OD5872 Occupational Therapists Industry Report PDF

US INDUSTRY (SPECIALIZED) REPORT OD5872 Occupational Therapists Doctor's orders: An aging population and expanding workforce are expected to support industry demand Anna Miller | February 2020 IBISWorld.com +1-800-330-3772 [email protected] Occupational Therapists OD5872 February 2020 Conte...

US INDUSTRY (SPECIALIZED) REPORT OD5872 Occupational Therapists Doctor's orders: An aging population and expanding workforce are expected to support industry demand Anna Miller | February 2020 IBISWorld.com +1-800-330-3772 [email protected] Occupational Therapists OD5872 February 2020 Contents About This Industry...........................................4 Competitive Landscape...................................26 Industry Definition..........................................................4 Market Share Concentration....................................... 26 Major Players................................................................. 4 Key Success Factors................................................... 26 Main Activities................................................................4 Cost Structure Benchmarks........................................ 26 Supply Chain...................................................................5 Basis of Competition................................................... 29 Similar Industries........................................................... 5 Barriers to Entry........................................................... 30 Related International Industries....................................5 Industry Globalization..................................................30 Industry at a Glance.......................................... 6 Major Companies............................................ 32 Executive Summary....................................................... 9 Major Players............................................................... 32 Other Players................................................................32 Industry Performance..................................... 10 Operating Conditions...................................... 34 Key External Drivers.....................................................10 Current Performance................................................... 11 Capital Intensity........................................................... 34 Revenue Volatility........................................................ 36 Industry Outlook............................................. 15 Outlook......................................................................... 15 Performance Outlook Data......................................... 17 Regulation & Policy...................................................... 36 Industry Assistance..................................................... 37 Key Statistics.................................................. 38 Industry Life Cycle....................................................... 17 Industry Data................................................................38 Products and Markets..................................... 19 Supply Chain................................................................ 19 Products and Services.................................................19 Annual Change.............................................................38 Key Ratios.................................................................... 39 Additional Resources...................................... 40 Demand Determinants................................................ 21 Major Markets..............................................................21 Additional Resources.................................................. 40 International Trade.......................................................23 Industry Jargon............................................................ 40 Business Locations..................................................... 23 Glossary Terms............................................................40 2 IBISWorld.com Occupational Therapists OD5872 February 2020 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. 3 IBISWorld.com Occupational Therapists OD5872 February 2020 About This Industry Industry Definition This industry includes independent health practitioners who help individuals with physical, mental or developmental conditions with daily living and working through everyday activities (occupations). More specifically, occupational therapy includes: helping children with disabilities to participate fully in school and social situations; helping individuals recovering from injury to regain skills; and providing support for individuals experiencing physical and cognitive changes. Major Players There are no major players in this industry Main Activities The primary activities of this industry: Providing habilitation services Providing rehabilitation services Providing other occupational therapy services The major products and services in this industry: Direct client intervention Indirect intervention and administrative activities Consultation services Research activities All other services 4 IBISWorld.com Occupational Therapists OD5872 February 2020 Supply Chain SIMILAR INDUSTRIES Physical Therapists in the US Mental Health & Substance Abuse Clinics in the US Residential Intellectual Disability Facilities in the US RELATED INTERNATIONAL INDUSTRIES None 5 IBISWorld.com Occupational Therapists OD5872 February 2020 Industry at a Glance Key Statistics $25.8bn % = 2015-2020 Annual Growth 4.8% 1.5% 2.9% 0.4% National unemployment rate Revenue Annual Growth Annual Growth Annual Growth 2015-2020 2020-2025 2015-2025 3.1% Key External Drivers Federal funding for Medicare and Medicaid Per capita disposable income Median age of population 0.6% Number of people with private health insurance 1.4% Industry Structure $3.1bn POSITIVE IMPACT Profit Annual Growth Annual Growth 2015-2020 2015-2025 12.2% Life Cycle Capital Intensity Growth Low Concentration Technology Change Low Low Globalization 12.2% Low Profit Margin Annual Growth Annual Growth 2015-2020 2015-2025 -0.5% MIXED IMPACT Revenue Volatility Industry Assistance Medium Medium Barriers to Entry 38,775 Medium Businesses Annual Growth Annual Growth Annual Growth 2015-2020 2020-2025 2015-2025 3.5% 2.6% NEGATIVE IMPACT Regulation Competition Heavy High 160k Employment Annual Growth Annual Growth Annual Growth 2015-2020 2020-2025 2015-2025 2.9% 1.9% $12.7bn Wages Annual Growth Annual Growth Annual Growth 2015-2020 2020-2025 2015-2025 2.5% 1.8% 6 IBISWorld.com Occupational Therapists OD5872 February 2020 Key Trends Rapid employment growth has driven a significant increase in total wage expenditure Strong demand for occupational therapists has driven increased industry employment Caps on Medicaid and Medicare coverage have constrained industry revenue growth Demand for OT as treatment for a wide variety of mental health conditions is anticipated to grow Strong demand for OT will continue to motivate more enterprises to enter the industry More states are expected to adopt Medicaid expansion Demand for habilitative OT services has grown, particularly as a result of an aging population and the increasing prevalence of autism spectrum disorder 7 IBISWorld.com Occupational Therapists OD5872 February 2020 Products & Services Segmentation 