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Affordable Care Act Slowing the Growth of Private Duty Home Care

By Stephen Tweed

Yesterday, I was in a very interesting conversation with a group of owners of $5 Million private duty home care companies.  The topic of our discussion was how they plan to handle the employer mandate for the Affordable Care Act.  As you know,  the implementation date for the employer mandate was just pushed back to January 2015, which gives owners a twelve month reprieve.

One of the questions that the owner of the largest company in the group asked is, “What do you think about expanding your business in the next year?  Is this going to be a good opportunity to grow while the smaller companies are struggling to deal with Obamacare?  Is this a good time to acquire another company? Or will there be some real pitfalls that could be potentially dangerous to us if we try to expand?”

As I sat there taking notes and considering the comments of these highly effective home care leaders, I realized that he had said something particularly telling.  He had the resources to grow his business, and he had figured out his approach to dealing with the Affordable Care Act.  He had a pretty clear estimate of what it is going to cost him, and he is confident he can get through the changes.

However, he was asking himself and the other leaders about the level of risk in actively growing his business during the upheaval.

Many Owners are Asking the Same Questions

A number of surveys of business owners in other industry sectors have had similar reservations about business growth.

  • 41% of employers in a Gallup Poll said they have held off on plans to hire new employees
  • 25% of employers in a U.S. Chamber of Commerce survey said they will reduce hiring in response to the Act.
  • Half the jobs in a Concord, California call center being set up to answer questions about implementing the Affordable Care Act will be part time with no benefits.
  • “Companies with 30 to 40 employees will think very carefully about hitting that magic number of 50. The primary effects will be on employers that are relatively low-skill, low wage” says a report from the Wharton School at the University of Pennsylvania.

According to the 2013 Private Duty Benchmarking Study, home care company owners are not sure what to do about health care for their employees.

  • Don’t know – 52.6%
  • Keep majority of employees under 30 hours – 19.9%
  • Provide required health insurance – 18.7%
  • Always operate with less than 50 FTEs – 17.4%
  • Pay the penalty – 9.4%
  • Drop group health insurance and pay the penalty – 1.9%

As I travel around the country, this topic is very much in the forefront of issues being addressed by home care company owners.  I’ll be at the Home Care Association of America annual conference in Scottsdale, AZ this week, and the association has been instrumental in keeping its members up to date on the news about health care reform.

I’ll be sure to take copious notes from the conversations and let you know what home care company owners are thinking and saying about this issue.

In the mean time, what do you think?  Is the unpopular implementation of health care reform affecting your decisions about growing your home care business?  What conclusions have you reached?  We’d love to hear from you on this issue.

If you have a home care company that generates $5 million or more in annual revenue, and would like to consider being a part of our $5 Million Mastermind Group, click here.  
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