SOURCE: Kalorama Information

Kalorama Information

March 30, 2012 10:44 ET

Long Term Care Industry Grew 5.5% in Past Five Years: Kalorama

NEW YORK, NY--(Marketwire - Mar 30, 2012) - The long term care industry, including nursing homes, assisted living, home care and hospice care showed 5.5% revenue growth between 2006 and 2011 and reached $259 billion, according to Kalorama Information. The healthcare market research publisher notes this is a healthy growth rate that reflects positive demographics as well as industry performance. Strongest growth occurred in the hospice and home care segments, while nursing care demonstrated the lowest growth as it is most dependent on government funding, according to the findings in Kalorama Information's latest report, Long Term Care Market: Nursing Homes, Home Care, Hospice Care, and Assisted Living.

According to Kalorama, the growth is resulting from demographics, but the industry will face challenges with the ability of its customers to pay. Over the next five years, Kalorama estimates no major expansion of state or federal long term care benefits is expected to occur, due to ongoing budgetary pressures at both levels. In fact, the report notes that many states are facing severe budget deficits and have begun cutting their Medicaid funding.

"Most Americans erroneously believe that they will not require long term care of any kind and that, if they do, Medicare or their health insurance will pay for it," said Bruce Carlson, publisher of Kalorama Information. "However, Medicare does not cover most long term care services and it covers only very limited costs related to residential nursing care."

Medicaid does pay for nursing home expenditures and, according to the report, it accounted for 16% of all nursing home payments in 2011. The program has resulted in nursing home care being the largest single budget item in many state budgets, averaging 22% across the states. However, recipients must first spend down their assets to meet the qualifications for this program which is intended for low-income persons. To preserve as many assets as possible, many seniors often transfer assets to other family members. Many states are now enacting laws to discourage this practice.

The assisted living industry continues to expand as it caters to a new type of elderly customer -- seniors who are unable to continue living at home without significant, round-the-clock assistance yet do not require the intensive medical care provided by nursing facilities. With many seniors wanting to remain active and retiring with relatively high net worth, they can afford very upscale facilities that offer a broad range of amenities. Kalorama also notes that cultural changes are important to assisted living's growth. "With the increased promotional efforts of assisted living and adult communities, norms are shifting and the stigma that was once associated with institutional living, though not gone, is eroding," noted Carlson.

More information on the long term care market, including market forecasts and estimates for each sector of long term care, profiles of operators and important trends in the industry, can be found in Kalorama's report: Long Term Care Market: Nursing Homes, Home Care, Hospice Care, and Assisted Living.

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