The Long Term Care Market

LONG TERM CARE MARKET
MARCH 2012
Long Term Care Market has been prepared by Kalorama Information. We serve
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Author:
Publication Date:
Alison Sahoo
March 2012
CHAPTER ONE: EXECUTIVE SUMMARY ..........................................................1

Scope And Methodology ..................................................................................................... 2
Overall Market Size ............................................................................................................ 2
Demographics ...................................................................................................................... 4
Activities of Daily Living ................................................................................................. 5
Chronic Illness .................................................................................................................. 6
Income .............................................................................................................................. 6
Quality Of Care ................................................................................................................... 6
U.S. Health Expenditures ................................................................................................... 7
Consumer Preferences And Lifestyle Issues ..................................................................... 8
Fees And Payment............................................................................................................... 8
Public Payments................................................................................................................ 8
Long Term Care Insurance ............................................................................................... 9
Preparing For the Future ................................................................................................. 10
Nursing Homes .................................................................................................................. 11
Number of Facilities ....................................................................................................... 11
Resident Population ........................................................................................................ 12
Issues and Trends ............................................................................................................ 12
Market Size and Forecast................................................................................................ 14
Competitor Analysis ....................................................................................................... 15
Market Analysis .............................................................................................................. 15
Home Care ......................................................................................................................... 16
Market Analysis .............................................................................................................. 19
Hospices ............................................................................................................................. 20
Market Analysis .............................................................................................................. 24
Assisted Living .................................................................................................................. 24
Market Analysis .............................................................................................................. 28
CHAPTER TWO: INTRODUCTION, ISSUES AND TRENDS .........................29

The U.S. Health Care Industry ........................................................................................ 29
Long Term Care ................................................................................................................ 29
Nursing Homes ............................................................................................................... 30
Home Care ...................................................................................................................... 31
Hospices.......................................................................................................................... 31
Assisted Living ............................................................................................................... 31
Demographics .................................................................................................................... 32
U.S. Population ............................................................................................................... 32
Aging of the Population .................................................................................................... 33
Racial Trends .................................................................................................................. 36
Age and Race ..................................................................................................................... 38
Age and Race ..................................................................................................................... 39
Age and Race ..................................................................................................................... 40
Obesity ............................................................................................................................ 41
Marital and Living Arrangements................................................................................... 43
Geographic Concentrations ............................................................................................ 46
Activities of Daily Living ............................................................................................... 52
Chronic Illness ................................................................................................................ 56
Addiction ........................................................................................................................ 58
Mental Illness.................................................................................................................. 59
Income ............................................................................................................................ 59
Health Care Reform ......................................................................................................... 61
Quality Of Care ................................................................................................................. 62
Certification and Accreditation ....................................................................................... 64
U.S. Health Expenditures ................................................................................................. 65
Consumer Preferences And Lifestyle Issues ................................................................... 71
The Elderly ..................................................................................................................... 71
Caregiver Issues .............................................................................................................. 72
Fees And Payment............................................................................................................. 74
Medicare ......................................................................................................................... 75
Medicaid ......................................................................................................................... 75
Long Term Care Insurance ............................................................................................. 77
Numbers of Insured ........................................................................................................ 80
Cost of Coverage and Affordability................................................................................ 80
Effect of the Economy .................................................................................................... 82
The Managed Care Environment .................................................................................... 85
Preparing For The Future ................................................................................................ 85
Staffing and Human Resources....................................................................................... 85
Information and Education Initiatives ............................................................................ 86
Medicaid Reform ............................................................................................................ 87
Building of New Facilities .............................................................................................. 88
CHAPTER THREE: NURSING HOMES ..............................................................89

Description Of Facilities ................................................................................................... 89
Services ........................................................................................................................... 90
Resident Population .......................................................................................................... 95
Demographic Data .......................................................................................................... 95
Functional Data ............................................................................................................... 95
Length of Stay................................................................................................................. 96
Insurance Coverage ........................................................................................................ 97
Issues And Trends ............................................................................................................. 99
Medicare Reforms .......................................................................................................... 99
Health Care Reform ...................................................................................................... 102
Medicaid Cuts ............................................................................................................... 102
Patient Dumping ........................................................................................................... 103
Quality of Care ............................................................................................................. 104
Staffing Issues ................................................................................................109
State Quality Improvement Initiatives ...........................................................112
Legal Actions .................................................................................................113
Safety ............................................................................................................................ 114
Market Size And Forecast .............................................................................................. 114
Cost of Care .................................................................................................................. 114
Size of the Market ......................................................................................................... 115
Competitor Analsysis ...................................................................................................... 117
Market Analysis .............................................................................................................. 118
CHAPTER FOUR: HOME CARE ........................................................................121

