Nursing homes were once viewed as the main option for seniors who were no longer able to live independently at home. However, over time, in-home care services and assisted-living communities evolved to help seniors with their nonmedical daily needs, such as bathing, dressing, eating, shopping and housekeeping.
In this edition of the Silvers Series, we examine how providing seniors with assistance in everyday living has evolved into a thriving industry.
While some silvers need specific care as a result of illness or disability, many look to in-home care or assisted living to help them deal with everyday issues, including: mobility, emotional needs, personal care, nutrition and household tasks. We focus on the segment of the industry that assists clients with daily activities based on their individual needs.
In-home care uses professional caregivers to provide help with everyday tasks in the client’s home. This is also referred to as domiciliary care, social care or homecare.Assisted living uses skilled caregivers to provide care to residents of communal facilities and centers. Along with room and board, these centers feature staff that assist residents with daily tasks such as bathing, dressing, eating and taking medication, as well as with socializing and mobility.
Sizing the Industry
Global Public Expenditure on LTC Is Estimated To Reach $1.71 Trillion In 2020.
LTC, or long-term care, comprises health and social support services to people with chronic conditions and disabilities who need care on an ongoing basis. The health component of LTC spending relates to nursing and personal care services. While younger age groups are also provided with LTC services, on average, almost 80% of those receiving LTC services are 65 or over.
Government-run organizations provide services and facilities specifically to the silver population. We estimate that global public spending on long-term health and social care totaled approximately $1.40 trillion in 2015 with an expected 4.0% average increase per year. So, at constant 2015 prices, we expect such spending to reach approximately $1.46 trillion this year and around $1.71 trillion in 2020. These figures include nursing and personal care services provided in institutions and at home, and include public spending only.
The Long-term Care Industry in the US
The cost of providing everyday care for silvers is substantial and growing. In the US alone, private spending on assisted living was an estimated $60 billion in 2015, based on revenue information from the US Census Bureau. Spending in this sector has grown at an average annual rate of 5.9% in recent years. Given this growth, we expect US spending on assisted living to total $64 billion this year, and to rise to $80 billion in 2020.
Types of Care Providers
In the US, five main types of care providers serve the senior market:
Adult day services centers
Residential care communities
Home health agencies
Home health agency services have seen higher consumer demand and tend to cost less than residential facilities while allowing seniors to live comfortably in their own homes for longer.
Nearly 3% of the US Population Uses the LTC Industry’s Services
8.76 million people in the US, almost 3% of the population, used LTC services in 2014 (the most recent year for which data are available).
- About 282,200 people in the US were enrolled in adult day service centers.
- Some 1,369,700 were residents in nursing homes.
- At least 835,200 were part of residential care communities.
The majority of the users of these services were aged 65 and over; 63.7% of users of adult day service centers and more than 80% of users of each of the other LTC services fell into this age group. We anticipate that positive growth will continue as additional players enter the market. Our estimates suggest that the total number of home health agencies reached 13,000 in 2015.
Growth in the assisted-living facility sector was less constant in recent years, implying that demand for home health agencies is growing faster than demand for assisted-living facilities. Our estimates suggest that the total number of US assisted living facilities approached 16,000 in 2015. The Parke Assisted Living is a great option for those looking for a reliable assisted living option.
Another indicator of rising demand for home health agencies is that the number of home health aide jobs has been increasing. Home health aide is the fifth fastest-growing occupation in the US, and projects 38% growth in the job category between 2014 and 2024.
Cost and Increasing Preference for “Aging in Place” Are Driving the In-Home Care Sector
One factor that is likely driving the growth of home health agencies is cost. It is less expensive for seniors to receive care at home than it is to move into a residential facility. We estimate the following average costs per day for different types of care services:
A second and likely stronger, factor influencing the growth of in-home care is seniors’ growing preference for aging in place; over 90% of seniors over age 65 prefer to stay in their homes as they age. OECD data for 10 countries suggests that a greater proportion of seniors who need care are receiving in-home care.
The move toward in-home care has prompted the development of new technology and services that enable seniors to live independently for longer, and families to participate more directly in administering care to their elderly loved ones. Check back next week for our post on new tech concepts and business models.
For more details on The Silvers Series read our full report here or check out the first or second post in The Silvers Series.
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