Home health care is projected to be one of the hottest health care sectors for growth and investment in 2019.
That’s according to an investment outlook survey from professional services firm KPMG and health care intelligence business Leavitt Partners. As part of the survey, researchers polled 175 healthcare CFOs, investment bankers and private equity executives to gauge their expectations for market and investment activity in 2019.
Areas that foster lower cost of care ultimately came out on top.
“We expect to see growth in subsectors like health care information (HIT), care management solutions, and home health care services — which support the industry’s evolution toward more accessible and lower-cost delivery sites, pricing transparency, and value-based care,” the survey authors wrote.
Of the investment professionals surveyed, 39% said they were most interested in investing in HIT, followed by management solutions for risk-bearing providers (31%) and home health care services (23%)
Survey respondents showed the least investment interest in traditional pillars such as health plans and hospitals. The lack of interest in hospitals is unsurprising, as the U.S. health care system overall is shifting away from acute-care settings, while implementing various initiatives to reduce readmissions and emergency department visits.
Meanwhile, 78% of respondents expected growth for predicted care management solutions for risk-bearing providers to outpace the overall healthcare and life sciences market, followed by home health (76%) and HIT (62%).
HIT and care management solutions are predicted to evolve most in 2019 “due to the potential for disruption from tools to enable consumerism, early and upstream interventions for health, and the entrance of nontraditional players,” researchers said. However, they must remain innovative to stay relevant.
And while cost effectiveness will continue to fuel growth within home health, there could be some choppy waters ahead, researchers predict.
Specifically, “increasing scrutiny of favorable federal reimbursement for home health care could become a headwind,” according to the survey.
The outlook survey also predicted the possibility of more vertical transaction activity, pointing to the merger between CVS (NYSE: CVS) and Aetna as a signal. Such partnerships leverage scale and improve competitiveness, according to the outlook.
They’re also good for home health agencies.
“The benefits of these mergers are particularly significant for subsectors that aim to provide quality care at a lower cost like care management and home health, as many observers believe that models of alternative care will eventually be integrated into one directed care delivery network,” the report says.
The outlook survey from KPMG and Leavitt Partners is not the only recent report to tout the strong investment outlook for 2019.
In a separate Capital One poll of nearly 300 senior health care executives, 97% of individuals surveyed expected to at least match 2018’s performance in the year ahead, with 73% signaling that they expect better business performance in 2019.
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