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Is there a single right way to run a home care agency? We sure don’t think so. That’s why we’re interviewing home care leaders across the industry and asking them tough questions about the strategies, operations, and decisions behind their success. Join host Miriam Allred, veteran home care podcaster known for Home Care U and Vision: The Home Care Leaders’ Podcast, as she puts high-growth home care agencies under the microscope to see what works, what doesn’t, and why. Get ready to listen, learn, and build the winning formula for your own success. In the Home Care Strategy Lab, you are the scientist.
Miriam Allred (00:10)
Hey everyone, welcome back to the Home Care Strategy Lab. This is Miriam Allred, your host. It's great to be back with all of you. In the lab today, I'm sitting across from Joseph Kitonga the founder and CEO of Vitable Health. Joseph, welcome to the lab.
Joe (00:24)
Thank you for having me.
Miriam Allred (00:26)
I'm excited to reconnect. You and I have crossed paths over the years and it's been a minute since we've reconnected, but I'm excited to hear and learn more about what you guys are up to and want to pick your brain on all things health insurance, major medical for these home care companies. You launched several years ago and now you're working with 600, 700 home care companies. And so you've grown a lot. You've got a lot of experience under your belt. And when I think of you, I think of kind of the medical health insurance guru or expert in the industry. And so I want to pick your brain on all things health insurance.
Before we do that, want to have you introduce yourself. Tell everyone a little bit about your personal background working in home care, your mom running a company. Give us kind of the story behind what you're building today.
Joe (01:06)
Well, thank you for having me, Miriam. It's been awesome to watch your journey and the just quality and caliber of conversations you've had on. so like my background starts with my family and I immigrated from Kenya to the US when I was 13. And I was really privileged that Philadelphia was willing to adopt me and my family and
I grew up watching my parents, once we immigrated to the U.S., especially many immigrants, chasing the American dream. started a, my mom and my dad were actually caregivers when we moved to the U.S. and then they started a small business, a senior care agency, a home care agency, that they grew to a meaningful size over the last decade and a half, about 200 caregivers. And for 10 years, I basically worked for my mom and her agency, everything from going back at
to the very beginning as they were, they started it in Pennsylvania, was as they were applying to get licenses and were rejected and reapplying. I'd come from school and said that my mom would have me sit in front of the computer and help her with filling out the forms. Once they were approved, getting the initial patients, ⁓ I played the guitar and my mom would have me go to the senior living centers all around Philadelphia, play the guitar so that they could get in front of patients and
all through getting the, it's just been like phenomenal journey watching my mom, my dad sort of build this business, it's a really difficult business to be in because it's also like, think the most, like agencies do the most important work in our community is taking care of our seniors and know.
people with disabilities in their homes and bringing empathy to every interaction. there are constantly challenges every day that I think most businesses, most other businesses probably don't comprehend. this was the foundational piece of my upbringing, just helping and working alongside my parents as they built this agency over the last decade and a half. But before that, I studied computer work.
High school, I studied computer engineering, Penn State, and then interned for three summers at Microsoft working on Xbox. I think it just, being at Microsoft in Seattle, emphasized this disparity of care and access that I'd go to in the summers and I'd have perfect health care. No deductibles, on-site clinic, no co-pays. It's just I show up and everything is taken care of.
And I'd go home in the summers, at the end of the summer, and help my parents out for a bit. their caregivers would come when they were sick and say, I'm feeling really sick, and I don't even have $100 to go pay for copay. For the few that did have coverage, and for those that didn't have coverage, they were stuck over utilizing the emergency room, where 70 % of visits are unnecessary, costing an average of $1,300 per visit, which is a lot of money for anyone.
But it's especially taxing for the everyday worker, given that most Americans don't have $400 saved up for a medical emergency. It makes upward mobility more difficult and just perpetuates a cycle of debt. But more importantly, at least to me, as I came to learn, it also leads to worse health outcomes. And the stat that sort of blew my mind is that in Philadelphia, two zip codes just five miles apart. The average life expectancy difference is 20 years.
