Hospice Market to Nearly Double by 2030; Palliative Care to See Large Gains

Rising demand and demographic tailwinds are propelling rapid growth in both the hospice and palliative care markets.

But ongoing labor pressures remain a risk point. A large concern is whether there will be enough hospice and palliative care providers to keep pace with demand, according to Brian Tanquilut, equity analyst in health care services at investment banking company Jeffries LLC.

“These markets are growing partly because of demographic trends and partly because of increasing acceptance of both palliative and hospice,” Tanquilut told Hospice News. “As we see growth acceleration, staffing capacity is the number one concern. It’s deploying the right level and type of staff to optimize these small labor pools.”

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The state of hospice and palliative care markets

In 2021, hospice was a $23 billion industry that made up roughly 20% of the overall U.S. home-based care market, according to a report that Bank of America (BofA) Global Research shared with Hospice News. The hospice market will grow at an annual rate of 7% to 8%, making it the second-fastest growing health care segment nationwide, trailing only behind personal care, according to findings in the report.

The hospice industry is expected to reach $64.7 billion by 2030, a rise from $34.5 billion this year, according to a report from ResearchandMarkets.

Like hospice, the nation’s palliative care market is also anticipated to boom in coming years. Palliative care is among the next market areas to hit substantial growth, according to BofA research.

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The global palliative care market will reach $78.50 billion by 2023, a climb from $49.42 billion during 2018, according to a recent Market.us report

Forces pushing markets ahead

Globally, the palliative medicine market is being propelled by a growing demand for these services as the number of patients living with chronic and serious illness rises, according to PharmiWeb.

Similar trends exist on the hospice side of the equation as the number of seniors swells nationwide. Adults 65 and older are projected to represent nearly a quarter (23%) of the overall United States population by 2060, according to data from the Population Reference Bureau (PRB). Roughly 95 million people will fall into this age group by then, nearly double the 52 million seniors nationwide in 2018, PRB indicated.

New payment models are also providing an impetus to embrace hospice care, according to BofA researchers. This includes gradual shifts towards value-based reimbursement and a drive to reduce facility-based care and associated costs.

The Center for Medicare & Medicaid Innovation is currently testing coverage of hospice care through Medicare Advantage with the Value-Based Insurance Design (VBID) program. Often called the Medicare Advantage hospice carve-in, the program is reaching the close of its second year.

It remains to be seen whether Medicare Advantage will become a permanent fixture in hospice reimbursement following the four-year demonstration. However, the hospice component of VBID has helped to illuminate to payers the value proposition of hospice, according to Tanquilut.

Hospices have other available avenues to value-based payment, particularly for upstream services like palliative care. These opportunities include partnerships with Accountable Care Organizations and providers participating in the Medicare Shared Savings Program.

“We’re closely watching what happens with value-based pilots in hospice,” said Tanquilut. “I think if Medicare Advantage plans pay for hospice, it will contribute to growth going forward. Although there are question marks about what kind of rates they are going to pay, it is going to be an incremental benefit to hospice providers and a trend worth watching as a key contributing factor to where the industry goes over the next five to 10 years.”

Value-based reimbursement is giving the palliative care market a push.

The U.S. Centers for Medicare & Medicaid Services (CMS) allows Medicare Advantage plans to cover palliative care as a supplemental benefit. Though traditional Medicare currently reimburses for palliative care physician and licensed independent practitioner services through fee-for-service payment programs, these do not sufficiently cover the full range of interdisciplinary care.

Recognition is growing among value-based payers that hospice and palliative care can lead to lower health care expenditures, said Tanquilut. Medicare Advantage plans are increasingly recognizing that these services can help improve the patient experience and reduce their health care spend, he added.

“There’s increasing payer acceptance buying into the idea that palliative and hospice are cost-saving tools that help drive to improve patient outcomes, better manage chronically ill populations and reduce hospitalizations,” Tanquilut told Hospice News. “Payers are seeing the value of palliative care, and they want to drive increased utilization of it because it benefits them and patients. I think that’s one of the key drivers there.”

Staffing woes curbing hospice and palliative growth

Labor pressures represent the biggest bump in the road for the palliative and hospice markets. Demand for serious illness and end-of-life care is anticipated to soon outstrip the supply of clinicians to provide it.

“The biggest limitation to growth currently is the labor shortage and high staff turnover,” BofA representatives told Hospice News in an email.

Recruiting and retaining sufficient volumes of clinicians is crucial to growth, according to Tanquilut.

But preparing for what lies ahead won’t be merely a numbers game in terms of bringing on staff. Finding the right referral sources and building those relationships also will be essential to support and drive growth in hospice, said Tanquilut.

“Finding the right referral sources and referral relationships matters,” Tanquilut said. “Cultivating those relationships with the referral sources for hospice is important, because you can shore up your staffing capacity but it won’t matter if you’re not getting the inbound referrals. It is important for providers to make the outbound efforts to build those relationships so that they have access to patients.”

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