As demand for personal home aides grows, so do businesses that provide helping hands for people who are sick or elderly, a blend of traditional independent operators and booming franchises.
The rare exception is worker-owned home care companies, which account for only two of the thousands of private duty providers nationwide.
“From our point of view, having ownership makes you more vested in the quality of the work,” says Karen Kulp, CEO of Home Care Associates (HCA).
Founded in Philadelphia in 1993, HCA is modeled after Cooperative Home Care Associates, a Bronx-based service that counts 1,000 worker-owners among its 2,000 personal care aides. Kulp says a similar model was launched in Boston, but disbanded.
Wages are low, on a par with the market, starting at $8 an hour and topping out at $12. But workers receive medical benefits and a dental plan, rarities in the industry, as well as a pass for public transportation. If HCA shows a profit, the worker-owners receive dividends, which have ranged from $600-$1,200.
Workers are eligible to become owners after three months of employment. The cost is $465. The worker chips in $35 and the cooperative provides an interest-free loan for the rest, automatically deducted from paychecks at a rate of $3 a week. If the worker-owner leaves the group, she or he gets a full refund.
Still, only 60 of HCA’s 200-plus personal care workers have opted to become owners. The group hasn’t distributed dividends for the past two years because the cost of training and professional development has consumed its slim profits.
“If you make all your workers part time so no one has benefits, you can make money,” Kulp says. “We can provide benefits and make money, but not nearly as much.”
Franchise Business Review, a market research firm, says home health care businesses are among the top five performing franchise sectors. Some, such as Bright Star, offer medical care in addition to companionship and personal care. Others, including Havertown, Pa.-based Visiting Angels, focus on non-medical services.
The review reports that the median amount paid for a new home care franchise in 2012 was about $66,000. Top performers can expect a healthy profit margin of 30-40 percent.
Yet an industry trade group says margins are more modest. The Indianapolis-based American Association for Home Care, formerly the National Private Duty Association, says agencies net 12-15 percent annually.
Home Instead, a franchise pioneer, traces its roots to Omaha, Nebraska, where a former Merry Maids operator was inspired to start a business in 1994 based on the challenges his family experienced in finding compassionate care for his grandmother. Today, the company has more than 900 operations in the United States, Europe, Asia, Australia and New Zealand, employing more than 65,000 caregivers.
David Forman, who operates a Visiting Angels franchise in Sussex County with his wife, had a successful career running a public relations agency in New York. He discovered the need for home care after the death of his bookkeeper, “a beautiful, beautiful lady who was very nurturing to me.”
Weeks after her funeral, Forman went to visit her widower, who was struggling to get by on his own.
“He had no business living in that apartment alone,” he recalls. “He had eye problems, balance problems. Volunteers helped, but I started thinking about the people who don’t have anyone to step in.”
Franchises are helping owners to get businesses up and running with loans, training and other help.
For example, Home Care Assistance, a California-based chain, provides owners with access to advice in labor law, business development and marketing, in addition to best practice for managing care.
FranData, a firm in Arlington, Va. that collects statistics for the franchise industry, says there are about 22,000 companies that offer care, a mix of more than 60 franchises and independent agencies.
“Our challenge is to keep up with the growth,” Forman says.