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Home Is Where The Health Is

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What mid- to long-term investment opportunities are expected to emerge in the home healthcare market following COVID-19?

Although the COVID-19 pandemic unfortunately still occupies much of the attention of the healthcare industry now, a picture of its aftereffects on the business side of the industry is coming into view. With that comes projections of corresponding investment opportunities in the mid- to long-term range.

Among several healthcare sectors, the home healthcare market — which generated a remarkable $93.4B in revenue in 2019 — is expected to surge because of seven key areas that will also provide multiple avenues for potential returns.1 Annual growth in the sector between 2014 and 2019 was 3.7%. The projection for 2019-2024 is 5.7%.2

Driving demand are a number of developments. One is simply a demographic with growing need: By 2030, the U.S. baby boomer (roughly 65+) generation is expected to represent 23% of the total population. By 2060, that number will nearly double, totaling 95 million persons.3

The expansion of nonmedical personal care reimbursement is also creating opportunity in home healthcare. Beginning this year, the Centers for Medicare & Medicaid Services (CMS) will allow Medicare Advantage plans (which now serve 34% of all Medicare beneficiaries) to cover supplemental nonmedical in-home support and services.4

As with other healthcare sectors, advancements in technology are expected to spur growth. Providers that have strong tech platforms (referrals, intake, EMR, billing/collections, etc.) are poised to benefit in the current environment.

To be sure there are challenges ahead. Like other industries, labor shortages and high turnover rates persist. Ironically, advancements in technology may be a drag as many service providers struggle to adapt to digital applications and new software and small firms compete to raise capital for infrastructure investment.

Overall, however, the horizon is bright. The rise in need for more home healthcare, changing reimbursement models, small (and undercapitalized) participants, the ability to effect change through consolidation and technology offer a positive outlook. The infographic that follows offers a quick glimpse at seven key areas in the sector.

Infographic

Footnotes:

1. & 2: IBIS World – "Home Care Providers in the US" – July 2019; LexisNexis Risk Solutions (2019).

3. & 4: FTI Analyses; IBIS World – "Home Care Providers in the US" – July 2019; Home Healthcare News.

© Copyright 2020. The views expressed herein are those of the author and do not necessarily represent the views of FTI Consulting, Inc. or its other professionals.


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Scott Bingham

Senior Managing Director, Leader of U.S. Transactions