Home Care Companies Keep Overtime Costs to a Minimum, PHI Study Finds

A new PHI report examines how three home care companies have successfully managed to control their overtime costs while maintaining their reputation for high-quality care.

The report, Can Home Care Companies Manage Overtime Hours? Three Successful Models (pdf), discredits home care industry claims that the Obama Administration’s proposal to revise the companionship exemption to extend minimum wage and overtime protections to home care workers would dramatically increase agencies’ overtime costs, since any overtime worked by aides would have to be compensated at time and half.

“These real examples tell us that, once there is a financial incentive for home care companies to manage overtime hours, they won’t just stand still and let their businesses suffer but instead will adopt modern staffing and scheduling practices, just like the companies profiled in the report,” said PHI Director of Policy Research Dorie Seavey, co-author of the report.

Staffing and Scheduling Practices to Manage Overtime

The report reveals how three home care agencies with differing case loads, service areas, and business models — Community Care Systems in Illinois; Addus HealthCare, a nationwide company; and Cooperative Health Care Associates in New York City — have independently implemented similar staffing and scheduling practices to manage overtime.

The most notable practices for managing overtime by these companies are:

• Electronic timekeeping and scheduling that enable “real-time” monitoring of aide availability, workloads, and overtime.
• Designation of new aide positions specifically designed to pick up incidental hours due to call-outs, worker absences, or emergencies.
• Proactive scheduling to spread work hours more evenly across the agency’s available aides.
• Splitting high-hours cases into multiple shifts shared by two or three aides.

“Once one company figures out how to minimize its overtime costs by more efficient scheduling, the rest will either follow or go out of business. That’s how competitive markets work,” Seavey said.

Strong Evidence for Successful, Quality Home Care Businesses Despite Overtime Pay

The authors conclude that the experiences of these three home care companies offer strong evidence that it is possible to grow and run successful home care agencies that have reputations for high-quality care and pay overtime at time and a half. The three companies are operating in 20 states and pay overtime even when not required to do so.

By spreading hours more evenly across their workers, carefully monitoring their workforce data, and designating aide positions designed to pick up incidental hours, these companies manage their overtime so that it does not become a costly business expense that undermines business profitability.

The directors of two of the companies that had “high-hour” cases reported that they “believe that provider continuity that results in overtime work has drawbacks that can affect the quality of care received by the client, including aide fatigue and burn out.” These companies use scheduling guidelines to split high-hour cases between two consistent aides so that continuity of care for the client is maintained.

Nationally representative surveys show that less than 10 percent of aides report working more than 40 hours a week (pdf).

“The real problem for this workforce is not overtime but ‘involuntary’ part-time work, which means aides who are assigned part-time hours by their employers but would like to work more hours,” Seavey said.

Can Home Care Companies Manage Overtime Hours? Three Successful Models (pdf) was made possible with support from the Ford Foundation.

— by Deane Beebe