Retention, rather than recruiting, has become the primary staffing focus for many home-based care organizations.
And that’s for good reason. Retention leads to better outcomes, less costs associated with recruiting and positive feedback loops.
Addus Homecare Corporation (Nasdaq: ADUS) has its turnover rate all the way down to below 55%, a massive improvement from the days when the company had a turnover rate near 70%, for example.
However, at just below 55%, Addus CFO Brian Poff doesn’t believe there’s a ton more room for improvement, given the realities of the personal home care industry.
“Last I saw, we’re just a little below 55%,” Poff said Wednesday at the Raymond James Annual Institutional Investors Conference. “So, we’ve gotten a little better. It used to be up to 65% or 70%. I think the industry has come down [as well]. I don’t think there’s a lot of room for improvement there.”
The Frisco, Texas-based Addus provides personal care, home health care and hospice care, but personal care makes up the great majority of its revenue. Overall, the company provides home-based care services to about 46,500 consumers through 202 locations across 22 states.
The home care industry has seen turnover rates come down from highs in 2018, according to data collected by the researching and training company HCP.
In 2018, the industry rate reached nearly 82%, but fell to around 65% in the three subsequent years. Even at that number, Addus is still far lower than the industry average.
Elsewhere in staffing, one aspect that has changed since the onset of the pandemic has been the ability to train workers virtually. Companies have invested in virtual training, but states have also allowed providers to do so.
“One of the things the state has allowed companies like ours to do is train [through technology],” Poff said. “[During] the pandemic, we’ve been able to train remotely with Zoom and otherwise, which we hope we’ll be able to continue. Because trying to get people in a central location to train them at times can be difficult. But each state has its own thoughts on training.”
While a client may be, on average, 75 years old or so for a company like Addus, its average worker is anywhere from 50 to 52. The latter is a little bit more technologically savvy.
Therefore, on top of stay- or sign-on bonuses, Addus has utilized some of the ARPA funds it received to invest in those online training tools.
Medicaid redetermination has been identified as a possible – and possibly major – headwind for providers like Addus that work in Medicaid-based business.
After all, the amount of Medicaid-eligible Americans ballooned during the public health emergency, primarily due to two factors: rolling eligibility and the financial impact of the pandemic on individuals.
Now, with redetermination requirements restarting on March 31, less Americans will be considered Medicaid eligible. Thus, the client base theoretically will fall for providers like Addus.
But the company is not concerned about it.
“When states expanded their Medicaid, it really didn’t add a lot of business for us because all our elderly patients are already qualified,” Poff said. “So we didn’t see a lot of upside from [rolling eligibility], and we don’t see a lot of downside with the return of redetermination from the standpoint of losing revenue.”
The end of rolling eligibility could also reduce costs for states.
Addus leaders already said during the company’s fourth-quarter earnings call that the states they operate in are in a better financial position now than they were prior to the pandemic. A smaller number of beneficiaries could be an additional financial tailwind for some of those states, Poff believes.
“What we do believe you could see from redetermination is, as states’ Medicaid [lists] get smaller, the cost of the Medicaid program will be less for each state,” he said. “So we believe that has a potential to bode well for the state’s ability to continue to pay their bill.”