Economic Forecast for Private Duty Home Care for 2016

Posted by Machelle Thompson on Feb 28, 2016 6:43:41 PM

The New Year has ushered in ongoing growth in the senior population needing care support, as well as new challenges for the private duty home care industry which actually began about two years ago. When AB-10 (minimum wage) and AB-241 (Domestic Workers’ Bill of Rights) passed in September of 2013, this resulted in increased hourly costs, as well as significant reductions in previous overtime exemptions. The net result of these changes caused a dramatic increase in the cost of home care to the consumer, as well as new operational challenges for business owners to find adequate and qualified caregiver staff.


Rising cost of private duty home care


The consumers affected most by these recent changes are those requiring 24-hour care.  The cost of such care increased from approximately $85,000 per year two years ago, up to a present cost of about $200,000 per year.  In an effort to manage costs to the consumer, as well as avoid penalties for labor code violations, many business owners were faced with the operational challenge of deciding whether to continue offering one caregiver to cover a 24-hour period, or transition to offering two 12-hour shifts, or three 8-hour shifts.  Since many companies opted to stop using a single caregiver to staff a 24-hour shift, this created an immediate shortage in qualified caregivers, as it now requires two to three times as many caregivers to support a client who requires 24-hour care.

California became the 27th state to implement mandatory licensing for home care agencies on January 1, 2016.  The transition to licensure under the guidelines of the California Department of Social Services (CDSS) marks an improvement for consumers of private duty homecare, as there are now minimum standards for home care agencies that didn’t previously exist.  The downside is that there are additional costs associated with obtaining licensure and implementing new systems, which will inevitably be passed on to the consumer.  All caregivers are now required to become registered with CDSS and newly hired caregivers are unable to work until their background check through CDSS are approved. Unfortunately, this process poses additional delays in putting much needed caregivers to work, further adding to the painful shortage of qualified workers.

Now is the time for all consumers of private duty home care to reach out to their politicians to express the extreme financial hardship which may cause them to leave their home prematurely.

Machelle Thompson, PT, CMC

Geriatric Care Manager

President- Keen Home Care


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