63.5% 24.8% 5.9% 1.5% 4.3% Direct client intervention Indirect intervention and administrative activities Consultation services Research activities All other services Major Players % = share of industry revenue Occupational Therapists Source: IBISWorld SWOT STRENGTHS Growth Life Cycle Stage Low Imports High Profit vs. Sector Average Low Customer Class Concentration Low Capital Requirements WEAKNESSES High Competition High Product/Service Concentration OPPORTUNITIES High Revenue Growth (2020-2025) National unemployment rate THREATS Low Revenue Growth (2005-2020) Low Revenue Growth (2015-2020) Low Outlier Growth Low Performance Drivers Median age of population 8 IBISWorld.com Occupational Therapists OD5872 Executive Summary February 2020 The Occupational Therapists industry comprises health practitioners who treat individuals with physical, mental or developmental conditions. Industry operators work to improve their ability to complete activities of daily living. Occupational therapy (OT) includes: helping children with disabilities to participate fully in school and social situations; helping individuals recovering from injury to regain skills; and providing support for individuals experiencing physical and cognitive challenges. Over the five years to 2020, the industry has benefited from growing demand for OT services and an increase in financial accessibility for patients due to disposable income growth and several beneficial healthcare policies. IBISWorld estimates industry revenue to increase an annualized 3.1% to $25.8 billion over the next five years, including 1.2% growth in 2020 alone. Profit is estimated to account for 12.2% of total revenue in 2020. During the current period, demand for habilitative OT services has grown, particularly as a result of an aging population and the increasing prevalence of autism spectrum disorder (ASDs). In addition, OT is a popular treatment strategy used during the rehabilitative process following a serious injury or major surgery. Greater need for OT services has coincided with increased accessibility to services due to several provisions of the Patient Protection and Affordable Care Act (ACA) and an increase in the number of states with legislation that mandates coverage for autism treatments. Furthermore, growth in both the number of people with health insurance coverage and per capita disposable income has ultimately enabled more people to seek OT services. Over the five years to 2025, the Occupational Therapists industry is anticipated to continue growing. The field is expected to develop an increasingly evidence-based practice (EBP) that will encourage more practitioners to include OT services as part of an overall treatment plan. In addition, the Bipartisan Budget Act of 2018 repealed Medicare outpatient therapy caps, which previously functioned as a barrier to care for those receiving outpatient OT services and limited industry revenue. Continued growth in the number of people with health insurance and per capita disposable income is also anticipated to support the industry moving forward. Overall, IBISWorld projects industry revenue to increase an annualized 1.4% over the next five years to $27.7 billion in 2025. 9 IBISWorld.com Occupational Therapists OD5872 February 2020 Industry Performance Key External Drivers Median age of population Older individuals are more likely to develop chronic conditions that require occupational therapy. As a result, an aging population bolsters demand for treatments provided by this industry. In 2020, the median age of the population is expected to increase, representing an opportunity for the industry. Federal funding for Medicare and Medicaid Medicare and Medicaid can provide coverage for occupational therapy services. As a result, increasing government funding for Medicare and Medicaid bolsters patients' demand for occupational therapy. In 2020, federal funding for Medicare and Medicaid is expected to increase. Number of people with private health insurance Health insurance plans may provide coverage for occupational therapy. As health insurance coverage increases, more individuals are able to pay for occupational therapy due to lower out-of-pocket costs, stimulating demand for industry services. In 2020, the number of people with private health insurance is expected to decrease, posing a potential threat to industry revenue. 10 IBISWorld.com Occupational Therapists OD5872 February 2020 Per capita disposable income Per capita disposable income determines an individual's ability to purchase goods or services. As the value of per capita disposable income increases, more individuals are able to afford private health insurance plans or incur more out-ofpocket costs, enabling them to increase their use of occupational therapy services. In 2020, per capita disposable income is anticipated to increase. National unemployment rate As the national unemployment rate rises, fewer individuals have employermandated health insurance. Due to many employer health insurance plans covering occupational therapy, growth in the unemployment rate may be indicative of fewer individuals being able to incur out-of-pocket costs for occupational therapy. In 2020, the national unemployment rate is expected to increase slightly. Current Performance The Occupational Therapists industry consists of health practitioners who treat patients with physical, mental or developmental conditions. Industry operators focus on improving their ability to perform activities of daily living (ADLs). Occupational therapy (OT) interventions could include: helping children with disabilities to participate fully in school and social situations; helping individuals recovering from serious injury to regain functional daily skills; and 11 IBISWorld.com Occupational Therapists OD5872 February 2020 providing support for individuals experiencing physical and cognitive challenges. Over the five years to 2020, revenue for the Occupational Therapists industry has grown due to growing demand for OT and an increase in patients' ability to pay for care. As a result, IBISWorld estimates industry revenue to grow at an annualized rate of 3.1% during the current period to $25.8 billion. In 2020 alone, industry revenue is estimated to increase 1.2%. Growing need for services OT constitutes a critical part of a well-rounded habilitative treatment plan for various illnesses and disabilities, such as Alzheimer's disease, cerebral palsy, autism spectrum disorder (ASD), and the loss of a limb. In addition, OT is an effective treatment strategy which can be used as part of an overall rehabilitation process following a serious injury or illness. During the period, the growing elderly population and increasing prevalence of ASDs have been primary demand drivers for the Occupational Therapists industry. Over the five years to 2020, IBISWorld expects the number of individuals over the age of 65 to rise at an annualized rate of 3.3%. As people age, they need more help with daily activities. According to Disability and Care Needs Among Older Americans, an investigation by Vicki Freedman and Brenda Spillman, nearly one-half of elderly Medicare beneficiaries have difficulty performing daily activities without assistance or receiving help with such activities. For seniors, OT helps them live more independent and productive lives