Interim/Post-COVID-19 Sector Outlook: Services & Products for Homebound Patients

Apr 2020

Click the home healthcare sectors below to view key takeaways on the effects of COVID-19.

Medical and Personal Services

Skilled Home Healthcare

Near term: REASONABLY STABLE / POSITIVE
Long term: POSITIVE / UPSIDE
Drivers/Factors:

  • Amidst COVID-19, some, presumably temporary operational/marketing headwinds: e.g., potential for LUPA increases; some visit cancellations by patients, less marketing access to referral sources, fewer elective procedures in hospitals that require home health; some caution or infections among nurse staff
  • Some PDGM-related reimbursement and recert pressures being at least partially offset by recently enacted accelerated payments from Medicare
  • Industry remains highly fragmented with few players with significant scale; PDGM dynamic likely to result in even more consolidation
  • Access to skilled caregivers improving due to reduced demand from hospitals
  • Demand remains attractive for home health as a mitigant to inpatient/institutional care options
  • Longer term skilled home care demand expected to grow significantly based on demographics, shifting more care towards the home and away from institutional settings; and potential for telehealth flexibility
Personal Home Care

Near term: REASONABLY STABLE / POSITIVE
Long term: MEANINGFUL UPSIDE
Drivers/Factors:

  • Amidst COVID-19, some, presumably temporary logistics/marketing/operational headwinds, but on a relative basis, a more stable segment than other (e.g., center-based and physician based) segments
  • Personal Home Care acts as a lower-cost complement or alternative to residential senior living, behavioral health and long-term care sectors
  • Increasingly attractive patient-directed services generally pairs a patient with a family member to provide care thereby reducing risk of spreading COVID-19
  • Federal government recently increased FMAP percentages to support program funding; governors and legislatures relaxing regulations to accommodate new enrollments in home and community-based programs; Medicare Advantage also a growth opportunity
  • COVID-19 exposing the risks communicability in institutional settings. Demand for long-term care far exceeds supply of institutional beds
Pediatric Home Health

Near term: REASONABLY STABLE / POSITIVE
Long term: POSITIVE / UPSIDE
Drivers/Factors:

  • Amidst COVID-19, some, presumably temporary logistics/marketing/operational headwinds, but on a relative basis, a more stable segment than many other healthcare sectors
  • Potential for further urgency to care for, maintain and monitor medically complex children at home vs. institutional/outpatient care with exposures
  • Among the more stable home health segments from a reimbursement/regulatory perspective
  • Unique specialty that adult-oriented home health providers tend to struggle with
Physician Housecall

Near term: UPSIDE / POSITIVE
Long term: MEANINGFUL UPSIDE
Drivers/Factors:

  • Amidst COVID-19, some, presumably temporary logistics/marketing/operational headwinds, but on a relative basis, a more stable segment than many other healthcare sectors
  • Significant, recent investments in and around physician-led home health
  • Ability to make immediate medical changes and potentially avoid adverse events and emergency institutional visits
  • Could be strong in combination with telehealth and home health/home care
  • Payers supportive
Home-Based Hospice

Near term: REASONABLY STABLE / POSITIVE
Long term: POSITIVE / UPSIDE
Drivers/Factors:

  • No significant, current industry issues to deal with other than marketing/operational headwinds with respect to marketing and providing services (some more issues for SNF-based hospice services)
  • Remains an attractive sector with home-based hospice services at a medical and cost advantage vs. institutional end-of-life care
  • No change in future growth outlook between organic growth and growth from consolidation
  • Ongoing, growing interest in the continuum of care from home health to hospice
  • Some role potential for telehealth in combination with hospice as well
  • CMS just proposed a 2.6% payment increase for hospice for FY’21, another incremental positive

 

Equipment, Product and Technology Services:

Home-based Telehealth

Near term: SIGNIFICANT UPSIDE
Long term: SIGNIFICANT UPSIDE
Drivers/Factors:

  • Recent, significant legislation supporting reimbursement and implementing favorable regulations
  • Payers and hospital systems supportive
  • Technology is there and can be implemented
  • Improved, regular patient monitoring and oversight of great importance
  • Excellent supplement to home health and home care visits
  • Opportunity to further reduce re-hospitalizations and adverse events
  • Other applications likely to show growth: e.g., PERS adding telehealth capabilities, utilization of tele-health by Medicare Advantage, tele-behavioral health, use within SNFs and ALF; telehealth in Medicaid waiver context, etc.
Home Care Products E-Commerce

