On the Inside: A Look at the Home Care Provider Industry
By Dallas Romanowski
In the U.S., health care has long been a source of contention, the goal of providing all Americans affordable, universal care seemingly unattainable. However,
The Patient Protection and Affordable Care Act (PPACA) of 2010 has helped to shift focus to the community- and home-based care. PPACA includes a list of changes to nursing services for seniors and the disabled, among them encouraging the transition from nursing home services to at-home managed care. This is good news for families and good news for homecare buyers and sellers. In fact, senior homecare has been one of the fastest-growing franchise segments in recent years as the number of adults older than 65 has increased at an annualized rate of 3.6% over the five years to 2019.
According to IBISWorld, home care also saves Americans billions of dollars each year by providing services at home rather than in hospitals and skilled nursing facilities. As we get deeper into the data, we’ll look closely at key factors that bolster steady growth in industry revenues--an annualized rate of 2.2% to $96.9 billion over the five years to 2020.
The Plus Factor: Making a Difference
Yes, these statistics are impressive, and—as I’ll talk about later—the barriers to entry in the homecare space are low. But, as owners know, buying into the homecare industry goes well beyond profit and loss statements. Buying into this industry provides agency owners the opportunity to engage in meaningful work. As an owner, you’ll improve the quality of people’s lives and truly make a difference. This might sound lofty, but I speak from experience. I also suspect that if you’ve found your way to this book, the business opportunity you’re seeking is one that melds your vision of success with a passion for helping others.
Many owners we’ve worked with were the original founders of the business. Most often, the owners started their homecare business because of a personal experience with their parents or grandparents. When peoples’ health starts to decline they often need around-the-clock care. This can take a toll on family members. Family members need help so they can take time for themselves or carry on with their jobs. Twenty to thirty years ago there were not a lot of options since the homecare industry was just getting started. Entrepreneurial-minded family members recognized this and pursued a business opportunity in what has become a huge industry.
Personal Homecare Versus Home Health Care: Industry Definitions
Companies in the “Home Care Providers” industry primarily deliver services for seniors and the disabled in their homes. Both “Personal Homecare” and “Home Healthcare” come under the umbrella of “In-home Care.” Both are popular options for 90% of Americans over age 65 who prefer to remain in their own homes for as long as possible. Though the range of services may sometimes overlap, based upon individual agencies, these services fall into “medical” or “non-medical” assistance.
Breaking It Down Further
We think it’s especially important to set out some clear guidelines that will help you delineate between these two broad categories. Personal Homecare comprises services that are typically classified as “non-medical.” Home caregivers primarily provide seniors and the disabled with companionship and assistance with activities of daily living. This might include grocery shopping, preparing meals, or providing help with bathing. Beyond this scope, Home Healthcare comprises medical-skilled services that typically require a written order from a doctor. This might include intravenous, respiratory, or physical therapy.
Our home care Providers and Agencies
The agencies we broker through Homecare United are generally in the Personal Homecare realm. As a rule of thumb, our clients do not provide care beyond the scope of services a Certified Nursing Assistant (CNA) performs.
The role of a CNA is extensive when it comes to home care. CNAs perform the tasks needed to take care of clients at their respective homes, guiding them toward a healthy recovery or in some cases, just a better quality of life. From feeding patients to taking notes on their health condition, CNAs perform many duties with compassion. Their work varies depending on the client but generally requires many skills to be put to use. Serving weak or elderly clients, people with disabilities, and those suffering from specific illnesses, CNAs must be well-rounded, knowledgeable, and flexible at all times.
According to CNABuzz.com, CNAs most common duties include:
Administer treatment – CNAs administer a client’s prescribed treatment to them at home. They also dress wounds, change bandages, and measure vital signs (temperature, blood pressure, respiration rate, etc.).
Monitor oxygen supply and equipment – If a client is under oxygen, then the CNA will be in charge of the oxygen supply and the equipment through which the oxygen is supplied.
Maintain clients’ healthcare records – CNAs keep note of a client’s condition through healthcare records and notify family members about their well-being.
Groom patients – CNAs assist clients in bathing, feeding, and dressing. They also provide hair care and nail care.
