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  • Thursday, October 24 2019

How Much Is Caregiver Turnover Really Costing Your Business?

Posted by hhsgroup
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As a business owner, you focus on how to reduce costs just as much as how to increase revenue. It’s easy to direct the majority of this focus on ways to reduce marketing costs and fixed operating costs. Other costs, like those associated with caregiver turnover, are often overlooked or clumped into general operating expenses.

How are you accounting for the costs incurred with high caregiver turnover?

Every time a caregiver leaves your agency, you can’t help but notice the effects on your remaining caregivers, your care coordinators, and relations with your clients. Beyond these strains on your business, the actual financial cost might be higher than you have ever imagined. On average, caregiver turnover will cost home care agencies $171,600 annually.

Shocking, right? How did we get this astronomical number? Let’s break it down for you.

Cost of Losing a Caregiver

Turnover cost varies by the salary of the position. For the purposes of this article, we’re setting caregiver wages at an average of $10.00/hour, with about 30 hours working per week according to findings from the 2017 Home Care Benchmarking Study. Using these numbers, the average annual caregiver salary is $16,300.  To get to actual turnover cost, we factor in a study conducted by the Center for American Progress, which showed costs of replacing an employee earning less than $30,000 a year at 16% of their annual salary. With an annual income of $16,300 and a 16% replacement cost, the cost to hire and train each replacement equals $2,600.

In the home care space, caregiver turnover is at an all-time high with an average of 66% (2017 Home Care Benchmarking Study) and has continued rising over the last decade. This means a home care agency with 100 caregivers is likely to experience a turnover of 66 in a year. When you multiply 66 (turnover) by $2,600 (cost to replace), the caregiver turnover cost for your business equals $171,600 per year.

This high number includes all the time and effort it takes to find and properly train a new caregiver. Josh Bersin from Bersin by Deloitte laid out where some of the costs could potentially come from:

  • Job postings, interviewing, screening and hiring time
  • Training and time with management
  • Lost productivity until the new hire is up to speed
  • Morale loss of the company

To see Bersin’s full list, you can view the article he published on LinkedIn.


What Can You Do to Minimize Cost?

With costs like these impacting your business, it’s critical to identify ways to reduce turnover. Here are a few suggestions.

  • Consider adding caregiver benefits.
  • Create a recognition program to bring positive attention to caregivers going above and beyond in their work.
  • Listen and take notes to what employees say during their exit interviews to help identify and understand areas your caregivers are struggling with that you may not already be aware of.
  • Home Care Pulse can also help with our quality management program. We help home care agencies all over the nation improve their caregiver retention by providing continuous satisfaction ratings and feedback from your caregivers.

Let’s compare the calculations above with the average Best Of Home Care® – Leader in Excellence award-winner who participates in the satisfaction management program we provide at Home Care Pulse. On average, a Leader in Excellence recipient has a caregiver turnover rate of 59% based on the 2017 Home Care Benchmarking Study. If 59 out of 100 caregivers leave their agency at a replacement cost of $2,600 per caregiver, the total expense from caregiver turnover is $153,400. This total is $18,200 less than the national average, based on our previous calculation.

Start Using the Satisfaction Management Program

With our caregiver satisfaction management program, we interview 10% of your caregivers each month for $39 per interview. If your agency has 100 caregivers over the course of 12 months, you will have spent $4,680 on caregiver interviews. When you subtract $4,680 from $18,200, you have a total saving of $13,520. While there are many factors affecting caregiver turnover, home care agencies fully utilizing caregiver satisfaction management are improving their recruitment and retention strategies, keeping them below national averages. Caregiver satisfaction management isn’t a one-year effort, rather requires continued focus. For example, some Leader in Excellence winners who’ve received recognition for multiple consecutive years experience turnover in the 20-30% range.

With the Home Care Pulse satisfaction management program, you will receive actional feedback from your caregivers about their satisfaction and are provided resources to help you take action and improve. We care about your agency and want you to succeed. We don’t just offer feedback and reports to help you benchmark your caregiver retention rate, but also help you learn proven retention strategies to implement in your business.









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With compassion, respect and great expertise, Home Health Solutions Group works closely with your loved ones improving their quality of life.

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