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Home care providers are navigating headwinds that include, but are not limited to, the 80/20 provision, the FTC ban on non-competes and increased workplace violence. Arguably, there are more legal considerations for leaders now than there were even during the COVID-19 pandemic.
Home Health Care News recently caught up with home care insiders Angelo Spinola and Tim Hanold to talk through these issues.
Spinola serves as the home health, home care and hospice chair at the law firm Polsinelli, and Hanold is the CEO of Care Advantage, a home-based care company with more than 45 locations across America’s Mid-Atlantic region.
Highlights from the conversation are included below.
HHCN: Tim, let’s start with some background on yourself and your company for anyone that may not be in the know. Also, I assume there’s been some updates at your company since the last time people heard from you.
Hanold: I have the honor of leading Care Advantage. We’re a home care company and also a skilled home health company serving the middle-Atlantic area. That contains Virginia, DC, Maryland, Delaware, and also North Carolina.
We have a pretty balanced payer portfolio — Medicaid, private pay, we serve our vets, the VA community, and a number of specialty programs throughout the Commonwealth of Virginia and elsewhere. We also have adult day in Northern Virginia. I’ve been here for six and a half years. We are backed by Searchlight Capital Partners.
Angelo, how about yourself?
Spinola: I am an attorney. Don’t hold it against me. I work with a lot of the folks on this call, including Tim. I specialize in home care. I personally am an employment lawyer. I’ve been doing this for a couple of decades now. My firm is Polsinelli. We’re a full-service firm, we do a lot of transactional work and health care regulatory and national practice. It is an honor of mine to work with Tim and the others on the calls, good to see you all, and to be able to support the industry.
Tim, let’s start with you. From a provider perspective, it seems like there’s more legal and regulatory issues than there have been in a while, certainly since I’ve been covering the industry. Obviously, during COVID there was a lot related to the vaccine, but a lot of different things are going on right now. What are the most pressing ones to you? What is top of mind for Care Advantage?
Hanold: I believe that there’s a number of these that, if you’ve been in the business for a while, these things are going to be present and a spectrum from some things that are more operational to other things that feel like regulatory shocks that create a different pathway. Whenever it comes to most pressing, I’d go back to just the spirit of the CMS access rule. It’s really something for us to collectively think about and to understand.
The rules final, I know we’ll probably end up spending some time to talk about this later in the conversation, but I think it’s an important moment that there’s continued added scrutiny and thinking around what should be the profitability of a Medicaid home care provider, with at this point, a firm federal view with that 80/20. The conversation is oxygen. We, as an industry, and leaders, need to understand what that means. An industry with reimbursement from the government by tax dollars, there should be a responsibility and certainly vigilance around fraud, waste, and abuse. That being said, for good actors, if there’s no margin, there’s no mission.
We need a manageable gross profit spread where we can be stable, healthy, and have funds to provide high-quality care. This gross profit spread or percentage is really, it’s very market-specific. We know that’s a fundamental issue with the CMS access rule. This lends itself to this general narrative that we need to prove our value to the state and the health care system, pay us for being the safety net in the community and for the quality outcomes that we provide.
Angelo, am I correct in the fact that there seems to be a lot of different things going on right now if you’re a home care provider? Tim mentioned the 80/20 rule. There’s a lot of non-specific regulation that can affect the home care industry going on right now as well. Am I right in that estimation, or is it just par for the course?
Spinola: No, you definitely are. I think historically what we have seen over the last several years are the states, both states and cities, getting into the game and passing legislation and law really at an all-time high rate. At least, the federal government was relatively gridlocked. You didn’t see a lot happening at a federal level. Now, you have all three of those things kicking.
You’ve got federal law changes and largely using the executive branch to do that, like with the FTC ban on non-competes, the DOL salary increases, the changes to independent contractor rules, the National Labor Relations Board has been very active in scrutinizing handbooks and bringing charges against employers. Their joint employment rule right now is in litigation.
