The pricing increases in home care have again outpaced other long-term care sectors, according to Genworth’s (NYSE: GNW) annual cost of care report.
The cost-of-care hikes have been consistent over the last few years, forcing providers to raise rates and consider diversifying into other payer sources outside of private pay.
In 2023, the cost of a home care aide increased by 10% to an annual median cost of over $75,000, according to Genworth. Homemakers services – which include less hands-on care – also increased by 7.1% to an annual median cost of over $68,600.
Those marks were far higher than the increases in other areas, such as in skilled nursing or assisted living. Assisting living costs increased by just 1.4%, skilled nursing costs increased by 4.4% and private rooms in nursing homes increased by 4.9%.
“As we look at this year’s data, costs are up, but not as drastically as in previous years, especially assisted living facilities, which only increased 1.4% from 2022 to 2023, but a total of 18.9% from 2021 to 2023,” Jamala Arland, the president and CEO of Genworth U.S. Life Insurance, said in a release. “This is likely due to inflation and housing market trends stabilizing post-pandemic. With 10,000 Baby Boomers turning 65 every day until 2030, and seven out of ten of them likely to need long-term care services and support at some point, there is increased demand for skilled workers in the long-term care space.”
Still, pricing did not stabilize in home-based care, which has changed provider attitudes.
As Medicaid rates for personal care became more sustainable during the pandemic, many home care providers pivoted to state-sponsored care delivery.
In certain markets, home care providers even reported billing rates rising as much as 20% to 40%.
Some have also begun to care for more Medicare Advantage (MA) beneficiaries through supplemental benefits, but with limited success.
“We saw increases between 1% and 10% across facility types for this year’s survey,” Arland continued. “While this continues the upward trend we’ve seen over the past several surveys, we are actively digging deeper into the data to analyze trends and plan to share those findings in the coming months.”
In home care, the major contributors to rising costs were inflation and a shortage of workers. While inflation may cool, worker shortages are likely to persist in 2024.
Genworth itself is now more involved in home care through its subsidiary CareScout, which is actively building out a network of home care providers.
It’s worth mentioning that some providers are sticking to the private-pay business model, hoping to drive operational efficiencies to make up for cost hikes.
“I like the idea that if we can provide a great service, then we can charge for a great service. If we can charge a premium, we can pay the people that do the service, and pay them fairly and offer the kinds of benefits that people want,” Tribute Home Care CEO John Sneath told Home Health Care News on a recent Disrupt podcast. “I just like the flexibility that private pay gives us, at the end of the day.”
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