through incorporating meaningful activities that promote self-reliance and a higher quality of life. Occupational therapists address challenges or limitations surrounding activities of daily living (ADLs), including cooking, feeding themselves, dressing and grooming. As OT has remained an important part of care for aging individuals, a growing senior population has driven demand for industry services and contributed to increased revenue. Demand for the Occupational Therapists industry as also increased in line with the growing prevalence of ASDs. According to the Centers for Disease Control and Prevention (CDC), ASDs are the fastest-growing developmental disability. Occupational therapists help families and children with autism identify any underlying sensory issues and create personalized intervention plans that focus on improving social interaction, behavior and performance within a classroom. Increased accessibility Demand for OT services is ultimately related to patients' ability to pay for services, either directly or through health insurance. As a result of economic growth and several policy changes during the period, more people have been able to pay for OT. Combined with growing demand for OT services, increased financial access to industry services has driven revenue growth. The Patient Protection and Affordable Care Act (ACA) expanded Medicaid eligibility, included both rehabilitation and habilitation as required benefit categories and prohibited pre-existing condition exclusions. Additionally, the ACA tax penalty for people who failed to purchase insurance coverage was instituted in 2014. Although this provision was repealed, effective 2019, it helped drive an annualized increase 12 IBISWorld.com Occupational Therapists OD5872 February 2020 of 0.6% in the number of people with private health insurance coverage over the five years to 2020, therefore contributing to increased accessibility of industry services as well. Increased Medicaid eligibility has enabled more individuals and families with limited incomes to access healthcare services, including OT services. This is illustrated by growing federal spending on Medicare and Medicaid, which, coupled with a growing senior population, has increased due to expanded coverage. Over the five years to 2020, IBISWorld anticipates federal funding for Medicare and Medicaid to increase at an annualized rate of 2.9% to $986.3 billion. In addition, the ACA included both rehabilitation and habilitation as required benefit categories, requiring all health insurance plans to cover such services, including OT. This has increased the ability of individuals to access industry services through health insurance. The prohibition on pre-existing condition exclusions has had a similar effect, enabling those with chronic conditions to secure health insurance coverage to cover ongoing treatment services. Additionally, Medicare and Medicaid reimbursement rates have been imperative to the industry. Medicare Part B pays for “medically necessary” OT, including industry services that help prevent, diagnose or treat an illness, condition, disease or symptom. The therapy cap limit for OT was eliminated through the Bipartisan Budget Act of 2018. Nonetheless, the cap was in place during the majority of the period and likely constrained industry revenue growth, despite overall expanded Medicaid and Medicare coverage. Some patients had been wary of exceeding the cap, thus limiting their use of OT services. As of 2019, all 50 states and the District of Columbia have laws that require some level of insurance coverage for the treatment of autism spectrum disorder (ASD). As OT is a popular treatment style for people with ASD, overall increased coverage of health services used to treat individuals with ASD has also contributed to industry revenue growth during the period. While the industry has benefited from several policies, it has also experienced increased demand due to per capita disposable income growth. Over the five years to 2020, per capita disposable income is anticipated to increase at an annualized rate of 2.1%, contributing to industry revenue growth by enabling more individuals and families to afford out-ofpocket costs associated with OT services. Industry landscape Growing demand for the Occupational Therapists industry has driven employment and enterprise growth during the current period. IBISWorld estimates that the number of industry enterprises has increased an annualized 3.5% over the past five years to reach 38,775 companies in 2020. Moreover, strong demand for occupational therapists has driven increased industry employment. Over the five years to 2020, the number of industry employees has increased an annualized 2.9% to 160,122 workers. Rapid employment growth has driven a significant increase in total wage expenditure, which has contributed to a slight decline in profit during the period. In 2020, industry profit margins are estimated to represent 12.2% of total industry revenue, down from 12.7% in 2015. 13 IBISWorld.com Occupational Therapists OD5872 February 2020 Historical Performance Data Year 14 Revenue IVA Estab. Enterprises Employment Exports Imports Wages ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) 2011 20,299 12,800 32,875 30,038 125,819 N/A N/A 10,080 2012 20,122 2013 19,328 13,279 33,755 30,764 128,443 N/A N/A 13,384 34,496 31,317 131,703 N/A N/A 2014 20,036 13,450 35,150 31,881 134,276 N/A 2015 22,135 14,305 36,160 32,605 139,011 N/A Domestic Number of Demand people with private health insurance ($m) (Million people) N/A 200 10,220 N/A 201 10,524 N/A 202 N/A 10,785 N/A 208 N/A 11,250 N/A 214 2016 22,983 15,126 37,353 33,288 142,880 N/A N/A 11,724 N/A 216 2017 25,356 15,384 41,090 36,607 153,309 N/A N/A 12,417 N/A 217 2018 25,129 15,623 41,368 36,854 154,343 N/A N/A 12,306 N/A 222 2019 25,462 15,920 42,424 37,812 157,276 N/A N/A 12,526 N/A 221 2020 25,767 16,148 43,482 38,775 160,122 N/A N/A 12,737 N/A 220 IBISWorld.com Occupational Therapists OD5872 February 2020 Industry Outlook Outlook Over the five years to 2025, the Occupational Therapists industry is expected to continue growing, driven by a rising need for industry services and high level of financial accessibility, enabling patients to ultimately receive them. In particular, demand for occupational therapy (OT) services will continue to grow alongside the aging of the US population and a mounting effort to enable seniors to live autonomously in their homes. Over the five years to 2025, IBISWorld projects industry revenue to increase at an annualized rate of 1.4% to $27.7 billion. Development of evidence-based practice Demand for OT services as treatment for a wide variety of mental and physical health conditions is anticipated to grow over the next five years. OT services can be used to treat patients requiring rehabilitation or habilitation services. For example, OT may be used to help adults to age in place, preventing falls through home modification, or rehabilitate someone recovering from a serious injury or medical procedure, such as a stroke, joint replacement surgery or the loss of a limb. OT services may also be used to treat chronic mental and physical conditions that affect an individual's ability to complete activities of daily living (ADLs), such as Alzheimer's disease and dementia, arthritis, diabetes, low