You have the federal government going wild. Tim mentioned the 80/20 [rule]. Then on top of that, you still have the states and the cities doing quite a bit. This is about the time of year to this time in January where the laws change. July 1st and January 1st are basically the two places where the law changes. We’re seeing so much happening at a state level, some of which is industry-specific, like the California health care minimum wage increases, the New Jersey Domestic Worker Bill of Rights that goes into effect in a couple of days.
Then some of it is, like you mentioned, generic that applies to everybody. A big one is workplace safety right now. There’s several new state level laws that impact the home care industry, as well as other industries, that require workplace safety plans and things like that. There is quite a bit going on.
Do you mind diving into that for just a brief moment? What’s going on, in terms of workplace safety, because that’s not something that I’m not as aware of.
Spinola: There have been some really significant changes, and I don’t know if it’s something in the water. My guess is that it has to do with some of the mental health issues that resulted from COVID and the quarantines and the isolation. There have been so many incidences of caregiver violence, caregiver or client violence, something happening in the home, significant things like murder suicides. Things that are hitting the news and creating PR nightmares for lots of providers. Like I said, I’ve been doing this for a couple of decades, and I’ve never seen anything like this. I’ve seen incidents occur, but at the frequency in which this is happening, is at the highest level I’ve ever seen.
We’re getting calls. It’s not always something that’s extreme, but guns in the home, some type of harassment. There was that whole Papa issue, that exposé on them, where there were caregivers doing things to clients, clients doing things to caregivers, and nobody really supervising any of that. Even at the W-2 agency level, there have just been a lot of incidences.
You’re seeing California has a new law. The state of Washington all have laws that require implementation of programs and policies and training and things like that for home care agencies to put their caregivers through incident responses, to try to avoid some of these issues. We’re seeing the government, the state OSHAs, like Cal/OSHA, get pretty active in enforcing their standards. I think that’s going to be a trend that we continue to see for the end of ’24 and well into ’25 where other states are going to do the same thing.
Tim, is this a trend that you’ve noticed at Care Advantage? Is there more client violence issues around that? If so, or even not, how do you deal with that proactively?
Tim: Fortunately at this point, we haven’t necessarily seen a bump or something that would be beyond the general probability of that. I would say that there’s probably a higher level of just conversation that we’re having in our branches around just mental health, and also just ensuring that our caregivers are safe going into all of these different environments.
That initial assessment up front is really important. It’s not just an assessment for the family and for the client, the member, if you will, but also for our caregivers. Certainly, on a weekly basis, there are cases that we will need to turn away from. We pride ourselves on taking rigor, if you will, on figuring out all the different puzzles and situations.
There are some cases where we’ll either state that, ‘Hey, this is something that needs a high level of care, something that we can provide if we have X, Y, and Z in place,’ and those things need to be paid for, or it’s something that may not be appropriate for care in the home. If you think about Maslow’s hierarchy of needs, safety comes first. If one of our caregivers doesn’t feel safe in the home, then that’s not a place for them.
Angelo, what do you find clients are bringing to your attention or calling you about the most these days? What’s something that maybe is on your wide range of clients’ minds, but not something maybe we’re writing about enough, or something that maybe everyone across the country knows is that big of a deal?
Spinola: I was trying to think about this because we get a lot of 80/20 calls. The salary level increase has gotten some folks spooked. I’m trying to figure out how to manage that. It’s all the things that we talked about, we get calls on, but the most common call really is a reactive one, because the government has been very active in investigation. It’s DOL investigations, union organizing, false claims issues or anti-kickback stuff, overpayment issues with the VA or Medicaid.
I can say that the Department of Labor, there’s a clear uptick in their audits and investigations. In these other realms, I’m relatively new to that, because I didn’t work at a firm where we handled those kinds of matters before. It’s only been the last three years or so.
It seems anecdotally, there’s a lot more scrutiny. You hear about that from the associations from NAHC and HCAOA, a lot more fraud investigations into hospices that are all in the same location. 100 hospices in the same place, and in LA and things like that. It seems like there’s a spotlight on our industry from a government perspective more than what we’ve historically seen.
