OD4166 Speech-Language Pathologists Industry Report 2021 PDF

INDUSTRY REPORT OD4166 Speech-Language Pathologists Inside voice: An aging population will likely increase demand for industry services Dmitry Diment | December 2021 IBISWorld.com 1-800-330-3772 [email protected] Speech-Language Pathologists December 2021 Contents COVID-19 (Coronavirus) Imp...

INDUSTRY REPORT OD4166 Speech-Language Pathologists Inside voice: An aging population will likely increase demand for industry services Dmitry Diment | December 2021 IBISWorld.com 1-800-330-3772 [email protected] Speech-Language Pathologists December 2021 Contents COVID-19 (Coronavirus) Impact Update.............................3 COMPETITIVE LANDSCAPE.......................... 23 ABOUT THIS INDUSTRY.................................. 5 Market Share Concentration............................................. 23 Key Success Factors........................................................23 Cost Structure Benchmarks............................................. 24 Basis of Competition......................................................... 26 Barriers to Entry............................................................... 27 Industry Globalization........................................................ 27 Industry Definition................................................................5 Major Players...................................................................... 5 Main Activities..................................................................... 5 Supply Chain....................................................................... 6 INDUSTRY AT A GLANCE................................ 7 Executive Summary............................................................ 9 MAJOR COMPANIES...................................... 28 OPERATING CONDITIONS............................ 29 Key External Drivers.........................................................10 Current Performance........................................................ 11 Capital Intensity................................................................. 29 Technology & Systems......................................................29 Revenue Volatility..............................................................30 Regulation & Policy........................................................... 31 Industry Assistance........................................................... 32 INDUSTRY OUTLOOK.................................... 14 KEY STATISTICS............................................ 33 Outlook.............................................................................. 14 Industry Life Cycle............................................................. 16 Industry Data..................................................................... 33 Annual Change..................................................................33 Key Ratios......................................................................... 33 INDUSTRY PERFORMANCE..........................10 PRODUCTS & MARKETS............................... 17 Supply Chain..................................................................... 17 Products & Services.......................................................... 17 Demand Determinants...................................................... 18 Major Markets....................................................................19 Business Locations........................................................... 21 2 ADDITIONAL RESOURCES............................34 Additional Resources........................................................ 34 Industry Jargon..................................................................34 Glossary............................................................................ 34 IBISWorld.com Speech-Language Pathologists COVID-19 (Coronavirus) Impact Update December 2021 IBISWorld's analysts constantly monitor the industry impacts of current events in real-time – here is an update of how this industry is likely to be impacted as a result of the global COVID-19 pandemic: • Operators in the Speech-Language Pathologists industry shifted to the remote delivery of services to limit the spread of COVID-19 (coronavirus) in 2020 and 2021, especially across vulnerable populations. This change has been encouraged by the new policies by the Centers for Medicare and Medicaid Services (CMS). For more detail, please see the Current Performance and Technology and Systems Disruption chapters. • Industry operators are affected by new guidelines for businesses issued by the Centers for Disease Control and Prevention (CDC) in response to the coronavirus pandemic. For more detail, please see the Regulation and Policy chapter. • In response to the economic consequences of the coronavirus pandemic, the federal government passed significant stimulus measures to aid the economy, including the Coronavirus Aid, Relief and Economic Security (CARES) Act in 2020 and the American Recovery Act (ARA) in 2021, which apply to industry operators. For more detail, please see the Industry Assistance chapter. 3 IBISWorld.com Speech-Language Pathologists December 2021 About IBISWorld IBISWorld specializes in industry research with coverage on thousands of global industries. Our comprehensive data and in-depth analysis help businesses of all types gain quick and actionable insights on industries around the world. Busy professionals can spend less time researching and preparing for meetings, and more time focused on making strategic business decisions that benefit you, your company and your clients. We offer research on industries in the US, Canada, Australia, New Zealand, Germany, the UK, Ireland, China and Mexico, as well as industries that are truly global in nature. 4 IBISWorld.com Speech-Language Pathologists December 2021 About This Industry Industry Definition This industry comprises businesses of health practitioners that primarily evaluate, diagnose and treat speech, language, cognitive communication and swallowing disorders. Major Players There are no major players in this industry Main Activities The primary activities of this industry are: Monitor patients' progress and adjust treatments Develop treatment plans for problems such as hearing loss and auditory processing disorder Evaluate hearing or speech and language test results Develop individual or group programs in schools to handle speech and language problems Instruct clients in techniques for more effective communication The major products and services in this industry are: Hearing loss Auditory processing disorder Autism spectrum disorder Pragmatics and social communication language disorders Semantics, morphology and syntax language disorders Reading and writing disorders Speech sound disorders Other 5 IBISWorld.com Speech-Language Pathologists December 2021 Supply Chain SIMILAR INDUSTRIES Psychologists, Social Workers & Marriage Counselors in the US Physical Therapists in the US Mental Health & Substance Abuse Clinics in the US Home Care Providers in the US Psychiatric Hospitals in the US RELATED INTERNATIONAL INDUSTRIES Other Health Services in Australia 6 Physical Therapists in Canada Other Health Services in New Zealand IBISWorld.com Speech-Language Pathologists December 2021 Industry at a Glance Key Statistics Key External Drivers $4.6bn Revenue Annual Growth Annual Growth Annual Growth 2016–2021 2021–2026 2016–2026 4.0% 2.7% % = 2016–21 