Clients Hiring Away Caregivers is a Growing Threat to Agencies

As the demand for home care continues to grow, a shortage of workers in the space is putting the squeeze on many agencies. And one rising threat is the number of caregivers who are turning their backs on being employed by a traditional agency, working directly for a family instead.

With median turnover in the industry reaching 66.7% in 2017, home care agencies can’t afford to lose caregivers to competitors, according to the recently released 9th edition of the Home Care Benchmarking Study from Home Care Pulse.

“One of the greatest threats is competition,” Aaron Marcum, CEO of Home Care Pulse, told Home Health Care News.

And more caregivers are being offered roles to work directly for a client instead of sticking with an agency or organization, the benchmarking study found. While privately hired caregivers were not the top threat to providers, more agencies are seeing this as an issue—24.4% of respondents said privately hired caregivers was a top-three threat to future business growth in 2017, compared to 18.6% in 2016 and 17.9% in 2015.

“One of the best things you can do as an agency is investing in the caregiver, in the training, especially for the ones that have been with you for a while,” Marcum said. “[Otherwise] the clients hire them away.”

One way to combat the threat is to implement a clause in a contract that will incur a penalty if caregivers leave the agency to work directly for a client or client’s family.

However, a penalty may not deter caregivers or clients; Marcum has heard of a client who paid $10,000 for a caregiver to work directly for them and circumvent the traditional agency.

“Clients may be prone to do that,” he said. “They probably saved a lot of money on the long term.”

These direct hire relationships do come with more risks for caregivers, including being “in charge of everything,” Marcum said, including managing scheduling and pay and figuring out what to do if a client dies or no longer needs care.

Top opportunities

Still, focusing on the employee is crucial, as having high quality caregivers was the No. 1 item that set providers apart in 2018, according to the study. Survey participants were asked what were the top three things that set their business apart from others when speaking with potential clients. Behind high-quality caregivers, 24/7 availability and exceptional customer service were frequently cited as differentiators.

A caregiver recruitment and retention program was also among the top growth opportunities in 2018, after strengthening relationships with referrals sources and expanding into new markets.

At the same time, caregiver shortages remained the top threat facing home care providers in 2018—78.7% of providers said this was the No. 1 threat, above 76.8% that said the same in 2017.

While pay is unsurprisingly tied to turnover rates, agencies with lower turnover rates tended to have a higher historical lifetime value of a caregiver, as well.

The historical lifetime value was calculated by the number of caregivers employed in the same year, multiplied by the average length of employment for the caregivers.

Written by Amy Baxter

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Amy Baxter
Assistant Editor at Home Health Care News
When not writing about all things home health, Amy fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."

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