Why Nursing Homes and Hospice are so Expensive in the U.S.
A Growing Need for Long-Term Care
Baby boomers are about to be the largest generation in American history to hit the long-term care space. Born between 1946 and 1964, as defined by Pew Research, the oldest baby boomers are turning 80 next year. The group is set to flood a senior care space that is already understaffed, underfunded, and facing political uncertainty.
A System Underprepared for the Future
“This space is completely underprepared for the number of older adults that are going to need long-term care and end of life care,” said David Grabowski, professor of healthcare policy at Harvard Medical School. “We’ve historically relied heavily on families. There’s not going to be the number of family members that we’ve had in the past.”
The Rise of Private Equity in Long-Term Care
Now, private equity is increasingly looking to get in on the market. A recent study found between 2015 to 2022, 47 private equity firms bought 124 U.S. hospice agencies. Today, an estimated 75% of U.S. hospice agencies are for-profit, according to a study out of the University of Pennsylvania.
Hospice: From Grassroots to For-Profit
“Hospice was started as a grassroots, nonprofit movement where the majority of care, a couple of decades back, was provided by strictly non-profits,” said Robert Tyler Braun, assistant professor in the division of health policy and economics at Weill Cornell Medicine. “In this current landscape now, the majority of hospice providers are for-profit.”
A Pattern of Investment in Nursing Homes and Long-Term Care
Nursing homes and long-term care facilities have long been an acquisition target for private equity and publicly traded companies. Data provided to CNBC by Coherent Market Insights shows that these same trends in the hospice care space have picked up significantly since the 2010s.
Watch the Video
Watch the video below to learn how these investments are impacting the space, who is investing in it, and what it means for seniors and their families.
Conclusion
The rising demand for long-term care and hospice services, combined with the increasing involvement of private equity, has resulted in a complex and challenging landscape for seniors and their families. As the need for these services continues to grow, it is essential to understand the underlying factors driving the high cost of nursing homes and hospice care.
FAQs
* What is the projected growth of the long-term care market?
+ The baby boomer generation is expected to flood the long-term care space, which is already understaffed and underfunded.
* Who is investing in the long-term care space?
+ Private equity firms are increasingly investing in hospice agencies, with 47 firms buying 124 U.S. hospice agencies between 2015 and 2022.
* What is the impact of private equity on the long-term care space?
+ The rise of for-profit hospice providers is changing the landscape of the industry, which was previously dominated by non-profit organizations.
* What does this mean for seniors and their families?
+ The increasing costs of nursing homes and hospice care can be a significant burden for seniors and their families, making it essential to understand the underlying factors driving these costs.
