drug sales as the fastest growing sector for national healthcare spending. The report estimates that by 2014, expenditures for home healthcare services will more than double their 2003 levels.
Medicare is the single largest payer for home healthcare services. In 2003, Medicare payments represented about 32% of total home healthcare expenditures. Medicaid accounted for an additional 24%, with private payers and individual deductibles representing about 21% and 18% respectively.
The report notes that, in light of Medicare's substantial contribution to home healthcare payments, reimbursement rates will play a key role in determining the industry's profitability and rate of consolidation. Should reimbursement cuts occur, Cochran, Caronia Securities predicts that large, well-capitalized home healthcare players could benefit from the anticipated increase in consolidation. However, the report states that changes brought on by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 have created a stable reimbursement environment for the near term.
The report states that there are currently about 7000 home nursing agencies, 2000 home respiratory locations, and 4500 infusion therapy sites in the United States. This highly fragmented structure, the report states, provides a strategic advantage to larger national and regional operators, which benefit from more efficient cost structures.
© 2005 Canon Communications LLC
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