Home healthcare statistics: how much does home healthcare cost?
Find out how much home health care costs, as well as how people are paying for it, its challenges, future outlook, and more.
Highlights
The average home healthcare service plan costs $30 per hour or $18,144 per month.
Home healthcare costs are projected to increase between 5.4% and 8.5% in 2024.
Increased Medicare Advantage penetration, regulatory demands, and service availability are the biggest challenges currently being faced by the home healthcare industry.
Personal savings are used to cover most home healthcare costs.
What is the home healthcare industry?
The home healthcare industry is an extension of the healthcare industry in which medical and assisted care is provided to people in the comfort and convenience of their own homes.
Home healthcare providers develop care plans based on individual client needs.
Since as far back as 1960, home healthcare expenditure in the US has been on the rise. However, there was a marked jump from 1980 to 1990 and 2000. Thereafter, the costs rose by as much as a billion dollars or more annually from 2005.
According to Statista, it is projected that the revenue from home healthcare services in the US will amount to approximately $100 billion by 2024. In 2000, home healthcare expenditures amounted to some 32 billion U.S. dollars. By 2019, this figure had increased to over $113 billion.
Looking at the year ahead, the home care sector is expected to see increased merger and acquisition (M&A) activity in 2024, driven by the sector's adaptation to macroeconomic factors and strategic growth initiatives.
How much does home healthcare really cost?
The median cost of home healthcare services in the US is approximately $30 per hour.
If those services were to be provided on a 24/7 basis (which they often are), costs would amount to $4,536 per week or $18,144 per month.
However, this amount can vary depending on location, state, and the level of care being provided to a client.
Home healthcare costs have several contributing factors.
Firstly, there are various ongoing Medicare home health payment changes to consider. The Centers for Medicare & Medicaid Services (CMS) proposed a decrease in aggregate home health payments by 2.2% for 2024, following a -3.925% adjustment in 2023.
There are also employer healthcare cost increases.
Over the next few years, employers are projected to see significant healthcare cost jumps, with estimates ranging from 5.4% to 8.5% in 2024 due to medical inflation and demand for costly treatments.
Furthermore, the trend of hospital consolidation grows, resulting in fewer but larger healthcare systems. This is likely to continue pushing up healthcare costs, including those associated with home healthcare services.
What are the challenges of assistance programs?
Assistance programs can be expensive to set up and maintain, creating challenges for organizations trying to implement comprehensive home healthcare initiatives.
For example, when comparing government to commercial payer profit pools, there are a number of hurdles that home healthcare services need to clear.
Due to a lack of funds, government funding is not always adequate, nor is it available to everyone who needs it. However, a shift toward government segment payer profit pools is now expected, driven by increased Medicare Advantage penetration, which will affect overall home healthcare costs and potentially impact home healthcare funding.
Regulatory and reimbursement challenges are also prevalent in this industry. Home health agencies face significant regulatory demands and reimbursement challenges, including reductions from Medicare, Medicaid, and managed care companies, which could put pressure on cost and service availability.
What does the future of home healthcare look like?
One of the most talked about projected outcomes for the future of home healthcare is the expansion of its services.
Growth opportunities include linking home care patients to community-based mental health providers and leveraging technology to improve patient outcomes and administrative efficiencies.
The incorporation of AI and technology is also expected to play a major role in how the home healthcare system operates, both in an administrative and service-centered way.
Home care providers are increasingly incorporating artificial intelligence (AI) for home monitoring, virtual assistance, and operational efficiencies, which could impact service delivery and possibly costs.
How are people paying for home healthcare?
About six in ten caregivers (63%) providing home healthcare services are paid by personal sources alone.
By contrast, 28% receive payment from publicly funded programs alone, and 9% from a combination of personal and public program sources.
Older people with family incomes over $75,000 per year receive 8.5 more hours of home care overall than those in the lowest income category who earn less than $15,000.
While the funding mix for home care services is strongly related to older people’s economic resources, in all income groups, at least 65% of services are provided by caregivers paid in whole or in part from personal sources.
In fact, almost all (97%) home care received by those with family incomes over $75,000 per year is financed by personal sources alone.
Get expert financial advice
Home healthcare service is one of the most effective ways to treat senior or disabled patients who need 24-hour care. However, the industry is currently facing a number of challenges, including changing regulatory demands, hospital consolidation, and service availability.
While the future of home healthcare is set for growth throughout 2024 and beyond, the industry is currently facing a number of challenges, including changing regulatory demands, hospital consolidation, and service availability.
To learn more about home healthcare costs and personal financial management, let Unbiased match you with an expert financial advisor.
Getting expert financial advice will ensure that you can adequately prepare for the future, no matter what it holds.
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