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Staying at home
An aging population fuels home care growth
| More seniors want to stay independent longer, and their growth in population is a boon to the home care industry. |
Let’s say that you’re looking for a franchise opportunity, preferably one in themedical or health care field. You want a market with proven growth potential, but one with a minimum of paperwork and without a huge capital investment for equipment.
Perhaps you should consider home care businesses.
Home care companies provide a wide range of services—from simple companionship to medical care given by registered nurses—for individuals who prefer to live at home rather than in an institution. This usually means senior citizens, but it can also mean a child who is rehabbing from an injury or major illness.
A quick look at government statistics shows the potential in this segment, one driven by demographics:
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The U.S. population age 65 and older numbered 36.8 million in 2005, up 3.2 million or 9.4 percent since 1995.
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The number of Americans aged 45-64 who will reach 65 over the next two decades increased by 40 percent during this decade.
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More than 2 million persons turned 65 in 2005.
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Nearly 11 million non-institutionalized older persons live alone.
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Almost 450,000 grandparents aged 65 or older in 2005 maintained households and had primary responsibility for grandchildren.
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It’s estimated that by the year 2020 there will be more people over the age of 65 than there will be of school age, the first time this has happened.
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The fastest growing segment of the population is the 85+ group. This group is expected to double to nearly 7 million persons in the next 15 years.
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Most older persons have at least one chronic condition including hypertension (52 percent), arthritis (50 percent), heart disease (32 percent), cancer (21 percent) and diabetes (17 percent).
“There is a tremendous need as the population ages and more people are living longer,” says Leann Reynolds, president of Homewatch CareGivers, a Colorado-based home care provider. Homewatch is one of the oldest and largest home care franchisors in the country with more 140 franchises in the U.S. plus another dozen outside the U.S.
Homewatch has seen a 35-percent increase in its gross domestic sales over the last four years, another indicator of the potential in this market. “We provide assistance to people who need care,” says Reynolds.
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Leann Reynolds, president of Homewatch CareGivers |
The market is also lucrative from another standpoint: The seniors paying for in-home care have more resources. Households headed by people 65 and older in 2005 had a median income of nearly $40,000 for non-Hispanic whites, according to the government. Consumers pay for many home care services themselves, allowing home care agencies to avoid much of the hassle that comes with private insurance, Medicare and Medicaid. “The consumer pays for the services,” says Reynolds, noting that her firm and others are not reimbursed by the government or insurer when they provide services that are not “curative” or rehabilitative.
“Older generations looked to Medicare and Medicaid,” says Neil Johnson, executive director of the Minnesota Home Care Association. “But now we have more people with more resources who are willing to pay out of pocket for these services. And with more baby boomers on the horizon, that situation is going to increase.”
Consumers’ ability and desire to pay for home care services become increasingly important as government programs cut payments for services and shift care to the community. President Bush’s New Freedom Initiative “calls for the fundamental rebalancing of our care system so that emphasis is placed on providing care in the community and on giving people more choices and control over their care options,” says Josefina Carbonell, assistant secretary for aging in the U.S. Department of Health and Human Services.
Carbonell says these “consumer-directed” moves give people “authority to hire their own workers. This has been shown to be effective in keeping high-risk individuals at home, and has strong appeal for consumers.”
Improvements in medical technology that make it easier to provide care in a non-institutional setting also are stimulating expansion of the home care industry. “Procedures now are being done in the home that 10 years ago were done in a hospital,” points out Johnson. “That’s largely because of an increase in technology.”
This increased capability is leading to a shift from acute care to chronic care models that are now being done in the home, he says.
Reynolds of Homewatch agrees. “You’re seeing an integration of people and technology that is enabling people to stay in their homes.” These technology-based services range from auto-medicine dispensing systems to patient monitoring systems.
“Instead of having a caregiver in the home 24 hours, day and night,” says Reynolds, “we might have monitoring systems at night. We have a combination now. It’s a huge point of differentiation for us.”
The home care business isn’t problem-free, however. In addition to changes in reimbursements at the federal level, there are labor shortages, training issues and licensing restrictions to be considered.
In June, the Supreme Court ruled that home care workers are not entitled to overtime pay under the Fair Labor Standards Act (FLSA), which ensures overtime and minimum wage for most workers.
But this situation could change. Sen. Edward Kennedy, (D-Mass.), who chairs the Senate’s Health, Education, Labor and Pensions Committee, said he hopes to amend the FLSA to provide a “fair solution that treats these hardworking caregivers with the dignity and respect they deserve.” Home care industry officials, however, say overtime pay would likely lead to increased home care charges.
Meanwhile, more than two dozen states have licensing requirements for home care providers and workers, a situation that can provide a bureaucratic nightmare for companies like Homewatch, since licensing requirements differ between states. Most states will require licensing in the next few years, Reynolds believes.
In general, any time a care provider deals directly with a patient, that person and his/her company must be licensed. “Once you start to touch the patient,” says Reynolds, “you get into licensing.”
Still, thanks to the market’s growing demographic, home care can be an excellent franchise opportunity—for the right person. “People who succeed,” says Johnson, “have some desire to serve society. People who come in only with a profit motive usually don’t do very well.”
