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Low Wages for Direct Care Providers Come with Strings

Analysis  |  By Lena J. Weiner  
   September 26, 2016

As health systems take on more long-term care services, healthcare executives must choose between paying living wages to CNAs and health aides, or dealing with the consequences.

Anna Ortigara, RN, an organizational change consultant at the Paraprofessional Healthcare Institute, routinely gives talks about how healthcare organizations can improve person-centered care, boost morale, and retain more workers. During a recent speaking engagement, an executive from a healthcare organization approached her with a problem this leader believed to be unique.

"This person told me that they have some employees that cannot work more than 28 hours a week, because if they work more than that, they will stop qualifying for their Medicaid benefits," Ortigara says.

It's not that these workers don't want to work over 28 hours, the leader explained to Ortigara; it's that, even when working in these roles full-time, these workers cannot afford to pay for health insurance, much less to pay for healthcare out-of-pocket.

And so, these workers stay in a permanent state of underemployment and without opportunity for advancement, because providing adequate care for their family is unreachable should they cease to qualify for Medicaid.

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The healthcare leader Ortigara was speaking to was certain this problem was rare, but Ortigara was familiar with it.

As health systems consolidate and become responsible for more services, including long-term care and care transitions, more healthcare leaders will find themselves making decisions regarding providing livable pay and benefits.

Run the Numbers
The first step to addressing this problem is admitting that there is one.

According to research conducted by PHI, 39% of direct care workers and their families in 2013 were found to receive benefits from Medicaid; 33% receive public assistance for food and nutrition support, and the total number of direct care workers receiving any sort of public assistance is 49%.

"Many of these people are working full-time jobs, but it's not a living wage," says Ortigara.

Looking at median wages doesn't tell a much rosier story. According to the Bureau of Labor Statistics, in 2014, the average hourly earnings for three common direct care provider roles were:

  • CNA: $12.07
  • Home health aide: $10.28
  • Personal care aide: $9.83

Most people cannot live comfortably on those wages, says Ortigara. "Anything can happen to upset the apple cart with these workers."

The example Ortigara likes to point to is the common annoyance of a car breaking down. For most workers in the professional class, several hundred dollars in car repairs is an annoyance, but survivable.

For someone earning less than $13.00 hourly, "their world is torn apart," she says. "They now can't get to work, and they may need to quit their job. Or they may just stop showing up to work because they don't have the money to fix their car."

The High Cost of Turnover
Consider what high turnover might mean for the bottom line.

Ortigara's colleague Abby Marquand, director of policy research at PHI, points to reduction in turnover as a vital part of improving patient outcomes. The "cycling in and out of the workforce" can undermine care relationships between staff and their patients, she explains. And what leads to reduced turnover?

"Increases in wage are linked with reduction in turnover," says Marquand, while lower wages are associated with higher turnover in workers. Research places the cost of this turnover at about $6 billion across the US health system, or $3,500 per lost worker, she says.

"That's just the cost of people leaving jobs and needing to replace them... I'm sure organizations could better spend that money in a way benefits people."

Increased starting wages also makes recruitment easier, says Ortigara.

"People act like it's not about the money, but guess what? It is…. If we start offering a reasonable wage, I believe we will attract wonderful workers who want to do this work. It's about respecting and being valued."

Lena J. Weiner is an associate editor at HealthLeaders Media.

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