And it's not rocket science why that's the case. There's a few variables that contribute to it. But the one that I felt was absolutely within our control was that there's just a lack of access to high quality preventive care. And so I was wrestling with this. We know what great care looks like. It's access that's the problem. And technology is uniquely suited to solving access problems. But I just felt like no one was focused.
on helping employers like my mom. At my mom's business, you'd have ADP and HR payroll reps and workers knocking down the door every day. I actually can't remember one health insurance rep coming in. It's just like this. for most agencies, they are likely familiar with the Blue Crosses and United of the World.
offer, you know, they automatically disqualify the home care agencies because they can't meet the enrollment requirements. And it's just this it's like this huge problem. but it's just no one was focused on. I just felt like this is really backwards because it's something that is absolutely within our control. And so anyway, like I dropped out my last year of school to focus on building Vitable full time. we
the core of what we're building is just how can we help employers like my mom offer affordable, high quality health plans and benefits to their caregivers in a way that enables them to attract and retain talent, to be compliant with ACA, the Affordable Care Act, and also to help them grow and save money on unnecessary spend that oftentimes creeps in.
And today we serve about, I think, close to 700 agencies with over 130,000 employees. so, but the, I actually think, although they were probably the largest home care focus health plan in the country, but we're so early and it wasn't until recently that we started sharing our message more broadly because I think
There's such a need for affordable healthcare, but oftentimes the options that are available for employers like my mom were awful and they just perpetuate the problem that continues to exist. And we are singularly focused on helping caregivers and their employers get access to high quality care. And our belief is that
And as we go on, I can share bit more about how we do it. But our belief is that if you make health care affordable, and all of our plans include primary care through doctors that actually work for our medical group for free, our belief is that if you reduce the barrier for getting access to care, like no co-opays, no deductibles, no complicated terms, you just turn on your app and have a visit same day instead of waiting three weeks taking off of work, a shift that you probably can't afford.
You know, our belief is that over time you actually get to increase the average life expectancy of the patients and members by probably five to ten years. Just like it's not rocket science, it's really simple things, but it requires a level of being unrelenting to just an empathy to understand the unique needs and challenges that caregivers and their employers have. that's been,
probably our biggest advantage and our reason for existing as a company.
Miriam Allred (07:57)
Okay, great introduction. And I've already got loads of questions based off what you just shared, but I love actually the contrast. I didn't know your Microsoft background, but I love that you were working, you know, high-end, you know, top, top 100 companies and they have like this premium healthcare experience. And then in the summer you'd go back to Philadelphia, be back at your mom's agency and see like the stark contrast of the reality of healthcare and the lack thereof offer to these caregivers. Like I love that contrast and you.
coming back to the home care world and thinking like, wow, this has got to change. Like it really is backwards. Okay. Lots of questions though, to just like get right into this. You have worked with so many home care companies at this point in time. I want you to think through the lens of these operators, what are the most common misunderstandings when it comes to offering health insurance? Again, I think people don't know what they don't know.
⁓ You know, when they hit that 50 employee mark as they continue to scale, like what, when you talk to these home care companies, what are the things that they don't understand or are just flat out wrong about?
Joe (08:55)
I think one, and this was true of my mom, I think that there's a misconception, I guess I'll use two examples. One, employers or agencies reach 50 full-time equivalent employees, they do have to offer ACA compliant plans or get fined by the IRS. oftentimes we'll speak to an agency that is
that has close to 100 and is yet to offer a plan. there's a bit of a, well, I probably will not get fined and I'm willing to take the risk. they later get audited and fined by the IRS and reach back out to us. I think the...
It's just such a distraction and it's so costly. It's called the sledgehammer fine for a reason. But the reason the ACA carved in the Part A of the Affordable Care Act, and there's Part A and Part B, and Part A is the really hefty fine.
