Providers Battle Declining Profits, Staffing Woes After Wage Rule

It’s no secret that new wage and overtime rules for home care workers have posed a business challenge to many agencies, but results from a recent survey translate that pain into hard numbers.

Out of 444 providers surveyed last month by satisfaction management firm Home Care Pulse, 62% said that the new rules were having a negative or highly negative impact. Nearly 30% checked the “highly negative” box.

Because the newly implemented rules state that home care workers now are eligible for overtime and minimum wage protections, it was anticipated that many providers would cut caregiver hours or reschedule shifts to control those costs. That has in fact happened, with nearly 68% of respondents saying they’ve cut hours and about 56% saying they’ve rescheduled shifts.

Another predicted effect: passing on additional costs to clients. About half of respondents have done so, by an average rate of $1.50 per hour or $55 a day for live-in care.

But the effects of the DOL rule—which officially took effect in October after a long battle in the courts—have not been uniform nationwide. States on the West Coast already were paying overtime when the rule took effect, and so were ahead of the curve. States in the South were facing the opposite scenario, though, and have felt the effects of the new rules most acutely. Perhaps because of that, providers from the South were the most likely to respond to this survey—they accounted for 26.4% of respondents, compared with 13.8% from the Pacific states.

Source: Home Care Pulse

Source: Home Care Pulse

Some providers who were well-positioned cheered the implementation, telling Home Health Care News that they would now have a competitive advantage over less-prepared agencies. But the cheerleaders are a modest contingent, according to the survey. Only 10.5% of respondents said the impact has been positive or highly positive.

But even among those previously mandated to pay overtime, many have taken a hit right to the bottom line. About 30% cited declining profits, with increased caregiver turnover, inconsistency in shifts and client loss among other impacts.

Source: Home Care Pulse

Source: Home Care Pulse

The survey mostly captured franchise and independent/standalone home care providers, which accounted for 92% of respondents.

Written by Tim Mullaney