In-Home Care Industry Identifies Greatest Growth Areas, Technology Drivers

Despite a recent uptick in M&A activity within the hospice space, many industry leaders still see private duty home care and medical home health care as the greatest growth areas for the in-home care industry in 2019. Meanwhile, the year ahead will also be filled with new technology adaptation, driven by payment model changes and regulatory compliance.

Those are a few of the key findings from the 2019 Home Health Care News Outlook Survey and Report, sponsored by Homecare Homebase and released earlier this month. The survey — conducted in November and December 2018 — reflects the opinions of more than 680 professionals working in or alongside the in-home care industry.

When it comes to business upside, survey respondents identified medical home health and private duty home care as equally lucrative growth targets for 2019, with nearly one-third of respondents (32%) naming each category as the industry’s greatest growth area.

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Meanwhile, 16% of respondents said palliative care was leading the pack, followed by 13% calling hospice the hottest growth target for the year ahead.

The fact that non-medical home care is seen as a significant growth area is understandable, as federal policymakers have made multiple moves to allow for more in-home care services and supports under Medicare Advantage (MA). Several major health care players — including Humana Inc. (NYSE: HUM) — have also started to shift focus toward social determinants of health and the overall well-being of their patients and members.

Despite its low survey ranking, the hospice landscape continues to be an attractive target for buyers as well, especially in the private equity space.

For example, PE-backed hospice leader Compassus could soon be up for sale, according to a January report from PE Hub. Additionally, hospice demand and valuations — which routinely are running to double-digit EBITDA multiples — are at an all-time high, according to M&A advisory firm Mertz Taggart.

The HHCN outlook survey results come as home health and hospice deals are expected to reach record numbers in 2019 and follow a record-breaking 2018, when the sectors closed a total of 82 deals. That’s according to Norwalk, Connecticut-based market intelligence firm Irving Levin & Associates, which collects and studies mergers-and-acquisitions data.

Technology Adoption

While survey respondents largely gravitated toward either private duty or home health care when asked to identify the greatest area for growth within the in-home care industry, they were less decisive on the leading drivers of technology adoption in 2019.

In-home care providers indicated new payment models (18%), staff satisfaction (22%), regulatory dynamics (18%) and PDGM (24%) were fairly equal in driving technology adoption. Referral partnerships lagged behind those choices, with 16% of respondents identifying it as the most important aspect driving providers to take on new technology.

Additionally, a number of factors could prompt providers to change technology platforms in the year ahead, according to the survey results.

The majority of respondents called regulatory compliance the top driver of change at 53%, followed by payment and reimbursement challenges at 51%, then the need to reduce operating costs at 42%.

Among the survey’s other takeaways: The in-home care industry still sees staffing as its No. 1 challenge — and slightly less than 30% of stakeholders have yet to begin Patient-Driven Groupings Model (PDGM) preparation.

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