I do want to get specific with each issue. I think we’ll start with DOL’s new overtime rule that’s increased the salary threshold that’s necessary for an individual to be exempt from overtime under the Fair Labor Standards Act. Tim, on your end, have you had to adjust things operationally at Care Advantage to deal with this?
Hanold: Nothing, I’d say, reactive at this moment, but things that we’ve adapted to over many years. Generally, we have a career ladder and really a tiered approach for our office personnel with respect to job description. Different tiers of role and responsibility, and then the compensation that goes along with it, and the compensation structure. There’s a knowledge and job test for salary positions. Consistency is really important. Angelo could speak to that, I’m sure.
For example, our senior care coordinators are salaried employees because of the expectations that go with that role and what it takes to get there. Across the company, we have both hourly and salaried employees. Many times, actually, you can see it with geographic trends. When it comes to hourly, you have to be really smart around managing OT. If there’s companies out there that are moving the threshold early of July 1st, it’s 44K. I’m rounding. January 1st, it’s 59K.
For those that may be moving to something hourly, be really smart on managing OT. It’s not just managing OT for your caregivers, but the entire office. Because you’ve got to ensure that work gets done and taken care of the clients and caregivers the right way, but also while being really efficient. Possibly one recommendation here is, what operators are using whenever it comes to daily and weekly KPIs to be managing the workforce.
Angelo, what are you telling your clients about how to get ready for this, about how to be prepared, how to make sure that you’re both not violating any rules, but also being efficient and making sure that you’re not putting in a payment system that’s ultimately going to hurt your bottom line?
Spinola: I think most providers are not having a problem with the July hike, which, as Tim mentioned, is about $44,000. It’s January where you’re going up to almost $59,000 and then it will adjust every three years after that. The numbers are going to keep going. Tim runs a really compliant shop, and very sophisticated, as you can hear from this conversation. There’s a lot of providers that don’t understand that there is a duties element to the salary exemptions.
You can pay the required minimum salary, but if the individual isn’t performing exempt duties, they’re not exempt. Doesn’t matter what their salary is. There are a lot of misclassification issues in the industry. We’re actually using this as an opportunity to clean some of that up. We’re seeing, I’d say, the Southeast is most impacted. The providers in the Southeast impacted from a financial perspective of what the salaries are. What we’re doing is using it as an opportunity to take care coordinators that shouldn’t be treated as exempt, or schedulers who shouldn’t be exempt in the first place, and cleaning that up.
Then it also impacts the pay-per-visit models because the way pay-per-visit works in the home health environment, there are flat rates that are paid that are supposed to be the equivalent of the salary threshold if you were to prorate the salary over a 40-hour work week. A lot of those clinicians, the way that works, they may ultimately make more than $60,000. If any individual visit amounts to less than that equivalent, they lose the exemption.
We’re seeing, and this has been a trend for the last few years, but in home health, a lot of the full-time clinicians, the RNs, PTs, OTs are moving to a different salary-plus model rather than pay-per-visit, which I think puts their exemption at risk. A lot of work around analyzing the workforce, determining whether it makes sense.
One other thing I’ll say is the employees do not like being moved to hourly. They do not like it. They see it as a demotion, even though the hourly rate is the salary equivalent of just reengineering the salary into an hourly rate. They feel micromanaged when they have to clock in and out, and things like that. Some of our clients are moving to a salary non-exempt type model where they’re still paid a salary, but they can also earn overtime if they work beyond that 40-hour threshold, and that’s been preferable.
For some, it’s more semantics than anything. It doesn’t really change the bottom line financially. I think Tim is absolutely correct that the key to all of this is how you communicate it to your employees and then really managing it on the back end. We saw this happen when the live-in and companionship exemptions went away and none of the EMRs were set up to record time, the time that wasn’t with the client.
It was only client time, so you didn’t have travel time and orientation and preparation time, and there were just a slew of lawsuits that continue to this day around personal care overtime because the providers were very slow to respond and start tracking all that time. The DOL says that when they conduct an investigation, 90% of the time, the home care providers are out of compliance. There’s some backwage component to the investigation. The concern of moving exempt people to non-exempt status is their behavior has to change, and the way we manage them has to change as well.