Annual Growth 2.7% 4.6% Per capita disposable income Federal funding for Medicare and Medicaid 3.3% -0.2% Number of adults aged 65 and older Number of people with private health insurance 0.0% Number of K-12 students $524.1m Profit Industry Structure Annual Growth Annual Growth 2016–2021 2016–2021 2.6% 11.3% POSITIVE IMPACT Life Cycle Growth Capital Intensity Low Industry Assistance High / Steady Concentration Low Industry Globalization Low / Steady Profit Margin Annual Growth Annual Growth MIXED IMPACT 2016–2021 2016–2021 Revenue Volatility Medium -0.8pp Technology Change Medium NEGATIVE IMPACT Regulation & Policy Heavy / Increasing 44,219 Businesses Annual Growth Annual Growth Annual Growth 2016–2021 2021–2026 2016–2026 4.6% 3.1% Competition High / Steady Key Trends  Government funding for primary and secondary education has increased during the period 79,890 Employment Annual Growth Annual Growth Annual Growth 2016–2021 2021–2026 2016–2026 4.8% 3.1%  Demand for speech-language pathology services is a result of health insurance coverage  Increasing demand for industry services has translated into strong profit  The number of K-12 students is expected to grow during the outlook period  Recent changes to the healthcare laws mandates is expected to negatively affect demand $1.8bn Wages Annual Growth Annual Growth Annual Growth 2016–2021 2021–2026 2016–2026 3.6% 3.3% 7 Barriers to Entry Low / Steady  The industry will likely be challenged by falling Medicare and Medicaid reimbursement rates  Increased access to health insurance has enabled individuals to afford industry services IBISWorld.com Speech-Language Pathologists December 2021 Products & Services Segmentation Major Players SWOT There are no major players in this industry STRENGTHS High & Steady Level of Assistance Growth Life Cycle Stage Low Imports High Profit vs. Sector Average Low Customer Class Concentration Low Product/Service Concentration Low Capital Requirements WEAKNESSES Low & Steady Barriers to Entry High Competition OPPORTUNITIES High Revenue Growth (2005-2021) High Revenue Growth (2016-2021) High Revenue Growth (2021-2026) Federal funding for Medicare and Medicaid THREATS Low Outlier Growth Low Performance Drivers Number of K-12 students 8 IBISWorld.com Speech-Language Pathologists December 2021 Executive Summary Inside voice: An aging population will likely increase demand for industry services The Speech-Language Pathologists industry has experienced steady conditions and stable revenue growth over the five years to 2021. The industry, which comprises health practitioners that primarily evaluate, diagnose and treat speech, language, cognitive-communication and swallowing disorders, typically services clients in school facilities, healthcare facilities and hospitals. In recent years, stable student enrollment rates have stimulated demand for the industry's diagnostic and treatment services. Furthermore, increased access to health insurance as a result of healthcare reform has enabled individuals to afford industry services, as many speech-language pathology services are covered by health insurance. As a result, IBISWorld expects industry revenue to rise an annualized 4.0% to $4.6 billion over the five years to 2021. The passage of the Patient Protection and Affordable Care Act (PPACA) in 2010 has been a boon to the industry. Under the healthcare reform law, subsidized state and federal healthcare exchanges have expanded private health insurance enrollment, despite the repeal of the individual mandate. As a result, more individuals have obtained private health insurance coverage over the past decade, better enabling them to access industry services. Moreover, healthcare reform has increased the number of individuals with government health insurance by expanding access to Medicaid in states that decided to participate in the expanded Medicaid program. With the number of people with healthcare coverage expected to rise in 2021 as the economy stabilizes from the initial disruptions of the COVID-19 (coronavirus) pandemic, industry revenue is projected to rise 9.6% as more people are able to access speech-language pathology services. These trends are expected to continue over the next five years. Growth of the industry's major markets, student and elderly populations, is expected to remain strong. In particular, the aging population will likely increase demand for industry services as people typically require more medical care as they age. Although access to industry services is expected to increase on account of expanding health insurance rolls, the industry is expected to contend with pressure from Medicare reimbursement rates, limiting profit growth over the coming years. Nonetheless, industry revenue is projected to increase at an annualized rate of 2.7% to $5.3 billion over the five years to 2026. 9 IBISWorld.com Speech-Language Pathologists December 2021 Industry Performance Key External Drivers Number of K-12 students Schools are the largest market for speech-language pathologists, where children receive assistance with vocabulary and communication development and issues, such as stuttering, cognitive communication disorders and dysphagia, which is difficulty swallowing. Since public school systems are required to have speech-language pathologists on staff, a rise in the number students results in greater demand for industry services. The number of K-12 students is expected to stagnate during 2021. Number of adults aged 65 and older The number of adults aged 65 and over drives demand for speech-language pathology services. As people age, their need for medical care can rise dramatically, including the need to address speech, language and swallowing problems. The number of adults aged 65 and older is expected to increase in 2021, representing a potential opportunity for the industry. Number of people with private health insurance The majority of speech-language pathology services are covered by private health insurance. Consequently, the share of the population covered by private health insurance influences demand for industry services, as coverage reduces out-of-pocket expenses for insured individuals. The number of people with private health insurance is expected to decrease in 2021. Federal funding for Medicare and Medicaid A growing share of industry revenue is derived from patients covered by Medicare and Medicaid. Within the regulatory framework, various areas are subject to administrative rulings, interpretations and discretion that may affect payments made under these programs. Increased government restrictions on reimbursement for industry services reduce patient access, thereby hurting demand. Although federal funding for Medicare and Medicaid is expected to increase in 2021, possible reimbursement cuts may constrain growth, posing a potential threat to the industry. Per capita disposable income A rise in household disposable income increases the likelihood of people having private health insurance and using speech-language pathologist services. In many cases, patients may be responsible for some of the cost of these services. Therefore, an increase in disposable income makes industry services more affordable, boosting industry demand. Per capita disposable income is expected to rise in 2021. 