Home health industry fights minimum wage rule

WASHINGTON -- Home health care companies are leading the fight against an Obama administration proposal to require them to pay their workers the minimum wage, despite data showing that the industry was one of the few nationally to maintain profits during the worst of the recession.

One of the industry's leading companies, Home Instead Senior Care, spent at least $362,000 in 2011 fighting the proposal while it also touts an almost 19% return on investment for potential franchisees, according to the magazine Franchise Business Review.

A spokesman for Home Instead sent a press release from the Private Duty Homecare Association stating that the proposed rules would cut employees' hours and, ultimately, hurt caregivers.

Home health companies have been more profitable in the past two years, even as other businesses have been hit hard by the economy, said Michael Lubansky, an analyst with Sageworks, which analyzes financial data for privately held companies.

A Sageworks analysis showed that publicly owned home health services companies made a net profit of 2% in 2006 and 4% in 2009, and remained stable for the past two years.

Private companies rose from a 6% net profit in 2006 to 8% over the past two years, the data show.

"In home health care, you can't even tell you had a recession," Lubansky said.

The minimum wage is now $7.25 an hour.

A Labor Department proposal issued in December would require home health care companies to follow federal wage and hour laws regarding their workers. It would overturn an exception first granted in 1974 that was aimed at allowing friends and family members to care for elderly relatives.

Since then, however, the home health care industry has used the provision to exclude certified nursing assistants and trained comfort providers from bigger paychecks. Those workers, the Labor Department says, were never meant to be excluded in the first place.

Changing the rules, industry officials say, would damage the quality of care, limit job opportunities and possibly force senior citizens from their homes and into nursing facilities.

Most home health care payments come from private insurance or the family of the person needing care, said Gale Bohling, director of government relations for the National Private Duty Association. Requiring them to pay minimum wage and overtime could hurt a population that would rather stay home than go to institutionalized care, he said.

According to the Department of Labor, in 2008, Medicare and Medicaid accounted for about 75% of home health care services revenue.

And, Bohling said, as the states face budget cuts, Medicaid won't be able to keep up with salary increases.

Despite the industry's rapid growth, fueled in part by the rising number of Baby Boomers reaching retirement age, wages for home health care workers have averaged about $10 an hour. Many workers lack health insurance, allowances for travel time or paid time off, said Kristin Smith, who researched the issue for the Carsey Institute at the University of New Hampshire. Many workers, Smith said, also have advanced training, such as certified nursing assistants.

"It does differ from a kid working at McDonald's for minimum wage," Smith said.