Older population, new issues

Sometimes the margins are so tight between what her agency gets paid to provide home health services and what she must pay the aides who do the work that Karen Kulp wakes up panicked and starts counting the dollars.

"It weighs heavily on my mind - when I'm in the shower, when I'm driving, whenever," said Kulp, president of HomeCare Associates, a worker-owned agency in Philadelphia.

In one way, it would not be hard to build profit, Kulp said. "You can make all your workers work 20 hours a week. Then you don't have to pay them any benefits. But it affects your quality. You can't give consistent care."

Aides visit several times a week, providing companionship and unskilled care, helping with bathing, toilet needs, meal preparation and tidying up.

Kulp's struggling with the margins reflects the entire industry. People need more care as they age, so demand is up. Yet workers are in short supply because of low wages and working conditions. Many agencies do not pay benefits, as HomeCare does.

But what is even more of a struggle is finding the money to pay reasonable wages - let alone benefits. The cost for private care is beyond the reach of many families.

Government reimbursements through Medicare and Medicaid have not increased in four years. They can range from $13 to $19 an hour, and vary by county, state, provider and individual circumstance, Kulp said.

For example, the government will reimburse the agency for home care of a disabled person at one rate. When that same person turns 60, the care is funded through another stream, which reimburses about $3 an hour less and brings the cost just below what HomeCare Associates pays an hour in wages and benefits.

In New Jersey, Medicaid reimbursements remained at $15.50 an hour from 2002 through 2006, rising 65 cents to $16.15 last year, according the Home Care Association of New Jersey, an industry group.

Last year, HomeCare Associates had to stop providing services for one vendor, a nonprofit agency that helps its elderly clients get home-care services.

The agency paid HomeCare $13 an hour, not enough to cover the wage for an experienced aide, let alone the health insurance, vacation time, sick days and transportation pass.

"We were losing money every hour," Kulp said.

As it is, the agency payroll for home health aides eats up about 82 percent of every dollar from reimbursement revenues. The remaining 18 percent pays the rent, Kulp's salary, utilities and, among other items, the 5-foot-high by 15-foot-long wall of latex gloves the agency buys by the pallet and stores in its crowded offices.

HomeCare's starting wage of $7.50 an hour used to be $2.35 an hour over Pennsylvania's previous minimum wage of $5.15 an hour - part of the HomeCare's persistent mission to create the kind of living-wage jobs that discourage turnover.

But so far, Kulp has not been able to bump up the starting wage to keep pace with the minimum wage increase to $6.25 an hour in January. She said she cannot imagine moving much beyond the $7.15-an-hour rate effective July 1.

Average pay is $9 to $10 an hour, with benefits adding $4 or $5 an hour to that. "I can't pay a starting wage of $9 without letting something else go," she said. "What can we do? Give up benefits?"

She cannot cut training.

Last July, Pennsylvania enacted a law requiring home-care agencies to train their workers, conduct criminal background checks, and screen for drugs. Regulations are now being drafted.

HomeCare had always done that. Studies show that worker satisfaction and the quality of patient care increase with training, while turnover decreases. Yet, with margins so slim, there is not much to reward workers for more training.

At HomeCare Associates, each extra training component adds 20 cents an hour to a worker's paycheck. If it were not for additional revenue that HomeCare receives from training grants, that might not be possible.

What makes HomeCare different from most other agencies is that it is a worker-owned cooperative. Employees can buy $500 shares after three months. Of the dozen directors, seven are worker/owners, who can vote to fire Kulp, if they want.

About half of the agency's 160 workers are shareholders. In 2004, they received a $900 dividend. In 2005, it was $400. Business was bad last year, so the directors voted to give all the employees a small bonus, forgoing their own dividends.

It all adds up to a lot of sleepless nights for Kulp, who joined the 14-year-old agency in 2001.

"When I wake up at night, I'm thinking over the margins," Kulp said. "Are there ways we can cut costs? Is there more business we can get? And can we do it without compromising our quality or without compromising the quality of our jobs?"

Headquarters: Philadelphia.

Business: Agency provides aides to elderly and disabled in their homes.

Ownership: For-profit, employee-owned cooperative.

President/CEO: Karen Kulp.

Employees: 160.

Owner/Employees: 75.

Founded: 1993.

2006 annual revenue: $5.3 million.

Clients: 250.

Source: HomeCare Associates

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For a list of Web sites about home care, go to http://go.philly.com/homecareEndText