Educate family members in case of an emergency – CNAs must educate family members on best practices in case of an emergency. Some practices include knowing signs of a stroke or heart attack, performing CPR, or what to do if their loved one has fallen.
Perform housekeeping – CNAs cook food, clean the client’s room, shop for groceries, and perform other housekeeping errands as described in the care plan.
Maintain a healthy environment – CNAs are responsible for maintaining a healthy environment for clients. They keep the environment clean and neat, taking every possible measure to prevent the spread of infection.
Adhere to clients’ nutritional requirements – When providing food to clients, CNAs adhere to any and all dietary requirements.
Make clients’ beds – CNAs make beds, as well as change bedpans, catheters, and soiled sheets.
Manage equipment – Clients with portable toilets, lift chairs, lift beds, wheelchairs, and other devices, often need help using them. CNAs provide that help, as well as keep up the cleanliness of medical equipment
Our focus fits neatly into the Aging in Place model that more and more seniors are choosing. As defined by the U.S. Centers for Disease Control and Prevention (CDC), Aging in Place is “the ability to live in one’s own home and community safely, independently, and comfortably, regardless of age, income, or ability level.” In other words, Aging in Place is the opposite of institutional residential care like a nursing home. We believe that the substantial benefits of this model of care are primary drivers for continued expansion in the homecare industry. Benefits of homecare enable seniors to:
Maintain their independence
Live in an environment that feels safe, secure, and familiar
Continue familiar hobbies and routines
Reap cost savings
And while these factors can be crucial to the emotional health of seniors, studies conclude that home care also positively impacts the physical health of older adults. We know that contagious illness is spread much more easily in shared living facilities, with COVID-19 providing the most devastating example in generations. In a nutshell, home care brings seniors the best of both worlds: professional caregiving in the comfort of their own homes.
Now that you know the scope of services (the “What”) of homecare agencies provide, I’d like to dig a little deeper into the “Who” and “Why” of the industry.
Key External Drivers
One of the most significant drivers in the home care industry is the baby boomer generation. As a demographic, this group tends to have access to better nutrition and health care, which means they’re living longer. Add to this, a higher level of disposable income and private insurance. Though not all boomers enjoy economic privilege, these individuals generally prefer the independence of home care rather than hospital or nursing home care. What’s more, America’s aging population is increasing. In the next five years, the number of adults older than 65 is expected to reach 55 million people.
Small Operations Versus Key Franchise Players
Increased demand for services and relatively low barriers to entry make the home care industry competitive. According to an IBISWorld analysis, the landscape is highly fragmented with 90% of industry establishments consisting of sole proprietorships.
Competition
For Homecare Agencies, gaining new clients rests first and foremost on providing quality services. Yes, homecare businesses do compete on the basis of price, but most clients will certainly pay more based on reputation and quality of care. Accreditations add value and differentiate one small operation from another. Skilled nursing and assisted living facilities still loom in the competitive landscape
Franchises in the Home Care Space
Franchising provides benefits for both buyers and sellers. The biggest benefit of buying an existing home care franchise is that you’ll be able to expand the brand more quickly than you could if you were starting from scratch. Just like in other sectors, franchise operations give owners a pre-packaged set of tools they’ll be able to access immediately. Training, support, and name recognition that come with a corporate brand are invaluable. Generally speaking, the chances of your franchise homecare business surviving are greater than a non-franchise.
Even with the economic woes of recent years, senior In-home care has been one of the fastest-growing sectors. From a big-picture view, franchises in the home care industry are highly fragmented. As the need for in-home senior services increases, it’s not surprising there are now more than 60 brands competing for market share. According to IBISWorld, the industry will see a continued increase in revenues--forecast to grow at an annualized rate of 6.4% to $15 billion over the next five years.
Major Franchise Players
Competition between home care franchise operations is moderately high and the industry has seen consolidation among smaller regional brands to gain national awareness and combat larger outfits. Major players (brands that generate more than 5.0% of industry revenue as defined by IBISWorld) include:
Home Instead Inc.
Interim HealthCare Inc.
Living Assistance Services Inc.
Right at Home Inc.
Comfort Keepers
Griswold home care
With mergers and acquisitions trending, the seven largest franchise brands in the industry are on target to generate more than half of all industry revenue.