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Summary of our market study
The global home health care market is influenced by an aging population and increasing access to healthcare services, particularly in developing countries. In the UK, over 15 million people required home care in 2020, with the majority of care being provided at home rather than in care homes or hospitals. The sector, facing a surge in demand especially for elderly and specialized medical care, has been significantly impacted by the Covid-19 pandemic, leading to higher mortality rates among recipients and caregivers, and exacerbating recruitment challenges. In response to budget constraints and the pursuit of efficiency, the market is moving towards innovations such as telemedicine and integrated care models. The market structure sees a division between public and private investments, with public sector dominating the home care provision. Despite the growth in the number of home care jobs, the sector struggles with competitive pay and recruitment, further stressed by factors like Brexit. Financial analysis reveals that for-profit providers generally fare better in terms of revenue and profitability compared to not-for-profit organizations. Overall, the market is under pressure to meet growing demands with quality services amidst staffing shortages and regulatory changes.
The UK Home Health Care Market: Rising Demand Amidst Aging Population and Challenges
In the UK, an aging population is driving an increasing demand for home health care services. According to the Office of National Statistics, the number of people aged 85 and over is projected to grow by roughly 35%, from between 1 and 2 million between 2015 and 2025. This demographic shift is anticipated to substantially elevate the need for home health care, which involves licensed healthcare professionals providing support within the home. Despite this growth in demand, challenges such as funding cuts and staffing shortages due to budget constraints and Brexit implications are putting pressure on the ability to deliver quality care services. The home health care market in the UK was valued at around £16.6 billion per year, with the care home sector being a major component. It's important to note that the services considered are medical in nature, as opposed to non-medical support tasks. A significant portion of the market is geared towards the elderly, but it caters to individuals with long-term illnesses, disabilities, and recent hospital discharges as well. Local authorities play a substantial role in purchasing these services, but funding issues have led to market instability.
National Health Service strategies emphasize the importance of aging in place and providing care close to home. Globally, the home care market is also on the rise, valued at US $282 billion and expected to grow annually at 7.9% through 2027. Aging populations worldwide and better access to healthcare in developing regions fuel this growth. Despite the challenges posed by the Covid-19 crisis, which led to heightened death rates among care recipients and frontline caregivers, the market has shown resilience. Recruitment difficulties, exacerbated by the pandemic and Brexit, remain a concern, with a high percentage of home care providers indicating the increased complexity of hiring staff. The UK has witnessed a shift in the age distribution of adults receiving long-term care, with a slight decline in beneficiaries aged over 65 and a steady number under 65 receiving support, indicating a greater proportional demand for home care among younger adults. With the population aged over 65 expected to increase by nearly 30% from 2020 to 2035, the demand for elderly care is predicted to rise annually by more than 2% from 2027 to 2030. In terms of supply, the number of jobs in home care services exhibited an 8% growth from 2019-20 to 2020-21, reflecting.
Key Players Shaping the UK Home Health Care Market Landscape The UK home health care market is composed of a variety of actors, each playing a critical role in shaping and delivering care to the population. This market has seen a dynamic interaction between public sector entities, private companies, non-profit organizations, and innovative startups that together create a diverse and complex ecosystem.
- Local Authorities: Often the cornerstone of home health care markets, local authorities are significant purchasers of care services. They manage the public-sector demand for home care and are crucial in shaping the market due to their statutory duties under the Care Act 2014. They are responsible for ensuring that there is an adequate supply of quality services to meet local needs.
- National Health Service (NHS): The NHS is essential in promoting policies that support aging in place and providing care as close to home as possible. The NHS has been seen as the backbone of the UK's health care, working hand in hand with home health care providers to optimize patient outcomes and manage costs.
- Private Service Providers: A multitude of private service providers caters to those not eligible for local authority home care. These providers can vary greatly in size and approach but are united in providing a range of services from personal care to specialized medical care at home. Private clients can directly engage these providers to receive personalized home care services.
- Non-Profit Organizations (NPOs): NPOs often contribute to the care sector by offering services driven by mission rather than profit. They play an essential role in providing care, especially to vulnerable populations, where affordability is a pressing concern. Non-profit providers may have more challenges generating revenue compared to their for-profit counterparts but are critical in filling gaps left by the private sector.
- Innovative Health Tech Companies: With the rise of digital health solutions, companies offering technology-driven services such as telemedicine, telehealth, and remote telecare are revolutionizing the home health care market. These innovators improve efficiency, accessibility, and quality of care through advanced technologies that enable remote monitoring and virtual consultations.
