Providers Cut Hours, Raise Fees to Handle DOL Rule

Home care agencies are cutting caregiver hours and rescheduling case loads in order to avoid paying overtime as mandated by the U.S. Department of Labor. The results are declining profits and increased caregiver turnover, according to survey findings from Home Care Pulse, a firm focused on research centered on satisfaction and quality assurance within the home care industry.

The survey, conducted in November, consisted of 10 questions focused on the impacts of the federal rule extending minimum wage and overtime protections to home care workers and included responses from 444 participants. Results initially were reported last month, and JC Weber, director of customer experience at Home Care Pulse, delved into them in a webinar Wednesday.

Among the survey’s participants, 67.8% indicated they were cutting their caregiver’s hours, and 55.5% noted they were rescheduling case loads to avoid having to pay overtime to their workers. Meanwhile, 50.2% said they were raising fees to cover additional costs associated with overtime, and 42.4% signaled that they were paying overtime to more caregivers than before. Only 8.3% of participants said they were making no changes.

The DOL’s provisions to expand the Fair Labor Standards Act to provide home care aides with overtime and minimum wage guarantees took effect Oct. 13, but the DOL didn’t actively begin enforcing the rule until Nov. 12, with full enforcement beginning Jan. 1. Prior to the October effective date, 43.8% had already been paying overtime, according to the survey.

The implementation of the rule and actions taken to handle it have led to some serious implications for the home health industry, according to the survey. Reduced profits were among the top impacts recorded in the survey, with 29.5% of participants indicating such an effect. Agencies have also been hit with an increase in caregiver turnover at 25.9% and client loss due to spiked fees at 24.5%, according to the findings.

Overall, an average hourly rate increase of $1.50 an hour was necessary because of the DOL rule, alongside an average live-in rate increase of $55.

While the survey painted a picture of a reeling industry, some home care companies are more circumspect about the rule and its effects.

Take Laurie Malone, managing partner and CEO of Golden Heart Senior Care in Scottsdale, Arizona.

“Some people are panicking and not managing,” she told Home Health Care News.

Malone and her husband and business partner Rodney, Golden Heart’s COO, wasted no time in responding after the DOL rule finally was put into place. Within two days, they had reconfigured shifts and met with clients to present options, which basically boiled down to paying more or cycling in more caregivers to split up the shifts.

The changes may be difficult in some regards, but they come with the territory, and all providers face the same mandate in this case, Malone said. As an MBA who has worked at GE Capital and done consulting for Procter & Gamble, she brings a certain perspective.

“There are going to be market conditions that are challenging,” Malone said. “I said, geez, if this is the worst market change we face, that’s great.”

Written by Kourtney Liepelt