10 IBISWorld.com Speech-Language Pathologists Current Performance December 2021 Revenue for the Speech-Language Pathologists industry has grown steadily over the five years to 2021. The industry services clients in several environments, including schools, healthcare facilities and hospitals. Consequently, demand for industry services depends on the prevalence of speech and language disorders in the industry's downstream markets, which have expanded steadily during the current period. However, individuals' ability to access industry services is also dependent on the availability of health insurance and condition of household finances, as patients are often responsible for covering a portion of the cost of industry services. With a growing number of US citizens gaining access to health insurance, clients' ability to pay for services has improved even as changes to the Patient Protection and Affordable Care Act (PPACA) and the COVID-19 (coronavirus) pandemic have engendered ample challenges. As a result, IBISWorld expects industry revenue to rise an annualized 4.0% to $4.6 billion over the five years to 2021. STEADY DEMAND FROM SCHOOLS Schools are the largest market for speech-language pathologists, where children receive assistance with vocabulary and communication development and issues such as stuttering, cognitive communication disorders and difficulty swallowing. IBISWorld expects demand from schools to account for 39.8% total industry revenue in 2021. Although all children develop at different rates, most go through the same stages of language and comprehension development. Typically, children are first screened for speech and language issues when they begin kindergarten, which involves a rapid assessment to determine which children need further testing, diagnosis or treatment. Consequently, a growing student population results in greater demand for the industry's diagnostic services and increases the likelihood that students will require further treatment for disorders. The number of K-12 students has remains steady over the five years to 2021, generating demand for speech-language pathology services. However, the coronavirus pandemic forced many public and private schools to shift to remote or hybrid education models throughout 2020 and the outset of 2021, stifling total enrollment over the two years although it is not anticipated to have a significant longterm effect on enrollment. Moreover, government funding for education has grown during the period. Since industry services are expensive and more discretionary than other types of healthcare, schools' ability to provide treatment for disorders is tied to funding levels. Although the coronavirus pandemic placed strain on the economy, strong federal funding for primary schools through emergency fiscal stimulus has actually enabled K-12 educational institutions to expand service offerings, despite the added challenges of providing speech-language pathology services. Government funding for 11 IBISWorld.com Speech-Language Pathologists December 2021 primary and secondary education has increased at an annualized rate of 2.1% over the five years to 2021, aiding to industry revenue growth. In 2021 alone, industry revenue is thus expected to expand 9.6% on account of strong funding and an uptick in need. HEALTH INSURANCE TRENDS Demand for speech-language pathology services is also a result of health insurance coverage. The majority of speech-language pathology services are covered by private health insurance, and many downstream clients in school and healthcare settings depend on insurance providers to pay for services. Accordingly, the passage of the PPACA in 2010 has been a boon to the industry over the past decade. Under the PPACA, subsidized state and federal healthcare exchanges for individuals earning less than 400.0% of the federal poverty level were rolled out in 2014; all individuals were required by law to obtain some form of health insurance coverage. As a result, the number of people with private health insurance rose steadily over the past decade. Despite the fact that the individual mandate was repealed when The Tax Cuts and Jobs Act came into force in December 2017, this has had only a limited effect on enrollment. More important was the severe contraction spurred by the COVID-19 pandemic, which resulted in a sharp reduction in the number of people with private health insurance, as the unemployment rate quadrupled in less than a quarter. Despite these challenges, the number of individuals with private health insurance coverage remains well above its level a decade ago as a result of the PPACA. Healthcare reform has also increased the number of US citizens who rely on government insurance, such as Medicare and Medicaid. For example, Medicaid eligibility was expanded to people earning less than 133.0% of the federal poverty level; the federal government will cover 100.0% of the cost of this expansion through 2016, 95.0% in 2017, 94.0% in 2018, 93.0% in 2019 and 90.0% in 2020, remaining at 90.0% over all subsequent years. Consequently, in the 39 states that decided to participate in the expanded Medicaid program, the number of people covered by government health insurance increased. In states where speech-language pathology services are covered by Medicaid, industry operators have benefited substantially. While 15 states, including Alabama, Arkansas, Connecticut, Washington, DC, Georgia, Kentucky, Louisiana, Maryland, Mississippi, New Jersey, North Carolina, Oklahoma, Pennsylvania, Rhode Island and South Carolina, do not cover industry services for Medicaid beneficiaries, of these states, only Arkansas, Connecticut, Washington, DC, Kentucky, Louisiana, Maryland, New Jersey, Pennsylvania and Rhode Island have accepted some form of Medicaid expansion. REIMBURSEMENT POLICY UNCERTAINTY Strong demand for speech-language pathology services has largely been positive for the industry landscape. The number of industry establishments has increased at an annualized rate of 4.8% to 47,416 locations over the five years to 2021, while industry employment has risen an annualized 4.8% to 79,890 workers during the same period. Increasing demand for industry services has translated into strong profit. Therefore, industry profit, measured as earnings before interested and taxes, is expected to account for 11.3% industry revenue in 2021. However, profitability has contended with challenges from several factors. For example, some states have threatened to cut Medicare and Medicaid reimbursement rates for therapy services, including speech pathology. Medicare, in particular, covers a significant amount of industry services provided in healthcare facilities. The Protecting Access to Medicare Act of 2014 prevented the 24.0% cut in reimbursements that would have gone into effect the same day, and halted further reductions related to the sustainable growth rate. These cuts have been traditionally delayed each year for more than a decade, but were then signed into law and scheduled to go into effect on April 1, 2014. Following the extension, funding levels for industry services have remained in line with previous rates. While demand for industry services is expected to be strong moving forward, industry operators could potentially be challenged by reimbursement rate cuts in the future. 