North American Homecare Market - Investment Analysis and Growth OpportunitiesFrost & SullivanDecember 12, 2006 65 Pages - SKU: MC1408661 |
| Countries covered: North America Research Overview This Frost & Sullivan research service entitled North American Homecare Market - Investment Analysis and Growth Opportunities provides an analysis of the key investment themes, industry economics, value chain analysis, merger and acquisition history, and various valuation indicators of homecare companies. In this research service, Frost & Sullivan's expert analysts thoroughly examine the following markets: respiratory therapies, infusion therapies, home medical equipment, and home nursing services. Market Sectors Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
The following technologies are covered in this research:
Reimbursement Issues Place Pressure on Providers’ Bottom Lines High operational costs coupled with continuous reimbursement cuts have created a challenging situation for North American home healthcare providers as they struggle to cope with falling profit margins, which are among the lowest in the healthcare industry. The introduction of the Balanced Budget Act in 1997 brought about major changes in the reimbursement scenario as it advocated the use of a prospective payment system rather than the previous cost-based system. Under the previous system, Medicare home health agencies were reimbursed according to per-visit costs with an upper limit on costs but unlimited visits, and this boosted home healthcare expenditure considerably till 1997. However, the interim payment system followed from 1998-2000 until the BBA-mandated system came into effect caused a significant decline in expenditure. The prospective payment system was finally implemented in 2000, and while many believe it will promote greater efficiency, there is no denying that home healthcare providers’ bottom lines have been affected. "Against such a backdrop, cost efficiency has become the name of the game," observes the analyst of this research service. "Payor mix diversification, geographic expansion and economies of scale are some of the benefits that home healthcare providers could take advantage of." In a fragmented market comprising more than 8,000 providers, consolidation increasingly seems to be the way forward as it helps reduce costs by achieving economies of scale. The opportunity to consolidate a fragmented market is potentially an exciting one for private equity participants Cost Benefits and Marked Patient Preference Drive Home Healthcare Market With healthcare costs constantly increasing, the emphasis on delivering cost-effective care is stronger than ever before. Home healthcare is ideally suited to address such concerns, as it enables substantial cost savings compared to institutionalized care. This can be as much as 25.0 to 60.0 percent more, depending on the nature of the disease under treatment and the level of care provided. For some conditions such as low birth weight, homecare can offer savings of up to 99.0 percent. Furthermore, customized care helps keep costs minimal by doing away with extra hospital services that a particular individual may not really need. Another strong factor boosting the home healthcare market is the high acceptance levels among patients. Many patients prefer to be treated in the privacy and comfort of their own homes. Familiar surroundings, family support, and personalized care combine to hasten the recovery process. "Patients are known to respond better to therapy received at home," says the analyst. "While one cannot understate the importance of hospitals in the healthcare system, especially when it comes to major surgeries, home healthcare is expected to emerge as the preferred choice for less acute conditions." |
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