- Saga, Care UK, and Housing 21: As three of the largest home care providers historically, their exit from the publicly funded home care market signifies the challenges and the evolving nature of the industry. These major players represent the shifts and economic pressures that the market is subject to, often leading to a reevaluation of their business models and strategies.
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1 Market overview
1.1 Definition and scope of the study
As the population ages, the demand for health care will increase. The Office of National Statistics projects a 36% growth in the number of people at age 85 and older between 2015 and 2025, from 1.5 million to 2 million. This is expected to result in a substantial increase in demand for home health care services. The care home sector, was worth approximately £16.6 billion per year in the UK in 2019.
As a reminder, home care is supportive care provided in the home by licensed healthcare professionals.
Thus, activities by professional caregivers helping with activities of daily living will be excluded from our study. Indeed, services such as help with shopping, ironing or cleaning are not medical services but only services provided to medically unfit people.
A large part of the market regards services to the elderly, but home health care is also provided to people with long-term illnesses and disabilities, as well as to those who have recently been discharged from hospital.
Home care can be provided and funded by a variety of people or organizations. Local authorities (LAs) play a major role in the home health care market by purchasing home care services for some of its residents. This includes direct purchase from service providers, volunteer services, and private service providers. Under the Care Act 2014, local authorities have a statutory duty to "shape" this market, to ensure that there are enough services of sufficiently high quality to meet need.
Private clients who, for example, are not eligible for LA home care can also purchase home care directly from private service providers.
For the NHS, it is essential to allow people to "age in place" and to provide care as close to home as possible. However, due to budget cuts, local authorities are struggling to fund these services for an aging population, and the shortage of care is only compounding the NHS's difficulties.
Moreover, between 2017 and 2018, three of the nation's largest home care providers (Saga, Care UK, and Housing 21) exited the publicly funded home care market, while two others (Mears and Mitie) reported losses in their home care divisions.
Thus, the health care market appears uncertain and fragile; the greatest challenges remain for public services to be able to provide quality home care while seeking greater efficiency. Industry innovations such as telemedicine, telehealth, and remote telecare are responses to this challenge.
1.2 The growing world market
The home care market is a growing market globally. The market is estimated to be worth US$*** billion globally in **** and is expected to grow at an average rate of *.*% per year through ****.
The aging population is one of the main drivers of this growth, as well as the access of more and more people to healthcare services (***).
Home Health Care Market Size World, **** - ****, US$ billion Source: ****
In Europe, market growth is driven by government policy support and development of innovative medical devices.
Increasing government initiatives (***) have made home healthcare more affordable for the population, thereby driving the market growth.
1.3 The home care market in the UK
The following graph provides an overview of the need for care in the UK in ****. More than ** million people needed care at home during the year ****. This graph shows that the majority of care is provided at home by paid or unpaid carers compared to only *.* million carers in care homes and *.* million in hospital beds. Distribution of people receiving or requiring care United Kingdom, ****, in millions Source: ****
The homecare market was the fifth largest healthcare submarket in the UK in **** at £*.* billion behind care homes for the elderly, specialist adult care, social care services and primary care.
top * components of the UK healthcare market United Kingdom, ****, £ billion Source: The Homecare Association Looking at the change in the number of hours purchased from **** to ****, we see an increase in all divisions of the UK with growth ranging from *% in the case of the UK to over **% for Wales.
Total number of home care hours purchased United Kingdom, ****-****, in millions of hours Source: ****
1.4 Effect of the Covid-19 crisis
The health crisis has had a significant effect on the home care market. Indeed, home care recipients have been very heavily impacted with a much higher number of deaths than normal as we can see in the following graph comparing the months of April through June **** with the years prior to the crisis. In addition, according to The Health Foundation, the number of death notifications from March ** to June ** to the Care Quality Commission reached ***% of the number observed from **** to ****, which equates to approximately *,*** additional deaths.
Deaths of home care recipients in England England, April ** to June **, **** to ****, in units Source: ****
COVID-** mortality rates for caregivers England and Wales, March * to May **, ****, in years Source: ****
The following chart is the result of a survey from the Homecare Association. It highlights the difficulties reported by a sample of *** homecare providers. It is noted that **% consider that it has never been harder to recruit caregivers and **% consider that recruitment has become more complex with the health crisis.