12 IBISWorld.com Speech-Language Pathologists December 2021 Historical Performance Data 13 Number of K-12 students (Million) Enterprises (Units) Employment (Units) Exports ($m) Imports ($m) Wages ($m) Domestic Demand ($m) 34,293 32,672 55,909 N/A N/A 1,294 N/A 55.1 34,966 33,244 58,170 N/A N/A 1,357 N/A 55.4 1,849 35,645 33,873 60,144 N/A N/A 1,410 N/A 55.9 3,647 1,890 36,607 34,680 60,761 N/A N/A 1,422 N/A 56.2 2016 3,809 1,997 37,575 35,372 63,305 N/A N/A 1,491 N/A 56.4 2017 3,925 1,883 39,003 36,606 64,712 N/A N/A 1,473 N/A 56.4 2018 4,159 1,969 42,592 39,761 69,778 N/A N/A 1,516 N/A 56.4 2019 4,287 2,187 43,945 41,033 73,734 N/A N/A 1,632 N/A 56.3 2020 4,232 2,052 44,752 41,846 74,142 N/A N/A 1,633 N/A 56.4 2021 4,638 2,372 47,416 44,219 79,890 N/A N/A 1,781 N/A 56.3 Year Revenue ($m) IVA Establishments ($m) (Units) 2012 3,321 1,748 2013 3,247 1,804 2014 3,414 2015 IBISWorld.com Speech-Language Pathologists December 2021 Industry Outlook Outlook Current trends in the Speech-Language Pathologists industry are expected to continue over the five years to 2026, resulting in strong revenue growth. In addition to demand from schools steadily growing in line with increased enrollment, the industry is expected to receive a boost from the aging of the population as the incidence of speech, language and swallowing problems rises with age. In addition to the expansion of the industry's client base, the economic rebound from the COVID-19 (coronavirus) pandemic will likely enable consumers to pay for the industry's more discretionary and expensive services. The recovering economy, coupled with the rising number of US citizens with government health insurance, is expected to result in substantial revenue expansion. Industry revenue is projected to increase at an annualized rate of 2.7% to $5.3 billion over the five years to 2026. DEMOGRAPHIC SHIFTS Demand from educational services will likely increase alongside growth in elementary and secondary school enrollment, including the enrollment of special education students. Federal law guarantees special education and related services to all eligible children with disabilities. The number of K-12 students is expected to grow slowly over the five years to 2026, generating demand for speech-language pathology services. Meanwhile, demographic changes are expected to lead to revenue growth during the outlook period. The aging of the population will likely drive demand because people typically require more medical care as they age, including treatment to address speech, language and swallowing problems. The number of adults aged 65 and older is projected to increase at an annualized rate of 3.0% over the five years to 2026. INCREASED DEMAND AND CHALLENGES FROM HEALTHCARE REFORM More US citizens will likely be able to obtain health insurance coverage over the next five years through the expansion of Medicare and Medicaid. Although only 39 states and Washington, DC have accepted the Medicaid expansion offered under the Patient Protection and Affordable Care Act (PPACA) to date, Alaska, Montana, Tennessee, Utah and Wyoming have considered expanding coverage for low-income residents. Moreover, several of the remaining states are expected to consider Medicaid expansion over the next five years, which would further increase the number of people able to pay for industry services through Medicaid. IBISWorld expects federal funding for Medicare and Medicaid to rise an annualized 4.4% over the five years to 2026. However, recent changes to the healthcare laws mandates for private insurance is expected to negatively affect demand for industry services. Under the healthcare reform law, subsidized state and federal healthcare exchanges functioned alongside the individual mandate to obtain insurance to expanding private health insurance rolls. Since the majority of speech-language pathology services are covered by private health insurance, fewer US citizens will likely be able to obtain industry services than under previous projections. Still, private insurance rolls will continue to rise as the unemployment rate declines and per capita disposable income rises, which will allow more individuals will 14 IBISWorld.com Speech-Language Pathologists December 2021 be able to afford private plans. Furthermore, the continued impact of healthcare reform is expected to shift the setting in which speech-language pathology services are provided to the elderly and disabled. In 2021, an estimated 13.8% of revenue is derived from services delivered at nonresidential healthcare facilities, while 5.2% and 11.1% of revenue is derived from services delivered at hospitals and residential healthcare facilities, respectively. The PPACA includes a list of changes to encourage the transition from providing services at hospitals and inpatient facilities to at-home managed care and community care services, which has already shifted the provision of services and is expected to continue over the next five years. INDUSTRY CHALLENGES Rising demand is expected to expand the industry's footprint during the outlook period. The number of industry enterprises is projected to increase at an annualized rate of 3.1% to 51,602 companies over the five years to 2026. Industry employment is expected to increase an annualized 3.1% to 92,855 workers during the same period. Nonetheless, demand for speech-language pathologists is expected to outstrip supply, creating personnel shortages. As a result, wages as a share of revenue are expected to increase over the next five years. The industry will also likely be challenged by falling Medicare and Medicaid reimbursement rates for its services, undermining operators that rely heavily on patients with government insurance. While the Protecting Access to Medicare Act of 2014 prevented a 24.0% cut in reimbursement rates and halted further reductions related to the sustainable growth rate, overall funding levels for industry services have stagnated. Overall, IBISWorld expects industry profit to remain stagnant over the next five years. Therefore, industry profit, measured as earnings before interested and taxes, is expected to account for 12.7% industry revenue in 2026. Performance Outlook Data 15 Number of K-12 students (Million) Enterprises (Units) Employment (Units) Exports ($m) Imports ($m) Wages ($m) Domestic Demand ($m) 47,416 44,219 79,890 N/A N/A 1,781 N/A 56.3 49,018 45,702 82,567 N/A N/A 1,846 N/A 56.4 2,556 50,621 47,186 85,193 N/A N/A 1,908 N/A 56.5 5,016 2,612 52,042 48,525 87,322 N/A N/A 1,958 N/A 56.5 2025 5,177 2,709 53,719 50,085 90,241 N/A N/A 2,029 N/A 56.4 2026 5,310 2,791 55,335 51,602 92,855 N/A N/A 2,092 N/A 56.4 2027 5,444 2,864 56,990 53,161 95,520 N/A N/A 2,156 N/A 56.4 Year Revenue ($m) IVA Establishments ($m) (Units) 2021 4,638 2,372 2022 4,782 2,458 2023 4,919 2024 IBISWorld.com Speech-Language Pathologists Industry Life Cycle The life cycle stage of this industry is December 2021 Growth LIFE CYCLE REASONS IVA is expected to grow at a faster rate than the overall economy Steady K-12 enrollment and an aging population will likely spur demand for industry services Strong demand for industry services has enticed new entrants The Speech-Language Pathologists industry is in the growth phase of its life cycle. Industry value added (IVA), which measures an industry's contribution to the overall economy, is expected to grow at an annualized rate of 3.4% over the 10 years to 2021. US GSP is projected to increase an annualized 2.1% during the same period. While the field is a long-established element of healthcare, demographic changes have spurred demand. In addition to steady demand from schools as a result