Benchmarking Data Show Reduced Turnover with “The 80th Percentile Principle”

Stephen Tweed | July 7, 2021 | Research & Trends
By Stephen Tweed  In our last Issue, we shared with you "The 80th Percentile Principle", and how you can use this concept to reduce turnover and grow your business. As you know, the biggest barrier to growing your home care business today is caregiver recruiting and retention.  If you can't find and keep caregivers, you…

By Stephen Tweed 

In our last Issue, we shared with you “The 80th Percentile Principle”, and how you can use this concept to reduce turnover and grow your business.

As you know, the biggest barrier to growing your home care business today is caregiver recruiting and retention.  If you can’t find and keep caregivers, you can’t serve more clients.

“The 80th Percentile Principle” says that you can effectively grow your home care business by positioning your company at the 80th percentile in your local marketplace for both billing clients and paying caregivers.

Review your Home Care Benchmarking Study from Home Care Pulse

This past week I set aside some time to go through the 2021 Home Care Benchmarking Study from Home Care Pulse.  I have had my copy of the study for a few weeks but I had not taken the time to go through it in detail.  One of the very important data points I found shows that companies who pay caregivers above the 75th percentile in their local market have dramatically lower turnover than companies that pay below the 25th percentile. 

You might look at that data and say, “OK. So what? What can I do about that?”

What you can do about that is conduct your own mystery shopping of your competitors to find out how much they charge their clients and how much they pay their caregivers.  Plot that on a spreadsheet and do some math. Where do your bill rates and pay rates sit on the chart compared top your competitors?  Then look at your annual turnover rate for 2020.

According to the benchmarking study, median caregiver turnover in 2020 was 65.2%.  This is up slightly from 64.3% in 2019, and the trend over the past five years was at about 65%.  Then you look at the data and see that companies that pay more than the 75% percentile had turnover of 49.3%, and companies that pay at the 25th percentile or less had turnover of 75.1%.

Grow Your Company by Keeping Your Caregivers

Imagine how much you could grow your business if you could keep more caregivers?  In our Home Care CEO Mastermind Groups, when we have discussed caregiver recruiting and retention, I’ve heard members say, “I could double my business if I could just find more caregivers.”  We are in a place in our industry where there are an overwhelming number of seniors looking for care at home.  We are at a place where if you can get the caregivers you can get the clients.

Look at the numbers, and you can see that if your company can reduce turnover to 49% instead of 65%, you will have more experienced caregivers to serve more clients.  We see that most companies are having trouble recruiting caregivers, and the new caregivers they recruit are going to replace caregivers who left.  That means many companies are not growing because they have no net new caregivers.

If you can’t recruit enough new caregivers, you can only grow my keeping the ones you have. If all you are doing in your recruiting is keep up with the “churn”, you won’t be able to grow.

Discuss Ideas That Work with Other Owners

Having the data is important. Knowing what to do with the data is critical.  One of the lessons we have learned from our Home Care CEO Mastermind Groups is that companies in the Top 10% of the industry are more likely to use industry data to improve their systems and take action on ideas to grow their businesses.  A quick survey of our 43 CEO Mastermind Groups in January of 2021 showed that 69% of our members grew their revenue in 202o over 2019, and the average annual growth was 14.55%.

If you would like to have regular discussions with other owners of home care companies that are similar in size to your company, and who do not compete with you in your local marketplace, you may want to explore becoming a member of a Home Care CEO Mastermind Group in the Home Care CEO Forum.  We currently have openings in our Top 10% Mastermind Group, and in our Top 7% Mastermind Group.  The Top 10% Group is made up of independent home care companies with annual revenue from $3 million to $6 million. The Top 7% Group are companies with annual revenue from $5 million to $12 million.  If you fall into that range, from $3 million to $12 million, we invite you to contact us.  We will have a conversation with you to learn about your company. If you do not compete with any of our current members, we will invite you to visit one of our monthly Zoom video meetings and meet the group.  If feels like a good fit to you, we’ll invite you to join the group.

We’re Approaching In-Person Meeting Season

Each of our Home Care CEO Mastermind Groups meet twice a year in-person for two days, and once a month by Zoom video.  All of our groups are in the process of planning their semi-annual in-person meetings.

  • The Strategic Growth Group will be going to Orlando Florida in September to hold their mastermind meeting right before the Home Care Association of American annual meeting.
  • The Top 10% Group will be going to Spokane, Washington to visit a larger company that is a member of our Top 5% Group.
  • The Top 7% Group will be going to St. Louis, Missouri to visit a member of their group.
  • The Top 5% Group will being going to South Bend, Indiana to the campus of Notre Dame University and a visit to another member of their group.

Home Care CEO Mastermind Groups are not for everyone, but if you own an independent home care company that generates between $3 million and $12 million in annual revenue, we would love to have some conversation about becoming a member.  If you are a company that generates between $1.5 million and $3 million, we have a waiting list of companies to join our Strategic Growth Group, and we are exploring the potential of forming a new group to meet that need.  We also have a waiting list for our Top 5% Mastermind Group, which is 12 companies between $8 million and $38 million in annual revenue

Take a look at the web site, and visit a Mastermind Group.

Want to have regular conversations with other owners about recruiting and retention? We have some openings in our brand new Caregiver Quality Assurance Mastermind Group. This is a group of companies that meet monthly to discuss burning issues around caregiver recruiting and retention.  We have openings in this group for either independents or franchises who are at our above $1 million in annual revenue, and new groups will be forming as our current group fills up.

Visit our Web site, and come visit the Caregiver Quality Assurance Mastermind Group.



Stephen Tweed
Stephen Tweed, CSP, began his journey as a business strategist in home health care in 1982. Today, Stephen is among the top thought leaders in Home Care strategy and management. He has worked with top 5% companies from across the US. He is a sought after speaker at from national and state association events.

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