Description Of Facilities ................................................................................................. 121
Services ......................................................................................................................... 121
Number of Facilities ..................................................................................................... 123
RESIDENT POPULATION........................................................................................... 124
Demographic Data ........................................................................................................ 124
Functional Data ............................................................................................................. 125
Insurance Coverage ...................................................................................................... 129
Issues And Trends ........................................................................................................... 131
Medicare Reimbursement ............................................................................................. 131
Medicaid Reimbursement ............................................................................................. 135
Medicare and Medicaid Co-payments .......................................................................... 135
State Service Reductions .............................................................................................. 137
Improper Payments ....................................................................................................... 139
Quality of Care ............................................................................................................. 141
Disease Management .................................................................................................... 142
Technology and Telemedicine ...................................................................................... 142
Cost of Care .................................................................................................................. 145

Market Analysis .............................................................................................................. 150
CHAPTER FIVE: HOSPICE .................................................................................151

Services ......................................................................................................................... 151
RESIDENT POPULATION........................................................................................... 155
Functional Data ............................................................................................................. 158
Fraud and Abuse ........................................................................................................... 166
Proprietary Technologies .............................................................................................. 169
Profitability ................................................................................................................... 170
Market Size and Forecast ............................................................................................... 170
Cost of Care .................................................................................................................. 170
Market Analysis .............................................................................................................. 174
CHAPTER SIX: ASSISTED LIVING ...................................................................177

Services ......................................................................................................................... 177
Functional Data ............................................................................................................. 184
Length of Stay............................................................................................................... 185
Quality of Care ............................................................................................................. 186
Mergers and Acquisitions ............................................................................................. 189
Consumer Knowledge and Information ........................................................................ 190
Cost of Care .................................................................................................................. 191
Market Analysis .............................................................................................................. 197
CHAPTER SEVEN: MARKET SUMMARY .......................................................199

Overview .......................................................................................................................... 199
Continuum of Care ....................................................................................................... 199
Reimbursement and Regulatory Changes ..................................................................... 200
Specialty Care ............................................................................................................... 202
Competitive Bidding ..................................................................................................... 202
MARKET SIZE AND FORECAST .............................................................................. 203
COMPETITOR ANALYSIS .......................................................................................... 207
CHAPTER EIGHT: COMPANY PROFILES......................................................209

AMEDISYS .......................................................................................................................... 210
History and Lines of Business ...................................................................................... 210
Long-Term Care Business ............................................................................................ 210
Financial Information ................................................................................................... 211
Corporate Strategies...................................................................................................... 211
APRIA HEALTHCARE GROUP INC./ BLACKSTONE GROUP ............................... 212
ATRIA SENIOR LIVING .................................................................................................. 215
AMERICAN HOMEPATIENT ......................................................................................... 217
BROOKDALE SENIOR LIVING ..................................................................................... 219
EMERITUS CORPORATION .......................................................................................... 222

EXTENDICARE, INC. ....................................................................................................... 224
GENESIS HEALTHCARE ................................................................................................ 227
GENTIVA HEALTH SERVICES ..................................................................................... 229
GOLDEN LIVING .............................................................................................................. 231
KINDRED HEALTHCARE, INC. .................................................................................... 233
HCR MANOR CARE, INC. ............................................................................................... 235
LIFE CARE CENTERS OF AMERICA .......................................................................... 237

LINCARE ........................................................................................................................ 238
SUN HEALTHCARE GROUP INC. ................................................................................. 240
SUNRISE SENIOR LIVING INC. ................................................................................ 243
CHAPTER ONE: EXECUTIVE SUMMARY

Figure 1-1: The Overall U.S. Long Term Care Market .................................................. 3
20062016 (Nursing Homes, Hospices, Home Care, Assisted Living)
CHAPTER TWO: INTRODUCTION, ISSUES AND TRENDS

