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The demand for personal home care services does not have a cap on it, and there will be more seniors than ever in the U.S. over the coming decade. But that doesn’t mean it’s an easy service to deliver right now.
In 2024, providers need to find business models that actually make sense – from their perspective, and from the client’s perspective.
For now, there are only a few primary payers for home care services: Medicaid, clients themselves (private pay) and Veterans Affairs (VA). Then there’s long-term care insurance and Medicare Advantage (MA), which tend to make up a smaller slice of providers’ revenue pies.
Staffing is one driver that keeps that demand out of reach. Providers can only care for as many clients as they have caregivers. On that end, Senior Helpers COO Mari Baxter recently said during Home Health Care News’ Non-Medical Home Care Webinar Series that there was a “light at the end of the tunnel” when it comes to staffing woes.
But then there comes affordability. One point that’s been driven into the ground is rising billing rates in home care services since the COVID-19 pandemic. As costs have gone up, there are less clients willing and able to pay for services.
Seniors and their families may need personal care services, and they may want them. But if they are unable to afford them, it does no good for a business.
That’s why providers are currently looking for sweet spots, or areas of business where they can deliver care, and also make a reasonable margin off that care.
That may mean finding the right Medicaid markets, too. Some of the largest and most successful providers have recently left states due to operating difficulties. Addus HomeCare Corp. (Nasdaq: ADUS) left New York this year, Help at Home left Alabama last year and Bayada mostly exited the Medicaid market in Florida in 2022.
”There are differences in marketplaces,” Tribute Home Care CEO John Sneath said during the webinar series. “We’ve discovered we need to get better at figuring out what those are.”
In addition to finding those sweet spot markets, providers are also looking for sweet spots in operating models, such as short-hour stays in private pay, alternative government models and value-based care models.
“I think you have to diversify,” Baxter said. “You have to look at all avenues. And we’re trying to get to all clients, not just the people that can afford care.”
This week’s exclusive, members-only HHCN+ Update explores how the business model behind personal care is changing, and why it has to.
Billing rates and short stays
The Maryland-based Senior Helpers is one of the largest home care franchises in the country. It was recently acquired by the private equity firm Waud Capital.
Baxter said that staffing is improving because of internal initiatives at Senior Helpers, but also just because of the market.
“I don’t feel the situation today is nearly as drastic as it was several years ago,” she said.
AccordCare CEO Brandon Ballew, also during the webinar series, said that the market has especially improved over the last 12 months.
Meanwhile, billing rates are plateauing in some areas, which is great news for providers.
Senior Helpers saw billing rates go up $4 to $5 per hour over the last four years, and in some cases, more than that.
“That probably slowed down last year, I think everybody kind of got to a certain level, and now it’s back to the smaller, more moderate increases,” Baxter said. “And I’m hoping that slows down further again.”
Still, a plateau doesn’t necessarily bring in folks that have already been priced out. There are many Americans who could once afford care that no longer can.
They are a part of the “forgotten middle.” They don’t qualify for Medicaid, but they also don’t have the ability to pay out of pocket for services.
Baxter says Senior Helpers has seen some clients pull back on care. She sees that as troublesome, because “if you need care, you need care.”
That brings us back to the core question of today’s personal care market: How do you tap into near-unlimited demand with the limited pricing options that exist?
Senior Helpers has responded with its flexHOME program, which is its short-hour commitment.
“At one point, you had to have at least eight or nine hours of care per week, or maybe even 20 hours per week,” Baxter said. “You had to have a minimum, and that minimum is no longer part of what we believe is the fair and the right thing to do. So we’re encouraging no minimum hours.”
Instead, Senior Helpers is going into communities and encouraging those who need it to get fractional care from the company, whether it’s after a surgery or during another time of need.
Baxter sees that as a home health-type model, in fact.
“They come in, they do 15 minutes, and then they leave,” she said. “It’s not an overnight process, you have to build it, you have to target neighborhoods that are over 55 communities. You’re not going to break even the first couple of weeks on this, it takes time to build up. But what we have seen is that most of these clients convert from 15 minutes, to 20 minutes, to 30 minutes, to several-hours shifts. You have to be patient.”
Most home care providers still carry a minimum requirement. It allows for a more smooth business operation, but could also be an impediment to future growth.
“When we do competitive analyses, … it is incredible how few providers offer short hours now,” Sneath added. “I think the number has shrunk. It’s really hard to do, obviously.”
Sneath’s Tribute Home Care is a home care provider that operates in Massachusetts, Maryland, Illinois and Northern Virginia.
AccordCare is likewise trying to take aim at that middle population, through shorter hours and also technology.
The company believes that technology in the home is one way to bridge the payment gap for those in the forgotten middle. A caregiver may not be affordable at all times, but with the right technology – the theory goes – a provider could still fill in the gaps.
“Can I marry that technology with the caregiver in order to still meet the needs?” Ballew said. “We’re still early in the innings, but I’m seeing that as being a viable solution for that mid group because that’s going to be a cheaper alternative than the full six- to eight-hour shift.”
The Atlanta-based AccordCare provides home health and home care services in Georgia, Alabama, Florida, New Jersey, New York, North Carolina and South Carolina.
Ballew admitted that the company has seen “nothing of great success today” with that strategy, only having dabbled in it. It will remain a commitment moving forward, however.
New models and standing out
The short stays, in their own right, are a more unique home care model. They’re unique enough that Seniors Helpers created the name flexHOME for them.
Ballew also said there’s some payer interest for those short-hour clients. That’s one reason home care providers have been turned off from Medicare Advantage (MA) in the past – the volatility and small number of client hours.
“Medicare Advantage is actually starting to be a faster growing group for us,” Ballew said.
There’s also the GUIDE Model, which is the Centers for Medicare & Medicaid Services’ (CMS) recently unveiled dementia care model.
That’s another area home care providers will be able to step into in the future.
“We’re looking at that as a real opportunity for us, and I think everybody is,” Baxter said. “You’d have to have your head in your sand not to.”
But while there may be excitement for the GUIDE Model, there’s a whole lot that home care providers can do to differentiate other than just that.
Home care standards vary by state, but the business model generally doesn’t. New models, new payer sources and new ways of thinking will be a major theme over the next five years.
“I am constantly amazed at how big and vast our market is, and how few points of differentiation most of us in the industry have,” Arosa CEO Ari Medoff said on the webinar series. “We need more creativity around business models. We need more companies to try different things, whether that’s short hours, [or] new service lines. I know that we have a tremendous opportunity with care management.”
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