of increasing K-12 enrollment, the industry is expected to benefit from the aging population. Furthermore, the number of US citizens aged 65 and older will likely continue increasing as a share of the population. The industry is also expected to grow due to structural changes in the US healthcare delivery system resulting from the Patient Protection and Affordable Care Act (PPACA) of 2010. Under provisions of the PPACA, both the number of people with private health insurance and people eligible for insurance under Medicaid has increased during the past decade. The number of people with private and public coverage is expected to continue rising due to a variety of measures at the federal level, even as the PPACA's individual mandate was invalidated during 2018. The expanding industry landscape also places the industry in a growth life cycle stage. Strong demand for speechlanguage pathology services is enticing new entrants into the industry, with the number of enterprises expected to rise at an annualized rate of 3.8% to 51,602 companies over the 10 years to 2026. Likewise, industry employment is projected to grow an annualized 3.9% to 92,855 workers during the same period. Despite this robust growth, demand for speech-language pathologists is expected to outstrip supply, resulting in personnel shortages. 16 IBISWorld.com Speech-Language Pathologists December 2021 Products & Markets Supply Chain Key Buying Industries Key Selling Industries 1st Tier 1st Tier Health & Medical Insurance in the US Primary Care Doctors in the US Home Care Providers in the US Specialist Doctors in the US Specialist Doctors in the US 2nd Tier Nursing Care Facilities in the US Brand Name Pharmaceutical Manufacturing in the US 2nd Tier Generic Pharmaceutical Manufacturing in the US Consumers in the US Medical Instrument & Supply Manufacturing in the US Products & Services SEMANTICS, MORPHOLOGY AND SYNTAX LANGUAGE DISORDERS Services regarding semantics, morphology and syntax language disorders are anticipated to comprise 19.2% of revenue for the SpeechLanguage Pathologists industry in 2021. Semantic language disorders create difficulty understanding, categorizing or defining words. Typically, children who have motor speech difficulties, such as apraxia, also have issues with syntax. Morphology-related language disorders include difficulty structuring and constructing words or sentences. This segment has remained relatively stable as a share of revenue over the five years to 2021. SPEECH SOUND DISORDERS In 2021, services regarding speech sound disorders are expected to make up 16.6% of industry revenue. Speech sound disorders concern children and adults who have trouble saying sounds clearly, making it hard to understand what they say. Generally, children who are unable to say words correctly by the age of eight fall under the umbrella of speech sound disorders. Adults are also an important part of this category, although many develop speech problems after a stroke or brain injury. This segment has increased slightly as a share of revenue over the past five years. READING AND WRITING DISORDERS Reading and writing disorders are anticipated to account for an estimated 11.1% of industry revenue in 2021. Literacy disorders concern difficulties reading and writing in both children and adults. This segment has declined slightly as a share of revenue over the past five years. 17 IBISWorld.com Speech-Language Pathologists December 2021 PRAGMATICS AND SOCIAL COMMUNICATION LANGUAGE DISORDERS In 2021, services regarding pragmatics and social communication language disorders are expected to make up 11.0% of industry revenue. This segment includes treatment of individuals who have issues with social interaction and pragmatics. Patients may have conditions such as specific language impairment, learning disabilities or language learning disabilities. For example, speech-language pathologists may help screen, assess, diagnose and treat school-aged children with social communication language disorders. This segment has declined slightly as a share of industry revenue over the past five years. Over the five years to 2026, demand for these services is expected to rise. The American Psychiatric Association added social communication disorder to the latest edition of its Diagnostic and Statistical Manual of Mental Disorders, which will likely stimulate demand for this service segment. AUTISM SPECTRUM DISORDER Individuals with autism spectrum disorder may require speech-language pathologists to assist with communication skills. Many autistic individuals have social communication problems, which are included in the pragmatics and social communication language disorder service segment. In addition, autistic individuals may require assistance with vocabulary, grammar, reading or writing. Over the past five years, this product segment has remained stable as a share of revenue. In 2021, treatments related to autism spectrum disorder are anticipated to generate 9.6% of industry revenue. AUDITORY PROCESSING DISORDER In 2021, services related to treating auditory processing disorder (APD) account for an estimated 4.1% of industry revenue. APD affects an individual's ability to process and understand auditory information. According to the ASHA, there has been growing public awareness of APD, which has stimulated demand for industry services over the past five years. Speech-language pathologists may work with audiologists to treat patients with APD. For instance, APD may affect an individual's ability to use central resources, such as language, problem solving, memory, attention and other cognitive skills, thus necessitating the services of speech-language pathologists. This segment has declined as a share of industry revenue during the period. HEARING LOSS Individuals who have hearing loss may require speech-language pathologists to assist them with communication. According to the American Speech-Language-Hearing Association (ASHA), individuals who suffer from hearing loss may require speech-language pathologists to effectively communicate in various sociocultural contexts. In particular, hearing-loss patients aged 21 and under typically require industry services to assist with their educational development. In 2020, this segment is expected to generate 1.0% of industry revenue. However, it has declined as a share of industry revenue during the period. OTHER Other services provided by the industry include treatments addressing communication disorders, dysphagia, fluency disorders, literacy, selective mutism, traumatic brain injury and voice or resonance disorders. For instance, speech-language pathologists may address childhood apraxia of speech. Cumulatively, other disorders are projected to account for 27.4% of industry revenue in 2021, increasing as a share of revenue during the period. Demand Determinants 18 Demand for the Speech-Language Pathologists industry is driven by numerous factors, including public and private insurance coverage and the prevalence of speech and language disorders. IBISWorld.com Speech-Language Pathologists December 2021 In particular, the level of coverage from public insurance providers, including Medicare and Medicaid, is a key demand determinant. Medicare Part B covers speech-language pathology services, so long as they are deemed medically necessary. Each state has its own requirements for coverage of speech, hearing and language