Seizing the Moment of Rising Home Health Demand
This article first appeared on TSL Express.
Home health services have long been a convenient and cost-effective way for patients to receive crucial medical attention in the security of their own homes. But, until recently, these services were mostly limited to post-acute care that required little to no specialized equipment. This year, the continued rise of COVID-19 has underscored the importance of access to safe and worry-free healthcare that goes beyond post-acute services, as more and more patients fear contracting the virus during a clinical visit or nursing home stay.
The rising importance of home health services has been a gamechanger for the healthcare industry. Still, there is more work to be done when it comes to normalizing this type of medical care and making it more accessible to a larger population.
Unfortunately, the rise in demand for home health is not completely up to the task. While certain services—such as attendant care, nursing, and rehabilitation—have long been provided at home, many post-acute care services are still difficult to perform outside of a dedicated medical facility and require specialized tools and technology. Most therapeutic and diagnostic equipment and other medical devices are neither small nor portable enough to make home health a widespread, viable option. And although telemedicine has recently exploded in popularity, it is not an antidote for patients who require an in-person encounter, examination, or treatment. As a result, patients must continue to receive many services on site, which increases the risk of contracting COVID-19 and is increasingly considered an inconvenient form of healthcare.
But there is a solution.
Private equity funds and other investors in the healthcare industry are well positioned to take the at-home model used for both acute and post-acute services and scale it across other areas. For instance, a PE fund with one portfolio company providing therapy services and another providing home health can bring the two together to uncover synergies and realize enormous opportunities for growth. Applying this same approach, other industry operators can capitalize on a home health partnership, funded by a PE investment.
With this type of investment, home health providers benefit from an injection of much-needed capital into the business. More resources mean greater opportunities for innovation that will foster the technological capabilities needed to scale the home health industry and make it a true alternative to traditional, onsite care. At the same time, doubling down on home health can effectively reduce overhead costs, as providers pivot away from hefty real estate and other facility expenses.
While the pandemic has emphasized the importance of alternative forms of healthcare access, the demand for fast, efficient, and cost-effective medical attention is here to stay. For geriatric populations and those in rural communities, especially, there is no minimizing the importance of easier access to healthcare. And with increased pressure to curb growing healthcare costs, any chance to improve patient care while keeping expenses low will yield lucrative opportunities for those providers willing to seize them.
There are also opportunities on the acute care side to implement hospital at-home programs for prevention of readmissions and surgical operations management. There are several pilot programs already underway at major health systems. Studies have shown that treating acutely ill patients at home rather than in a hospital has many benefits, including lower costs, shorter treatment durations, fewer procedures, reduced complications, increased activities, and better patient and caregiver satisfaction.
To properly carry out this type of model, however, requires significant business integration skills and an investment in IT platforms to facilitate scale and synergy savings. These platforms must be sufficient to onboard new companies and services to integrate various aspects of the combined enterprise more easily and seamlessly. The upfront investment in appropriate infrastructure will allow for growth and save time and money when integrating new organizations into the business model. In order for this to be successful, companies must take a step back and determine the long-term strategy and structure of their organization. Once the vision is set, a new process must be outlined to determine the appropriate IT platform.
Another hurdle in scaling the home health model is attracting and retaining staff. The home health industry has long suffered from a lack of dedicated professionals willing to trade a traditional clinical or nursing position for one at home. These roles are often compensated at a significantly lower level than other personal care and service workers and fall well below the average income for all occupations. This disparity is expected to undoubtedly impact market growth and discourage individuals from working in the home health field. Compounding this challenge is the shortage of skilled nursing professionals, which is expected to get worse over time.
In order to make home health a more competitive field that attracts top talent, the industry must reevaluate how it compensates and incentivizes its caregivers. As the market continues to grow, industry regulations will likely also impact the low entry barrier for those pursuing home health positions.
The rising importance of home health services has been a gamechanger for the healthcare industry. Still, there is more work to be done when it comes to normalizing this type of medical care and making it more accessible to a larger population. Focusing on home health services, and unlocking the resources needed to accelerate the requisite technology, will present powerful investment opportunities for those looking to make a big impact on the industry in both the short and long term.