(This is an op-ed written by Bill Shockley, CSA, COO, Director of Franchise Development for Ask-Carol Franchising LLC)
The cost of senior home care is about to go way up, making it less affordable for families, and creating a profit and quality squeeze for both medical and non-medical home care. Many won’t survive or will need to cut back on the quality of their services. After years of stagnation, assisted living is on the march again, as new facilities are being built. The surprise is that seniors love assisted living and few would want to go back home.
Want to know more? Read on.
The Senior Home Care Story
We all know that most rehab discharges go home, some with care provided by family members, some with medical home care and some with non-medical home care. And we know that if you ask a senior if they want to go home, the vast majority will say “yes.”
For those that can go home with little or no care, perhaps just a family member stopping by every day to check in, great! Nothing is going to change until the next crisis.
But for home care, both medical and non-medical, big changes are coming that may devastate that industry and make the choices for seniors much more difficult. Over recent years, non-medical home care in particular has blossomed, driven by the perceived desire of seniors to stay at home and the low cost of labor that made home care reasonably affordable. But both types of home care are in big trouble, and there is a death knell sounding that is likely to drive many of them out of business.
Senior Home Care Franchises Could Be Impacted
Why? Because of the upcoming $15 minimum wage. New York has already approved it and it goes into effect on a stepped basis over the next several years, a little quicker in New York City, and somewhat slower in Long Island. New Jersey appears to be next. Massachusetts and California are already on board. Washington D.C is on board. Right now, the average home care aide earns $11.07/hr in New Jersey and $11.23/hr in New York. An increase of $15/hr is a 35% increase! By the way, in New Jersey assisted living facilities the average wage for personal care aides is $13.50/hr, so the increases won’t hit assisted living nearly as hard, only about 11%.
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But any way you look at it, the wage increase over the usual rate currently paid to aides is going up, up, up. And this is on top of the new requirements to pay travel time and other benefits to aides.
It’s true that some families can afford the extra dollars in non-medical home care cost, but many will not or will need to cut back on the hours per week. For medical home care the outlook is worse. While the cost of labor is going up, there is no move underway to provide a higher reimbursement rate from Medicare and Medicaid. In fact, the rate and number of hours that Medicaid will pay for is going down for medical home care in states that have adopted managed care.
But even before the increase in the minimum wage happened, if you went to any healthcare networking meeting, you saw home care companies tripping over themselves trying to get attention, referrals and staff. The latter has already been difficult as much better paying jobs are available.
Assisted Living Facilities Are Ramping Up
That’s why the assisted living industry, which went through some slow growth years as home care expanded, is now salivating. Many assisted living operators are building new facilities, such as The Bristal, Brightview, and Brandywine. They know that the handwriting is on the wall for home care.
I recently did a study of the crossover where assisted living cost equals non-medical home care cost. The crossover was at about 40 hours per week. But that crossover is headed downward to about 30 hours per week. Good news for assisted living and bad news for home care.
There’s even better news for assisted living. Seniors who move into modern assisted living facilities actually like it better than home care! In fact, they like it a lot. Most of them wouldn’t want to go back home. Whenever I visit an assisted living facility, I ask a couple of residents if they think my Mom would like it there. Almost always they say yes. One recently told me that she fought going to assisted living for five years and deeply regretted it. She felt like she was now living in a resort.
We are about to undergo a sea-change in how our elderly parents are cared for. In fact, it’s already started.
At the end of the day, we all want what is best each family. Sometimes that’s not easy.
Do you agree or disagree that the death knell is sounding for senior home care? Want to add to the conversation? The Franchise King®, Joel Libava, was kind enough to open up the comment section below. I encourage you to weigh in.
– Bill Shockley, CSA, COO, Director of Franchise Development for Ask-Carol Franchising LLC