This article is part of the HHCN+ membership
So far, 2025 has been a turbulent for home care providers. Changes in regulations and policy have led industry stakeholders to participate in high stakes speculation games to predict the meaning of the latest headlines.
While focusing on the future is important, looking to recent history can provide providers with important information on how to expand their business to succeed, as well as peers' performance.
Previous Home Care Pulse Active Insights released its latest benchmark report last week, based on a survey of 120,000 home care clients and employees, based on surveys of nearly 1,000 home care providers. That discovery surprised me with multiple counts. Much of the news was positive as it reached a six-year high from median home care income and significantly lowered the turnover rate for home health workers from the previous year.
But following almost every discovery that gave me the most hope, “but” and “but.”
Employee turnover is declining, but employment is difficult, for example. While home care revenues are high, two-thirds of providers are missing out on the opportunity to capture additional revenue. I don't think that it forces providers to chase their tails and pursue opportunities to face their ultimate shortcomings. The report suggests how providers can begin paths to coordinate resources and create positive change.
This week's exclusive member-only HHCN+ update will share the findings of a report that providers think is most important to consider in 2025, offering analysis and important takeaways, including:
– Issues regarding the cost of acquiring home care clients
– Employee retention success story
– Homecare revenue jumps and opportunities
Customer trends
Home care companies face a long list of issues, from refunds to staffing, but in the end, everything goes back to the patient or client. And there's the good news.
Overall, in home care, the median customer growth rate in 2024 was 12.9%. This is higher than within six years. Activated insights do not have long-standing data on customer growth rates for the home hygiene and hospice industries, but the good news is anyway: hospice client growth rate is 14.5%, with home healthcare increasing significantly from 0.7% to 9.4%.
Activated Insights
The good news about rising customer growth rates is mitigated, as is the subject of the theme here. In this case, my excitement about the revenue growth was balanced by the news that customer acquisition costs also hit a six-year high, reaching $845 per client in 2024.
We previously reported high customer acquisition costs in the behavioral health industry. If you're stuffed into a BetterHelp ad for a YouTube video like podcast episode or a YouTube video like me, you can understand the kind of investment that some digital behavioral health companies are making to attract customers.
Providers need to balance customer acquisition costs with customer lifetime value, and behavioral health investors have told me before, hoping that the cost of acquisition is lower than the margin dollars for episodes of care.
Some providers have found new ways to do so. For example, Anise Health, a mental health company focusing on Asian Americans, will work with Asian Employee Resource Groups (ERGs) or high-level Asian student enrollment universities to create referral pipelines.
While such a narrow focus may not be applied immediately to home care, we expect this continuing trend in patient acquisition costs will see providers looking for new and creative ways to find people in need of services.
According to Todd Austin, president and chief operating officer of Activated Insights, agents that track every investigation and focus on reputation could overcome customer acquisition costs and increase revenue.
“What's fascinating is that the agency tracking every investigation, or at least showing that they have a high love for tracking inquiries, has led to nearly $1 million in revenue than those who don't,” Austin said in a recent webinar. “So if you're not tracking all your inquiries, there's a big gap in your business.”
Building reputation also helps to address customer acquisition costs, as Austin is increasingly selecting care providers based on experiences and referrals people have gained from others. Currently, two-thirds of providers use reputation or recognition management programs, which has increased significantly over the past few years, Austin said.
“Reputation is no longer an option,” he said.
Progress in retention, employment issues
All home-based care companies are fighting to have enough workers to meet the growing demand. The leader has emphasized to me many times the importance of retention.
“People spend a lot of time hiring staff, then recruiting staff and then training staff. Only for staff within the first few months may not have been there, so we move on,” Bill Dombi, senior adviser at Arnall Golden Gregory Law Firm, told me previously. “Expanding time in retention is the most efficient, economical and successful way to deal with today's labor shortage.”
The Activated Insights report shows progress in terms of retention (please keep news of low-light staffing).
Caregiver sales fell from 79% to 75%, falling to the lowest rate in three years, a positive indicator of improvement in the labor market and corporate culture, Austin said.
According to Austin, an example of an improved corporate culture is the Visiting Angels location, founded in 2024 to improve onboarding, awareness and ongoing communication with employees. The location achieved the highest growth quarter in the history of the company, due to successful creation of the environment caregivers want to stay in.
“That commitment to building a positive employee culture has been translated directly into business success and is seen over and over again,” Austin said.
Home hygiene and hospice sides got even better news, dropping dramatically from 32% clinician sales to 17%.
This is bad news. Retention has improved, but recruitment is becoming more difficult.
According to Austin, the employment-to-employment ratio deteriorated in 2024. Only 9.6% of home caregivers were hired, down nearly 5% from the previous year. At the same time, 39% of providers reported that they declined cases due to insufficient staffing.
“So we have to think about the approach, so we're not only hiring more, we're just hiring smarter jobs,” Austin said. “I was getting feedback from that Angels location that I visited. They were more focused on who they hire and what their first 90 days would look like, the impressions that create a good match. It's a great starting point for applying in your own organization, digging and actually identifying your funnels and data.
Improved retention rates are a good indication for the industry, but these employment statistics are certainly a concern. Working on “smartier” can be a key component of both recruitment and retention. For example, recruiting applications through word-of-mouth referrals means using your company's time better than casting as much as possible nets.
Home care revenue is high
The report included several reasons why stakeholders in the home care industry were optimistic. Most notable for me was the discovery that in 2024, the median revenue for home care providers reached $2.3 million, an increase of $291,315 and the highest increase in six years.
Activated Insights
My discussions with providers often focus on industry struggles, from Medicaid budget uncertainty to the chronically inadequate caregiver workforce. Certainly, median revenue is not the only benchmark for industry health. But it certainly is one benchmark, indicating that providers maintain their solvents to expand access to essential services.
The revenue growth rate is outweighing client growth. Austin means that rate increases begin to take effect and are showing up in the top line performance of home care companies.
The drawbacks associated with this finding are also advantages. According to Austin, one of the key factors in the increase in revenue is that more institutions will bill based on both the length of visit and the skills of caregivers. In 2024, only 32% of agents did that.
That figure has risen from a 29% increase since 2023, but leaves us with a considerable opportunity for more providers to jump in. Home care providers, especially those with robust employee training programs, have a clear path to getting more revenue.
“We said, 'What is the chronic condition of the individual I care for, what is my caregiver's skill level, and what matches the billable time?” Austin said. “My takeaway is very simple here. Financial scale and smarter billing creates a room for doing more problems, serving clients well and growing sustainably.”