vision and autism spectrum disorders (ASDs). Over the next five years, IBISWorld forecasts the number of people aged 65 and older to increase at an annualized rate of 3.1%, driving demand for OT services due to age-related issues. Over the last decade, occupational therapists, industry associations and other interest groups have worked to develop a climate of evidence-based practice (EBP). EBP is the integration of critically appraised research results with clinical expertise and patient preferences to achieve the best treatment outcomes. More occupational therapists have been working to developing an EBP by combing their clinical practice with a research career. Additionally, various funding sources are being made available for occupational therapists to conduct research. Over the next five years, the industry's focus on research and developing an EBP is anticipated to continue. As research surrounding the effectiveness of OT in treating a variety of ailments grows, its popularity as a rehabilitative and habilitative treatment method 15 IBISWorld.com Occupational Therapists OD5872 February 2020 is expected to continue increasing as well, contributing to industry revenue growth during the outlook period. Accessibility of care Over next five years, more states are expected to adopt Medicaid expansion. In addition, the eliminated Medicaid spending cap on therapy services, a projected increase in the number of people with private health insurance and continued growth in disposable income is anticipated to strengthen the ability of individuals to access OT services. Overall, accessibility to industry services is anticipated to increase over the next five years, driving more individuals to seek out industry services and contributing to revenue growth. The Bipartisan Budget Act of 2018, which was enacted in February 2018, repealed the Medicare outpatient therapy caps, which functioned as a barrier to care for those needing outpatient occupational and other therapy services. As a result, Medicare beneficiaries are no longer required to seek additional coverage beyond a set dollar amount, which was previously done through an exceptions process. Over the next five years, the removal of this cap is anticipated to increase access and demand for outpatient OT services. Increased Medicare and Medicaid coverage during the outlook period is anticipated to further boost demand and access for OT services. IBISWorld projects that federal funding for Medicare and Medicaid will increase an annualized 4.4% to reach $1.2 trillion over the five years to 2025. While a portion of this growth is expected to be a result of healthcare inflation, it also reflects increased coverage under Medicare due to an aging population and growing Medicaid coverage as more states are expected to adopt the federal Medicaid expansion. The number of individuals with private health insurance coverage is anticipated to decrease very marginally at an annualized rate of 0.1%. This could pose a potential threat to industry operators, albeit a minor one, since most individuals are expected to retain coverage. Those with insurance coverage will benefit since private plans are required to cover rehabilitative and habilitative services as an essential health benefit (EHB). A significant number of individuals are expected to opt out of health insurance coverage following the repeal of the individual mandate of the Patient Protection and Affordable Care Act (ACA). Nonetheless, a large portion of private health insurance coverage is generated through employer-sponsored plans and individual income levels. Therefore, sustained low unemployment is anticipated to help offset any declines in coverage due to the repeal of the individual mandate. Moreover, increased disposable income will also enable more individuals to maintain their private health insurance plans and cover any out-of-pocket costs for OT services. Over the five years to 2025, disposable income is anticipated to increase at an annualized rate of 1.9%, further supporting both access to industry services and revenue growth. 16 IBISWorld.com Occupational Therapists OD5872 February 2020 Enterprises and employment Strong demand for OT will continue to motivate more enterprises to enter the industry. Over the five years to 2025, the number of industry enterprises will grow at an annualized rate of 2.6% to 44,005 companies. Furthermore, occupational therapists will be increasingly required in inpatient and outpatient healthcare settings, as well as in residential care environments and patients' homes. As a result, IBISWorld projects industry employment to increase at an annualized rate of 1.9% to 175,635 professionals in 2025. Industry profit margins are anticipated to decrease slightly to 12.0% of industry revenue in 2025 due to growth in total wage expenditure. Performance Outlook Data Year 2020 2021 2022 2023 2024 2025 Revenue IVA ($m) ($m) (Units) 25,767 26,102 26,479 26,864 27,264 27,680 16,148 16,396 16,667 16,944 17,227 17,508 43,482 44,595 45,787 47,006 48,238 49,203 Industry Life Cycle Estab. Enterprises Employment Exports Imports Wages (Units) (Units) ($m) ($m) ($m) 38,775 39,790 40,877 41,992 43,126 44,005 160,122 163,101 166,312 169,520 172,768 175,635 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 12,737 12,960 13,201 13,444 13,690 13,913 The life cycle stage of this industry is Domestic Number of Demand people with private health insurance ($m) (Million people) N/A 220 N/A 220 N/A 220 N/A 220 N/A 220 N/A 220 Growth LIFE CYCLE REASONS Industry value added is growing in line with GDP The number of new companies is growing Aging population and expanded insurance coverage translate to growing long-term demand 17 IBISWorld.com Occupational Therapists OD5872 February 2020 The Occupational Therapists industry is currently in the growth life cycle stage. Industry value added (IVA), which measures an industry's contribution to the overall economy, is expected to increase at an annualized rate of 2.0% over the 10 years to 2025. Meanwhile, US GDP is projected to grow at an annualized rate of 2.1% during the same period. Demand for geriatric occupational therapy (OT) services is anticipated to be a primary demand driver during the 10-year period. Over the five years to 2025, IBISWorld projects the number of adults aged 65 and older to increase at an annualized rate of 3.3%. Older individuals are more likely to develop chronic conditions such as back and joint pain and require fall prevention services, thus stimulating demand for industry services. OT promotes the autonomy of seniors and makes it more likely that they will be able to age in place. During the 10-year period, the number of enterprises is expected to increase at an annualized rate of 3.0% due to strong demand for OT services. The continued development of an evidence-based practice (EBP) by practitioners and industry associations will elevate the industry and further grow demand for services as evidence of their effectiveness grows. Moreover, favorable government policies have reduced barriers to receiving care, which have paved the way for more individuals to ultimately access industry services, driving demand over the 10 years to 2025. 