Pediatric Homecare: An Overview

Vertical: Pediatrics / Home Health & Hospice
Author: JC Lupis / Will Ahlemeier
Date: July 2020

Pediatric homecare is a collection of health services provided to a child with medical complexity (“CMC”) in a convenient setting such as their home or school. An increasing prevalence of CMCs, driven in part by increased life expectancies from conditions that were previously untreatable, has stoked demand within pediatric homecare, with the proportion of medically complex children more than quadrupling since the 1960’s.

The pediatric homecare market is characterized by the highest acuity children requiring extensive, specialized care. CMCs comprise 6% of the pediatric population, but account for 40% of the pediatric healthcare spending.

In contrast to funding for long-term homecare services for adults, which is largely federal, pediatric homecare funding relies on a disparate patchwork of state-by-state reimbursement environments. This farrago of reimbursement environments has led to sporadic, inadequate payments, causing an erosion of the provider base while demand rises.

Key Data Points

  • $8.64B. The total US home care expenditure for children aged 0-18 in 2014 (latest data available), according to CMS data.
  • 500,000+. The number of children in the US who required homecare in 2017.
  • 9.9%. The percentage of commercially insured US children (0-18) with at least one complex chronic condition who received home nursing post-hospital discharge. (Period of analysis: January 2013-November 2016.) The probability of receiving home nursing was highest in Nebraska (19.2%) and lowest in South Carolina (3.4%).
  • 8.5%. The forecast compound annual growth rate (CAGR) in the global pediatric homecare market from 2019 through 2026.

Payment Dynamics

Spending on pediatric homecare more than doubled in the decade between 2004 ($3.9B) and 2014 ($8.6B), according to a Global Healthcare Advisors (GHA) analysis of CMS data. During that period the payor dynamics shifted considerably, with Medicaid growing from 63% share of spending to 81%, and out-of-pocket spending declining from 12% to 5%.

GHA-Pediatric-Homecare-Payor-Data

Source: CMS, National Health Expenditure Data, 2014

Select M&A Transactions

GHA-Pediatric-Homecare-Select-Deals

Source: GHA Internal Database