Table 2-1: Projected U.S. Resident Population, by Age, Selected
Years, 2010 - 2030 ............................................................................................................ 32
Table 2-2: U.S. Expectation of Life at Birth, by Sex and Race, 2007 ........................... 34
Table 2-3: U.S. Life Expectancy in Years, 20062016 ................................................... 35
Table 2-4: U.S. Resident Population, by Gender and Age, 2011................................... 36
Table 2-5: U.S. Resident Population, by Age, Hispanic Origin, and Race,
Selected Years, 2000 - 2025 ............................................................................................. 38
Table 2-6: U.S. Resident Population, by Age, Hispanic Origin, and Race,
Selected Years, 2000 - 2025 .............................................................................................. 39
Table 2-7: Proportion of U.S. Resident Population, by Age, Hispanic Origin,
and Race, Selected Years, 2000 - 2025 ........................................................................... 40
Table 2-8: Characteristics of U.S. Household Population of Persons
65 and Older, 2011 ........................................................................................................... 44
Table 2-9: Marital Status of U.S. Residents Age 65 and Older, 2011 ........................... 45
Table 2-10: Marital Status of U.S. Residents Age 65 and Older, 2011 ......................... 46
Figure 2-1: U.S. Senior Population in Top 10 States, 2011 ........................................... 49
Table 2-11: U.S. Resident Population, by State and Age, 2011 ..................................... 50
Table 2-12: Estimated Number of Nursing Home Residents by State, 2011 ............... 53
Table 2-13: Disability Prevalence by Age, 2011 ............................................................. 56
Table 2-14: Frequencies of Selected Diseases Among Older U.S. Persons, 2011 ........ 57
Table 2-15: Frequencies of Selected Diseases Among Older U.S. Persons, 2011 ........ 57
Table 2-16: U.S. Median Income by Householder Age, 2009 ........................................ 60
Table 2-17: National Health Expenditures, 2007 2016* ............................................. 67
Table 2-18: Funding Sources for Home Health Care Spending, 2006 2016* ........... 68
Table 2-19 :Funding Sources for Nursing Home Spending, 2006 2016*................... 69
Table 2-20: Selected State Budget Shortfalls in 2012 and 2013 .................................... 84
CHAPTER THREE: NURSING HOMES

Table 3-1: Nursing Home Patients and Charges, by State, 2010 .................................. 93
Figure 3-2: Medicaid Nursing Home Payment Freezes and Cuts,

by State, 2010 2012 ....................................................................................................... 103
Table 3-3: U.S. Nursing Home Deficiencies by State, 2010 ......................................... 107
Table 3-4: The U.S. Nursing Home Market, 20062016 .............................................. 116
Table 3-5: Leading Competitors in the U.S. Nursing Home Market, by Revenues
and Market Shares, 2011 ............................................................................................... 118
CHAPTER FOUR: HOME CARE

Table 4-1: Medicare Home Care Patients and Visits, by State, 2010 ......................... 127
Table 4-2: Sources of Payment for Certified Home Health Care Services, 2011 ...... 129
Table 4-3: Medicare Fee-for-Service Home Health Outlays, Visits, Clients,
Payment/Client, and Visits/Client, Calendar Years 1996-2010 .................................. 133
CHAPTER FIVE: HOSPICE

Figure 5-1: Services Offered to Hospice Patients Family and Friends ..................... 153
Table 5-1: Number of Medicare-certified Hospices and Program
Payments, by State, 2010 ............................................................................................... 156
Table 5-2: Mean Length of Hospice Stay, According to Disease Category ............... 159
Figure 5-2: Drugs Prescribed to U.S. Hospice Patients in the Last Week of Life ..... 160
Table 5-3: Average Medicare Reimbursements for Hospice Care, FY 2012 ............. 163
Table 5-4: Medicare Hospice Outlays, Clients, and Days per Client,
FY1996-FY 2011............................................................................................................. 164
Table 5-5: The U.S. Market for Hospice Care, 2006-2016 .......................................... 172
CHAPTER SIX: ASSISTED LIVING

Table 6-1: The U.S. Market for Assisted Living, 2006-2016 ....................................... 194
Table 6-2: Leading Competitors in the U.S. Assisted Living Market, by
Revenues and Market Shares, 2011............................................................................... 195
CHAPTER SEVEN: MARKET SUMMARY

