The majority of the 3.6 million baby boomers retiring in 2016 have decided to age in place. This is creating an economic growth spurt in the home health care industry. Yet turnover rate by caregivers in this traditionally low-paid, high-stress environment is one of the highest rates in any industry (topping 60 percent in 2014), a rate that costs employers as much as 20 percent of the annual pay for every employee who quits.
A 2015 survey of more than 700 private home health care agencies showed that nearly 63 percent found caregiver shortages to be one of their top three threats to business growth. Turnover does not just impact home health companies—it prevents employees from advancing in their careers, and seniors face a revolving door of caregivers.
Why Do Employees Leave?
Low wages are a major reason home care workers leave. Workers in this field average $11 per hour, bringing home about $22,450 annually. In comparison, McDonald's employees will make more than $10 per hour by the end of 2016.
Prior to 2015, due to the Companionship Services Exemption of the Fair Labor Standards Act, employers were not required to pay workers minimum wage or overtime. Workers often drive long distances to clients' homes (often without reimbursement by the company) and routinely perform physically and emotionally demanding tasks. Even the ones with a passion for the field are likely to burn out and move on.
The High Cost of Turnover
A 2004 study showed that companies pay $3,362 (more than $4,200 in 2015 dollars) for each turnover. Turnover also causes losses in productivity and morale, as well as increased stress among the employees who stay.
Decreasing turnover rates is vital for stabilizing the industry. Not only does doing so save companies millions of dollars, but it also mitigates the caregiver-shortage threat and gives caregivers a chance at a career path.
Companionship Services Ruling
In September 2015, the Court of Appeals for the D.C. Circuit ruled in favor of the Department of Labor's (DOL) proposed changes to the Companionship Services Exemption that would mandate minimum wage and overtime pay for home health care workers. Industry trade groups have requested that the Supreme Court overturn the decision, saying it could potentially destabilize the industry and put home health care out of the financial reach of seniors who need it.
The ruling does not currently say how the DOL will move from educating companies to investigating alleged violations. As yet, no ramp-up period has been published, but there are signs that if a program is trying to comply, they will be viewed favorably. One thing is certain, though, companies will be hit with higher payroll costs, which will certainly have industry-wide impacts as the changes go into effect.
While the ruling is a good thing for caregiving employees, extending them basic labor protections they have long been due, it could impact the companies that caregivers work for and the seniors they care about. On the surface, the situation looks grim—but if you look deeper at staffing alternatives, you can see how such changes may benefit the industry in the long run.
Retaining Quality Employees
The solution to turnover seems, in part, to be paying home health workers higher wages. Companies who have already adopted competitive wage, overtime and benefits for workers have shown a turnover reversal—with some retaining up to 90 percent of their employees.
In addition to achieving higher retention rates, companies that pay caregivers more can attract better workers, improving care for seniors.
However, simply increasing wages is not enough. The key lies in creating a multifaceted approach, which includes:
- Offering competitive benefits
- Incorporating continuing education
- Allowing employees to work flexible hours
- Using software to match caregivers with seniors
The Benefit of Benefits
Benefits such as health insurance play a major part in employees' decisions to stay with a current employer. Benefits increase employee engagement and attachment and, when they are promoted, engagement rises.
A study by PHI showed that caregivers enrolled in their company's health insurance program had a higher retention rate than those who were eligible but not enrolled—56 percent as compared to 45 percent.
Health insurance is just one benefit companies can offer. Childcare, free food, health perks, retirement and stock options are others. Some companies are even starting to offer student loan payback as a benefit for young employees.
Most workers in the health care field are interested in increasing their skill levels, not only for reasons of personal fulfillment, but also as a way to earn a better wage. Offering educational advancement options to workers is a win-win opportunity. As an employer, you can place more highly skilled workers than non-skilled. You can also charge a little more for workers with advanced competencies and specialized skills.
For example, workers who complete an educational program on assisting patients with Alzheimer's are a better fit for those clients, and their loved ones are more likely to be happy with the caregiver, and thus your company.
Training and Matching
Many home health care agencies do very little screening beyond background checks. They may not check references or education, and even fewer do skills tests. Not only does this lack of screening lead to unhappy clients, but it also places workers in situations they are not equipped to handle.
A better plan is to create a system that treats every employee equally. Before any worker is sent to a client's home, they should complete a training process that introduces them to the company's policies, procedures, benefits and culture, as well as training on in-home care and privacy issues. Rather than screening out, think of it as screening in, meaning you value potential new hires and want them to succeed by finding the place they will be a good fit.
One aid to this is software that has a matching ability, which can be used like a dating site to pair a caregiver with a family or individual based on things such as a client's symptoms and personality traits. Matching workers makes it more likely that the caregiver will be a good fit with their clients. The better the fit, the longer the employee is likely to stay.
Building in Flexibility
Another reason many workers move on to other agencies is an inflexible schedule. Some employers promise a flexible schedule to lure employees, only to decrease flexibility the longer an employee stays. As the workweek grows longer and more employers demand we be reachable outside of office hours, flexibility becomes essential to happiness. In a recent study, Forbes found that employees placed flexibility high on the list of reasons to stay (or leave) their current company.
Tapping Into Motivation
Another powerful way to decrease turnover is to find out what motivates your employees. Develop an input form that asks what aspects of the home care field appeal to them the most. Do they like working with dementia patients or do they prefer to work with those with physical disabilities? Finding out each worker's preferences not only makes it more likely they will end up in a job they love, but it also shows you care and are interested in creating a respectful work environment.
With a booming industry and the changes to the companionship law, home health workers have better employment opportunities than ever—but that means your competition is also that much stronger. Brands that continue offering low wages, reduced training and inflexible schedules will be at the mercy of high turnover rates and diminishing levels of customer satisfaction. Companies that create programs to hire and retain the best caregivers will benefit. Not only are happy employees better employees, but they also exude a positive attitude that is picked up on by both clients and their families, so all parties win.