FEED-BACK.COM E-ZINE
MARCH / APRIL 2009
Volume 12 Issue 2
Home Care / Long-Term Care Markets
Through the years, Feed-back.com has posted numerous news abstracts about the U.S. home care market. A review of archived blurbs from August 2003 indicates that health care information technology companies were consolidating (Historical Perspectives). Did the acquisitions meet long-term strategic objectives? Original material is included below, along with updates on current competitors.
Historical Perspectives (2003)
The August 2003 edition of Feed-back.com's "Home Health Care" news page highlighted corporate acquisitions and financial developments involving: Amedisys (Baton Rouge LA; www.amedisys.com), BeyondNow Technologies (Overland Park KS), CareCentric Inc. (Atlanta GA), Cerner Corporation (Kansas City MO; www.cerner.com), and Metro Home Health. Edited news excerpts are reprinted below.[1]
Acquisition Of BeyondNow Technologies By Cerner Corporation will help establish Cerner in the home care information processing market segment. The purchase agreement was announced on August 13th, 2003. A major strategic objective is to meet future home care demand that is anticipated as members of the baby boom generation become older. The goal fits well with the Cerner Corporation's commitment to develop personalized health systems. Ideally, better information technology will enable patient data sharing among clinicians and should result in productivity gains in case load management. The largest group within the target population is currently between the ages of 55 and 59. To address their health care needs in 2010, the current rate of health care expenditures would most likely double from current levels. BeyondNow Technologies offers information solutions that enable remote access to electronic data to reduce administrative paperwork and support faster reimbursement payments by third-parties.
Second Quarter 2003 Financial Results demonstrated fairly stable net income for CareCentric Inc. even though revenues declined by 3.8% compared with the same period in 2002. The Company achieved a fourth consecutive quarter of profitability, while supporting new product development and making bank debt payments from operating funds. Factors that have adversely affected sales of home health information technology systems include revised regulatory Health Information Portability and Accessibility Act (HIPAA) requirements and an estimated 15% decrease in reimbursement rates. CareCentric's products assist home health agencies and medical equipment providers with profitable management of their businesses.
Two Home Health Agencies Acquired By Amedisys will extend the Company's presence in New Orleans and southeast Louisiana. The two agencies, operating as Metro Home Health, cover suburban home health services. The expected gains from these agencies are likely to between $17.0 and $18.0 million in annualized revenues for Amedisys Inc., for an estimated $8.0 million purchase price. In July, Amedisys purchased another agency that serves patients in Fort Smith, Arkansas.
The Competitive Landscape (2008 - 2009)
Amedisys still serves the home care market. In February 2009, the Company acquired two Arizona-based home health nursing businesses. In addition to growth through acquisitions, Amedisys is implementing operational efficiencies and improving the clinical services provided to patients.
Cerner Corporation specializes in health care technology solutions. For home care, Cerner's web site promotes BeyondNow's suite of products with testimonials from organizations such as the VNA of Western Pennsylvania. Using a lightweight wireless device, the system provides integrated telehealth and operational applications to deliver efficient, quality patient services while also consolidating data in electronic medical records.
Cerner's technology solutions enable the Company's 6,000+ to clients implement paperless health care information processing systems. Fourth quarter 2008 bookings totaled approximately $405 million, comparable to revenues generated during the same period in 2007. With the Obama administration's recognition of information technology and its important role in health care, Cerner is well-positioned to participate if reforms are implemented.
Markets (2004 - 2008)
Home Care Products:
Patients receive care in their homes for a wide range of conditions. Chronically ill and elderly patients may be monitored remotely via telehealth technologies to evaluate their overall health and/or measure their vital signs.
Based on interviews conducted with company representatives in 2004, Feedback Research Services expected the U.S. home care monitor / telehealth market to generate approximately $70 million in 2005 (unpublished forecast). [2] A much bigger market exists now. According to a September 2008 press release announcing a technology/distribution agreement between G.E. Healthcare and Living Independently Group Inc., the global home monitor market is valued at $500 million. Home settings were also expected to contribute significantly to growth of the U.S. pulse oximetry monitor market through 2013, with strong demand for finger and handheld devices (Frost & Sullivan).[3] [4]
Patients with acute illnesses typically require more aggressive intervention with devices, equipment, and supplies that provide infusion, nutrition, or respiratory therapies. The market for these products is forecast to account for more than $5.0 billion in 2012 (Medtech Insight).[5]
In-Home & Long-Term Care Services:
Demand for in-home caregivers is also on the rise. One company that participates in this market is Homewatch CareGivers. Since 1980, the Company has supplied 3.1 million hours of services in the United States and five international locations. Most caregiving, however, is not conducted with or tracked by market transactions. Additionally, "current" statistics are quite dated (1996 - 2000), although new data will become available after the U.S. census is conducted in 2010.
As described in a Fall 2002 article on Entrepreneur.com, the majority of long-term care for chronically ill or disabled elders is provided by informal caregivers (family and friends) within the communities in which they live. Such informal services are the only care received by 70% of disabled elderly.[6]
In 1996, elder care services were provided by one or more persons in 25% of U.S. households. A subsequent 1997 benchmark survey indicated that the number of "caregiver households" exceeded 22.0 million, and 62.0% of the caregivers were employed. The economic value of informal caregiving is largely ignored in the business world. One figure (calculated in 1999) estimates that unpaid elder care in the United States costs $196.0 billion annually compared with $115.0 billion for formal care (home health and nursing home care combined).
Significant financial, productivity, and social costs are absorbed by informal caregivers and employers. The Gross Domestic Product also takes a hit — up to $29.0 billion per year, according to 1997 estimates. Elder care and health care costs will explode if reality meets statistical projections. By 2030, the number of U.S. residents 65 years of age and older is expected to reach 70.3 million.[7]
- - - - - - -
[1] August 2003 News Archive, Home Health Care, Feed-back.com.
[2] Estimate extrapolated from BBI Newsletter figure published in 2002 (Feedback Research Services).
[3] "Pulse Oximetry Market to Grow 150 Percent by 2013", Home Care Magazine, August 2007.
[4] U.S. Pulse Oximetry Monitoring Equipment Market, Frost & Sullivan, 2007.
[5] U.S. Markets for Home Healthcare Products, Medtech Insight, 2007.
[6] "The economic costs of informal elder caregiving", Business Perspectives, Entrepreneur, Fall 2002.
[7] Ibid.
- - - - - - - - - - - - -
Visit Feed-back.com's E-Zine Archive for more market assessments.
