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Home Care 2020: Three Big Barriers to Growth

By Stephen Tweed

Agency growth has slowed in the home care industry.

This past two weeks, we’ve been on our video conferences with members of our various Home Care CEO Mastermind Groups.  Our topic this month is, “How was your year in 2019?” We asked our members to tell us what there revenue was at the end of 2019, what percentage of growth they experienced, and what were the challenges they faced that affected their growth.

The Three Big Barriers to Growth

As we talked with our members and our Strategic Coaching clients, we identified the three big barriers to growth in 2020:

  1. The Caregiver Recruiting and Retention Crisis
  2. Internal Leadership Issues
  3. Increasing competition in the local marketplace

We’re continuously doing research on solutions to the caregiver crisis. We’ll keep you informed in our articles on Conquering the Crisis.

The companies we know whose revenue was flat or slightly down at the end of 2019 experienced some type of internal leadership issue.  It might be that the company had previously outgrown the capabilities of a key member of the team, and they were not able to compete.  It might be that a key person left the company and there was a gap until their replacement was hired.  In a few cases, owners and CEOs discovered that a key operations leader has a leadership style that is offensive to other members of the team and it was getting in the way of growth.

The third big barrier is Increasing Competition

We have found that most home care markets of any size are saturated with home care companies.  And yet, there are new companies starting up every day.

Every year or so, I have my research consultant update my list of agencies by type.  We look at the state licensure records. We look at the franchises companies to see the number franchise locations by brand, and we revisit our data on “Affiliated Agencies”, those private pay home care agencies who are affiliated with a home health agency, a senior living community, or a hospital system.

Based on this research, we project that there are about 26,000 companies providing in-home personal care in the US.  This is not a precise number because there are still 21 states that do not license personal home care.  However, we have a method to project the numbers and here’s what we found:

  • Independent Agencies – 14,000   
  • Franchise Locations – 6,939 as of September 2019
  • Affiliated Agencies – 5,000

This number has not changed much in the past two years.  The reason is that while new agencies are forming, larger agencies are growing through acquisition and many new start ups fail in the first two years.

What This Means

This trend of increasing competition means that it is harder than ever to grow your business.  The smaller companies in your local community are chipping away at marketshare, picking up a client here and a client there.  There’s also chipping away at the available pool of caregivers.  The bigger threat to median sized agencies is the growth of consolidated home care companies in many markets.  We are seeing an increasing number of home care companies in the $20 million to $150 million annual revenue size. The companies have the resources and connections to compete for caregivers, to compete for referral sources, and to compete for clients and families.

What You Can Do

There are three things you can do to grow your business in the face of increasing competition:

  1. Create Distinction – you have to be clear about what makes your agency different from your competitors. They you need to build on that distinction and sell it in the marketplace.  Part of this is creating distinction in the minds of your caregivers and applicants.
  2. Craft Your Culture and Develop Your Leaders – it’s clear that the biggest and best companies in home care are focusing on their company culture and their leadership team.  Culture is “The way we do things around here,” and it is based on the leadership style of the CEO, the core values of the company, the behavior you expect, and the behavior you permit.
  3. Master Your Systems – the leaders in the largest home care companies are systems thinkers. They look at tasks that have to be done over and over again and put in place systems that are reproducible and scalable.  You need systems for selling and marketing, and you need systems for caregiver recruiting and retention.  We’ll talk more about the Twelve Systems in Home Care in a future article.
Join Me for the 2020 Home Care Growth Summit, hosted by Home Care Pulse

If you would like to take a deep dive into these factors affecting your future, join me on Wednesday, February 5, 2020 at 11:00 am eastern time as I kick off the Home Care Virtual Growth Summit sponsored by Home Care Pulse.  I’ll be leading the way with an in-depth look at these forces and trends.  I’ll be followed by 20 other thought leaders in the home care industry for the largest virtual growth summit ever presented in our industry.

Register Today!
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