It’s no secret that we’re an aging society. According to the U.S. Census Bureau’s 2017 National Population Projections, by 2030, all baby boomers will be older than age 65. That means one in every five residents will be retirement age, and that translates into millions of more people relying on health care services. AARP research reveals that 90 percent of those over 55 plan to stay in their homes after retirement, known as “aging in place.”
And an increasing number of them prefer to receive their health care in the home. A 2015 study conducted by Merrill Lynch and Age Wave showed that roughly 85 percent of retirees prefer to receive extended care within their home.
With statistics like these, it’s easy to see why the home care industry is exploding. In fact, it’s one of the fastest-growing industries in the nation, with new agencies starting up almost every day.
Home care has also become big business.
According to the Centers for Medicare & Medicaid Services, the U.S. spends more than $40 billion every year on home health care. The Bureau of Labor Statistics projects the industry will employ 2.02 million people by 2024, including home health aides, personal care aides, physician assistants, registered nurses, nurse practitioners, therapists, and managers. And the end of 2017 saw the merger of pharmacy giant CVS with insurance giant Aetna, and soon after, Humana’s acquisition of a 40 percent stake in Kindred at Home. Other big mergers are in the works for 2018 and beyond.
Greater demand = greater challenges.
This explosive growth is good news for the home care industry overall. But the industry is also facing some daunting challenges, including innovative technologies, changing documentation regulations, and the federal government’s continuing efforts to cut Medicare, Medicaid, and home health Medicare reimbursements.
But one challenge could dwarf them all: the staffing crisis.
With the rapid growth and increase in demand for home health care services, agencies are having an increasingly hard time finding and retaining qualified staff. Even though the home care workforce is estimated at 1.3 million workers and growing, the demand is still greater than the supply – and according to industry estimates, that’s likely to be the case for years to come.
This could be the industry’s biggest hurdle to growth.
As the home care industry continues to grow, agencies will continue to compete for staff, and the growing shortages of practitioners could pose a threat to the very viability of the industry. Loss of revenue, lapses in quality of care, staff burnout, and decline in patient confidence could all be part of the fallout.
Notoriously low pay for many home health workers is also a challenge that needs to be met, with many home care workers living at or below the poverty line. And the cost to replace staff is high. It’s estimated that the cost to replace a nurse making $75,000 a year is $41,000, including direct costs and lost productivity.
All trends point to a common reality: home care will become even more challenging and the expectations placed on the industry will continue to become more demanding. Overcoming staffing challenges will require smarter staff planning and smarter decisions about containing recruitment costs, increasing retention levels, operating more efficiently, and expanding into new service lines such as palliative care and telehealth.
Your agency is facing more challenges than ever before. That means now more than ever, a smart risk management strategy is crucial to your survival. And, a smart employee benefits plan, liability and workers’ compensation insurance will be crucial to attracting and retaining a talented team. When you’re ready to talk about robust solutions to these challenges, talk to the home care coverage professionals at Heffernan Insurance Brokers.