Recruitment process for home care workers United Kingdom, August ****, percentage Source: ****
Vacancy rates in the home care sector United Kingdom, June **** to August ****, in percent Source: ****
2 Analysis of the demand
2.1 The growing demand of the elderly
The following graph shows the change in the age distribution of the number of adults receiving long-term care from local governments through ****. It can be seen that despite a steady decrease in the number of beneficiaries over the age of ** through ****, the number of adult beneficiaries under the age of ** is stagnating which shows that the proportion of adults under the age of ** receiving home care is trending upward.
Number of adults receiving long-term care from local authorities England, ****-** to ****-**, in units Source: ****
British population change United Kingdom, **** to ****, in millions of people Source: ****
2.2 The demand for specialized medical care in the home
The total expenses for home care are broken down as follows.
In-home care consists of support for personal care and/or household tasks in the person's home. Assisted living refers to programs that help young adults live independently in their own homes. Direct payments are payments made through a bank account or prepaid cards, allowing adults to purchase their own care and support, often by employing personal assistants. Housing support includes long-term placements in adult housing plans, homes, and unstaffed or partially staffed homes. Other long-term care includes day care and meal services.
The following chart shows the distribution of the £*.* billion spent over ****-**** by UK local authorities on home support. There is a relatively even split between home care, assisted living, and direct payments, which have relatively close shares.
Distribution of UK local authority spending (***) United Kingdom, ****-****, in percent Source: ****
2.3 Distribution of Adult Home Care Demand
The following graph shows the distribution of adults receiving long-term medical support. It is immediately noticeable that physical support for people over ** years old is the most frequent form of care with *** thousand people being cared for in the year ****-**. However, for adults under ** years of age, patients with learning disabilities are the most common, followed closely by those with physical problems.
Number of adults receiving long-term medical support England, ****-**, in thousands Source: ****
Projected increase in demand for care for adults aged ** to ** England, ****-****, in units Source: ****
Projected increase in publicly funded care costs for adults England, ****-****, in billions of pounds Source: National audit office Note: These forecasts assume that unit cost increases will remain constant, in line with the Office for Budget Responsibility's March **** forecast, with an increase for years through **** to account for projected increases in the National Living Wage.
3 Market structure
3.1 UK Home Care Providers
The UK home care supply is growing to meet the high demand for care.
The change in the number of jobs shows a steady growth in the workforce with a recent increase greater than previous years of *% from ****-** to ****-**.
Number of jobs in home care services United Kingdom, ****-** to ****-**, in thousands Source: ****
Home care providers in the UK per million population United Kingdom, ****, in units Source: ****
3.2 A sector divided between public and private investments
The following graph breaks down the UK home care market. First, it can be seen that the majority of the market is occupied by the public sector with **% for short visits and **% for more complex care. The private sector accounts for a combined share of only **%
UK Home Care Market United Kingdom, ****, percentage Source: ****
Projected spending on care for people aged ** and over England, ****-****, £ billion Source: ****
It can be seen that EBITDAR is logically higher on average for for-profit organizations, with **% of organizations having EBITDAR higher than **%, compared to *% for non-profit organizations. The same is true for ROCE, with **% of for-profit organizations having an ROCE above *% compared to *% for non-profit organizations. This chart shows that for-profit organizations have clearly higher revenues and profitability than their non-profit counterparts.
Revenues and profitability of home care providers England, ****, in percent Source: ****
3.3 Difficulties of the sector
The home care market is quite competitive for several structural reasons. First, it is a market with few barriers to entry and exit and relatively low fixed costs. The only non-labor costs are in transportation, which is higher in rural areas. The main difference with other health care industries is the low skill level of the average worker and also his low cost. Thus, employers in this sector are competing with all other recruiters for low-skilled jobs, which helps explain the recruitment difficulties already observed.
A study by the University of York details the quantitative analysis of data from the sector and draws the following conclusions.
The supply of home-based workers appears to improve when there is a decline in wages across the economy, as well as a higher level of unemployment. In addition, when recruitment is easy, recruiters typically set effective wage rates at or even below the minimum wage. The supply of health care is lower in rural areas, which translates into higher transportation costs for the small number of workers who will not be fully reimbursed.
Another challenge facing home care providers is the development of unregulated competition. According to The Homecare Association, in order to reduce costs, ...
4 Analysis of the offer
4.1 Home care versus nursing home care
Home care services in the United Kingdom include the following.
