That’s just one dynamic that could change the way home care agencies do business in the new year.

At the same time, providers are also investing in what they believe to be differentiators, whether that’s through Medicare Advantage (MA) business, technology, care coordination or alternative home-based programs.

Below are all of the home care trends HHCN believes should be on providers’ radar in 2023.

Curious what we predicted for last year? Revisit our 2022 trends here.

HHCN published its home health trends for 2023 last week.

Caregiver-client poaching will pick up

Caregivers leaving their agencies to work directly for clients, perhaps for steadier hours or higher pay, has long been an industry trend. Unfortunately for agency owners, HHCN expects this trend to pick up in 2023.

At the federal level, the Biden administration’s Federal Trade Commission (FTC) is seeking to ban employers from imposing noncompete agreements on their workers. Some states – such as Connecticut, which in 2019 specifically sought to ban home care noncompetes – have attempted to do this at the state level in the past, with mixed results.

FTC is currently asking for public comments on its proposal, which, if finalized, could increase U.S. wages by nearly $300 billion per year, according to the commission.

“The freedom to change jobs is core to economic liberty and to a competitive, thriving economy,” FTC Chair Lina M. Khan said in a statement. “Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand.”

At the same time, the demand for home care services continues to rise while the supply of quality caregivers continues to shrink. In 2023, clients who value particular caregivers who go above and beyond may be emboldened to hire them directly to secure their ongoing support.

To protect themselves from this trend, home care operators will have to continuously invest in their workforce-retention programs, including training initiatives, rewards programs and more. Clients may be able to compete on wages, but they’ll be hard-pressed to compete on all the other employment benefits an agency can offer.

For what it’s worth, HHCN anecdotally heard from some owners about caregiver-client poaching already picking up toward the end of 2022.

Home care providers will be forced to choose a lane

The cost of care is getting more expensive. The increase has been stark.

Many home care agencies are considering this an existential threat. While the private-pay bottom line may be growing with cost of care – which will cause many to be complacent – market share will likely shrink.

“There are some folks that have reached their level of contentment with their income,” Griswold Home Care CEO Michael Slupecki said during HHCN’s Franchise Forum in December. “And I think sometimes they’ll go, ‘Look, it’s been an easier year for me. I can make my target income without working so hard. I love this.’ So, as an organization, we’ve got to try to keep pushing through that. Because while they could be doing better, they could be losing market share. And that’s not something we want to do in any market.”

Agencies are reporting cost-of-care increases of anywhere between 15% to 40%.

That is why HHCN predicts a forthcoming fork in the road in home care. With the cost of care as high as it is, even if it levels out, agencies will have to decide between two propositions: going for the wealthiest clients and committing to private-pay business or diversifying revenue streams through Medicaid, MA or other means.

Take 24 Hour Home Care, for example. It is seemingly taking the latter route.

Its president and co-founder, Ryan Iwamoto, recently told HHCN that cost of care rose for his company by 20% to 40% “overnight.” Traditionally a private-pay company, it recently acquired a Medicaid-based home care provider in New Mexico.

In 2023, it will be interesting to see if others do the same.

Bill rates will level off

Despite the above-mentioned cost-of-care hike, agencies do believe that rates will hit some sort of ceiling in the year ahead.

“Every time I say I don’t think pay rates can go higher, they do,” Matt Kroll, Bayada Home Health Care’s president of assistive care services, told HHCN in December.

That trend has been consistent throughout the U.S.

“With private-pay rates, it seems like recently you can’t find the top of the market, which has always felt disturbing to me, because it’s not cheap to pay for care in the home,” CareAdvantage CEO Tim Hanold said in the fall.

Because bill rates were mostly level from the early 2000s to about 2015, home care experts believe the industry as a whole has been in a catch-up period and hasn’t taken the time to reevaluate the sharp and sudden rate increases.

Despite that, many home care providers expect rates to hit some sort of peak in 2023.

“If the bill rate cools off, then wages have to cool off,” Hanold said. “Maybe we’re not there yet, but there does have to be a leveling out. The macroeconomics reality is that these things have to level off.”

Franchise-system tensions will intensify

Home care franchises and their franchisees were at odds in 2022.

