Last week was the annual conference of the Home Care Association of America. There were lots of great components to the event, including our Association’s Caregiver of the Year award and my Support For Home co-owner and I presenting on our Flowers For Seniors non-profit program. I was also very proud to be elected to the national Board of Directors of the Association. As always, however, the most important part of these conferences is the opportunity to talk with our colleagues who are managing home care agencies around the country – and in our own state of California.
This year’s event was even more important than prior years’, due to what my co-owner calls “the perfect storm” that has hit the home care industry. Some of the components of that storm affect most businesses – such as the Affordable Care Act (ACA). However, even that hits different industries very unevenly. For example, the ACA says that any business with more than 50 FTEs (Full-Time Equivalent employee positions) is a large business, required to pay for medical insurance or pay a $2000 – $3000 non-deductible penalty per full-time employee. In my prior life, in high technology, 50 employees could definitely qualify as a large company, in my view, as it would likely be grossing $15M-$20M per year.
In home care, however, there are very, very few companies of that revenue size. The Small Business Administration defines a large home care company as one with revenues exceeding $7M. Still, there are only a few companies (perhaps 5%, according to the 2013 Private Duty Benchmarking Study) that reach that mark. In addition, non-clinical home care, in spite of what some folks think, is actually quite a low margin business. People who get into this industry thinking it is going to make them a pot of money usually get out pretty quickly. 🙂
Unfortunately, to the government, it does not matter what your revenue is or your profits – if any. There is just an arbitrary line in the sand, and it is your problem to figure out how to meet the mandate.
Still at the federal government level, in addition to the employer mandate for medical insurance, there is the loss of the overtime exemption for Home Care Aides / Personal Attendants. I have written about this issue and its very negative impact on the income of professional caregivers and on the costs to folks who need care. We have a bit of time to get ready, but, by itself, the pain to caregivers and families will be very, very real.
Added to those two federal back breakers, however, is what is happening in our own state of California. I will talk about those pieces of the perfect storm next.
In the meantime, best wishes. Bert