And the reason it was carved in was to offer these minimal essential services, like these MEC plans or minimal essential coverage plans often cover these essential services that are mostly preventative services and some vaccines. And the reason was that if you increase access to preventative care, like at least the thought was like, if you increase access to preventative care, then you'll ⁓ help reduce the downstream sort of cost of care, like over time, and also like people live healthier, longer lives.
know, the, and so it's, these plans are not, I guess, complex, but they are quite awful. And so my parents, when they first saw these plans that they were offered, they said, these plans are basic, it's just a tax. It's a tax to employers to offer this check the box compliance solution, which is like, honestly, most of the health plans that are focused on agencies are really, really awful.
And so my parents, like a lot of the owners that we work with, when they hit 50, they're faced with this choice, is, I am willing to take the risk and we'll roll the dice and see what happens.
Miriam Allred (11:17)
Do they, when
you say they're willing to take the risk, do they have any sense of what this fine would be? Like how much is that fine? What are we talking?
Joe (11:23)
It's about $4,000 per employee. And it's quite hefty. So if one of your employees goes to the exchange and gets a plan, you pay $4,000 for the collective employees that you have, which is quite, quite painful and costly.
And our recommendation when we speak with owners is actually don't take that risk. It's a distraction. there is enforcement. But more importantly, so that's one, which is one misconception is that the enforcement is unlikely to happen, which is often wrong and is quite costly. thankfully, and at least most employers hear about
and are educated about the likelihood they often course correct. The second misconception is caregivers don't care about benefits. So let's say an employer is willing to and wants to operate compliantly. The second thing is they don't, my caregivers don't care about benefits. And the only thing that they care about is how much we pay them per hour. And that is true. Pay is the number one sort of
the most important variable for every agency. naturally there's a limit to how much you can pay. And if you're solely competing on pay, it's a race to the bottom because there's always an agency across the street that is willing to pay 50 cents or a dollar more per hour. And the best agencies that we partner with look at it holistically as a way to
How do we become the agency of choice for caregivers? How do we build programs to attract and retain caregivers? Because we know, especially in the states where it's family caregivers, if a caregiver leaves, that's revenue that's leaving alongside of them. the best agencies that we work with look at it as a, actually, we want to go above and beyond, within limits, naturally, but to make sure that
our caregivers understand that we absolutely care about them and to build things that they can't get anywhere else because we know that if you look at it over a long enough period of time, given the higher turnover rates within agencies, if you reduce your turnover rate from 100 % a year to 70 % a year, that's actually quite meaningful because you're spending money to acquire the caregivers.
And so the second misconception is often around, caregivers just don't care about benefits. And this was before the One Big Beautiful bill. think the One Big Beautiful bill will further stress test that assumption. Because before, at least with agencies that we worked with, call it about a third of caregivers were on Medicaid. But with the One Big Beautiful bill,
Many of those caregivers will be kicked off of Medicaid. with the subsidies likely expiring, ⁓ even if they don't expire, those caregivers will be looking at their employer and saying, before I could rely on the Medicaid for coverage, but now I need some help. How will you help me? And we're already seeing this with our members that ⁓ have friends that are on Medicaid and reaching out. Can you cover?
I always hesitate to be hyperbolic, but so I won't say that it's like a ticking time bomb, but it is quite an important consideration just given how many caregivers are relying on Medicaid for coverage and now many of them will be looking at their employers for help and our hypothesis is that caregivers will go to the employer that will provide them the best coverage.
those employers that will be proactive about that will have the greatest impact in both retaining caregivers, but also in being competitive in their local market to attract the very best caregivers that, like our belief at least is that there's nothing more important than healthcare and every single one of us utilizes some sort of care, both for acute needs, but also for
know, sort of like maintenance and everyday needs.
Miriam Allred (15:23)
was looking up stats before we got on from PHI is where I could find this 42 % of direct care workers rely on public health coverage, i.e. Medicaid. That's direct care workers kind of across the spectrum. I think you had mentioned to me maybe about 30 % of home care workers you're seeing are relying on Medicaid. Is that accurate or what you're seeing?
