Home Healthcare: Seizing Opportunities in Family Caregiving
The family caregiving segment is growing rapidly, and with good reason. It’s convenient for patients, especially the elderly or those with disabilities or chronic conditions, as well as their families. Family caregiving also alleviates some of the labor pressures in the healthcare industry, and it closes a gap in areas with limited access to healthcare providers.
Many states offer programs that allow family members or friends to be paid as caregivers through Medicaid. The category exploded during the pandemic and the long-term outlook remains strong. Employment in this segment is expected to grow 22% between 2022 and 2032, according to the U.S. Bureau of Labor Statistics.1
But this is still a new segment. Each state has different rules and requirements for paid family caregivers, and many states that participate in the program are developing regulatory frameworks that could impact how current programs operate. For the home healthcare agencies that act as fiscal intermediaries in these programs, success depends on taking the right approach.
The game is changing
In many states, the family caregiver segment is growing so quickly that it’s been difficult for states to provide oversight. Quality of care and fraud have become areas of concern. In response, some states are tightening their controls over their programs. And after a pandemic-era boost in funding, some states are cutting back on programs that fund family caregivers or eliminating them altogether.
As this segment grows and states become more diligent in regulating it, solely acting as an intermediary won't be sufficient. Instead, the home healthcare agencies that provide added value in the process will be best positioned for success.
The amount of training and support family caregivers receive is a key issue. This is an area where home healthcare agencies can differentiate themselves. This includes maintaining strong controls over the selection process of the caregivers and regularly monitoring the care being provided. That could involve conducting surveys to determine whether the person needs care, as well as measuring outcomes, such as whether the patient has shown improvement in areas such as personal grooming, bathing and ambulatory function.
Setting up for success
The companies we've seen succeed in this space are well-established agencies with a good mix of licensed caregivers who are accustomed to training employees and maintaining control over the quality of care through regular visits (weekly or monthly in most cases). It’s also worth noting that the successful agencies don’t solely focus on family caregiving. One reason is because skilled home care provides significantly higher margins through Medicare payments.
With that in mind, successful agencies treat family caregiving as more of a volume driver, a way for agencies to increase their revenue base without having to hire additional caregivers. If margins start to compress on the skilled care side, boosting your family caregiving business is a way to increase volumes by diversifying your revenue stream.
There's also some uncertainty right now as states continue to modify their family caregiving programs. We’ve seen agencies that earned over 90% of their revenue from the family caregiving side scramble to adjust as the states they operate in made changes to their programs. Navigating this segment requires partners with local connections who understand how the regulatory landscape is changing in your region.
Despite the fluid nature of this burgeoning subsector, family caregiving is likely to grow in importance. For agencies that are experienced, well-diversified and maintain relationships with knowledgeable partners, the opportunities are plentiful.
1. U.S. Department of Labor
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Imran Javaid
Managing Director, Healthcare Finance Group
Mr. Javaid offers nearly 30 years of investment, finance, and management experience with a variety of institutions both public and private. For over 20 years, Mr. J…(..)
View Full Profile >The family caregiving segment is growing rapidly, and with good reason. It’s convenient for patients, especially the elderly or those with disabilities or chronic conditions, as well as their families. Family caregiving also alleviates some of the labor pressures in the healthcare industry, and it closes a gap in areas with limited access to healthcare providers.
Many states offer programs that allow family members or friends to be paid as caregivers through Medicaid. The category exploded during the pandemic and the long-term outlook remains strong. Employment in this segment is expected to grow 22% between 2022 and 2032, according to the U.S. Bureau of Labor Statistics.1
But this is still a new segment. Each state has different rules and requirements for paid family caregivers, and many states that participate in the program are developing regulatory frameworks that could impact how current programs operate. For the home healthcare agencies that act as fiscal intermediaries in these programs, success depends on taking the right approach.
The game is changing
In many states, the family caregiver segment is growing so quickly that it’s been difficult for states to provide oversight. Quality of care and fraud have become areas of concern. In response, some states are tightening their controls over their programs. And after a pandemic-era boost in funding, some states are cutting back on programs that fund family caregivers or eliminating them altogether.
As this segment grows and states become more diligent in regulating it, solely acting as an intermediary won't be sufficient. Instead, the home healthcare agencies that provide added value in the process will be best positioned for success.
The amount of training and support family caregivers receive is a key issue. This is an area where home healthcare agencies can differentiate themselves. This includes maintaining strong controls over the selection process of the caregivers and regularly monitoring the care being provided. That could involve conducting surveys to determine whether the person needs care, as well as measuring outcomes, such as whether the patient has shown improvement in areas such as personal grooming, bathing and ambulatory function.
Setting up for success
The companies we've seen succeed in this space are well-established agencies with a good mix of licensed caregivers who are accustomed to training employees and maintaining control over the quality of care through regular visits (weekly or monthly in most cases). It’s also worth noting that the successful agencies don’t solely focus on family caregiving. One reason is because skilled home care provides significantly higher margins through Medicare payments.
With that in mind, successful agencies treat family caregiving as more of a volume driver, a way for agencies to increase their revenue base without having to hire additional caregivers. If margins start to compress on the skilled care side, boosting your family caregiving business is a way to increase volumes by diversifying your revenue stream.
There's also some uncertainty right now as states continue to modify their family caregiving programs. We’ve seen agencies that earned over 90% of their revenue from the family caregiving side scramble to adjust as the states they operate in made changes to their programs. Navigating this segment requires partners with local connections who understand how the regulatory landscape is changing in your region.
Despite the fluid nature of this burgeoning subsector, family caregiving is likely to grow in importance. For agencies that are experienced, well-diversified and maintain relationships with knowledgeable partners, the opportunities are plentiful.
1. U.S. Department of Labor
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