disorders. For example, Alabama, Arkansas, Connecticut, Washington, DC, Georgia, Kentucky, Louisiana, Maryland, Mississippi, New Jersey, North Carolina, Oklahoma, Pennsylvania, Rhode Island and South Carolina do not cover industry services for Medicaid beneficiaries. Overall, limited Medicaid coverage of industry services may constrain beneficiaries' access to speech, hearing and language services from industry operators. However, public school systems are required to employ speech-language pathologists, which has stimulated demand for industry services. Moreover, demand for speech-language pathology services is also determined by population demographics. The burgeoning elderly population has bolstered demand for industry services, since the elderly are more prone to medical conditions that result in speech, language and swallowing issues. The number of children enrolled in school also drives demand for industry services. Additionally, medical advances are an indirect demand determinant. As medical advances improve patient outcomes, particularly for trauma and stroke patients, the pool of potential patients requiring speech-language pathology services will likely broaden. Major Markets SCHOOLS Schools are expected to make up the largest market for the SpeechLanguage Pathologists industry, generating 41.8% of revenue in 2021. Speech-language pathologists, who are able to assist school-aged children with vocabulary and communication development, have been in high demand from the education sector over the five years to 2021. In addition, speechlanguage pathologists may assist children with stuttering, cognitive communication and dysphagia. Public school systems are required to have speech-language pathologists, which has kept demand for industry services stable over the past five years. While the COVID-19 (coronavirus) pandemic resulted in a substantial disruption in the delivery of integral services during 2020 and 2021, demand is only expected to heighten as a result of these disruptions. The next five years are thus expected to see a continued rise in demand for speech-language pathology services from this segment. NONRESIDENTIAL HEALTHCARE FACILITIES Nonresidential healthcare facilities generate an estimated 13.8% of industry revenue in 2021. This market segment includes speech-language pathology services provided to patients in outpatient settings, such as speech and hearing clinics and doctors' offices. This market segment also includes home health agencies, early prevention programs implemented by healthcare providers and private practices. Typically, demand from nonresidential healthcare facilities is driven by healthcare providers' desire to reduce service volumes and lower healthcare delivery costs. Additionally, many healthcare facilities hire speech-language pathologists to promote patient welfare and reduce patient complications. Demand from this segment has risen slightly over the past five years. COLLEGES AND UNIVERSITIES AND OTHER Colleges and universities generate an estimated 13.0% of revenue in 2021. 19 IBISWorld.com Speech-Language Pathologists December 2021 Speech-language pathologists, who are able to work with college- and university-aged individuals that have communication disorders, have been in high demand from the education sector over the past five years. IBISWorld estimates that the number of college students has declined during the period, however demand has increased over the past five years. RESIDENTIAL HEALTHCARE FACILITIES Residential healthcare facilities generate an estimated 11.1% of revenue in 2021. This market segment includes skilled nursing facilities and assisted living facilities. Compared with nonresidential healthcare facilities and hospitals, this market segment requires that speech-language pathologists focus on helping patients obtain autonomy in the long term. Although the burgeoning elderly population is expected to increase demand for industry services, the Patient Protection and Affordable Care Act has increasingly transition seniors away from residential healthcare facilities to nonresidential healthcare facilities. Therefore, this segment has risen as a share of revenue over the past five years, a trend that is expected to continue over the following five-year period. HOSPITALS Hospitals account for an estimated 5.2% of industry revenue in 2021. This market segment includes services for long-term acute care, rehabilitation and pediatric hospitals. According to 2015 data from the American Speech-Language-Hearing Association, about 60.0% of hospital speech-language pathology services are provided to adult patients (latest data available). In particular, 41.0% of adult services were for individuals that had difficulty swallowing, while 38.0% of pediatric services were related to language issues. Furthermore, a large share of children who required industry services were autistic, with autistic patients making up about 22.0% of the industry's pediatric caseload. As hospital usage rates have risen over the past five years, demand for speech-language pathologists from hospitals has increased. Exports in this industry are Low and Steady Imports in this industry are Low and Steady Due to the service-based nature of industry-relevant services, international trade is not included in the SpeechLanguage Pathologists industry. However, speech-language pathologists may use medical equipment, such as speech-language prosthetics, which are included in the Medical Instrument and Supply Manufacturing industry (IBISWorld report 33911a). 20 IBISWorld.com Speech-Language Pathologists December 2021 Business Locations Establishments in the Speech-Language Pathologists industry largely follows the dispersion of the US population. Typically, speech-language pathologists locate themselves near hospitals, schools and healthcare facilities. However, the industry's personnel-to-population ratio varies considerably, with some areas having more speech-language pathologists on a per capita basis. Some regions, namely New England, have a higher prevalence of speech-language pathologists per capita. The New England region accounts for an estimated 4.9% of establishments, while the Mid-Atlantic regions accounts for an estimated 20.0% of locations. Comparatively, the Great Lakes and Southeast have less pathologists per person, although the regions account for 13.8% and 25.4% of all industry establishments, respectively. Notably, the West has the lowest ratio of pathologists to members of the population according to 2019 data from the American Speech-Language-Hearing Association, despite accounting for 14.3% of establishments. California alone accounts for 8.9% of industry establishments, the highest concentration of speech-language pathologists, but has among the lowest per capita figures in the United States. Nevertheless, over the next five years, many speech-language pathologists will likely cater to demand in geographical regions where the number of speech-language pathologists per capita is low. 21 IBISWorld.com Speech-Language Pathologists 22 December 2021 IBISWorld.com Speech-Language Pathologists December 2021 Competitive Landscape Market Share Concentration Concentration in this industry is Key Success Factors IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are: Low The Speech-Language Pathologists industry exhibits a low level of market share concentration. The industry is highly fragmented, with