As some senior living and home health care providers address shrinking profit margins due fluctuating supply and demand, some companies say innovative employee pay models have contributed to their success.
National home care and hospice provider Oxford HealthCare offers a pay-per-visit model for its health care staff, said Oxford HealthCare President Karen Thomas during the recent LINK Home Care and Hospice Conference in Chicago, Ill. The event brought home health care providers together to discuss pressing issues in the industry.
BAYADA Home Health Care, with locations in 25 states, operates with a hybrid model — employing both salaried and per diem staff members — said BAYADA Home Health Care Division Director Eric Thul.
Salaried and per-diem pay models are traditionally seen in the sector, Thul said, adding that a salaried-only pay model is becoming less common.
At Oxford, the pay model has increased employee productivity and trimmed unnecessary costs, Thomas said.
“It has allowed us to cut back on staff in the office,” she said. “The importance of paying per visit is that it can tell us how long that person is in the home, how long that person spent traveling — that helps us reduce our cost.”
While Oxford has operated using this model for more than a decade, it did try other staffing pay models before deciding that the pay-per-visit model was the best fit for them.
“At one time we were paid per visit with salaried nurses and our average time per visit started creeping up,” she said. “Our client surveys were awesome, but we were out there for a long time.”
Oxford discussed the pay-per-visit model with nurses, and said adopting a model that reduces cost would allow the provider more money to put back into employees’ pockets, such as by offering raises. Nurses are classified as full- or part-time based on their number of client visits.
At BAYADA, 70% of visit demand is serviced through salaried employees with a guaranteed weekly visit quota, and 30% of visit demand is serviced through a combination of per diem staff that are paid per visit and salaried staff willing to perform extra visits during the week, Thul said.
The hybrid approach works well for BAYADA because it helps attract quality employees with the stability of guaranteed salary pay, and the per diem model allows for flexibility to address fluctuations in supply and demand, Thul said.
Since implementing the hybrid model “a long time ago,” BAYADA has achieved over 95% of guaranteed visit quotas met during a time period and over 90% of total visits performed that were direct client care versus administrative processes, Thul said, adding the company projects those improvements to equal between 2% and 4% points increase in gross margin.
But when it comes to pay and staffing models, not one size fits all.
“We’re constantly playing the productivity challenge game,” Thul said. “You can’t be the jack of all trades health care provider, you have to customize solutions.”
Looking ahead, Thul expects that as profit “margins continue to erode, there will be continued pressure to migrate towards a per diem payment model because it is an easier way to optimize supply and demand, thereby controlling costs.”
Smaller providers might try an inverted version of BAYADA’s pay model, Thul said, wherein providers have more per diem than salaried employees.
“Although this model can be effective is smaller, start-up offices, it is usually difficult to scale to a larger number of employees,” he said.
Seasonal changes also affect the demand for home health services, thus contributing to staffing changes, Thul and Thomas agreed.
“In markets such as Florida and Arizona during the summer snowbirds move out of the area creating less market demand,” Thul said. “Furthermore, elective surgeries such as hip and knee replacements often represent seasonality patterns creating high and low demands for services throughout the year.”
Written by Cassandra Dowell
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