Personal care offers expansion opportunity
But watch staffing challenges and slim margins
Aging demographics suggest a large and ever-growing senior services market. The statistics speak for themselves:
· In 1996, 13% of Americans were aged 65 or older. This percentage will increase to 20% by 2030.
· 67% of older non-institutionalized persons lived in a family setting in 1995; 30% of these individuals lived alone.
· In 1992, 54% of the older population reported having at least one disability that limits them in carrying out activities of daily living and instrumental activities of daily living. The percentage who need help with activities of daily living rises sharply with age, from 2.3% for those aged 65 to 69 to 20% aged 85 or older.
· In 1996, 40% of family households headed by someone aged 65 or older had income $35,000 or higher.1
Such numbers make senior personal care a very alluring business opportunity for private duty providers. (See Private Duty Homecare, February 1998, p. 21.) But it presents some of these unique challenges providers should carefully consider when planning such services, sources advise:
· Different service orientation.
While personal care and skilled care are clearly both customer service businesses, there are important differences, sources say. Skilled home care is a medical model where patient-customers are sick and the home care company seeks to cure or restore the person's health status, says Molly K. Miceli, chief executive officer for LifeStyle Options Inc., a Schaumburg, IL-based personal care company. This requires certain parameters in terms of the timing, frequency, and nature of services.
Alternately, personal care is a social model where the client calls the shots. "Your role is to make [the client] comfortable; help [them] stay home. If they don't want to get up until 10 a.m. or they don't want to eat breakfast, [that is their decision] and you must structure services around their needs," says Miceli. This translates into a level of flexibility that private duty providers may be unaccustomed to.
For example, a personal care provider suddenly can become the best friend of a hospital discharge planner who is arranging a late Friday afternoon discharge. He or she must get out of the hospital a patient who requires support but does not have skilled needs. "They know we have an extensive caregiver pool and can provide good service [on the spur of the moment]," says Marcia R. Melincoff, marketing manager for Special Care, an Erdenheim, PA-based special care company.
· Significant staff recruitment and retention challenges.
"Unfortunately, the people who [provide special care] are not valued financially, so getting people to do it [is a real effort]," says Melincoff.
Miceli concurs. "The greatest challenge [to this business] is getting the right people to do the work. They must enjoy it because the money isn't that great."
Finding personal care workers is no easy task. A tight and dwindling labor market adds complexity. "Our recruitment plan is pages long," says Miceli. LifeStyle Options targets, among others, church groups and mothers returning to work. Certain Special Care offices only consider potential workers referred by existing employees, says Melincoff. Agencies that place want ads heavily screen applicants.
Both Special Care and LifeStyle Options require previous caregiving experience. Often, this may not be formal work experience but rather caring for a relative or neighbor. LifeStyle Options also uses an internally developed attribute-based screening tool that assesses individuals' caregiving and compassion capabilities.
Special Care uses a rigorous screening process that eliminates 14 of every 15 applicants. The company also performs criminal background checks on all applicants and requires four professional references.
Retaining staff is another hurdle. Special Care works hard to match client needs with the caregiver's interests and skills. For example, a person uncomfortable with serving disoriented or confused people would not be asked to care for a client with Alzheimer's disease or known memory loss, says Melincoff. Special Care also allows caregivers to set their schedule, working the days and hours of their choosing.
LifeStyle Options offers benefits, part- and full-time employment, permanent and flexible full-time assignments, a career path, and a variety of bonus and reward programs, as well as extensive training to keep staff on board. (See related story, p. 90.)
· Slim margins.
With personal care services largely paid out-of-pocket, pricing is competitive and margins slim. "You can't make many mistakes," says Miceli. And while private duty providers "make a strong case for one-stop shopping, their cost structure may not be competitive," says Melincoff. Most of the companies' fees go directly to caregivers, with little left for benefits, supervision, and other overhead expenses.
Special Care's $10 to $12 hourly rates reflect its use of independent contractors in many locations. The company's live-in services top out at $120 per day. LifeStyle Options bills in fifteen minute increments in certain situations, such as retirement communities, to help with affordability. Both Special Care and LifeStyle Options work with bank trust divisions and insurance companies.
Although long-term care insurance is growing, it now accounts for only 2% of LifeStyle Options' payer mix. Some corporations also partially fund special care services as part of their employee assistance programs to help workers deal with aging parents' growing care needs. However, with such limited third party reimbursement, the service is largely for middle and upper income seniors.
Special Care has a nonprofit foundation that, on a short-term basis, assists qualified individuals who need care but can not afford it. Foundation-funded clients are usually waiting for a nursing home placement or are on a roster for state funding, says Melincoff.
Despite its challenges, personal care can be profitable and rewarding. "It's a challenge, but what isn't?" says Miceli. "If we do this correctly, we may have options when we're older."
Reference
1. U.S. Administration on Aging. Profile of Older Americans: 1997. Washington, DC; October 1997.
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content