18 IBISWorld.com Occupational Therapists OD5872 February 2020 Products and Markets Supply Chain KEY BUYING INDUSTRIES KEY SELLING INDUSTRIES 1st Tier 1st Tier Consumers in the US Brand Name Pharmaceutical Manufacturing in the US Generic Pharmaceutical Manufacturing in the US Specialist Doctors in the US 2nd Tier Primary Care Doctors in the US Products and Services Occupational therapists provide individuals with therapeutic services to fulfill everyday life activities, which are also known as occupations. Broadly, occupational therapy (OT) services focus on habilitation and rehabilitation to help patients improve their ability to complete activities of daily living (ADLs). OT may be used for individuals following a serious injury or procedure, as well as used to promote “aging in place” for seniors. In addition, OT services are used for those who have been diagnosed with a physical or mental disability. Unlike physical therapy, occupational therapy encompasses physical as well as other life aspects, such as a patient's living and work environment and mental health. The majority of revenue for industry operators is generated through direct client intervention. Nonetheless, administrative activities, indirect interventions, consultations and 19 IBISWorld.com Occupational Therapists OD5872 February 2020 other research represent important auxiliary services provided by industry operators. Direct client intervention Direct client interventions constitute the largest share of industry revenue, estimated at 63.5% in 2020. A therapeutic intervention can be broadly defined as an effort made by individuals or groups to improve the well-being of someone else. For occupational therapists, this constitutes time spent directly counseling patients following an initial evaluation. Occupational therapy treatments and plans are tailored specifically to patients; therefore, interventions differ significantly from patient to patient. Orthopedic, geriatric, neurology, psychiatry and ergonomics are all common specializations within the broad field of occupational therapy. Orthopedic occupational therapists diagnose, manage and treat disorders and injuries of the musculoskeletal system, including rehabilitation and habilitation services following a surgery. Geriatric occupational therapists are increasingly in demand. Therapists in this area of specialization provide services to elderly patients with a special focus on promoting the ability of individuals to maintain their autonomy as they age. The setting for client interventions also tends to differ. Occupational therapy counseling is commonly done in a healthcare setting, including inpatient, outpatient and acute care facilities. Home based occupational therapy services are also common, in particular when addressing required changes to an individual's living environment. Indirect interventions and administrative activities Indirect interventions and administrative activities are estimated to represent 24.8% of total industry revenue in 2020, making it the second largest service segment for the industry. Occupational therapists must organize and maintain patient records and information collected through interviews, observations and tests. In addition, they must fill out and maintain client-related paperwork, including federal- and statemandated forms, client diagnostic records and progress notes. indirect interventions constitute strategies or modifications for patients that they can use outside of direct counseling, such as developing therapeutic routines, modifying the physical environment or counseling a patient's various caregivers so they are better equipped to promote the treatment process. Consultation services Consultation services are estimated to account for 5.9% of total industry revenue in 2020. According to the American Occupational Therapy Association Inc. (AOTA), the top settings for consultation services are community settings, schools, mental healthcare and other areas. For example, occupational therapists can help assisted living facilities understand and meet the needs of residents, who typically struggle with ADLs. Occupational therapists can help assisted-living facilities design and oversee group wellness programs for residents; advise on the architectural design 20 IBISWorld.com Occupational Therapists OD5872 February 2020 of facilities to ensure the appropriate modifications are made; train therapists and nursing aides; and develop fitness and water aerobics programs. Other services All other services provided by industry operators are estimated to account for 4.3% of total industry revenue in 2020. Clinical and academic research activities are estimated to account for 1.5% of this segment. Industry operators and AOTA, as well as other stakeholders, have been working to develop occupational therapy into an evidence-based practice (EBP). As a result, an increasing number of occupational therapists have been engaging in clinical research to further legitimize and improve treatment strategies. Demand Determinants Demand for industry services depends on several factors, including median age of the population, per capita disposable income and federal funding for Medicare and Medicaid. Other demand determinants include the number of people with private health insurance and the number of employees. Spending on occupational therapy services has a strong correlation with age. As consumers age, they generally develop conditions (e.g. Alzheimer's disease, Parkinson's disease, osteoarthritis) that require the support of industry operators. Services for older patients include low-vision rehabilitation, older driver safety and rehabilitation, and home safety and modifications for "aging in place." The median age of the US population has increased at an annualized rate of 0.4% during the five years to 2020, according to data sourced from the US Census Bureau. At the same, the number of adults aged 65 years and older has increased at an annualized rate of 3.3% over the past five years, boosting the demographics' spending on industry services. Per capita disposable income is another driver influencing industry demand. The private sector, which includes consumers, accounts for a significant share of industry revenue. Some industry services are considered discretionary. As a result, demand for these services relies in part on discretionary income. When per capita disposable income rises, consumers have a greater propensity to spend on nonessential services. Third-party payers, including government reimbursement programs like Medicare and Medicaid and private health insurance carriers, may pay for occupational therapy. As public and private health insurance coverage increases, more individuals are able to afford occupational therapy, thereby increasing demand for industry services. 