an estimated 47,416 establishments in 2021. Further adding to the industry's high level of fragmentation, some speech-language pathologists cater to specific markets, including schools, healthcare facilities and hospitals. As a result, no industry operator is expected to control more than 5.0% of industry revenue. Many speech-language pathologists also provide services to specific patient demographics, such as geriatric patients who have dysphagia, or difficulty swallowing, after having a stroke. Additionally, each state has its own regulations for licensing speech-language pathologists, which limits the extent large-scale speech-language pathology practices can provide services across the United States. Development of a symbiotic relationship with another industry: Association with physicians, hospitals, nursing homes or community health programs can boost referrals. It is important to establish relationships with commercial insurers, managed care health plans and other payers to negotiate contracts. Having a good reputation: Many healthcare providers refer patients and residents to speech-language pathology practices as a result of their reputation for quality of patient services or relationship with them. Ability to quickly adopt new technology: New technologies are increasingly being developed to better treat patients. Companies that are able to adopt these technologies quickly maintain a competitive advantage. Reporting systems can also help track costs and use of services. Proximity to key markets: Speech-language pathologists tend to cluster in areas near hospitals and other healthcare providers, which can help increase the number of referrals. Must comply with government regulations: Speech-language pathologists should be licensed. The company should understand all regulations pertaining to its practice to avoid litigation, fees and billing complications. Ensuring pricing policy is appropriate: Speech-language pathologists must set fees at levels that maximize profitability while remaining attractive to customers. Pricing policies may require alteration as government reimbursement levels change. 23 IBISWorld.com Speech-Language Pathologists December 2021 Cost Structure Benchmarks Profit Profit, measured as earnings before interest and taxes, is projected to account for 11.3% of industry revenue in 2021. Profit has remained relatively high during the current five-year period due to rising demand, the result of growing downstream markets, expanding private health insurance coverage and improved economic conditions at the consumer level. Nonetheless, industry profitability contends with several challenges. Some states have threatened to cut Medicare and Medicaid reimbursement rates for therapy services, including speechlanguage pathology. In addition, patient uncertainty about whether services are covered has the potential to limit industry demand and profitability. Since government health insurance programs represent a sizable segment of industry revenue, industry profit would experience pressure from any substantial reimbursement rate cuts. Instability has ultimately led to industry profit to decline over the past five years, in addition to the downturn in revenue during 2020 as a result of the COVID-19 (coronavirus) pandemic, which resulted in a disruption in the delivery of industry services. The Protecting Access to Medicare Act of 2014 prevented a 24.0% cut in reimbursements and halted further reductions related to the sustainable growth rate through March 31, 2015. These cuts were originally scheduled to go into effect April 1, 2014, and have traditionally been delayed each year for more than a decade. While demand for industry services is expected to be strong moving forward, industry operators could potentially be challenged by reimbursement rate cuts in the future. Reimbursement rates for speech-language pathologists have remained relatively stable to date. Wages Wage costs represent the largest cost for industry operators, accounting for an estimated 38.5% of industry revenue in 2021. Speech-language pathology services are labor-intensive, requiring highly educated and skilled professionals. According to 2020 data from the Bureau of Labor Statistics, speech-language pathologists commanded an average salary of $ 80,480 in 2020 (latest data available). Speech-language pathologists also require significant help from assistants who typically work part-time, bringing the industry's 24 IBISWorld.com Speech-Language Pathologists December 2021 average wage to an estimated $22,296 in 2021. Strong demand for industry services during the current period has increased demand for employees. However, wage costs have fallen as a share of industry revenue, as industry revenue growth outpaced industry wage growth. By comparison, wages accounted for an estimated 39.1% of industry revenue in 2016. Purchases Purchase costs account for an estimated 7.9% of industry revenue in 2021. Purchase costs include a variety of medical supplies used in offices and provided to patients for use at home. Purchase costs have remained stable as a share of revenue during the period. Marketing Marketing costs are limited, accounting for an estimated 1.7% of industry revenue in 2021. This figure has ticked up over the five years to 2021. Depreciation Depreciation costs are estimated to account for 1.4% of industry revenue in 2021. Depreciation has risen slightly as a share of revenue over the current five-year period. 25 IBISWorld.com Speech-Language Pathologists December 2021 Rent Rental costs are expected to comprise 6.0% of industry revenue in 2020. Speech-language pathologists typically lease offices at rates that are adjusted according to contract terms. However, rental rates vary significantly across the industry. For example, locations in urban areas, where industry operators tend to cluster to services larger segments of the population, are typically more expensive than those in rural areas. Utilities Utility costs are expected to account for an estimated 0.5% of industry revenue in 2020. Other Costs Other expenses for industry operators include depreciation, communication services, taxes, license fees, repair and maintenance services and professional liability insurance. In 2020, all other expenses are expected to represent 37.6% of industry revenue. Basis of Competition Competition in this industry is High and the trend is Steady INTERNAL COMPETITION The Speech-Language Pathologists industry largely competes on the basis of price, breadth of services and reputation. According to the American Speech-Language-Hearing Association (ASHA), speech-language pathologists typically offer diagnostic and therapeutic services. As a result, speech-language pathologists may compete on the basis of treating market niches, such as patients with particular developmental conditions. However, competitive speechlanguage pathologists may be able to treat a larger patient demographic, such as by providing both habilitative and rehabilitative services. Typically, industry operators receive referrals from either patients, family members, audiologists, physicians, teachers or interdisciplinary teams. Speech-language pathologists may compete on the basis of reputation for 26 IBISWorld.com Speech-Language Pathologists December 2021 bolstering patient outcomes. Furthermore, internal competition may vary based on the healthcare setting. For