BrightStar Care and its franchisees quarreled over whether committing to MA was worth the effort, as well as a new “call option” included in the franchise-franchisee agreement. All the while, BrightStar has been building up its company-owned locations.

Home Instead, another one of the biggest home care franchises in the country, is having similar issues, though over slightly different matters. Since Honor Technology Inc. acquired Home Instead in 2021, there’s been a transition period that has caused tension between leaders and the franchisees. In this case, the disagreements are mostly centered around the implementation of Honor’s technology.

These two cases are a microcosm for not just franchise systems, but the larger home care ecosystem itself. Industry dynamics are changing, and there’s disagreement over how to – or if to – adjust operations because of that.

In 2023, there will undoubtedly be an even further push on things like MA business and the implementation of technology. There will be more resistance, too.

Even when it comes to cost of care, for instance, agencies will have to convince franchisees that growing revenue with a shrinking market share could be a bad thing.

“We do collect our revenue off of the top line,” Slupecki said. “So, with the wage inflation that we’ve seen, we have to be really cognizant on that hourly piece, because it’s all about market share. Are we growing our market share, and not just growing our revenue? I think that’s really critical to keep our eye on.”

More home care franchise companies will embrace company-owned locations

Over the past few years, a number of home care franchise companies embraced company-owned, or corporate-owned, locations. These companies utilize these locations for a variety of purposes aimed at improving the overall organization.

In 2019, Right at Home began strategically adding company-owned locations to its overall portfolio. The company was using these locations as “test kitchens” for paperless processes, technology and best practices for the organization at large.

Right at Home’s test kitchens have allowed them to avoid implementing the wrong things company-wide.

“When you test anything, sometimes things work, and sometimes they don’t,” Jon Searles, vice president of corporate-owned operations at Right at Home, told HHCN in May. “Franchisees are busy people. We’ve been able to slow the pace down a bit and try something, but not waste the time of some of our franchisees by bringing something to them that we don’t think is developed enough yet, or just that will not work.”

Similarly, Griswold Home Care has been able to test the launch of new software and the company’s mentorship program. Company-owned locations have also allowed the company to perfect its phone script.

For BrightStar Care, company-owned locations have been part of the organization’s strategy since 2002.

“Our first three locations ever were company-owned locations,” Shelly Sun, founder and CEO of BrightStar Care, told HHCN in June. “Having company-owned locations is how we had the ability to document all the policies and procedures for growing a successful home care company that we then franchised.”

BrightStar Care has seen comparable margins between its company-owned locations and franchise locations. This has also opened the door for the organization to further embrace MA opportunities.

“We will be more focused on growing revenues and are willing and able to accept lower-margin business, such as Medicare Advantage,” Sun previously told HHCN. “We evaluate businesses based upon the dollars rather than the percentages so while margins overall may come down as we expand our Medicare Advantage volume, the overall dollars will go up — both top line and bottom line.”

Senior Helpers has also long-held company-owned locations.

As those franchise-system tensions do intensify and companies look to implement future-facing strategies and technologies, it’s likely that the company-owned route will become more traveled.

Ownership pipelines for caregivers will become more common

‘Elevating the caregiver’ has been a long-standing idea in personal home care. The idea is that, if caregivers see a clear path to career advancement, they will be more likely to want to stick with a company long term.

“The lack of career pathways within direct care jobs — and from direct care into other fields— prevents direct care workers from assuming new roles with elevated titles and higher compensation,” New York-based advocacy organization PHI wrote in a report. “This scarcity of career paths also affects retention.”

One of the ways home care companies have been creating a path forward for caregivers is through initiatives like Nurse Next Door’s “front line to franchisee” program. The program aims to eliminate barriers for caregivers who are trying to become franchisees.

“The program helps to support the idea of caregiving as a long-term career by breaking down one of the biggest barriers to ownership, which is startup costs,” Michelle Greer, agency director at Nurse Next Door of Raleigh, North Carolina, said last month during HHCN’s Franchise Forum event.

While not solely focused on caregivers, HomeWell Care Services also made moves to get rid of the initial franchise fee for new owners for 2022.

At a time when providers are looking to strengthen their retention efforts, prioritizing career advancement will be crucial. Providing leadership and ownership opportunities is a way to do that.

