Retail Overstaffing, Rising Inflation and Disappearing Mandates: What’s Improving the Labor Crisis in Home-Based Care

In mid-May, I stumbled upon a story.

I had been talking to providers for other assignments when I heard a few of them mention off hand that the staffing situation for their companies had gotten better.

Some had reasons why they believed that was turning, while others didn’t offer anything but gratitude that it was. Once I had one or two of those testimonials, I went back to more providers, and then I went to staffing companies as well.

What I ended up with was this: For one reason or another, the staffing situation – both in home care and home health care – has generally improved over the last four months or so. Specifically, providers were referring to the previous 90-day period as to when things began to turn.

I wrote about the tailwinds in May I’m now digging in further to find out if those tailwinds are here to stay – at least for the near-term future.

In this week’s exclusive, members-only HHCN+ Update, I dive into what I’ve found and explore what could be contributing to a better staffing situation for home-based care providers of late.

The 90-day period

There were no leading questions. I was only asking providers if they had experienced any change in their staffing situations in recent months.

“We’re tracking our workforce total counts, new applicants and new hires on a weekly basis,” BrightStar Care CEO and founder Shelly Sun told me last month. “And I think in the last 90 days, we’ve gotten better.”

BrightStar Care is a Chicago-based home care franchise company with over 350 locations across the U.S.

The Visiting Nurse Health System (VNHS), based in Atlanta, is a mid-sized provider and offers home health care and hospice services. Here’s what its CEO, Dorothy Davis, had told me a week before I talked to Sun.

“It’s the best 90-day staffing stretch we’ve had in three years, since before the pandemic,” she said.

Then, take the San Antonio-based home care provider Caring Senior Service, which had dealt with major staffing struggles during the pandemic.

“We’ve managed a hub here in San Antonio for multiple of our locations, in which we receive applicants,” Caring Senior Service CEO Jeff Salter told me days after I spoke to Sun. “We have seen that those numbers dramatically increased through the first part of this year. It was tough going through most of 2021. We saw, definitely, a decrease of applicants. We’ve seen a large volume increase in applicants in the last three months alone.”

That last three months, of course, fit into that 90-day period once again.

Then there was the conversation I had with Todd Walrath, the CEO of the post-acute care staffing company ShiftMed, around the same time.

“I was looking through some numbers, and we had these workers who downloaded our app in 2019, okay? And we had 350 of those workers that worked their first shift last week – who, again, had downloaded the app three years ago,” Walrath told me. “That supports the idea that people are like, ‘Hey, I’ve got to get more earnings here.’ I would have guessed that number would have been 10 or so, for that group. But it was 350.”

Why the last 90 days?

In the previous story I wrote, I hypothesized that there were at least two contributing factors: inflation and the end to travel-nursing utilization as we knew it during the height of COVID-19.

Inflation, as in, workers needing to pick up extra shifts or go back to the workforce entirely because of the price of gas, food and other everyday items.

The rising price of goods is common throughout time, as is some level of inflation – around 2%. Even a bit more than that – around 5%, like the levels we saw toward the end of last year – may go unnoticed by a lot of consumers.

Past that though, where we’ve gotten to at the beginning of the second quarter and on, is where it really starts to become a problem for everyday Americans. And it is especially a problem for lower-income citizens, which is the class of workers generally in the home-based care workforce.

The federal reserve has obviously made adjustments to interest rates and the Biden administration is doing what it can to address inflation levels, but a fix will not come overnight.

“I mean, we are very pleased to have the success we’ve been having,” Davis told me. “But, you know, I think, certainly, inflation has something to do with it. … We’ve even been hearing about that from our employees, just the pressure that puts on them. And also with contract [work], I think people are just tired.”

The popularity of travel nursing is undoubtedly waning, which is directly tied to COVID-19 wreaking less havoc on health systems. After a peak from the Omicron variant in early 2022 due to the sheer number of people that were being infected, hospitalizations have once again leveled off.

That means less demand for travel nurses. Meanwhile, less government funding to hospitals for COVID-19-related surges means less pay for those nurses.

But that won’t mean immediate tailwinds for home-based care providers, as travel nurses were paid far more than home-based care workers.

“The real big kicker is the pay,” Matthew Mawby, the co-founder of the full-service health care staffing company StaffHealth, told me. “I think the average median salary for a home health care worker is right around $14 an hour. And then some of these health care workers are getting $20 or more working at facilities. It is even more for travel nurses.”

At the same time, home-based care workers that have gotten increased rates through contract work – which has also significantly hurt the bottom line of home-based care providers – are showing signs they are exhausted.

The mental toll that contract work has put on them has led to a trend of workers wanting to find a permanent home, as Davis and others have told me.

Other factors

What I’ve found since my travel nursing-inflation hypothesis, however, is that there are many more factors.

For one, COVID-19 vaccinations are no longer a pressing issue. Either employees have gotten vaccinated and complied with mandates – or the mandates they were once evading no longer exist.

Child care will become less of a concern, too, when children are finally back in school – in-person – in late August and September.

But there is also less demand elsewhere.

Ask any home-based care leader where their biggest competition comes from for labor, and they are unlikely to point to each other. Instead, they point to retail or fast food – industries that may not offer more meaningful work, but can offer a very meaningful extra couple of dollars per hour.

Well, it turns out that two of the biggest retailers in the country – Amazon (Nasdaq: AMZN) and Walmart (NYSE: WMT) – overhired late in 2021 and early in 2022.

While they initially could not hire enough workers, either due to increased demand or Omicron-related pressures, both have now tapered off hiring.

And that decision-making timeline from those two retailers almost matches up exactly with the timeline we’ve been discussing.

“As the [Omicron] variant subsided in the second half of the quarter and employees returned from leave, we quickly transitioned from being understaffed to being overstaffed, resulting in lower productivity,” Amazon CFO Brian Olsavsky said during the company’s first quarter earnings call.

Likewise, Walmart CEO Doug McMillon said during a first quarter earnings call that the company experienced weeks of overstaffing later on in Q1. Both companies lost money due to this overhiring, and both have adjusted their strategies subsequently.

For home-based care providers, this could also mean hundreds of thousands of workers may be finally landing back into the home-based care workforce.