5. Invasion of Private Equity – The world of private equity capital is quite small, and word has gotten around that the in-home care industry is a great place to invest. They all want in. Major announcements have been made this year about private equity groups buying or investing in home care companies, home care franchise organizations, and home care software companies. A majority of the Top Ten home care franchise organizations are now owned by private equity groups and several of these companies have been bought and sold multiple times. The largest provider of in-home health care has become Humana, the giant Medicare Advantage Insurance company that now owns 40% of the country’s largest home health company, all of the country’s largest hospice, and is a significant provider of in-home private pay home care. Humana has made those acquisitions by partnering with two large private equity groups.
6. Growing Bigger Companies – The median sized home care company in 2017 was $1,600,000 in revenue. This is up only slightly from $1,544,000 in 2014. However, we are seeing rapid growth of companies in the top 10% of the industry. In 2012 we formed the $5 Million Mastermind Group with five companies. Today, that group is known as the Top 5% Group with 13 companies between $7 million and $40 million. Our Top 7% Group has 10 companies between $5 million and $12 million, and our Top 10% group has ten companies between $3 million and $6 million. These are all independent companies. We are also meeting more and more franchise agencies that are in excess of $5 million in revenue.
7. Conquering the Caregiver Crisis – The caregiver shortage along with increasing caregiver turnover continues to be the biggest barrier to growing a home care company. The larger companies in our industry are in a position where if they can get the caregivers, they can get the clients. Caregiver turnover hit an all-time high of 82% in 2018 according to the 2019 Home Care Benchmarking Study.
8. Attention to Retention – While recruiting continues to be important, caregiver retention and creating a corporate culture that makes an attractive place to work are the two major points of focus this year. We’ve learned that caregivers stay when they are doing meaningful work, when they feel valued and appreciated, and when there is a culture of attraction and accomplishment in the agency. Agencies are putting in place innovative strategies to reach out to caregivers and help them feel valued. Over half of the agencies in our Top 5% are working on crafting their corporate culture.
9. The $15 Per Hour Minimum Wage Movement – States and municipalities across the country continue to legislate higher minimum wages and this directly affects home care agencies and their clients. That, combined with the elimination of the Companionship Exemption for overtime means that most companies have been raising their rates to clients and still seeing gross margins being squeezed.
10. Readmission Reduction – Hospitals across the country are being penalized for unnecessary patient readmissions within 30 days of discharge. They are working on improving their readmission rates, and they are passing the pressure on to skilled nursing facilities. That pressure in turn is being passed on to home health agencies and private pay home care companies who receive referrals from Hospitals and SNFs. A small handful of home care companies have figured out how to earn a seat at the table to work with hospitals and SNFs on reducing readmissions and providing the data to prove it. We’ve discovered that the two biggest causes of hospital readmission are medication compliance and physician follow up … getting patients to take their meds and keep their doctor’s appointments. Who better to make sure those two things happen than a home care company?