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2017 Post-Acute Market Report

2017 Post-Acute Market Report

Market At-A-Glance
The market for post-acute services is valued at $200 billion in 2017. This is expected to grow at a compound annual growth rate of 14.0% to $500 billion by 2024. The driving factor in post-acute market growth is increased life expectancy which has risen to 78.7 years. By 2050, the number of seniors seeking post-acute or home care services is expected to grow to 27 million, up from 8 million in 2012.

Skilled Nursing Medicare Margins Are Up, But Payer Mix Deteriorates
At $55 billion in 2016, Medicaid is the largest SNF payer, equaling 43.3% of total revenues. Medicare reimbursements are the second largest revenue source for SNFs, totaling $40 billion in 2016 and accounting for 31.5% of revenues. Over the years, Medicare margins have improved for SNF providers; however, shifts in the SNF payer mix have lowered the percentage of Medicare patients, negatively impacting revenues. These shifts have also introduced increasing numbers of lower-paying Medicare Advantage patients, putting profits under pressure.
• Over the past 10 years, the number of Medicare Advantage patients grew 300% to more than 18 million.
• These programs typically pay 20% less than traditional Medicare for the same services. Because of this, some of the largest skilled nursing investors are exiting the industry.

Inpatient Rehabilitation Facilities Profit Margins Improving
Payments per case for inpatient rehabilitation facilities increased by 40% since 2004.
• Over a similar period, this segment experience slower-than-expected growth in costs, resulting in improved profit margins.
• From 1999 to 2015, Medicare margins grew 60% for inpatient rehab facilities.

Assisted Living Revenues Projected To Grow
By 2021, revenues for this segment are expected to grow 31%, up from $24.5 billion in 2016. Occupancy has remained stable for assisted living facilities from 2001-2016; however, the number of facilities grew 24% over the same period, raising bed capacity by 45%.

Continuing Care Retirement Communities Expect More Residents
By 2025, the number of daily residents in continuing care retirement communities (CCRCs) is projected to grow 49% to exceed one million. With the influx of new residents, revenues are expected to increase 25% over a similar period.


2017 Post-Acute Market Overview
SNFs, Health Systems Anticipate Collaboration, Not Consolidation
Discharges From Hospitals To Post-Acute Facilities Projected To Increase 60% By 2035
Seniors 85+ Twice As Likely To Need Post-Acute Services
Providers Struggle To Compete For Talent
SNF Numbers And Occupancy Remain Flat
Skilled Nursing Market Is Fragmented
Majority Of SNFs Are Freestanding And For Profit
Medicaid To Remain Largest SNF Payer Through 2021
Medicare Spending Growth Twice That Of Other Payers
Medicare And Medicaid Spend Per Patient Day Increases For Skilled Nursing
SNF Medicare Payments Higher Than Costs
Payer Mix Deterioration Erodes Profits
Patient Mix, Size Impact SNF Profitability
SNF Intensive Therapy Days Increase
Services For SNF Patients Include Assistance With Daily Activities, Incontinence
SNF Patient Volumes Projected To Increase, Despite Flat Occupancy
SNF Leaders Report More Short-Term Stays, Plan To Expand Amenities
Fewer 5-Star SNFs
SNF Shareholders Are Looking For Exits
$14.4 Billion In LTC M&A Deals In 2016
IRF Profits Increase While Number Of Facilities Remains Flat
IRF Profits Fueled By Payment Growth Outpacing Costs
IRF Stroke Patients Result In Lower Medicare Margins
LTAC Moratorium Ends In 2017
Assisted Living To Grow To $32 Billion By 2021
Increased Spending Anticipated For All Assisted Living Payers Through 2021
Memory Care Investment Increases Despite High Out-Of-Pocket Costs
CCRC Occupancy To Grow 50% By 2025
GHX Reports $2.3 Billion In Post-Acute Sales Through The Distribution Channel In 2016
GHX Lists Top Post-Acute Care Products Sold Through Distribution
GHX Reports Post-Acute Care Sales By Segment
Definitions
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