Joe (15:44)
No, that's absolutely right. It varies per agency and per se, but generally speaking, a third of our clients rely on Medicaid for coverage. it feels like this thing that isn't talked about enough, given just how
impactful it will be for the agencies and the caregivers. Because I think there's a limit, naturally speaking, unless you're focused on private pay clients. And in that case, it's still the case that you, like the caregiver compensation, there is a limit to how much.
an agency can pay the caregivers while continuing to have enough margin for overhead. But generally speaking, the
caregiver compensation has somehow been, like in our view, has been subsidized by Medicaid offices. Because if the caregivers needed to pay for coverage, especially for the quality of coverage that Medicaid often provides, the existing system at least wouldn't be feasible because all of those caregivers will be relying on the employers for coverage. the typical cost of family coverage is
I think over $25,000 per year, is, know, like that's not possible with home care agency. Exactly. Exactly. And so it's just unreasonable. And it's this cycle because it's, know, the caregivers are not paid nearly enough to afford coverage. And if they do have any medical needs, like the incentive is for them to stay on Medicaid.
Miriam Allred (17:16)
that's close to what the caregiver wage is. The annual wage is close to that.
Joe (17:38)
And so it perpetuates this cycle, is, I think, over time is probably, in my personal view, and this is, some of these things are outside of my current control, so it's more of an opinion as opposed to something that we're actively looking to solve, at Vitable. But my personal view is, if the caregivers that are taking care of
our elderly and our most sick members of the community are also relying on Medicaid for their coverage, as opposed to getting paid enough so that they can, and not just Medicaid, but other public assistance benefits. I think the more rational choice would be to
increase the pay that they have so that they don't need to rely on Medicaid and other forms of public assistance, which is somewhat increasing the cost in the short term on how much agencies are reimbursed for those that are relying on Medicaid and Medicare. also, like overall, would reduce the total cost of care if you took into account the public assistance and Medicaid.
coverage that is going to caregivers. And I know a lot of the agencies that we speak with also share that perspective. the margins are really tough. It's a really, really tough business to be in. And many of the agencies we work with are in it because they care about delivering and serving. But I think something does have to change pretty soon for it to be sustainable.
Miriam Allred (19:06)
Yeah, a couple of thoughts on that. The way that I've heard it explained as well as like this benefits cliff, and we don't talk enough about this in home care, this like perpetual cycle that you're talking about where the caregivers aren't making enough so they can't afford their own health insurance. So then they're also taking advantage of the public, not taking advantage, but utilizing the public health coverage systems. And it's just like perpetuating this issue. And you're right. I don't think we talk enough about it in home care. And the second misconception that you were talking about is home care operators say,
they don't want benefits, they don't need benefits. I actually think it ties back to this issue is there's this benefits cliff and the caregivers are aware of it. They know how much they need to make to stay above or below that Medicaid threshold, but we're not talking about it or addressing it head on. I think it's kind of like swept under the rug. It's kind of this like unspoken truth that again, we're not talking enough about. And so I'm glad you bring awareness to that. And it's a big...
Issue to solve but you would what you all are doing at least addressing this issue head-on is bringing more awareness to it and Opening up the operators eyes about you know, what's happening and what we need to do about this issue Let's get into the weeds of the different options. You've already referenced MEC plans You maybe even said the health reimbursement arrangements HRAs Employers have options. There's no like one-size-fits-all when it comes to health insurance But like you've said the kind of big traditional Blue Cross Blue Shield, United
Joe (20:21)
you
Miriam Allred (20:30)
Those aren't necessarily tailored to home care. So I want you to explain the different options that exist that providers need to consider. Can you break down, what their options are, direct primary care, MEC plans, health reimbursement arrangements? Can you just kind of dial through like what the options are and then we'll get into the weeds on each of them.
