STEWARTVILLE, Minn. - Barbara Hatcher sat in her favorite rocking chair, head bowed and tears pouring from her eyes, as she recalled a recent trip to the hospital emergency room.
“It was terrible, just terrible,” said Hatcher, 79, who a year ago was diagnosed with a rare form of blood cancer. “My fear is they will take me away and I’ll die there, alone.”
Like untold numbers of frail and elderly Americans, Hatcher wants to live out her final years in the place she feels most at peace: her own home. It is here, in a living room crammed with memories, that Hatcher rocked each of her seven children to sleep. Family photographs and teddy bears bearing the logo of her beloved Nebraska Cornhuskers crowd the room.
Yet when she tried to find home caregivers to make that possible, Hatcher and her family found themselves thrust into an ordeal they never expected — a world of erratic care, dubious sales tactics and bewildering marketing claims. Overwhelmed, they are now shouldering the burden of home care on their own.
Explosive growth in the number of frail and elderly Americans who need care at home is producing wrenching changes in the industry they rely on. The once-amicable and highly local business of home caregiving has become a multibillion-dollar industry marked by for-profit franchising and cutthroat competition.
At the center of this transformation is a new category of caregiver: the national home care chain. Like the fast-food franchises they emulate, many of these chains rely on a low-wage army of caregivers who often feel little loyalty to their clients or to the corporations that employ them. The chains, with names like Comfort Keepers and Home Instead, now operate more than 5,600 outlets — filling a vast need for help but leaving many frail adults with substandard or inconsistent care, say elder care advocates.
Thanks to light regulation and low barriers to entry — almost anyone with $40,000 and a bank credit line can start a home care franchise — thousands of people with no medical experience are getting into the caregiving business. They buy artificial “territories” from the franchise companies, and then sell or shut them down if the concept fails.
“It’s the ‘McDonaldization’ of home care,” said Dr. Robert Kane, chairman of long-term care and aging at the University of Minnesota’s School of Public Health. “What you have here … is the flavor of the month, and everyone is rushing into it.”
Industry executives counter such criticism by pointing out that national chains have introduced quality standards that never existed in the lightly regulated market for private-pay home care. Large franchises such as Home Instead and Visiting Angels carefully screen job applicants, they say, and keep a pool of caregivers on-call in case an employee fails to show up for work. They also conduct spot checks of elderly and frail clients in their homes to ensure that aides are following written plans of care.
“We are driving standards in home care where there were none,” said Phil Bongiorno, executive director of the Home Care Association of America, a Washington-based trade group that represents 2,500 home care companies.
The chains can also offer a big payoff for consumers: lower prices. The hourly cost of basic, nonmedical home care services has fallen by 30 percent or more in some markets where the national chains proliferate, according to industry analysts. And the army of new caregivers provides much-needed relief to the estimated 4 in 10 American adults who care for their own loved ones, often while juggling work and other family duties.
“We are truly heading towards a caregiving cliff, and we need all the help we can get,” said John Schall, CEO of the Caregiver Action Network, a caregiver advocacy and support group in Washington, D.C.
Even so, the emergence of thousands of start-up home care franchisees poses a challenge to regulators. Because many of these agencies collect their fees directly from clients and don’t take payment from public programs such as Medicaid and Medicare, many receive no formal oversight from government regulators. In many states, the chains are not even licensed because they provide basic services, such as cooking and housekeeping, that are unregulated.
“It’s indefensible that we let private pay [home care] companies pad their pockets with billions in public dollars without adhering to basic standards,” said Sarah Leberstein, a staff attorney with the National Employment Law Project in Washington, D.C.
While intense competition can drive down prices for consumers, it can also pressure franchisees to rely on low-wage workers, and that troubles many advocates for the elderly. Workers often jump from one chain to another for small gains in wages or hours, leaving clients to find new aides and train them on often-complex personal care needs. More than half of all nonmedical home caregivers either quit or were fired last year — an all-time high, according to Home Care Pulse, a market research firm.
The high turnover rate can lead to unreliable care, neglect and deadly consequences.
Just this month, a Roseville franchise of Interim HealthCare Inc., one of the nation’s largest chains, was found responsible for the severe malnourishment and death of a Minnesota client who was admitted to a hospital emergency room weighing just 80 pounds and covered in feces and urine. State investigators found that the patient, who was not identified, was never weighed at home, even though an Interim nurse visited weekly. Rather than do a proper assessment, the nurse checked the patient’s nutritional status “by looking at the patient and checking for food in the home,” investigators wrote.
Tom Geary, owner of the Interim franchise, said the nurse has been fired and the office is retraining staff on how to assess a client’s well-being.
‘Walking on a minefield’
Liz Evans, a former corporate executive from Plymouth, estimates that 40 caregivers rotated in and out of her elderly mother’s home in the final years of her life. She fired one after discovering bruises on her mother’s arms and legs — evidence the caregiver was moving her mother too forcefully.
