Senior and Home Care Franchise Industry Report 2012
A Booming Population
At no other time in history has the percentage of the population over 65 been higher. This population segment is growing faster than any other population segment, and this growth is expected to continue for several years to come. The surge in the senior population segment is centered around the aging of one particular generation.
If for nothing else but its sheer size, the “baby boomer” generation – which consists of 77 million people born between 1946 and 1964, has had an impact on virtually every facet of American life.5 As this age cohort closes in on, and reaches, retirement they are widely expected to continue having a huge impact. Consider the following statistics:6
- The U.S. population 65 or older currently makes up over 13 percent of the total population.
- About 10,000 people turn 65 daily, and this trend is expected to last for nearly 20 years.
- People reaching age 65 have an average life expectancy of an additional 19.0 years (20.3 years for females and 17.4 years for males).
- At the end of 2011 the senior population of America was estimated at almost 49 million. By 2025, it will grow to nearly 72 million.
- The U.S. Census Bureau projects that the population age 85 and over could grow to nearly 21 million by 2050.
- In approximately 20 years, the number of people over 100 is expected to be over 500,000.
As the boomers – the largest generation ever born in the U.S. ever to this point – and subsequent age groups continue to age and life expectancy increases, senior and home care franchises will be in a prime position to provide services that many members of this population will need.
Aging in Place
As alluded to in the previous statistics, advances in healthcare practices and healthcare-related technology are resulting in longer lifespans, and many senior citizens are exhibiting a desire to remain in a comfortable, familiar setting during their “golden years".
“I feel very comfortable, and the most important thing is that at my age of 85 I am allowed to live in my own home with my husband,” says Frances Zaglan, a client of CareMinders Home Care for over two years.
According to an AARP survey, approximately 89 percent of seniors want to age in their own homes for as long as possible.7 This “aging in place” phenomenon has contributed to many senior citizens seeking ways to maintain their quality of life affordably, and provided a foundation for the growth of the home care industry.
Decreases in federal funding are a contributing factor to aging in place. According to Joe Hafkenschiel, president of the California Association for Health Services at Home, Medicare, which currently pays for about three quarters of the care that licensed home health agencies provide, has cut its reimbursement rates by eight percent. Simply put, “for seniors, this means the government is going to pay for less and less of your care".8
Estimates show that roughly two of five Americans will need long term care at some point in their lives but many will not be able to afford it.9 Going forward, home care services are a likely benefactor to the decreasing amount of federal funding, as home care is generally used on a part-time basis and typically costs less than many other senior care options. The 2011 National Long-Term Care (LTC) Cost Study, conducted by insurer John Hancock, revealed the rate of cost increase for home health aides was slower than other long term care options. The LTC Cost Study showed these finding over the previous nine year period:
- The 2011 average cost of a private nursing home room was $235 a day/ $85,775 annually, and has risen an average 3.5 percent per year.
- The 2011 average cost of a semi-private nursing home room was $207 a day/ $75,555 annually, and has risen an average 3.2 percent per year.
- The 2011 average cost for a month in an assisted living facility was $3,270 a month/ $39,240 annually, and has risen an average 3.4 percent per year.
- The 2011 average cost for a home health aide was $20 hourly/$37,440 annually, and has risen an average 1.3 percent per year.10
5 Population Bulletin, http://www.prb.org/pdf09/64.1generations.pdf
6 Compiled from various sources including: CareMinders Franchise Brochure, The Department of Health and Human Services and the State Department, the U.S. Census Bureau & the Administration on Aging
7 Private Duty Home Care Industry Fact Sheet, http://www.privatedutyhomecare.org/downloads/NPDA-FactSheet.pdf
8 Baby boomers shaping the future for senior care, http://www.bizjournals.com/sacramento/print-edition/2012/03/02/baby-boomers-shaping-future-senior-care.html?page=all
9 Long Term Care Revenues to Reach $353 Billion in 2015, http://seniorhousingnews.com/2011/05/12/long-term-care-market-revenues-to-reach-353-billion-in-2015/
10 John Hancock Announces Results of 2011 National Long-Term Care (LTC) Cost Study, http://www.johnhancock.com/about/news_details.php?fn=apr2011-text&yr=2011