Why Employee Tenure Can Make Or Break A Home-Based Care Deal

During an acquisition process, there are obvious boxes that need to be checked on the buyer and seller sides.

On the buyer side, that due diligence includes checks around financials, compliance and a whole lot of other numbers.

But one factor that can fly under the radar is employee tenure.

“Tenure is a very important factor in our decision-making process as we evaluate potential partners to become part of our Help at Home family,” Rich Tinsley, chief development officer of Help at Home, told Home Health Care News. “We value long-tenured employees at every level of an organization. Tenure definitely makes the acquisition more attractive to us.”

Home-based care leaders told HHCN that a company’s workforce — and collective experience and dedication — is playing an even larger role these days in M&A.

Employee tenure – both at the caregiver and back-office level – can be an indicator of a company’s stability, resilience and positive culture.

Based in Chicago, Help at Home has more than 180 branch locations across 12 states. It provides personal care services to more than 66,000 clients via more than 53,000 caregivers.

“Our company has an average client and caregiver relationship of 4-plus years, which is reflective of the importance that we place on tenure,” Tinsley said. “We focus on like-minded organizations that place the same amount of importance we do on supporting the caregiver. It’s a win-win at the end of the day, when you have purpose-driven and supported caregivers doing their very best to care for their clients.”

Culture isn’t something that is necessarily quantifiable, however. That’s what makes M&A deals so risky in certain situations. Tenure, however, can be a data point for buyers to look into.

“Strong tenure is an indication that there is a strong culture,” Kris Novak, managing director of home health, hospice, home care and pediatrics at The Braff Group, told HHCN. “It tells me that your staff is dedicated and committed. If they’ve stayed for a long time, clearly they’re aligned on what the mission of the organization is. Given what we do in home care, home health, hospice, pediatrics — the greatest asset is the people.”

The Braff Group is an M&A advisory firm that specializes in senior care dealmaking.

Before joining the firm earlier this year, Novak was the vice president of mergers and acquisitions at the Baton Rouge, Louisiana-based Amedisys Inc. (Nasdaq: AMED).

With his background, Novak has intimate experience talking to providers about culture and quantifying the value of a well-run organization. If the people are staying on longer more often than not, that could lead to growth and is a very attractive attribute for a buyer.

“If you have employees saying that they feel like they have meaningful work, are being developed and feel appreciated — in this labor environment — that’s critical,” Novak said. “The demand for services right now is clearly very strong. All organizations are struggling from a labor perspective and so that’s your biggest lever for organic growth: having clinicians that can take care of more patients.”

Good culture fit

Tinsley said that in his experience, tenure and compliance track records are two good indicators that caregivers and care supervisors will remain with Help at Home beyond an acquisition.

“That’s key for us,” he said. “We want to manage the cultural integration strategy so that it ensures a smooth transition from the two cultures to one cohesive culture that enables our employees to thrive. We believe that the caregiver-first mindset is the key to success. If that is woven into the company’s culture, it’s a great match for us.”

There is so much unknown that goes into deals. So, if a buyer can feel more confident in the culture fit before a deal is finalized, it makes a world of difference.

“When I get a deal book and an [agency] is highlighting how long their employees have been there, I immediately think, ‘This sounds like I’m going to be stepping into something that has a recipe for success,’” Avid Health at Home CEO Jen Lentz told HHCN. “Any company who values their length of employment — whether it’s office or field staff — means that they are looking at culture and that people want to stay there.”

Avid Health at Home is a home care platform created in conjunction with the acquisition of For Papa’s Sake Home Care by private equity firm Havencrest Capital Management.

Improved outcomes

Tenure isn’t just about retention, it’s also about the care that’s being provided.

“There’s always been a correlation between tenured staff and the quality of patient care that’s delivered,” Novak said. “Obviously there’s efficiency there because they’ve done it for a long time and they’re able to be really productive from a financial perspective. But even more importantly, typically a tenured clinician is providing excellent care. That’s going to lead to higher STAR ratings and better patient satisfaction.”

With all of those elements coming together, providers are able to tell better stories to referral sources, Novak added.

The importance of tenure is different based on the organization and based on the type of worker, too.

“Caregivers and the supervisors at the branch levels — those who touch the clients — are most important in smaller acquisitions,” Tinsley said. “As prospective acquisitions get larger, the branch administration and regional leadership tenure start to play a larger factor in a successful change management execution.”

That’s why, for providers looking to sell in the near- or long-term, it’s important to keep track of tenure and be as self-aware as possible about delegation and the hierarchy.