Joe (20:50)
The foundation, because of how margin-constrained agencies are, they want to maximize, how much value can I give to my...
caregivers, but oftentimes the options they have are not high quality enough at all. So the baseline options are, once you have 50 employees in the agency, you have to offer an ACA compliant plan. And usually you'll offer a plan, like most agencies we run into, we'll start by offering a baseline, minimum essential coverage plan, covers part A of the fine, which is a sledgehammer fine. But it's a bare bones plan that is honestly quite awful.
Everyone that sells these plans knows they're awful and they're like largely to check the box solution on compliance. ⁓
Miriam Allred (21:34)
What do they
offer? you explain it minimal essential coverage? Like what are those like minimal essentials?
Joe (21:38)
Yeah, yeah.
they only cover preventative services. for instance, and so the coverage is actually not high at all. So for instance, if you were to get sick and go to the urgent care, it would not cover that. It would cover your annual physical exam. It would cover your vaccines. It would cover colonoscopy and other preventative sort of screenings, but only preventative service. If you did get sick,
and you needed to see a doctor, it would not cover that. But the dirty secret is that these plans are designed so that no one uses them. And the people that sell them are very high margin plans because they offer them as a look. You offer this and you're.
employers offer this and it's just like a tax. plans are like taxing the employer. And part of what inspired the launch and I get quite angry about is that these plans can actually be a net positive for society if you actually invest in creating something that the caregivers will use. So they turn from just being a compliance check the box solution to being something that helps employers both meet compliance and attract and retain talent.
And so the foundational sort of part of the plans we offer are these. ⁓ We offer different plan designs and tailor to the unique needs of the agency. And so I'll start maybe broad scope and then narrow down on what makes each ⁓ unique, both for us and what is typically offered. So the suite of plans that we offer at Vitable are call it broken into three options. One are
our level funded plans which include the minimum essential coverage plan and we also have a minimum value plan that meets part A and part B compliance. And then we also offer our health reimbursement arrangements, so that could be QSERA for qualified small employer, health reimbursement ranges for employers with under 50 employees. They can offer this plan and if employees still need to utilize and get subsidies from the exchange, it wouldn't affect that. ⁓ So for employers with under 50, that's quite.
useful for business, which has actually been our fastest growing product, what we call our individual contribution, health reimbursement arrangement, or ICHRA It's employees under 50, over 50 employees, or under 50, but ⁓ we typically see it utilized by employees over 50. And usually hundreds of employees, they'll have office staff, maybe 10, 20, 30 office staff that they want to, like, and they're
generally higher income than the caregivers and they want to offer them like a high quality health plans. But again, like the United, Blue Cross wouldn't underwrite because of the, it's only like 10, 20 % of the employee population. So those tend to do really well where, like my mom actually offers for the office staff, they use the ICHRA they offer our level funded minimum value plan to the,
you know, the caregivers and the last option of plans that we offer, which is what we call our direct primary care plan. It's included in all of the plans that we offer. And this is actually what helps employers attract and retain talent. the way to think of it is a simple membership, quite affordable, that covers about 70 % of the healthcare needs someone would have. So whenever someone gets sick, they could open our app.
or call us and they'll speak via chat, video, or phone with one of our providers, like same day visits instead of waiting three weeks to get an appointment. And the provider will either see them virtually or in specific markets like Philadelphia, one of our providers will actually come and do a concierge and home visit or a work site pop-up visit.
And it's quite powerful because caregivers can't afford to take off time from work. it's either you meet them off hours or you come directly to them, but it's reducing the barriers. there are no co-pays in this plan. It doesn't hit their deductible. It's just quite simple. And because of the way we've designed the plan, not only the unlimited sort of virtual visits, we also include 1,000 plus medications for free. 40 plus are the most common lab tests for free.