“It’s like walking on a minefield,” said Evans, who is creating a website (myeldercarepackage.com) and mobile phone application to help others. “Every day you feel like you’re on solid ground, but you’re actually slipping.”
Evans and Barbara Hatcher are caught in the uncomfortable middle: Too affluent to qualify for government assistance, and too poor to afford private round-the-clock nursing care. Like 8 million other Americans, they rely on a fragmented system of for-profit home care agencies.
To build their franchise empires, the large companies carve up markets into “territories,” usually marked by ZIP codes, and then sell these territories for $30,000 to $60,000 in franchise fees.
In attractive markets, securing a territory can be “like winning the lottery,” said Ed Teixeira, a franchise consultant from New York. Among Comfort Keepers franchises that had been open at least one year, for example, the average outlet posted $679,000 in revenues in 2013, and some collected as much as $4.9 million. At Senior Helpers, another national chain, the highest-grossing outlet made $5.2 million last year, according to franchise disclosure documents.
The business model, say analysts, is remarkably simple: Treat as many patients as possible, while keeping hourly wages in check. Many of the chains charge consumers $25 to $35 an hour, while paying their workers as little as $9 to $12 an hour. Even with overhead costs, the profits can be substantial. The average for-profit home health agency that receives payments from Medicare, the federal insurance program for the elderly, made 20 cents in profit for every dollar in revenue in 2011.
“There is an absolute fortune being made in home care, and few know about it,” said Stephanie Woolhandler, a professor at CUNY School of Public Health at Hunter College in New York.
But as the number of franchise concepts has mushroomed, competition within these territories has become increasingly fierce. Franchise owners say they target funeral homes, nursing homes, churches — even focus groups for grieving widows — to drum up new business.
“It’s about getting in front of people and making the pitch,’’ said Emma Dickison, who was an executive with the Blockbuster video chain before becoming president of Home Helpers, a Cincinnati-based chain with more than 600 outlets nationwide.
In retirement havens such as Phoenix, where more than 300 home care agencies are vying for elderly clients, the competition has shifted into overdrive. Franchise operators visit nursing homes and hospitals, offering free gifts, including jewelry and tickets to sporting events, to the discharge nurses who compile the prized lists of recommended home care providers.
“It’s out of control,” said Bob Dailey, owner of a Visiting Angels home care franchise in Mesa, Ariz. “People are turning a blind eye to the ethics.”
Lots of pitches
Kat Whalen was pacing the hallway of her office one day recently, a cellphone tucked under one ear, making one desperate call after another to a list of elder care referrals. In less than 72 hours, Whalen’s mother would be discharged from a senior home where she was undergoing rehabilitation after suffering a near-fatal stroke.
“I feel like someone stuck me in the middle of Egypt and told me to go find something,” Whalen said. “Right now, I just want some straight answers.”
But many families find that objective advice is hard to find. For example, Assisted Transition, a placement service that helps consumers find a care provider, is affiliated with the owners of Senior Helpers, a major national provider of home care.
Even where there aren’t direct corporate affiliations, there can be financial conflicts of interest. Several placement firms that advise families on choosing a home care agency collect thousands of dollars in commissions from the home care providers they recommend. In 2012, the Federal Trade Commission found that two prominent elder-care placement franchise companies — Always Best Care and CarePatrol, Inc. — had misled consumers into thinking they researched providers and had detailed knowledge about them.
Whalen consulted A Place for Mom, the nation’s largest senior placement firm, after her mother’ stroke. Like many, she heard Joan Lunden, a former host of ABC-TV’s “Good Morning America,” pitch the firm on the radio. Weeks later, Whalen got an e-mail with information for two assisted-living homes. Her mother couldn’t afford either one.
“It was clear they were not objective,” Whalen said, frustrated.
Family takes on care
The Hatcher family has finally had enough of private-pay home care. After a year of sporadic and undependable help, the children have decided to care for their parents on their own. Each weekend Barbara Hatcher’s daughter, Toni Mangskau, her sister, Linda VanSickle, and brother Travis Hatcher, nicknamed “Mr. T.,” load cleaning supplies and food into a sport-utility vehicle. They call themselves the “A-Team” and aim to do as much housework as possible, while providing love and support, in a single afternoon.
On a recent Sunday, the trio of siblings burst through the door of Barbara Hatcher’s home, yelling “The A-Team is here!” By nightfall, the kitchen was spotless, the laundry was done, and their father, Ronald Hatcher, 82, was reminiscing at the kitchen table about the time he caught a 10-pound rainbow trout in the middle of an Iowa snowstorm.
“You know,” Ronald said, as he hugged his daughters and said goodbye, “this is the very best time of the week for us.”