Long Term Healthcare Industry

In order the cut the increasing healthcare costs, hospitals are working on the decrease of patients’ stays at hospitals. As a consequence, the number of outpatient procedures and home nursing is increasing considerable as they avoid many of the costs associated with facility-based care, so they are much cheaper.

  • Home care accounts for over $40bn of the $1.3 trillion healthcare industry. (National Center for Health Statistics, 2002)

  • The home health agency industry struggled after the Balanced Budget Act in 1997 in the US, under the interim payment system. But the new prospective payment system, appears to be a great improvement and has encouraged providers to streamline operations and efficiently deliver services, offering high opportunities for key players in the long term healthcare market. (CMS, 2002)

  • Healthcare reforms throughout Europe over the last decade have resulted in a decline in average in-patient stay time and a decline in the number of hospital beds, leading to a shift away from the traditional hospital setting towards alternative care sites, such as long stay environments and the patient’s home. (Frost & Sullivan, December 2001)

  • Medtrade 2002, addressed to the home healthcare industry (the biggest in this sector) had some 1,000 exhibitors and nearly 21,000 attendants.

Key main trends are:

  1. Demographics: Over 65 years old population, which represents the immense majority of people requiring long term healthcare, is rising extraordinarily - it is expected to double within the next 20 years in Western countries.

  1. Costs Reduction: governments worldwide are trying to reduce rising costs in healthcare to make it more efficient and cope with extra demand. Over the last decade the trend has been to limit expensive stays in hospital and promote long term care solutions for patients and elderly - much cheaper.

  1. Technology: Advances in technology (i.e. in equipment and in technology) are allowing ever more the possibility of healthcare at home with therapists visiting patients at their home from time to time.

  1. Patients Demand: Patients prefer to receive as many health services as possible in their home versus going to healthcare facilities. Furthermore healthcare authorities have also come to realise that patients recover better in a non-hospital environment and are encouraging long term care facilities.

Long-term care refers to a broad range of supportive medical, personal and social services needed by people who are unable to meet their basic living needs for an extended period of time. An important part of long-term care is palliative care, which is that aimed to the relief of pain and treat suffering symptoms. Most of palliative treatment is based on drugs, but it also includes massages and sophisticated equipment.

Long-term care may be needed as a cause of an accident, illness or frailty and affects the elderly and other individuals with an illness or injury.

The two main types of long term healthcare are:

  • home care
  • long term healthcare institutions:
  1. nursing facilities or hospices
  2. specialised long term care institutions or hospitals with long term care facilities
  3. hospitals

The care typically includes room, board, supervision and assistance in daily living, such as housekeeping services. Some times these establishments provide skilled nursing care for residents in separate on-site facilities.

Long term care providers serve the fastest growing segments of the population: the elderly and persons aged over 65 years and over.

Long term care facilities/services include:

1) Rehabilitation hospitals and facilities

2) Intermediate care facilities

3) Home health services

4) Other: Assisted living facilities

There are different mechanisms or organizations around home care in itself:

  • Community healthcare
  • Home care
  • Local authority care
  • Nursing,  
  • Occupational therapy,
  • Private care,
  • Other: Day centers, meal services, social alarms, telecare, voluntary care.

  • US long term healthcare providers have seen a massive increase in revenues during the last year. Five of the top 10 companies have seen an average growth of 9.8%.

  • The equipment suppliers to this industry have also seen enormous growth. Six of the top companies saw an average growth in revenue of 23% during the last year.

  • In the US alone there are over 12,000 non-profit assisted living, nursing facilities, develop-mentally-disabled and subacute care providers caring for over 1.5million elderly and disabled individuals. (AHCA, 2002)


Home care is provided to patients in their place of residence to promote, maintain and restore health or to maximize the level of independence, while minimizing the effects of disability and illness, including terminal illness.

  • The US home care market is worth between $30-$40bn. (Wall Street Transcript, June 2002)
  • Medtrade 2002, addressed to the home healthcare industry had some 1,000 exhibitors and nearly 21,000 attendants.

Home care services are provided by:

  1. Home healthcare agencies (HHA): these are organizations that provide part-time caregiving (typically through home health aides) and other therapeutic services on a visiting basis to persons in their homes. They can be Medicare and non-Medicare certified agencies.

  1. Providers of the following therapies and services/equipment at home:
  • respiratory therapy
  • home medical equipment
  • and infusion therapy

Source: Centers for Medicare and Medicaid Services, June 2002

Home care services are reimbursed by Medicare, Medicaid, managed care and private insurance.

The homecare market is being more exploited as an alternative to expensive hospital healthcare. This is creating new services needed among which:

  • intravenous therapy,
  • pain control
  • and basic needs services delivery.

  • 7.6 million of individuals in the US (roughly 2.8% of the population) received homecare services in 1998, and this number is constantly increasing. (National Association for Home Care, September 2002)

  • In 1997, there were approximately 20,000 providers of home medical equipment, respiratory therapy and infusion therapy and home health agencies in the US – which compared to 1,100 in 1963, represents a 94.5% increase in 34 years. (National Association for Home Care, September 2002)

  • US Medicare expenditures on home care are about $10bn. (Wall Street Transcript, June 2002)

  • The US home care products market is valued at $5.0bn. (Kalorama Information, May 2002)

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Source: JP Morgan, Lehman Brothers

  • The UK home medical equipment market had sales of, approximately, $4.1bn in 1999 and is expected to grow an average of 10% annually through 2005, reaching estimated sales of $7.3bn (Clinical Reports, February 2002)

Source: Clinica Reports, February 2001

  • The principal diagnosis of home care patients in 1998 were:
  1. Diseases of the circulatory system                                33.5%
  2. Heart disease                                                        18.9%
  3. Injury and poison                                                14.7%
  4. Diseases of the respiratory system                                11.1%
  5. Endocrine, nutritional and metabolic diseases

and immunity disorders                                         10.3%

  1. Diabetes mellitus                                                7.9%
  2. Neoplasms (tumors)                                                7.0%
  3. Essential hypertension                                        5.5%
  4. Diseases of the digestive system                                5.2%

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