Near term: SIGNIFICANT UPSIDE
Long term: POSITIVE / UPSIDE
Drivers/Factors:

  • Increased consumer urgency to have proper, basic medical products and supplies at home
  • Potential ongoing reluctance to go to brick and mortar retail to procure these products
  • Low cost products relative to perceived medical and assistive benefits
  • Consumable supplies easy to secure for prescribed and non-prescribed equipment
  • Ease of use and growing e-commerce affinity among population
Direct-to-Patient Home Medical Supplies

Near term: SIGNIFICANT UPSIDE
Long term: POSITIVE / UPSIDE
Drivers/Factors:

  • Accelerated patient preference for direct delivery of home medical supplies: convenience, safety, continuity of supply reorders
  • Broad increase in telehealth likely to also result in increased telephonic prescriptions, further expanding access to direct-to-patient home medical supplies
  • Improved medical outcomes with recurring re-supply complemented by telephonic interactions with patient to educate and guide
  • Home medical supply providers will be viewed more positively post COVID-19 and will provide cross-sell opportunities for telemedicine and other in-home services
  • Ongoing adoption of home-delivered Continuous Glucose Monitoring & Insulin Pump therapy supplies for Type I diabetics will remain attractive. The Type II market will present extraordinary growth opportunities to service tens of millions of patients in the home.
Home Respiratory and HME

Near term: POSITIVE / UPSIDE
Long term: MEANINGFUL UPSIDE
Drivers/Factors:

  • Putting select, current operational dynamics aside, potential for reduction in historical reimbursement and regulatory pressures to ensure patients have access to core, needed medical equipment at home
  • Not a nursing-based business; delivery and drop-off of equipment without significant patient interaction
  • CMS has removed non-invasive ventilation from Medicare competitive bidding, an added positive
  • At a low point in number of providers after years of substantial pressure; potential for upside now
  • Relatively low-cost products compared to medical benefit and stabilization of patient at home
  • Chronic diseases/long-term medical conditions are best treated at home and typically require assistive, therapeutic and supportive medical equipment and products
  • Ongoing technological improvements lowering product cost
Mobility and Home Modification Products

Near term: POSITIVE / UPSIDE
Long term: MEANINGFUL UPSIDE
Drivers/Factors:

  • Some current, presumably temporary headwinds related to COVID-19 (e.g., in the arena of patient interaction, new patient referrals and clinic or home-based custom work)
  • Attractive, long-term demographic and chronic condition trends that favor mobility, custom mobility and home modification products and services; home (and vehicle) modification particularly under-penetrated
  • Post-COVD-19, even more considerations around home-based mobility and home-modification solutions (as well as other technologies, like PERS and telehealth) to keep patients assisted and safe within their home environment
  • Ongoing technological improvements lowering product cost
  • While complex mobility products have solid payer recognition and reimbursement, wheelchair accessible vehicles, van modification and home modifications remain largely private pay segments today
Home Infusion

Near term: REASONABLY STABLE / POSITIVE
Long term: POSITIVE/UPSIDE
Drivers/Factors:

  • Current, presumably temporary headwinds given COVID-19 (e.g., some reduction in hospital referrals, patient and infusion nurse safety dynamics; fewer elective procedures).
  • Chronic infusion really cannot be delayed; some movement of patients from center to home IV
  • Long-term upside driven by home health tailwinds and increased patient safety provided in home settings particularly for medically at-risk patients
  • Long-term upside supported by new drug pipeline, including infusible specialty drugs
Specialized Pharmacy

Near Term: POSITIVE / UPSIDE
Long Term: MEANINGFUL UPSIDE
Drivers/Factors:

  • Continued availability and home delivery of medications for patients with chronic conditions has been a priority during COVID-19 shelter-in-place orders
  • Home delivery services and adherence packaging will see increased interest post-COVID-19
  • Existing specialty drugs proving to be recession-resistant particularly for homebound patients
  • Pharmacies focused on mental health, group homes and other institutional settings will experience continued investment and robust M&A activity

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