Angelo, also non-competes, something you and I have talked about a lot, and not just the non-compete ban, but how it could affect the similar language and non-solicitations that are very common in home care. What’s the update here? First, let’s just talk about the non-compete ban at large and legal challenges, and then maybe we’ll dive deeper into other aspects of it.
Spinola: Basically, what’s happened is the FTC, the Federal Trade Commission, has issued a ban on non-competes. This was a Biden initiative. He’s been talking about it for a long time. I honestly didn’t think it was going to happen, so you have to take my prediction with a grain of salt as well. I thought the FTC would punt on this. They punted last year on the vote till April of this year.
I thought they would punt again and wait until the election because I think they took a real political risk in trying to do something so sweeping as ban non-competes, effectively, for everyone other than highly compensated executives retroactively in an area where this is the state’s domain. The states have always addressed non-compete law, and never the federal government, and we’re seeing more of that. CMS is looking at doing that, as well for facilities where they’re receiving government funds to eliminate what they call TRAPS, trading repayment agreement provisions, I think is what that stands for.
When you look at the FTC language, you look at enforcement provisions in, say California, Connecticut at a state level, the rulings and the positions are going beyond just the traditional non-compete agreement into client service agreements that have direct hire provisions or penalty provisions not allowing the client to hire the caregiver away. That’s a big concern about what the FTC is doing is that they’re going to take that position and apply the term non-compete very broadly. If you look at the language of the final rule, it absolutely suggests that’s going to be their enforcement position.
The good news, as you mentioned, is there is some litigation challenge to the FTC. It seems to me, and again, take it with a grain of salt, I haven’t read or seen many lawyers that are willing to predict what they think is going to happen. We know this, it’s going to happen really, really soon because the judge in the litigation that’s challenging the FTC has said that before July 3rd, there will be a decision on whether or not the rule be enjoined, at least at the district court level.
If it’s enjoined, that means that it doesn’t apply to anybody until the litigation is concluded. Normally, when something is enjoined, that’s a real suggestion that at least at that level, that court is going to invalidate the rule.
My view is that that’s probably what’s going to happen for a couple of reasons. No.1, this is state domain, not federal domain. If it were federal domain, it’s so significant that it should be something that goes through Congress, and actual rulemaking and legislation, not through a branch where there’s really no way to stop them from doing what they want to do, other than this litigation.
My view is that it gets enjoined, it gets stricken at the district court level, and then it gets appealed by the FTC. It may turn out just like some of the prior Obama initiatives, like the salary increase. If you remember, the salary levels were going to increase to $47,000 many years ago. We actually brought litigation on behalf of several associations to challenge it.
At the district court level, we were successful. The Department of Labor appealed that, and then Trump won the election and they withdrew their appeal. Eventually they split the baby and moved salaries up to what they are today, 35 and change. Now, they’re at it again under Biden. I think with all the things that we’re looking at and talking about, there’s litigation in nearly every arena around independent contracting, salary level increases, joint employment. There’s litigation challenging just about all of it. Nothing yet on 80/20, but I would expect that may be coming. It’ll be interesting to see, if we do see a change in administration, how many of those initiatives continue, or are they withdrawn for some other less obtrusive option. That’s my thought of what happens at the FTC stage, at the district court stage with the non-compete ban.
Tim, I’m curious, are you more concerned about executives and how they could leave, jump to other agencies, or are you more concerned about those direct hire clauses?
Hanold: Sure. I think Angelo approached the question well and the topic well. It is something that, for example, it was that the FTC voted three to two, so along party lines. We’ll see what happens here by July 3rd.
I’ll start with maybe the first piece, in regards to executive senior leadership.
When I think about execs jumping, and we’ll see a forecast, a spike of that, I don’t believe so. Regardless of the covenant, I just think people are attracted to, and want to pursue purpose-driven work in settings that are conducive to do it.