Personal care assists the recipient with daily personal tasks made more difficult by illness or aging (***). Companionship helps lonely seniors who are still able to live independently and do not wish to move into a nursing home or another group living facility. Dementia support is normally provided by specially trained social workers. Indeed, it is estimated that there are ***,*** British people living with some form of dementia today. The aim is to help them maintain a routine and social life by assisting them with personal and household tasks. Respite home care is for individuals who are already caring for a loved one full-time. These temporary care services provide breaks for the caregiver to manage other commitments or possibly take a vacation. It is also possible to have a live-in caregiver. This is the most expensive home care service. Nursing care is care provided by a registered nurse to perform tasks that require nursing training and experience (***). Shared Lives allows the recipient to visit or live with their caregiver in order to eventually join a family or group to avoid loneliness. The arrangement can be short-term, as in the case of a ...
4.2 Cost of home care
The UK Homecare Association provides the following estimate of the minimum price for remote care to provide a sustainable quality service while aligning with the national minimum wage. This hourly cost was therefore estimated at £**.** in April **** with the majority of the cost relating to the duration of care and business costs.
This indicative hourly cost is primarily for providers and commissioners of publicly funded social care services purchased by local councils and the NHS. It therefore does not include the additional costs of providing home care services to individuals.
UK Homecare Association Minimum Price for Homecare United Kingdom, ****-**, in pounds sterling Source: ****
Average hourly price paid for home care compared to the UKHCA minimum price
England, ****, as a precentage of the UKHCA minimum price
Source: ****
4.3 The new home care offerings
Adult home care is benefitting from innovation in a number of areas, including the following examples
Technology and digital Home automation systems that include a light path that turns on when a person gets out of bed, gas and smoke detectors, fall alarms, and a remote assistance call center. Video consultations using a device that allows nurses to assess cardiopulmonary status and facial expressions, with an analog stethoscope connected to a phone line, as well as a digital blood pressure monitor and a magnifying glass. Coordinated care planning Carebox: a touch screen displays reminders and messages to reinforce routine while allowing caregivers to request confirmations. The memory lane feature also provides the ability to view a slideshow of personal photos and play some brain games that can be selected remotely by caregivers. Cera includes technology that takes into consideration digital care records and enables automated operations using an artificial intelligence engine. The technology facilitates knowledge transfer between caregivers, other professionals and family members. Recruitment St Monica's Trust in Bristol has engaged in a process of exchange with care recipients to determine the qualities expected in a carer to improve their recruitment process. Teamwork The example of Buurtzorg in the Netherlands was ...
5 Regulation
5.1 The Care Act 2014
The Care Act **** is a law relating to care and support for adults and carers. This law is of fundamental importance and affects anyone who gives or receives care in the UK.
The Care Act **** gives the following guidance to caregivers to protect adults experiencing abuse and improve their quality of life:
Encourage and support vulnerable people to make their own decisions and enable them to give informed consent about their care. Protect care recipients by training caregivers to recognize signs of abuse and alert appropriate authorities. Prevent abuse by proactively identifying elements that could make an individual vulnerable, such as trauma related to past neglect. Respond to protection issues in a manner that is appropriate to the situation, taking into account the needs of the individual, by involving the individual in decision-making for example. Collaborate with local initiatives to avoid wasting time with redundant or contradictory information from different actors. A degree of accountability must be assumed by the caregiver by being fully transparent to the client and other stakeholders about the decisions made.
Source: ****
5.2 Regulation of home health professionals
The regulation of home health care is done at the state level in the United Kingdom with the following bodies
Care Quality Commission (***) in England Care Inspectorate (***) in Wales Care Inspectorate (***) in Scotland Regulation and Quality Improvement Authority (***) in Northern Ireland
In England, care agencies must follow the following basic guidelines:
Care must be personalised and tailored to each individual. Dignity and respect must be shown to all service users. Consent must precede any care or treatment. Health risks assessment is mandatory and staff must have the necessary skills, qualifications, abilities and experience to ensure the safety of service users. Caregivers must act to protect service users from abuse. Service users must not be lacking the necessary food to stay healthy. Equipment must remain clean, appropriate, used and maintained properly. A complaints system with thorough investigations is needed. Providers must have governance plans in place to meet these guidelines. Staff must be sufficiently competent to meet these guidelines. Staff must be sufficiently competent to provide care and treatment appropriate to their role, and providers must take steps to verify this. Providers have to be fully transparent about their care. Potential care beneficiaries must have access to the Care Quality Commission rating ...
6 Positioning of the actors
6.1 Segmentation
- City & County Healthcare Group Ltd
- Pulse Healthcare Ltd
- Agincare UK Ltd
- The Seva Care Group Ltd
- Cera Care Ltd
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