FirstLight Eyes Risks, Rewards of Operating in Hawaii

Hawaii may be a vacationer’s paradise, but it’s also, perhaps, one of the toughest states for home care franchises to take off.

An unemployment rate well below the national average makes finding caregivers even more difficult than on the mainland United States, while the Aloha State’s often rural and mountainous landscape can also make it laborious just to visit patients in their homes. Plus, it doesn’t help that Hawaii boasts the highest cost of living of any U.S. state.

Cincinnati-based FirstLight Home Care, a national non-medical home care franchise company that serves more than 4,300 clients in nearly three dozen states, is aware of Hawaii’s unique challenges, but still plans to open its first location there later this summer. The planned office, located in Honolulu, will be owned and operated by Oahu residents Lauri and Scott Topping, who moved to Hawaii in 2011.

“Getting caregivers is generally difficult,” Scott Topping told Home Health Care News. “One of the biggest challenges right now is that our unemployment rate in Hawaii is 2%, so you can imagine the competition for caregivers with that added dynamic.”

FirstLight has been in operation since 2010 and has more than 160 different owners overall, roughly a third of whom own and operate locations in more than one territory. The network provides about 93,000 hours per week of care, with the the typical patient receiving 22 hours of care per week.

The move into Hawaii comes during a major expansion push for the franchisor. FirstLight added 51 new markets and 20 new locations last year. It plans to add up to 60 additional locations throughout 2018.

“As we looked at Honolulu and, quite frankly, the rest of the islands, we found the demographics very appealing,” Bill McPherson, executive director of franchise development at FirstLight, told HHCN. “We looked at the number of seniors, the aging population, and we also looked at [individuals with disabilities] by age group because, at FirstLight, we provide care for anybody who’s over 18 years old.”

Husband and wife Scott and Lauri Topping will split ownership of their FirstLight franchise 49% to 51%, respectively.

Low unemployment, high costs

Findings caregivers is widely cited as the No. 1 challenge for any home care provider, as the number of direct care workers in the labor force is insufficiently growing to meet demand for their services.

Largely driven by the aging baby-boom generation, employment of home care aides is projected to grow at least 41% through 2026, much faster than the average for all other occupations, according to U.S. Bureau of Labor Statistics. Fewer women are entering the workforce, though, and those who do are more likely to pursue a professional career following college, according to Pew Research Center. An improving economy, too, means there are fewer job seekers out there for home care franchises to recruit and hire.

Those factors are only magnified in Hawaii, Scott Topping said.

“It’s just going to be tough,” he said.

And even if the Toppings are able to successfully recruit caregivers, Hawaii’s high cost of living means they’ll have to be extra diligent to retain them. On average, it costs more than $1 million to buy a home in Hawaii and close to $3,000 a month to rent an apartment, according to the Council for Community and Economic Research. Honolulu, in particular, is a pricey area.

The Toppings, who will graduate from FirstLight’s franchise training program on June 20, hope to hire and keep staff by offering attractive wages and fostering a desirable work environment, they said. They have not yet begun recruiting efforts, however. Several industry studies have repeatedly identified caregiver wages as the main cause of turnover, with employee satisfaction cited as an important factor as well.

“Hawaii really embraces the Aloha spirit,” Lauri Topping told Home Health Care News. “That’s something we really plan to execute on and not just talk about—treating employees with respect, holding them in the highest regards and taking good care of them.”

From an operational standpoint, working around Hawaii’s high cost of living is similar to how FirstLight franchises operate in states with demanding minimum wage laws, McPherson said. Franchises may have to offer higher wages, but margins will likely remain steady, as consumers are willing to pay more for home-based services.

Hawaii consumers are also partially supported by the state’s Kupuna Caregivers Program, which gives eligible families up to $70 per day to help pay for certain in-home cases services, he said.

“We actually see similar types of operational challenges elsewhere, such as the state of Washington, where the minimum wage has risen pretty starkly compared to other sates in the past 12 months,” McPerson, who works out of Dallas, said. “And what we’ve seen in other high-cost markets—New York, Chicago, San Francisco or [Los Angeles]—is our owners, across the board, have maintained 90% to 100% margins. … So far, what we’ve researched in Hawaii is it’s like what we’ve seen in these other high-cost markets, and the reason is, overwhelmingly, people want to stay in their own home.”

Hawaiian market 

Life expectancy in Hawaii has consistently hovered around 82 years of age, state researchers have found. So, if Hawaii has one good thing going for it from a business perspective, it’s the fact that many of its residents live long enough to need to types of home-based services FirstLight offers.

Additionally, while demand is high, relatively few franchises have taken advantage of the strong demographics, meaning ample opportunity exists compared to other markets that are saturated with home care providers.

“I know [Hawaii] has a fair amount of mom-and-pop [providers], but, even so, it’s much less than some of the markets we would see on the mainland,” McPherson said. “You don’t go into any market here on the mainland with less than 40 players in a territory—and some markets, like a large metro area, might have 70 or 80 home care competitors.”

Hawaii’s Office of Health Care Assurance currently lists 14 home care providers operating in Oahu.

Geographic challenges 

Hawaii also poses geographic challenges that are somewhat unique to the islands. Ongoing volcanic eruptions on Hawaii’s big island since May 3 have destroyed dozens of buildings and forced the evacuation of thousands of residents. The Toppings, located more than 200 miles away from the heart of the activity, have fortunately been unaffected, they said.

“There’s not much risk or really impact for us because we’re in Oahu,” Lauri Topping said. “But it’s definitely on everyone’s hearts and minds, knowing people who have lost homes and have had to pick up and leave. ”

The Toppings may not have to worry about volcanic activity, but they do have to deal with other geographic barriers. Their part of Hawaii can be rural and mountainous, which can make it difficult for caregivers to get around or get from one patient’s home to another in a timely fashion. On top of that, it’s common for Hawaiians to not own cars of their own, they said.

To overcome geographic hurdles, FirstLight and the Toppings plan to open up satellite offices throughout the island, McPherson said. Additionally, the Toppings plan to leverage ride-sharing services such as Uber or Lyft.

“Some of the commutes here can be very long, so we have to be sensitive to that, too,” Scott Topping said. “Uber or Lyft will be part of the solution, but we also have to understand that [commuting dynamic] as well and kind of think about what’s the maximum [travel that caregivers] can realistically sustain.”

Written by Robert Holly

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Robert Holly
When Robert's not covering the latest in home health care news, you can likely find him rooting for the White Sox or roaming his neighborhood streets playing Pokemon Go. Before joining HHCN, Robert covered everything from big agribusiness to the hottest tech startups. 

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