We’re in a place where, especially when talking about leaders, executive leaders, senior leading teams that essentially strike the right balance on some motivation and accountability. If an exec is solely staying at a job because they’re tethered to a non-compete, I can’t imagine that’s a really productive situation for either party, the company, or the employee.
There are certain covenants whenever it comes to the selling of a business and some of those things and maybe the quantum that goes along with that, where these things will have, even regardless of what happens here, real durability.
The point around direct hire clauses, that would, for me, probably be more so a concern that’s less controllable. I know that those are things that we responsibly have in our agreements, especially for private pay. That is something that could
create some issues for certain, considering how much time and energy we put into our professional caregiver workforce. I’ll be intently watching to see what happens there, but there’s a time training development that goes into our caregivers. I think we should be able to retain that value.
Angelo, do you want to jump in and add anything to that?
Spinola: I think that hit the nail on the head. Regardless of what happens with the FTC, we continue to see more and more regulation into the ability to use non-competes, and restrictive type agreements with employees. The analysis that the courts typically take is the design to protect your business. If it’s to protect your business, your trade secrets and confidential information, your pricing, things like that, and you’re simply protecting that and the employee can’t take those things to a competitor, that’s in-bounds.
If the restriction is on the individual’s ability to have a career in the area that they know, in the industry that they know or the place that they live, there’s more and more scrutiny into those agreements, however they look. I think it’s insane to try to apply that to a client service agreement when you’re the agency, you’re vetting the worker, training them, doing the background screening, you have all the costs for marketing, and you put caregiver and client together, and then the client can just hire that caregiver away.
That’s the position right now in California and the Department of Justice is out fining businesses for enforcing those provisions, or even having those provisions in their client service agreement, which is crazy. You’ve got providers taking those out. In some cases, notifying clients, ‘Hey, you had this provision in your agreement, it doesn’t apply to you,’ because they don’t want to be fined by the DOJ, which by the way could be up to $5,000 per term in an agreement. If you got 100 agreements, you do the math. It’s a lot of money.
We’re seeing naturally, as you would expect, clients taking the caregiver away and there being no remedy. That makes no sense to me. There’s some work to be done there. I would expect that that California position is going to be challenged before too long. In general, I think that the philosophy of an agency should be — make your platform so attractive that people don’t want to leave because the ability to restrict them is becoming less and less of an option for you.
Tim, across state lines, do you have to be more sensitive with this subject, in one state versus another right now, or is that something that you haven’t seen materialize yet?
Hanold: We have not. I guess just whenever it comes to running the business, our covenants for leaders are consistent. We’re also, I guess fortunate to be in a pretty tight geographic region. We don’t have those swings. We do not provide care in California.
Spinola: Tim is absolutely right that the rule and in general, these laws do not protect an individual who’s selling their business. When it’s an arm’s length sale, you can utilize those type of restrictive covenants. I know there’s a lot of acquisitive folks on this call. That’s an exception to the rule. We’re really talking about agreements with employees, independent of a sale of a business.
Moving back to 80/20, Tim, knowing that there’s six years before implementation, and knowing that people like Angelo are telling us there’s most likely going to be legal challenges, how do you prioritize getting ready for the 80/20?
Hanold: It does seem like something that is pretty far out on the horizon. That being said, I think just generally, I touched on this a little bit earlier, but whenever it comes to the 80/20, it is about the scrutiny of the profitability of a home care provider.
Then also, just in general, there’s things I agree or disagree with, but in general, it’s just progressively running a smarter business. Whether we’re talking about home care, or any other industry, you’re going to have these pressures. For example, the way we run our business is whenever the 80/20 rule came out, and then whenever the final came out, it did not change the course about how we’re going about our business plan. For me, that’s volume, rate, and OPEX. Volume, really the 80/20, if anything, underscores the need for density in your core markets and to pursue expansion, at least for us and our appetite around M&A and de novo.