21 IBISWorld.com Occupational Therapists OD5872 February 2020 Major Markets Hospitals Hospitals, schools and nursing facilities are the primary users of industry services. Other markets, including outpatient clinics (generating 10.8% of industry revenue), home health (6.8%), academia (6.1%), early intervention (4.6%), community health facilities (2.0%) and mental health settings (2.4%) account for a smaller share of industry revenue. Hospitals account for the largest share of revenue, representing an estimated 26.6% of total industry revenue in 2020. Hospitals turn to occupational therapists (OTs) to work with individuals who have physical or mental conditions that limit their ability to complete activities of daily living (ADLs). The focus of treatment is to assist individuals to either develop, maintain or recover the skills required to maintain autonomy. Occupational therapy services in hospitals is typically provided on an inpatient basis. Schools Occupational therapists who work in schools, also known as school-based occupational therapists, provide support for children who require assistance to engage in the specific activities that comprise the school day. Typically, schoolbased occupational therapy is provided to students with disabilities but is also provided to students experiencing other problems in school. In addition, OTs may work with to teachers to help them understand how classroom design affects attention, why particular children behave inappropriately at certain times, and where best to seat a child based on his or her learning style or other needs. Children who may benefit from OT include those struggling with behavior, learning, cognitive processing, visual or perception problems, mental health concerns, difficulties staying on task, disorganization or inappropriate sensory responses. Demand from this segment has risen over the past five years and has been supported the Individuals with Disabilities Education Act (IDEA). The legislation requires that eligible students with certain disabilities, such as blindness, deafness or autism, receive an Individualized Education Program, which is an educational plan for the student that can include placement with an OT. In 2020, schools are expected to account for 19.9% of total industry revenue. Skilled nursing facilities Skilled nursing facilities (SNFs) are healthcare facilities that are primarily for adults who require medical care for different periods of time, ranging from relatively short 22 IBISWorld.com Occupational Therapists OD5872 February 2020 to more extended or permanent residence. SNFs rely on occupational therapists to help patients with rehabilitation or habilitation. According to the American Occupational Therapy Association, patients who work with occupational therapists in SNFs are more likely to have shorter lengths of stay and greater functional improvements. Medicare Part A, Medicare Part B, Medicaid and private insurance typically pay for occupational therapy at SNFs. Demand for this segment has increased over the past five years as the median age of the population has increased. In 2020, SNFs are expected to account for 19.2% of industry revenue. International Trade Exports in this industry are Low and Steady Imports in this industry are Low and Steady The service-based nature of the industry limits the opportunity for trade. As a result, the industry records no import or export revenue. While trade does not apply to the industry, occupational therapists do display some degree of globalization through their reliance on the medical instrument and supply manufacturing industry (IBISWorld report 33911a). Medical instrument and supply manufacturers own overseas subsidiaries or are involved in the import or export of surgical and medical appliances. 23 IBISWorld.com Occupational Therapists OD5872 February 2020 Business Locations Business Concentration in the United States WA MT ME ND OR VT MN ID WI SD NY WY MI NV PA IA NE IL UT CO KS CA NH MA CT RI NJ MD DC DE OH IN WV MO VA KY NC AZ TN OK NM SC AR MS TX AL GA LA FL AK HI Establishments (%) 0 3 6 9 Occupational Therapists Source: IBISWorld Occupational therapists are located throughout the United States, with denser concentrations in more populated states. To illustrate, California is the country's most populous state and accounts for the largest share of industry establishments. In 2020, an estimated 9.3% of establishments are located in California. New York (8.2%), Florida (7.5%), Texas (6.3%) and Pennsylvania (4.9%) also account for significant shares of total establishments, in line with their share of the country's population. In addition to population, industry establishments tend to be located in states with higher Medicare acceptance rates and reimbursement levels. Medicare Part B provides coverage and payment for outpatient therapy services, including occupational therapy. For example, industry operator Select Medical Holdings Corporation generates about 10.0% of revenue from Medicare and other government programs. Other factors that occupational therapists consider when determining a location include the state-based policies (e.g. Medicaid, workers' compensation, public health programs), the age distribution of the population, birth rates and household incomes. 24 IBISWorld.com Occupational Therapists OD5872 February 2020 25 IBISWorld.com Occupational Therapists OD5872 February 2020 Competitive Landscape Market Share Concentration Key Success Factors Concentration in this industry is Low The Occupational Therapists industry exhibits a low level of market share concentration. This trend can be partly attributed to the industry's high level of fragmentation, due to being comprised of nonprofit and community-based volunteer organizations that provide occupational therapy. In 2020, the top three companies are expected to account for less than 10.0% of industry revenue, with no company having a 5.0% or higher market share. In addition, each state has its own requirements for occupational therapy certification, which has made it slightly arduous for large-scale occupational therapy companies to cater to demand throughout the United States. Moreover, according to the American Occupational Therapy Association, there are nine types of board and specialty certification types that occupational therapists can achieve. As a result of many occupational therapists catering to a market niche, such as providing services to help patients maintain their driving and community mobility, this trend has added to the industry's fragmentation. IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are: Having a good reputation: Many patients and residents are referred to providers as a result of their reputation for quality of patient services and efforts to establish and build a 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 quickly can maintain a competitive edge. Reporting systems can also help track all costs and utilization of services. Proximity to key markets: Occupational therapists tend to cluster in highly populated urban and suburban areas. Additionally, proximity to hospitals and other healthcare providers can help increase the number of referrals. Must comply with government regulations: Practitioners should be licensed. The operator should understand all regulations pertaining to its practice to avoid litigation, fees and billing complications. 26 IBISWorld.com Occupational Therapists OD5872 February 2020 Cost Structure Benchmarks Profit Profit, measured as earnings before interest and taxes, is expected to account for 12.2% of industry revenue in 2020. Over the past five years, industry profitability has declined slightly from 12.7% of industry revenue in 2015. As the largest cost for industry operators, the value of total wage expenditure plays a significant role in determining profit margins. Strong demand for OTs over the period, which has driven employment gains and growth in the average wage, has cut into profit margins slightly. Nonetheless, the relatively stringent education and certification requirements to enter the industry enable operators to charge a premium for service, and thus maintain a relatively high profit margin. Reimbursement rates also play a significant role in determining profit. These rates tend to vary between health insurance providers and thus affect each industry operator differently, depending on the coverage plans of their patients. 