Posted on October 25th, 2022

The home care industry is changing. Its role in the overall healthcare system is growing, but the question is whether home care providers are doing enough to keep up with that growth.

This is reflected in the contrast between client and caregiver growth. It’s reflected in the urgency to get into value-based models, despite the meager amount of agencies tracking data.

It’s also clear that, while there are certainly clear trends across the industry that are telling, there are differences between each agency’s place in the space – and a difference in how each gets from Point A to Point B.

That’s all encapsulated in Home Care Pulse’s recently released 2021 Benchmarking Study.

Home Care Pulse is an Idaho-based research and education firm that reports on workforce and financial developments, marketing strategies and other trends in the non-medical home care industry.

This year, the company’s benchmarking study included nearly 1,500 participating agency locations.

Value and data

The home care industry is becoming more self aware. It realizes the value it can provide, and that others – including health systems, hospital-at-home programs and private equity investors – are also taking notice.

But while providers are eager to jump at these opportunities, some of their value is still not demonstrable, mostly because of the lack of data tracking.

Only 21.8% of agencies, for instance, tracked readmission rates in 2021 – a vital data point to prove the value of home care. That number actually decreased year over year.

“We’ve just got to continually work on improving the tracking of readmission rates, because that’s going to keep us at the table in both the acute and post-acute spaces moving forward,” Home Care Pulse President Todd Austin told Home Health Care News.

The next step will likely have to be with technology to get there, Austin noted. Though tracking readmission rates can be a relatively simple process – some agencies use Microsoft Excel to do so – software capabilities are a more surefire way to get to the next level of data tracking.

“And I think a lot of it is around software utilization,” Austin said. “And most major EMRs have that capability. So it’s probably more about training at this point.”

The home care workforce

In 2018, caregiver turnover hit 81%. It was a staggering number that raised alarms for everyone in the home care industry. By 2019, whether through provider mitigation or workforce trends out of their hands, it had been knocked down to 64%.

It increased by about 1% in 2020, but after all the mayhem that COVID-19 brought – including vaccine mandates – most of the industry assumed it would again return to a frighteningly high number.

But it did not. In fact, it remained basically flat – at 64% – in 2021.

“Turnover is relatively flat, and it is flat regardless of how we segmented it,” Austin said. “Whether it was those that were doing $5 million in business, $4 million in business, or whatever it was. It was flat, however you slice and dice it.”

Given the environment, that felt like a win for the industry – with the caveat being that number can always improve, and is still too high. Turnover, among other things, was also higher in the Central U.S., but that tends to be in line with yearly expectations.

But given the different regulation and legislation in each state in the wake of COVID-19, some states are certainly faring better than others. Coastal states – namely New York and others that have funneled money into home- and community-based services (HCBS) – were starting to see payoff in terms of caregiver recruiting and retention.

Regardless, when agencies were prompted to name the three biggest threats to the industry, over 80% still cited caregiver shortages as one – by far the highest number. In second was caregiver turnover, which nearly 40% of agencies cited as a top-three threat.

“For 80% of the industry to say caregiver shortage is the No. 1 threat and turnover being No. 2, I think we’re doing a good job managing with with what we’ve got,” Austin said. “And I think there’s some silver linings in some specific regions, like with New York, and FMAP funding specifically, which has been shown to decrease turnover.”

Those encouraging signs in the states that have invested further monies and support into HCBS are a reason to continue to work with home care associations on lobbying efforts, Austin noted, but obviously that support may not necessarily help out providers that are primarily private pay.

For providers not lucky enough to be located in a state increasing funding to the industry, no single strategy on recruiting and retention has ubiquitously paid off.

“The question we always get asked is whether there is a specific benefit that is a silver bullet, and when you look at the combination of benefits offered correlated with turnover, there’s no direct correlation,” Austin said. “With the exception of child care and day care services, which is [rarely offered].”

At the same time, orientation and training have helped agencies keep employees on board for longer periods of time.

“Initiatives around orientation training and career laddering lead to lower turnover, both in the 90-day period along with annual turnover,” Austin said.

The way agencies are finding caregivers is also changing and, in turn, becoming more expensive. Job hiring sites are becoming more popular – and undoubtedly help hiring – but lead to more turnover after hiring and cost over three times the amount it cost to hire a caregiver through word-of-mouth employee referrals.

There is also evidence to suggest that the caregiver pool may be slightly widening this year, as sidelined caregivers get back to work.

Client growth rates

While caregiver turnover remained flat, client turnover also spiked. That metric hit a five-year high in 2021, at 76%, which is measured by Home Care Pulse by taking the total number of clients who stopped services and dividing that by the average number of clients.

At the same time, more clients were coming on service. The client growth rate went up for the first time in six years.

That alone is good news.

But what is more interesting – and could be viewed as good or bad – is that the caregiver growth rate simultaneously shrunk. In other words, more clients were coming on service, but less caregivers were joining home care agencies.

“We’re servicing more clients, and we’re doing it with less caregivers, which could be a compounding problem, because one of the top complaints from caregivers is their schedule and thee ratio of clients to caregivers,” Austin said. “So I think the important thing for agencies in the industry to continue to watch is if we’re trying to service more clients than we’ve done historically, while doing it with less caregivers.”

There are ways to supplement caregivers, such. as telehealth. But in general, having client growth increase and caregiver growth decrease is probably an unfavorable and incongruous trend.

Pay for services and caregivers

Pay for caregivers went up in 2021, as expected.

Under pressure, many agencies were forced to raise wages to remain competitive. Government funding also certainly helped in some cases.

Below is just the 95th and 75th percentile of wage payers, but it offers a glimpse at how much median wages increased in 2021.

At the same time, the cost of services often increased. But as of now, that hasn’t hurt many providers across the country. Client growth grew, and anecdotally, providers have said people are generally understanding of raised rates to account for higher caregiver wages.

“In that top class of agencies, they’re doing higher billing amounts, they’re increasing rates faster than the rest of the industry,” Austin said. “And it’s not affecting their growth rate. They’re actually growing faster from a revenue perspective than the ones doing less than $5 million annually. So yes, we are seeing rates increase, and it’s not affecting our growth rate.”

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