Scale is a must. Volume, that then tags to 0.3 OPEX, which I’ll touch on in a second. Then rates have to be really good. There’s a number of groups within the home care landscape that do that really well, but everyone has to have a voice on this. You can point to keeping states honest on access to care. According to the rule, CMS is requiring states to report out on waiting lists in regards to the 1915(c) waiver.
Those are things that we can arm ourselves. When we’re talking to the General Assembly at the state level and the administrations and governors, it’s like this is something that is coming and something that we have to ensure that we’ve got a place where we can afford stability, and not just that, but also we can do things that are innovative because we are the safety net for the community — for the frail, for the elderly, for the disabled. We can keep people safe and happy at home.
Then third, what I was talking about is OPEX. It’s like an MLR for an MCO, this is equivalent for home care. I spent time whenever I was working at Humana, and the way that we went about just managing those cost structures, that type of thinking is also, we’re going to have to bring to the way that we operationalize our business. Obviously, it’s the membership and the census volumes can be very different there that goes back to point one, you got to go scale, you got to go be of size, but also look for where are things that we’re doing manually right now, we can automate, and then leveraging technology to support and enable those consumer facing.
Tim, you said safety net for the community. Do you think that those safety nets may go away, particularly in states where there isn’t rate adequacy and smaller providers don’t have that scale?
Hanold: That’s a real potential consequence anywhere. 100%, the safety net is essentially only as durable as the rate adequacy that goes with it.
Essentially, it creates both a number of different points, or issues for a general assembly or who’s looking at funding or where those dollars go to. You’re not funding the safety net of HCBS, then you’re going to have to build some more nursing homes.
Absolutely. Angelo, anything to add there before we move on?
Spinola: Only that I think that the fact that 80/20 has a six-year window has gotten some folks complacent. It reminds me of a show on Netflix called Three-Body Problem, where these aliens are coming and they’re 400 years away. It’s like, do you care? Some people care, some people don’t care. I’ll be dead by then. My kids will be dead by then.
I think that some folks, they’ve taken their foot off the gas. We’ve seen changes already in 80/20 from what was proposed and what was final. For example, training, the cost of training and supervision was at one point in that 20%, and now it’s excluded from it. That needs to continue for us to be effective. We have to speak with one voice. Everybody’s got to get involved. I do think that if we do that, and handle our business, where we end up and what is actually implemented is going to be very different, hopefully, than what we see today.
Let’s move on to dealmaking. There’s a lot of scrutiny around dealmaking. What’s your take on the environment for M&A right now? Obviously, it’s been down for a couple of years now. Do you think that has to do with the scrutiny, and do you think that’s going to ease up at a certain point?
Spinola: I think that’s probably a factor, but not a significant one. You’re talking about the mega deal. Even there, I think that is more of a nuisance. Amedisys Inc. (Nasdaq: AMED) will probably have to divest some of their offices. I think we’ll see that in the news sometime in the near future. At the end of the day, United already has 10% of home health car. e That’s about what it would be with this deal. To me, that’s not the news. There are headwinds in every arena.
For personal care, it’s the increased labor costs. With home health, the reimbursement cuts. For each area, you’ve got an issue. You’ve got the 80/20 issues for the Medicaid group. What we’ve seen is that a lot of our clients are yin-ying when others are yang-ying and wanting to take advantage of some of that disruption. The main thing is the interest rates. That’s what most folks will tell you.
Then the white-hot 2021 and those multiples, I think sellers are just now sort of readjusting to the new world. That we’re not in ’21 anymore. What I’ve heard is from the banks and those who are closer to the ground, there’s a lot more prep activity with sellers, getting their house in order, and those types of things. We’ve seen a few things break in the last few months. HouseWorks acquired AccordCare’s personal care division in Connecticut. We just saw Addus HomeCare Corp. (Nasdaq: ADUS) get Gentiva’s personal care division.
There’s been some pretty significant movement, and that’s what I think will happen towards the end here of ’24 that we’ll see the market return, not to ’21 numbers, ’20 numbers, but a certain uptick. That normally happens towards the end of the year anyway. The back half is always more active than the first half. There has been a little bit of a lull, but I don’t anticipate that lasting much longer.