Care coordination takes precedent for larger providers

Home care companies believe they are capable of doing more in the home.

Agency leaders have talked about their willingness to do more, and the pandemic has offered opportunities.

Take Help at Home, for example. In October, the Chicago-based personal home care company launched a new segment that will focus on care coordination.

When it launched the pilot of its care coordination arm in three states, the company found what it had anticipated: that its clients had a laundry list of complex and unmet needs, whether those be physical, behavioral or environmental.

“We have an opportunity to capture, in a really simple and digital way, observations that our caregivers can make across physical issues and behavioral issues,” Julie McCarter, Help at Home’s care coordination president, told HHCN. “Those simple observations flow into our clinical platform and create alerts for our broader clinical care coordination team. This, to me, is really where the holistic approach can start.”

Plus, as client needs evolve, so do caregivers’. If a caregiver feels like they are making a true difference in their clients’ lives by doing more, that creates a level of satisfaction that is tangible.

“It creates longer tenure of our caregiver employment, creates longer tenure with our clients,” McCarter said.

In addition to care coordination, personal home care is positioning itself as a potential “quarterback” for programs like hospital at home, ED in the home and others.

With a larger seat the table than they had prior to the pandemic, home care owners will be able to leverage their at-home expertise with other partners in health care.

Senior-focused in-home care startups will scale back

Home-based care was gaining momentum prior to 2020, but the COVID-19 pandemic turned that steady jog into a full-on sprint. And as the U.S. health care system shifted care into the home, senior-focused in-home care startups garnered plenty of investment interest.

Examples of such companies include Sprinter Health, MedArrive, DUOS, Papa, Naborforce, Biofourmis and so many more.

In 2023, economic uncertainty and more conservative approaches from investors will cause some of these startups to scale back, whether that means updated growth goals or downsizing. Papa already started preparing for a different investment climate when it cut 15% of its job force in July.

“It was tough, but the circumstances were that it had to be done in order to extend our runway to be able to support our health plans and our members,” Papa CEO Andrew Parker told HHCN during an episode of Disrupt.

The idea of startups scaling back in 2023 due to economic pressures and less investment activity isn’t exclusive to home-based care. San Francisco-based digital health venture capital and advisory firm Rock Health recapped the trends, and their impact, in its latest quarterly investment report.

“For the digital health sector, 2022 was a downhill ride — one that we think signals the tail end of a macro funding cycle centered around the COVID-19-era investment boom,” the report explains.

Overall, according to Rock Health, 2022’s total funding among U.S.-based digital health startups amounted to $15.3 billion across 572 deals, with an average deal size of $27 million. Last year’s annual funding total was just over half of 2021’s total of $29.3 billion – and barely over 2020’s total of $14.7 billion.

There will still be investment interest in senior-focused in-home care startups this year, but HHCN anticipates fewer splashy investment rounds from investors and more measured growth from companies.

Contributions from Joyce Famakinwa, Patrick Filbin and Robert Holly.

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Dealmaking for non-medical home care assets largely remained steady.

All in all, 2019 saw at least 42 home health-related deals and 36 home care-related deals.

Q4 2019 only saw five Medicare-certified home health-related transactions, however, compared to the 14 deals that took place in Q3. There were at least 16 home health-related deals in Q4 2018, for context.

As PDGM — a major industry disruption — drew closer, many industry insiders predicted that home health M&A activity would slow down while providers and other interested parties took a “wait-and-see” approach to purchase within the space.

At the same time, many experts also predict an upcoming slew of consolidation activity.

“We expect some opportunistic consolidation in Q1 for home health,” Cory Mertz, managing partner at Mertz Taggart, said in a report highlighting the new data. “But we’re not sure if that consolidation will take the form of actual acquisitions — or simply companies informally ‘merging.’ In some cases, you may see the dominant provider retaining the name and back-office capabilities while bringing on caregivers and marketers from the other entity.”

LHC Group Inc. (Nasdaq: LHCG) was a standout in terms of Q4 M&A activity in home health care.

In November, Lafayette, Louisiana-based LHC Group and LifePoint Health continued their joint venture partnership with the purchase of CMH Home Health Care.

In another JV expansion, LHC Group along with Texas Health Resources and Methodist Health System agreed to acquire and share ownership of Healthcare Resources, an Arlington, Texas-based home health provider.

