The Size of the Senior Home Care Industry: Now and In the Future

Senior care has developed into an industry with many different types of care options, including senior home care which has been rapidly growing into a dynamic segment of senior care.  Estimates vary on the size of the industry, but it is estimated that more than 33,000 companies provide some sort of home care for American families¹. This includes home health, hospice, and non-medical care.

According to Stephen Tweed from Leading Home Care, greater than 15,000 of these companies are non-medical in-home care companies². Forty six different companies are selling franchises, representing over 3,500 individual locations². Estimates vary on median revenue per company, but for private duty non-medical home care, the estimates are between $1.185 million³ and almost $1.5 million². If you do some “back of the envelope” math, that makes the non-medical in-home care industry worth about $17-$22.5 billion to the U.S. economy. This does not take into account the “shadow” industry that hires private caregivers, which makes it difficult to ascertain the size of the overall market. The good news for the industry is that it is a large market that is only going to continue to grow.

Below are some quick statistics from the US Census Bureau:

The US population will grow from approximately 310 million in 2010 to almost 440 million in 2050.

• In 2010, there are over 40 million people over the age of 65. In 2020 that number is expected to increase to roughly 55 million.

• In 2010, people over the age of 65 accounted for approximately 13% of the population of the US, in 2025 that number will be almost 18%.

• According to the Department of Health and Human Services over 8,000 people will turn 65 every day, which exceeds the death rate of the over-65-year-old crowd by approximately 4,000 people per day.

What do all these numbers mean to you, the Private Duty owner? There is going to be tremendous opportunity for those companies that are well run over the decades to come. Companies that can put people, processes and systems in place to improve the customer experience will be rewarded in the marketplace. Companies utilizing technology to more effectively communicate with clients, employees and referral sources will be able improve the experience with the company, while using less internal resources. Human resources and hiring practices will need to continue to be streamlined to keep up with increasing numbers of employees and increased regulation from the state and the federal governments. Repeatable processes also become more important as companies begin to scale, therefore people and technology are vital components to success.

Home care can truly be called a people business, but equally important is financial performance. Systems need to be in place to monitor gross margins, operating costs, collections, billing, payroll, marketing costs, hours billed, conversion ratios, net margins and a host of other financial data points. As the industry continues to grow, companies will continue to grow both organically and through industry consolidation. The industry has already started to see some consolidation as larger players, private equity groups and others try to ride the wave of the aging US population, by purchasing smaller players.

As a mergers and acquisition company, we believe the median size senior home care company in ten years will be considerably larger in terms of revenue, geographic footprint and employees than the median one in 2011. The senior home care industry is an exciting business, and all signs point to a bright future for the decades to come for the companies that can execute.

About The Waterford Group: The Waterford Group is a mergers and acquisitions firm that specializes in selling Private Duty, Home Health and Hospice companies. The Waterford Group helps define a practical business sale plan, with the ultimate goal of protecting, and increasing, your exit value. Selling a business is generally a significant financial event in your life and its implications can impact retirement, future business endeavors and your personal net worth. It’s never too early to start thinking about your exit strategy. If you would like to learn more about how to plan your exit strategy or discuss developing a plan, please give The Waterford Group a call. www.thewaterfordgroupinc.com

¹ “Basic Statistics About Home Care” Updated 2010, National Association for Home Care and Hospice. ²Stephen Tweed, Leading Homecare…A Tweed Jeffries Company

³”2010 Annual Private Duty Benchmarking Report”, National Private Duty Association (NPDA) & Home Care Pulse, LLC.