While at an Alliance for Care at Home conference in Chicago a few weeks ago, someone told me it's a better time to be in the business of hospice than home health. This surprised me, because hospice is a small niche within the broader home health and home care sector.
Digging in deeper, I've learned that these two sectors, as well as palliative care, show a range of different economic trajectories, and the policy environment is creating some surprising dynamics. Understanding how home health, hospice, and palliative care intersect (and compete) reveals a complex landscape where payment models and regulatory approaches vary wildly despite serving overlapping patient populations.
Hospice may have some extra advantages right now, but all three areas are still growing and will continue to grow for a while. Before diving in, let’s make sure we know what these services really are.
The Patient Journey: Where These Services Intersect
For a Medicare beneficiary facing serious illness, the care journey might look like this:
🏥 Physician diagnoses complex/serious illness
→ ➕ Goes through treatment for the diagnosed condition
→ 🏠 May receive home health care, especially post-acute
→ ♥️ Can access palliative care for comfort measures and care coordination
→ 💊 When prognosis is 6 months or less, hospice care begins
What's remarkable is how differently these overlapping services are funded and regulated, creating potentially perverse incentives throughout the continuum of care.
Market Growth: Speed vs Stability vs Emergence
Home Health: $162.3B (2024) → $284.3B (2030) | CAGR ~9.8%
Hospice: $29.9B (2024) → $39.1B (2030) | CAGR ~4.6%
Palliative Care: $15.1B (2024) → $26.8B (2030) | CAGR ~10.1%
Home health's nearly 10% growth rate reflects massive demographic tailwinds. The 65+ population will grow by 70% through 2060. Add in remote monitoring technology and Medicare Advantage expansion, and you have a sector riding multiple growth waves simultaneously.
Palliative care shows the highest growth rate as health systems increasingly recognize its value in reducing hospital readmissions and improving quality of life. However, reimbursement complexity remains its biggest challenge.
Hospice's steadier 4.6% growth signals market maturation. With hospice penetration among Medicare decedents already above 50%, growth comes mainly from longer lengths of stay and continued preference shifts toward home-based end-of-life care.
Policy Paradox: 2025 Payment Environment
Here's the paradox my conference acquaintance was referring to: the fastest-growing sectors face the most reimbursement uncertainty, while the mature market enjoys favorable policy winds.
Reimbursement Reality Check
To understand the economic incentives, imagine your Medicare-covered relative becomes seriously ill:
Home Health: If homebound and needing intermittent care, Medicare covers nursing, PT/OT, social services, and equipment. However, costs can be high for patients without Medigap coverage, especially for durable medical equipment. The 0.5% rate increase barely covers inflation while providers navigate expanded value-based payment models.
Palliative Care: Traditional Medicare often excludes care coordination and comfort medications, which are the very services that define palliative care. Medicare Advantage plans may offer better coverage, and health systems increasingly cover costs to reduce expensive hospital readmissions. But navigating what's covered remains a maze for families, creating market friction despite growing demand.
Hospice: Medicare fully covers the final 6 months via flat daily rates, including all equipment and medications. While comprehensive for patients, the payment model can incentivize early enrollment of healthier (less expensive) patients and potential under-treatment of complex cases. The 2.9% rate boost provides welcome margin relief.
Economic Timeline - How It Might Play Out
Short-term (2024-2026): Hospice wins on margins and regulatory relief. Home health faces cost pressures as administrative burdens rise faster than reimbursement. Palliative care sees rapid growth but struggles with reimbursement standardization.
Medium-term (2026-2028): Palliative care reimbursement models mature as CMS and Medicare Advantage plans recognize ROI from reduced hospital utilization. Home health technology investments in remote monitoring start paying efficiency dividends.
Long-term (2027-2030): Demographics drive the story. Home health's massive addressable market expansion from aging baby boomers overwhelms near-term policy headwinds. Palliative care becomes integrated throughout the care continuum. Hospice growth becomes constrained as market penetration approaches natural limits—there's only so much room to expand end-of-life services.
Investment Implications
For investors evaluating these opportunities:
Home Health: Accept near-term margin compression for superior long-term growth. Best suited for growth-oriented investors comfortable with 2-3 years of policy-induced volatility. Technology investments in telehealth and remote monitoring create competitive moats.
Palliative Care: Highest growth potential but requires navigating complex reimbursement landscape. Early movers who crack the payment model puzzle could capture outsized returns as the market standardizes.
Hospice: Stable margins and predictable growth appeal to yield-focused investors. Limited upside but lower execution risk. Consolidation opportunities as smaller providers struggle with compliance costs.
Consumer Takeaway
As someone with aging boomer parents, the lesson is clear: dig deep into insurance coverage for all three service types and understand provider incentives. The fragmented payment system means the "best" medical decision isn't always the most financially sensible one, a reality that shouldn't exist but defines today's healthcare landscape.
In Summary
Three sectors, different speeds, one destination: integrated, value-based home care. Home health trades short-term pain for long-term demographic destiny. Palliative care offers rapid growth for those who can navigate reimbursement complexity. Hospice provides stability, but it faces growth constraints as its addressable market matures.
The ultimate winners will be providers who can seamlessly deliver services across this continuum, optimizing for patient outcomes rather than payment silos.
Sources: Grand View Research, CMS Final Rules 2025, Research & Markets, Axxess, Axios, National Academy of Medicine