⁓ And we've built a first party cash pay network. know, for things specialist visits like imaging, et cetera, we've built a cash pay network and negotiated favorable rates that are like, even if you are insured, it's like probably more affordable for you to pay cash pay versus dip into your deductible or pay the copay on your plan. ⁓ But it's in essence designed to make it, simple for the everyday worker to get access to the
preventative and also sick care visits that they would need and to have them avoid going to the ER, which is just really expensive. But, we pair that direct primary care plan in every one of the, either the level funded plan options that we offer or the ICHRA because the, and that's what most people use. And so like when you speak to our members, our average NPS is 92 compared to the typical health insurance NPS of like
nine. Yeah, yeah. If you ask what the typical NPS for, you know, home care focus benefits like MEC plans, it's like negative 10. You know, it's like everyone knows their awful plans. And our belief and like, you know, when we go to an employer that has any one of these things in place, we win 95 % of deals because it's like, it's, it's
Miriam Allred (26:35)
I was going to say a lot lower than that.
Joe (27:00)
Employers want to offer great benefits. It's just the cost that's the problem and they previously weren't any options. And so when you look at, yeah.
Miriam Allred (27:07)
Yeah, they're trying to fit into these
very generic plans that just don't make sense for home care. I want to ask one specific nuanced question that's relevant to all of these plans before we get into them another layer deeper is part-time employees versus full-time employees. Like that's a hang up with offering major medical is in home care, there's a lot of part-time employees, but there's also full-time employees and also full-time caregivers. When I say full-time, I don't just mean the office staff. I also mean full-time caregivers. So address that nuance head on.
Joe (27:12)
Exactly. Yeah.
Miriam Allred (27:36)
part-time versus full-time and how insurance providers address that nuance.
Joe (27:41)
The ACA looks at full-time equivalent employees. And that's looking at over the preceding months how many of the employees have worked on average 40 plus hours per week. what we often see is,
the employers that we work with, I'll use my parents as an example. They have 250 total employees that they work with, but only about 200 are full-time equivalent. And so they offer benefits to the, like the minimum essential coverage and the minimum value plan are typically tailored for the full-time equivalent employees, and that's what the IRS looks for as a,
audit and find agencies. But the part-timers, know, natural, like usually employers want to offer something and that's where, but they don't have to. ⁓ That's where the, usually like what we see is they'll offer the direct primary care plan. ⁓ But in terms of compliance, it's usually tied to the...
full-time equivalent, which is largely the number of hours worked over a specific look time period. And that calculation is honestly one of the things that we help our clients with because it's a nuanced one. We've seen some owners try to somewhat game that nuance unsuccessfully, but it's
usually just full-time equivalent. Like even if they are hourly employees, it's the number of hours they've worked on average over the last.
Miriam Allred (29:25)
So you don't actually combine part-time employees. So say you have 30 part-time employees, that's not like 20 full-time equivalents. That's not how it works.
Joe (29:35)
I don't believe so, no. ⁓ It's largely the number of hours ⁓ that each caregiver works.
Miriam Allred (29:41)
Per employee, okay. And that's where that calculation comes into play. Like it's a little bit confusing because in my mind it's like, yeah, do you combine the part-time hours and then that equates to a full-time equivalent or no, it's just full-time equivalent based off those actual hours work per employee. Okay. Yeah, that was just one of the nuances that I want to cover. Let's, I kind of want to do this case study style. Like there's probably three different home care companies that are listening to this. Those that are below 50 employees, those that are probably between 50 and like 250.
which we already kind of addressed, and then like 250 plus. Can we talk about like each one? I think this would be the best use of our time is actually like focusing on each size and what you recommend they do and look for at each size. Because again, I think those three people are listening to this and they're like, okay, what exactly should I be considering? not even just from the Vitable lens, but like what are the things they should be thinking about considering and then potentially offering at that size. Let's start with a small group. So a company that's below 50 caregivers.
They probably have three or four people in the office and they probably have less than 50 caregivers and they probably have a mix of full-time and part-time caregivers. What should they be considering and what should they put in place below 50 employees?