27 IBISWorld.com Occupational Therapists OD5872 February 2020 Wages In 2020, wages are anticipated to comprise 49.4% of industry revenue. Overall, wages account for a large share of industry revenue, due to occupational therapists providing personalized services to patients. Moreover, industry employees are skilled workers that require extensive education, such as a master's or doctoral degree, as well as certification (e.g. the American Occupational Therapy Association's board and specialty certifications). Over the past five years, total wage expenditure has increased at an annualized rate of 2.5% to $12.7 billion in 2020. Purchases Purchases include various medical and general supplies used to provide occupational therapy services, such as exercise equipment, wheelchairs, treatment machines, tables and educational materials. Typically, purchase expenses match overall revenue trends, due to industry operators only requiring equipment to meet growing demand for industry services. In 2020, purchases are expected to account for 2.7% of revenue. Depreciation Depreciation costs are only expected to make up 1.1% of revenue in 2020. 28 IBISWorld.com Occupational Therapists OD5872 February 2020 Marketing Marketing costs account for 0.6% and have remained relatively stable. Rent Rent is expected to account for 2.8% of revenue. Rental costs are high because many industry therapists, especially those with small local practices, rent offices and examination space. Industry operators located in urban regions typically have higher costs. Utilities Utility costs are estimated to account for 0.2% of total revenue and are not a significant expense for industry operators. Other Costs Other expenses include administration, research and other costs. These are estimated to account for 31.0% of revenue in 2020. 29 IBISWorld.com Occupational Therapists OD5872 Basis of Competition Competition in this industry is February 2020 High and Increasing Internal The industry has a high level of competition. Occupational therapists compete on several factors, including reputation, quality of service, location and price. Since industry services are uniform, providers must maintain relationships with patient referral services (e.g. insurance companies, physicians, hospitals), provide high quality of service and have skilled staff. Additionally, in an industry that is highly fragmented, comprised of nonprofit, small community-based volunteer organizations and large national corporate chains, identifying a viable market is key. Over one-third (36.2%) of industry establishments are located in the country's top five most populated states, and over one-third (36.0%) of locations are in the South. Industry competition has increased over the past five years and is expected to continue rising over the next five years as a greater number of companies have and will enter the field. External Industry operators compete with other healthcare service providers, including physical therapists. Physical therapists provide overlapping services, including support for individuals suffering from injuries or muscle, nerve, joint and bone disease. The ability for a provider to distinguish itself from other healthcare providers through the quality and types of services offered becomes a key competitive factor. Barriers to Entry Barriers to entry in this industry are Medium and Steady Barriers to entering the industry are Barriers to entry checklist moderate. Since many patients receive home care, the industry has low capital Competition High costs. At the same time, because Concentration Low occupational therapists require training and licensing, labor costs are extensive. Life Cycle Stage Growth Additional barriers include obtaining Technology Change Low licensing and accreditation and meeting Regulation & Policy Heavy regulations required to obtain reimbursement from third-party payers. Industry Assistance Medium That said, the industry remains highly fragmented and, thus, provides an opportunity for potential entrants, particularly those with a niche or specialization. Industry Globalization 30 Globalization in this industry Low and Steady IBISWorld.com Occupational Therapists OD5872 February 2020 The Occupational Therapists industry has a low level of globalization. There are multiple factors that keep industry operators within national boundaries, such as the personal nature of services (i.e. between the therapist or physician and patient); the prevalence of therapist- or physician-owned practices; the tendency for physical therapy offices to be small with limited opportunities to accrue economies of scale; and the ability of US operators to access government and private third-party payment systems. 31 IBISWorld.com Occupational Therapists OD5872 February 2020 Major Companies Major Players THERE ARE NO MAJOR PLAYERS IN THIS INDUSTRY Other Players ENCOMPASS HEALTH CORPORATION Encompass Health Corporation (Encompass Health), formerly known as HealthSouth Corporation, is the largest operator and owner of inpatient rehabilitation hospitals, measured by both revenue and the number of hospitals, in the United States. The company provides specialized rehabilitative treatment on a predominantly inpatient basis, but provides services on an outpatient basis as well. As of 2019, Encompass Health operates 130 inpatient rehabilitation hospitals located throughout 31 states and Puerto Rico (latest data available). The company employs a staff of more than 40,000 individuals through its two operating segments: inpatient rehabilitation and home health and hospice. Encompass Health generates industry-relevant revenue through occupational therapy services provided to patients on an inpatient or outpatient basis, as well as through its home health services. Other services offered by the company include nursing, physical and speech therapy, medical social work and other home health aide services. In 2020, IBISWorld estimates industry-relevant revenue for Encompass Health to reach $905.6 million. KINDRED HEALTHCARE INC. Kindred Healthcare Inc. (Kindred Healthcare) provides home health, hospice, community care, transitional care and rehabilitation services through its facilities and home healthcare providers throughout the United States. Kindred Healthcare was established in 1985 and currently operates out of headquarters located in Louisville, KY. Kindred Healthcare, not to be confused with Kindred at Home, was acquired by TPG Capital and Welsh, Carson, Anderson & Stowe in 2018. The company maintains a staff of about 38,300 employees and operates more than 2,000 sites of service, with locations in 45 states. IBISWorld estimates that Kindred Healthcare will generate $749.0 million in industry-relevant revenue in 2020. SELECT MEDICAL HOLDINGS CORPORATION Select Medical Holdings Corporation (Select Medical) was founded in 1997 and is currently one of the largest industry operators, based on number of facilities, of long-term acute care hospitals (LTCHs), inpatient rehabilitation facilities (IRFs), outpatient rehabilitation clinics, and occupational medicine centers in the United States. As of 2019, the company operates 101 LTCHs, 29 IRFs and 1,740 outpatient rehabilitation clinics (latest data available). In addition, the company operates 521 medical centers through its joint venture subsidiary, Concentra Inc. Select Medical employs about 35,700 full-time and 14,200 part-time employees. 