The home health segment of LHC Group’s business currently accounts for 72% of the company’s revenue, but the company has plans to give equal focus to hospice moving forward.

“For acquisitions going forward, home health is going to be natural for the next two to three years, but we are pushing our team to focus equally on hospice,” Keith Myers, chairman and CEO, said earlier this month at J.P. Morgan’s annual health care conference. “The goal in the next five years is to have at least 75% of our locations where we have home health, co-located with hospice.”

On the non-medical home care side, Q4 2019 saw nine deals — only a tiny dip from the previous quarter, which saw 10 deals, according to Mertz Taggart data.

The home care industry, unlike its Medicare-certified counterpart home health, was unencumbered by a major regulatory change, such as PDGM. This left room for continued buyer interest.

Among some of Q4’s most notable deals, Care Advantage acquired Team Nurse Inc., a provider of both non-medical and medical home health care services in December. Care Advantage made four acquisitions total in 2019, with the Team Nurse deal being one of its biggest.

“Whether it’s Medicare, Medicaid or private duty, we are essentially taking care of the entire swath of the population of the Mid-Atlantic area,” Care Advantage CEO Tim Hanold previously told Home Health Care News. “When we’re looking at acquisitions, we’re looking at other families joining ours, and whether they match up with the same type of passion in providing a great experience for our patients and a great experience for our caregivers.”

Additionally, the BelHealth-backed Care Advantage purchased Amaisa Home Care — a provider of in-home personal care, companionship and respite care services — in January.

The full Mertz Taggart M&A report is available here.

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Executives shared that view and other winning sales and marketing strategies April 10 during a panel discussion at Home Health Care News’ Capital + Strategy Forum in Washington, D.C.

“A home health sell is very different than a home care sell and is very different than hospice,” panelist Wanda Coley, president and COO at Wilmington, North Carolina-based Well Care Health, told conference attendees. “[We’ve been] trying to really divide those sales teams so you can speak to the customer at that level.”

Panel moderator John Griscavage, CEO of San Francisco-based PlayMaker Health, agreed.

“In my experience, it’s a very different sale,” he said. “The several-hour conversation, holding the hand of the family member is a very different thing than the more transactional nature of home health.”

As those conversations have grown more sophisticated over time — with a larger focus by clients and referral sources on factors such as readmission rates and quality scores — Well Care has updated its sales teams to match.

“Most recently, we separated our teams,” Coley said. “We did have our sales teams selling the care continuum.”

Well Care provides home care and home health services to patients in eastern North Carolina. It’s also working to roll out hospice offerings.

“What we found was home health really took the majority of the [sales representatives’] time,” Coley said. “They were incentivized more on the home health side, so that’s what they sold. Private duty or home care received less attention, so we separated our marketing teams. In fact, we eliminated marketing on the home care side and rolled it into a branch manager role.”

The move has allowed sales representatives to hone in on selling home health, maximizing referrals. Well Care’s hospice line will also have its own sales team, Coley said.

Panelist Tim Hanold — CEO of Richmond, Virginia-based CareAdvantage, which offers medical and nonmedical services in the mid-Atlantic — also lauded separating service lines. His company has also recently taken a similar approach to marketing, allowing CareAdvantage to customize content for different areas.

“Previously we took a broad brush approach to our digital marketing platform,” he said. “We found that we really needed to outsource it and use a company called Five19 out of Richmond. They have these different tactics that allow us to be more hyper-local across the mid-Atlantic. That’s native video, that’s really unique blog content and things that really speak to our different markets.”

Meanwhile, panelist Lesly Cardec — senior vice president of marketing and public relations at Sunrise, Florida-based Interim Healthcare — says the home care and hospice franchise is also leaning into local marketing.

While maintaining brand consistency is a priority, the company is exploring new ways of allowing local offices to make locations their own.

“It’s a balance game,” Cardec told attendees. “Consumers are local. They want local marketing and local marketing is now becoming hyper-local marketing. … Where the opportunity lies is maybe the industry should look at the franchisor from the marketing perspective a little differently. Maybe the way that they view us is more providing the infrastructure to allow the markets to make it their own and adapt to their market’s needs.”

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