Joe (30:53)
Yeah, as you're getting started, you are competing against the glides in whatever market you're playing with. And you could choose to pay more, but that's a losing game, in my opinion. And you should compete on experience for caregivers and just being the most caring and like, the place where...
you're just unreasonably kind and just you go above and beyond both for the clients and for the caregivers. Because, and for your office staff, like at this point you're scrappy, you're doing everything and you're just fighting to survive. And like many of the clients they've kept and as they're growing through referrals, like a lot of it is just the word of mouth and like the...
the love that the caregivers and the clients feel for them. in terms of how to think of it, it's largely within the constraints of budget that you have, how can you show that you absolutely care? One of the things that we've seen small agencies that we work with continue to do, and this isn't necessarily by size, but it's can you bring turkeys over to the caregivers? Can you host an annual celebration for your caregivers?
and where they bring their family members to celebrate and their kids, can you offer a scholarship? These tiny things that are, they don't cost a lot, but they show the thoughtfulness and the care that you have, are largely how I recommend the smaller agencies think about it. Because there is no requirement on compliance to offer a plan.
But there is a, like, how do you compete to attract and retain your great talent? And it's those, how can you show that you're going above and beyond within the limits and the budgetary constraints? But I think it's really, really important that they do so. And on the help, yeah.
Miriam Allred (32:38)
The two words that
come to mind for me is like differentiation. Like you've got to differentiate yourself against the Goliath and then also like culture building. Like you want these caregivers to have a unique experience with you and focus on building that culture and going above and beyond in the ways that you just mentioned.
Joe (32:52)
Exactly, on the culture building, and you see this in home care and even outside of home care, where the companies that have access to the same talent pool just deliver a different experience that you absolutely love and is like, wow, that was refreshing. And it is the culture that they build. in my opinion, it starts with how do you treat the caregivers?
Do the caregivers feel like you care and love them and that you're thoughtful and want the best for them? Because then they can translate that to how they care for your patients and clients. But if you're not thoughtful and caring with how you treat your caregivers, it's very unlikely that they will be thoughtful and caring. But you have largely access to the same talent pool. ⁓ And you can see this in food and grocery.
same talent pool, just like substantially different experience that's given and it's, you the culture is the foundational part of that. the benefits that you offer should be enforcing or reinforcing the cultural tenants that you want to have. But, I think it starts with whatever experience you want to give to your clients, like starts with how you treat your caregivers. And, like the benefits reinforce those tenants and the, in
Terms of like, health benefits, think typically what we've seen is that the options are, you you offer some low-cost virtual care options or, medication discount or prescription discount options that are low cost for the employer but that are like, quite valuable for the employee. Or you offer a QSEHRA option for the employer and you choose the budget that you can afford. And so if you can only afford a hundred bucks or 50 bucks per employee,
And that's also okay, but you choose the budget that was within your constraints and it doesn't impact the employee's ability to go take advantage of the subsidies on the exchange. for those that don't meet the subsidy threshold or if the subsidies go away, the employees get to use that additional 50 or 100 bucks or 250 for the most generous ones to, on a healthcare.
⁓ services that help them stay at work or instead of rushing and going to the ER. But it's largely within the budgets and it is a competitive advantage. We have one Visiting Angels franchise in Florida that did that and they mentioned the way we win is by just the culture that we build and it is absolutely true. The way for David to win is by being
ever present and having a reputation for being the best at delivering the service and caring. It's just something that is quite powerful.
Miriam Allred (35:38)
A couple of stats on this. I was looking at Activated Insights Benchmarking Report about who offers benefits, major medical specifically, at what size. And so just wanted to share a couple of these. So major medical companies between zero and 800,000, 10 % of companies are offering major medical. Companies from 800,000 to 1.6 million, 12 % are offering major medical. And then where we see the first big jump is 1.6 million.
to 2.8 million, 28 % of those companies are offering major medical. So just to kind of confirm what you're saying, below 50 employees, you're not required to offer major medical, but it can be an advantage. It can be a differentiator. I think the thing that's resonating with what you're saying is you've got to ask, you've got to know your employees. What's high priority to them? What's important to them? If you've got a lot of prospects coming to you that are seeking out major medical because their other home care company's not offering it, like...
