Home Health Care Industry Focus

In 1994, approximately one in eight Americans was age 65 and older. But by 2030, one in five Americans will be a "senior citizen." From 2010 to 2030, the number of baby boomers age 65 to 84 will grow by an estimated 80 percent while the population age 85 and older will grow by 48 percent. In addition, between 1994 and 2020, the nation's population of 85 years and older is projected to double to 7 million, and then increase to between 19 and 27 million by 2050.

So, it's easy to see why those in the home health care industry see another boom on the horizon — one of ever-increasing demand for services.

During 2006, the average annual cost for a private room in a nursing home rose to $70,912, or $194 a day, up 2 percent over $69,400, or $190 a day, according to a Genworth Financial annual survey of long-term care costs. As a result, many families are opting out of nursing home care and selecting in-home health care as the best option.

And while the cost of home health services also continues to increase, the benefits of having the family member at home make the added cost worthwhile.

Home health care services consist of providing skilled nursing or medical care in the home under the supervision of a physician. Services may be provided on a short- or long-term basis and may include respiratory therapy, physical therapy, feeding and nutritional services, infusion therapies and assistance during recuperation.

The National Association for Home Care (NAHC) reports there are more than 25,000 home health care providers caring for nearly 9 million people living with acute illness, long-term health problems, disabilities or terminal illness. This number represents a phenomenal increase since 1963, when only 1,100 homecare providers were in operation. Annual estimated expenditures for home health care are estimated to be more than $55 billion. Home health care services may be owned by government entities, hospitals, non-profit organizations, visiting nurse associations or private companies.

The customer base for home health care services is a certainty, and new technologies are making it possible for the infirm and aged to stay at home longer than ever before. However, the industry took a hit with the Balanced Budget Act of 1997 that dramatically cut Medicare reimbursements for home health care.

Another challenge is the same as that faced by hospitals and clinics — the shortage of registered nurses and home health care aides, coupled with a very high rate of turnover, often the result of onerous paperwork and governmental regulations that add hours and stress to a care provider's workdays.

In recent years, the percentage of home health care businesses owned by hospitals has decreased, and private-sector managed care plans are picking up a larger proportion of the bill.

Another recent development is experimentation with telehomecare, using telephone and Internet-based communication that allows medical care professionals to communicate with patients without traveling to the home. And, as the medical device industry develops more easy-to-use vital sign testing equipment, such as portable EKGs and fingerstick glucometers, the need for on-site care is lessened.

Other innovations ready to come to market include vibrating shoes that help with balance, talking pillboxes that remind patients when their next dose of medication is due and shirts that monitor vital signs via computer. More interactive technologies include systems that lead patients through a series of questions. The answers, along with vital signs, are transmitted to the physician's office, alerting medical staff if there is a problem. Costly on-site visits are then reserved for situations requiring hands-on assistance.

In 2001, the U.S. Department of Labor, Bureau of Labor Statistics counted 658,110 employees in home health care agencies, excluding hospitals and public agencies. Health care practitioners and technical occupations accounted for nearly one third of all jobs. Registered nurses, the largest in-category occupation, had a mean annual salary of $47,560; occupational therapists had a mean annual salary of $64,930; and licensed practical and licensed vocational nurses had a mean annual salary of $33,030.

Health care support occupations, such as home health care aides and nursing aides, accounted for 36 percent of the industry's jobs, with a mean annual salary of $17,880. Personal and home care occupations held 18 percent of the industry's jobs. Home care aides had a mean annual salary of $14,650.

So, for the enterprising entrepreneur or the professional with health care experience, the landscape is promising to take advantage of the aging of America. And for those of us approaching the "golden years," we can enjoy the assurance of staying home longer and still receiving the finest of care.

- Mary Paulsell, Director, MU's University Center for Innovation and Entrepreneurship 6/12/06