Table 7-1: The Overall U.S. Long Term Care Market, 20062016 ............................ 203
Table 7-2: Long Term Care Industry Revenues by Sector, ..............................................
Selected Years 2006 - 2016 ............................................................................................. 205
Figure 7-1: Long Term Care Industry Revenues by Sector, Selected
Years 2006 - 2016 ........................................................................................................... 206
Figure 7-2: Long Term Care Industry Revenues by Year .......................................... 207
Table 7-3: Long Term Care Industry Revenues by Major Player, 2011 ................... 208
Three: Nursing Homes

116
Table 3-4
The U.S. Nursing Home Market
20062016
Year
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Period
Revenues
(MM)
Percent
Change
-
Compound Annual
Growth (CAGR)
2006 - 2011
2011 - 2016
2006 - 2016
Source: Kalorama Information, LLC.
Nursing home expenditures increased at a compound annual rate of % during

this time, and are projected to increase at a faster pace of % per year between 2011
and 2016. In 2016, nursing home expenditures are forecast to reach $ billion. It
should be noted that this figure does not include continuing care retirement community
(CCRC) fees unrelated to nursing care, which are included in CMS estimates provided in
Table 2-17.
Four: Home Care

133
Table 4-3
Medicare Fee-for-Service Home Health Outlays, Visits, Clients, Payment/Client, and
Visits/Client, Calendar Years 1996-2010
Year
Persons
Served in
000
Persons Served
Per 1,000
Enrollees
Payment/
Client
Visits/Client
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Medicare and Medicaid Statistical Supplement, 2011

Since then, total outlays for home health care and payment per client have
continued to increase but visits per client remain low.
In December 2009, CMS adopted a % cap on outlier payments for home health
agencies, representing a significant policy change for outliers. These are additional
payments for 60-day home health episodes of care that carry unusually high costs. The
change was an attempt to address abuses that had been increasing in this area but could
affect many home health care recipients as it is not unusual for home care patients to have
special medical needs requiring additional services. Figure 4-1 shows fluctuations over
Five: Hospice
164
available to low-income persons who meet specific state income criteria. Outlays are
significantly lower than for Medicare, however, since, according to the National Hospice
and Palliative Care Organization, Medicare currently pays for more than % of hospice
fees, Medicaid pays for less than % and private insurance and other funds pay less than
%. This is due to the fact that the vast majority of hospice patients are over the age of
65 and therefore are Medicare beneficiaries.
Table 5-4
Medicare Hospice Outlays, Clients, and Days per Client, FY1996-FY 2011
Fiscal Year
Outlays
($millions)
Number of
Medicare
Hospice
Patients
Average Days
per Client
Average
Dollar Amt
per Patient
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010*
2011*
* Estimated
Source: CMS, Office of the Actuary, Center for Health Plans and Providers.
Managed care organizations (MCOs) often pay for hospice benefits jointly with
Medicare, for persons covered by both programs. When a Medicare-eligible patient who
is enrolled in an MCO elects hospice care, the hospice services must be provided through

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LONG TERM CARE MARKET

CHAPTER ONE: EXECUTIVE SUMMARY ..........................................................1

Market Analysis .............................................................................................................. 28

CHAPTER TWO: INTRODUCTION, ISSUES AND TRENDS .........................29

CHAPTER THREE: NURSING HOMES ..............................................................89

CHAPTER FOUR: HOME CARE ........................................................................121

Size of the Market ......................................................................................................... 145

CHAPTER FIVE: HOSPICE .................................................................................151

CHAPTER SIX: ASSISTED LIVING ...................................................................177

CHAPTER SEVEN: MARKET SUMMARY .......................................................199

CHAPTER EIGHT: COMPANY PROFILES......................................................209

EMERITUS CORPORATION .......................................................................................... 222

LIFE CARE CENTERS OF AMERICA .......................................................................... 237

CHAPTER ONE: EXECUTIVE SUMMARY

CHAPTER TWO: INTRODUCTION, ISSUES AND TRENDS

CHAPTER THREE: NURSING HOMES

Figure 3-2: Medicaid Nursing Home Payment Freezes and Cuts,

CHAPTER FOUR: HOME CARE

CHAPTER FIVE: HOSPICE

CHAPTER SIX: ASSISTED LIVING

CHAPTER SEVEN: MARKET SUMMARY

Three: Nursing Homes

Nursing home expenditures increased at a compound annual rate of % during

Four: Home Care

Source: Medicare and Medicaid Statistical Supplement, 2011

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