The other thing I think that has to be addressed, and maybe Tim can talk about this, is you may want to do a deal, but who’s available to you? When you look at the type of transaction that the bigger providers and the strategics and the PE firms would like, what they’re targeting, there’s not a ton of that inventory that’s available where you’ve got a $10 million revenue agency that actually wants to sell. I think everybody’s seeing the same tailwinds. We’ve talked a lot today about headwinds, but everybody is also seeing where our industry is going and the need for what it is that we do, and understanding that it’s only going to get better and better.
As you continue to invest in your own business, it will continue to grow and become more valuable as our population ages. There’s a lot of desire for a lot of our clients on the sell side to hold and wait, let’s hold out and grow it back after COVID, and exceed where we were prior to the COVID years, and then think about maybe an exit strategy.
Tim, I know one thing that Care Advantage does is arrange different sorts of agreements with sellers to make them feel comfortable coming on board now and getting creative. One seller may want this, one may want a completely different thing to make them feel comfortable. Can you explain how you’ve gone about that, especially over the last few years?
Hanold: There’s different strategic reasons for investing in different types of home care companies, whether it’s the team that comes with it, the leadership team, the geographic presence, different types of contracts and agreements and specialty arrangements, pay for performance, you name it. Anyway, it’s a mosaic of different things that equates to the value of a company.
That can be different from one buyer to the next. This is something, and again, it’s not just in home care, but whenever it comes to M&A and acquisitions, companies that bring real distinct value have run their shop the right way, really tight on compliance, have a very durable, organic engine. You can see that both on client, and caregiver acquisition, those companies will get paid appropriately.
Then for other companies where maybe it was a difficulty going through COVID, and maybe a slower time getting volume back and showing those organics or just being able to deliver on good caregiver retention and some interesting programs that go along that within your business, those are ones that are probably taking time to tighten things together, stitch things together the right way, and then being able to come back later and go to market. We’re not in the era of ZIRP anymore, the zero interest rates. Good, smart money is going to be really diligent at how they go out, and about and use it.
To your question, what is the motivation of the seller matching that up? Culture matters a lot. Then from a financial perspective, to get people where they need to be, there’s earnouts and there’s other different types of mechanics and mechanisms that ensure that with performance, that people get paid appropriately.
Just to end this call, on a brighter note, we’ve talked about a lot of the headwinds. Is there a tailwind, is there a regulatory piece or legislative piece that you’re really happy about?
Angelo: I’m very excited to see, hopefully, some PAGA reform, Private Attorney General Act reform in California. That has been an absolute nightmare for providers in California. Governor Newsom has been working with some of the business leaders and associations in California to create some regulatory modifications that will make this significantly better for employers.
There are literally thousands of these PAGA suits. It’s basically an end around class actions. You can avoid class actions in any state with an arbitration provision, the right arbitration agreement, certain kinds of class actions like wage-hour class actions, which are so prevalent in our industry, except for in California, because of these PAGA claims. There was a ballot measure on the docket that we didn’t think was going to pass, but it looks like instead of that, we’re going to see some legislative reform, which is very, very much needed.
Hanold: I’ll just say in general, any type of legislation that is something that, essentially, takes a look at fraud, waste, and abuse, and continues to prune out bad actors is excellent for the industry. 99 out of 100 providers that you’ll have a conversation with are really doing this thing for the right reason, purpose-driven, going about this the right way, and really doing something special.
Anyway, when regulation design helps with that, and helps to elevate the state of good actors and companies are going about doing it the right way, I’m all for it.
Anything else, I’d say it’s around whenever these things come through, like the CMS access rule, just be smart, be really as efficient as possible in your service delivery, be innovative outside of regular reimbursement streams, whether it’s paid for performance, value-based care, whether that’s direct to a payer or CMS 2030, that vision is risk-bearing entities like ACOs and so forth. I feel really bullish on our industry because the outcomes are there, the data proves it out.
Now, let’s just continue to make sure that we’re providing it, and selling that with a really comprehensive and smart approach.
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