32 IBISWorld.com Occupational Therapists OD5872 February 2020 Select Medical operates in the Occupational Therapists industry through occupational therapy (OT) services provided through three segments: outpatient rehabilitation, inpatient rehabilitation and Concentra. Select Medical provides physical, occupational and speech rehabilitation programs and services through both its rehabilitation facilities and on-site via its home health services providers. IBISWorld expects the company's industry-relevant revenue, which is generated only through OT rehabilitation services, to constitute $878.3 million in 2020. 33 IBISWorld.com Occupational Therapists OD5872 February 2020 Operating Conditions 34 IBISWorld.com Occupational Therapists OD5872 Capital Intensity The level of capital intensity is February 2020 Low The Occupational Therapists industry has a very low level of capital intensity. In 2020, for every dollar spent on labor, industry operators are expected to spend $0.02 on capital investments. Patients require personalized services from skilled employees, resulting in very high labor costs. Occupational therapists typically are highly educated, with most having at least a master's degree in occupational therapy. Occupational therapy assistants and aides require specialized training through accredited programs at community colleges and technical schools. Many states also require licenses for occupational therapy assistants. Over the past five years, capital intensity has steadily increased due to the growth of technology, such as electronic medical records. This trend is anticipated to continue through the next five years, though industry services will remain labor-driven. The Occupational Therapists industry is not subject to technology disruption. Industry operators are highly skilled and trained to provide occupational therapy and treatment personalized to each client. The industry is also highly regulated and operators must possess a license to provide industry services. As a result, it is not feasible for technology to replace and disrupt the value provided by trained occupational therapists. The level of technology change is Low There is not much technological change in the Occupational Therapists industry. Most technological developments have affected the industries supplying products (like medical equipment) to occupational therapists. Industry-specific technological developments include software systems that have allowed providers to compile patient information into computer databases as opposed to note cards or paper files. These systems are known as electronic medical records (EMR). EMR's advocates argue that EMR will benefit occupational therapists because it will improve assessment tools to monitor the costs, evaluate the treatments and make necessary financial and marketing decisions to enhance the business performance. For example, occupational therapists will be able to assess past performance by tracking the number of new patients or the rate of referrals becoming regular 35 IBISWorld.com Occupational Therapists OD5872 February 2020 patients. Also, automatic booking and cancelation can potentially reduce staff hours, decreasing operating expenses. Revenue Volatility The level of volatility is Medium Note: Revenue growth and decline reflective of 5-year annualized trend. Y-axis is in logarithmic scale. Y-axis crosses at long-run GDP. X-axis crosses at high volatility threshold. The Occupational Therapists industry is characterized by a low to moderate level of revenue volatility. In general, occupational therapy is a relatively more discretionary treatment, compared to essential healthcare treatments like surgery or medication. Conversely, occupational therapy can provide aid to patients for lower costs than surgery or medical treatment. Over the past five years, the burgeoning elderly population has resulted in steady demand for industry services. Moreover, government funding for Medicare, which included an increase in the cap for occupational therapy, has prompted demand for industry services from beneficiaries. Regulation & Policy The level of regulation is Heavy and is Steady The healthcare industry is highly regulated. Occupational therapists are subject to extensive federal, state and local laws, rules and regulations relating to payment for services, conduct of operations, privacy and security of medical records, employment practices and various certification and licensure requirements. Certification and licensure requirements vary by state, but most states, the District of Columbia and Puerto Rico require occupational 36 IBISWorld.com Occupational Therapists OD5872 February 2020 therapists to be licensed; a few states (two to three) only require certification or registration by a state agency. Licensure requirements typically require graduating from an accredited occupational therapy educational program, completing fieldwork requirements, passing the National Board for Certification in Occupational Therapy Certification Examination, and applying for a license and paying a fee for each state or jurisdiction in which one plans to practice. The federal government also has regulations in place for occupational therapists to receive Medicare and Medicaid reimbursement funds through the Centers for Medicare and Medicaid Services. The federal Anti-Kickback Law makes it a felony to intentionally offer, pay, solicit or receive any form of remuneration in exchange for referring, recommending, arranging, purchasing, leasing or ordering items or services covered by Medicare or Medicaid. Industry Assistance The level of industry assistance is Medium and is Steady The industry benefits from federal government reimbursement programs, such as Medicare, which helps individuals pay for occupational therapy. Beneficiaries can receive occupational care in private settings, but they cannot receive speech-language pathology services in a similar independent practice setting. Medicare regulations require that a physician certify the need for therapy services for each patient and that these services be provided under an established plan of treatment. In 2018, the Bipartisan Budget Act of 2018 repealed the Medicare outpatient therapy cap, which previously functioned as a barrier to care and limited industry revenue growth. State Medicaid programs, which provide healthcare aid for low-income individuals, provide some occupational therapy services. For example, Utah's Medicaid program provides occupational therapy coverage for traumatic brain injuries, traumatic spinal cord injuries, traumatic hand injuries, congenital anomalies or developmental disabilities resulting in neurodevelopmental deficits, and cerebral vascular accident (within 90 days of its onset). The industry also receives support from industry trade organ