example, according to the ASHA, speech-language pathologists garner significantly higher wages at skilled nursing facilities, which may intensify competition in this market. Moreover, each state has varying regulations, which may add to the industry's level of competition. For example, state requirements that speech-language pathologists continue their education after receiving their license affects internal competition. EXTERNAL COMPETITION The industry is subject to limited external competition, since there is no viable substitute for industry services. However, some industry services may overlap with audiology, as communication disorders may be related to a hearing issue. However, pathologists typically work in conjunction with audiologists, which limits the extent to which the industry is subject to external competition. Barriers to Entry Barriers to Entry in this industry are Low and the trend is Steady The Speech-Language Pathologists industry is characterized by low barriers to entry. However, speechlanguage pathologists experience educational barriers related to securing their license, which vary from state to state. Moreover, the industry is highly skilled, with speech pathologists requiring either a doctoral or master's degree. Furthermore, some states have additional requirements that pathologists continue their education even after receiving a license. Additionally, some states have a code of ethics and telepractice provisions, which add barriers to entry for some speech-language pathologists. In some areas, however, low practitioner-topopulation ratios keep barriers to entry low. Finally, another key barrier to entry in the industry is forming relationships with healthcare providers, including physicians, specialists and audiologists, as well as with hospitals and skilled nursing facilities, which may be arduous for new industry entrants. Industry Globalization Globalization in this industry is Barriers to Entry Checklist Competition High Concentration Low Life Cycle Stage Growth Technology Change Medium Regulation & Policy Heavy Industry Assistance High Low and the trend is Steady The Speech-Language Pathologists industry experiences a low level of globalization. Globalization is limited due to the fragmented nature of industry services, with many speech-language pathologists catering to local demand for industry services from hospitals, schools, skilled nursing facilities and other markets. 27 IBISWorld.com Speech-Language Pathologists December 2021 Major Companies There are no major players in this industry. 28 IBISWorld.com Speech-Language Pathologists December 2021 Operating Conditions Capital Intensity The level of capital intensity is Low The Speech-Language Pathologists industry experiences a low level of capital intensity. In this industry, labor costs are considerably larger than capital expenditure, and therefore, for every $1.00 spent on wages, an estimated $0.04 is allocated toward capital expenditure in 2020. Capital intensity in the industry has remained unchanged over the past five years. The industry is labor-intensive, relying on pathologists and their assistants to evaluate, diagnose and treat speech, language, cognitive-communication and swallowing disorders. In 2021, wage costs are estimated to represent 38.4% of industry revenue. This figure has declined slightly over the five years to 2021, contributing to the slight increase in capital intensity across the industry. By comparison, wage costs accounted for an estimated 39.1% of industry revenue in 2016. Historically, capital costs have been low in this industry. Most functions in this industry cannot be made less laborintensive, as medical care requirements ensure a high degree of manual input. Nonetheless, industry operators rely on tools, such as adaptive communication switches, sound measuring devices and decibel meters, diagnostic stroboscopes, tablet computers and voice synthesizers, to perform industry services. Additionally, industry operators have increasingly relied on a variety of computer-based applications, including medical software such as Avaaz's Interactive Voice Analysis System, Bungalow Software's Aphasia Tutor software, KayPENTAX Inc.'s Multi-Speech and Micro Video Corporation's Video Voice Speech Training System. Technology & Systems 29 Potential Disruptive Innovation: Factors Driving Threat of Change IBISWorld.com Speech-Language Pathologists December 2021 The Speech-Language Pathologists industry has experienced some technological disruption. For example, mobile apps are able to offer exercises that enable clients to receive therapy through their phones. Although most app-based services had not been considered a substitute for in-person services from qualified professionals, this has the potential to change as a result of the COVID-19 (coronavirus) pandemic. Due to the need to limit the spread of the virus by limiting in-person interaction, operators have been encouraged to deliver services remotely when possible. Smartphones or tablets can be used to provide evaluation and treatment and billed as in-person services according to the Centers for Medicare & Medicaid Services (CMS). CMS has stated that therapists, including speech-language pathologists (SLPs), may provide evaluation and treatment services to patients in skilled nursing facilities (SNFs) via audiovisual devices, and that these services, for billing purposes, would be considered in-person services when provided in the same building as the patient. This marks a dramatic change from previous policies, although the continuation of these policies after the pandemic remains underdetermined. However, the use of telehealth has the potential to disrupt the delivery of industry services moving forward. The level of technology change is Medium The Speech-Language Pathologists industry is characterized by a moderate level of technological change. Speech-language pathologists may use mobile apps to keep track of patients' progress. In particular, mobile apps have enabled speech-language pathologists to bolster compliance among school-aged children, due to many of these individuals being more willing to use high-tech software. Moreover, speech-language pathologists may use adaptive communication switches, such as infrared switches. The industry may also use imaging systems, such as digital videostroboscopy systems, which enable speech-language pathologists to obtain patient images, including images of the patient's vocal cords. In addition, the industry uses numerous computer applications, such as language analysis, speech analysis and signal analysis software. Revenue Volatility The level of volatility is Medium The Speech-Language Pathologists industry is subject to a low to moderate level of revenue volatility. Demand for industry services is relatively stable, rising with growth in the industry's downstream markets. For example, schools comprise the largest market for industry services because of the high number of school-aged children that require assistance with vocabulary and communication development. The number of K-12 students, which represents total student enrollment in both public and private kindergarten, elementary and secondary schools is relatively stable and changes slowly. Similar trends are expected to drive the industry moving forward, with the number of K-12 students rising marginally over the next five years. 30 IBISWorld.com Speech-Langua