That's when you start to these questions and start to research options that make sense for you. Because again, it's not required, but it doesn't mean you shouldn't do it. And it really just depends on what your employees value and what they need and what you're hearing from them, which is also back to that like culture-based concept, which is just really knowing your employees well enough to know what they value, to know what they prioritize. And if major medical is up there, you've got to find something to offer them.
Joe (36:55)
Yeah, and I'd even argue that, like for instance, the 10 % and 12 % under, I think it was 1 million revenue.
I think the story that always sticks in the back of my mind, if you'd asked people whether they wanted a faster horse or a car, they would have said they wanted a faster horse. And I think when competing for talent and building culture to differentiate against the Goliaths
Like benefits are just a part of the solution. It's, and if you ask caregivers, what is the most important thing to you? It will be pay. It is absolutely going to be pay, but there's a limit to how much you're going to be able to pay. And so you need to be able to like put together a package of things and benefits being one of those things that enable you to in some ways like persuade and show how much you'd be able to.
care and go above and beyond what a typical Goliath would be doing. the default, if you asked the caregivers that we speak with what they care most about, the first thing is I want more pay. And I know owners would be eager to pay more. It's not that they don't want to. But there is a limit. benefits are the, at least as we've seen, the
For those 10 to 12 % of agencies that offer them, largely it's driven by, just want to make sure that we absolutely win. And it's a part of the story and the narrative that they tell both to the clients that they serve and the caregivers, which is really quite interesting. But we do see that big jump as well once they get further along.
Miriam Allred (38:23)
So let's talk about that second group. Let's talk about the, which is like the majority of this home care market. We know the average is, know, that 2. something million, 50 caregivers to 200 to 250 caregivers. Like, okay, now it's required. What should they consider? What do they need to do? How should they go about investigating plans and what should they be looking for? And then what should they start offering when they're in that bucket?
Joe (38:51)
I think the most important thing is you should, if you're not compliant and you're over that 50 FTE mark, should be. ⁓ As I see it, there's no reasonable reason not to be because the fines could be quite hefty and costly, especially on the part A part of the.
of the ACA fine. the first thing would be if you're not compliant and you are close to that 50 FTE mark where you just crossed it, you should look to put in place a minimum essential coverage plan so that you avoid part A of the fine. Now, how to select a good minimum essential coverage plan? I think the first thing is what's the admin burden that they put on you? It should be simple to understand.
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hours and so that connection between your source of truth on HR payroll is seamless. And then I think that once you meet those bare bones requirements, I think the question then is, what is the experience for the employees? usually, most will say that no one will actually use it. That's like the dirty secret. And it's like, large EA. I checked the box solution. But I'd argue that
for the same amount of money that you're spending, if you could get something that would also help you attract and retain talent, why would you not do it? If you could offer something that would help your employees live healthier lives, save them money instead of going to the ER, why would you not do it? I think you're investing this money, you might as well get something, like that is our view anyway.
There's a bunch of options available, but I just ask whoever you're working with to make sure that they are, one, which is the first most important thing, just simplify compliance so that you're not constantly having to do a bunch of manual work and that you understand and you feel like they're trustworthy and you care about the small details. But two, also maximize the value that you're getting for that dollar.
what is the experience for the employees? Because ultimately, your employees will be using and enrolling in these plans. You have to offer them to your employees. And some of your employees will enroll in these plans thinking that they cover everything under the sun, because sometimes those options are not as transparent. And then they go to the ER and find out that, it does not cover anything, but now they have a $100,000 bill. And it's an awful, awful experience. And oftentimes, they'll call you, the owner, and ask, hey, what
can you do? Not only does it, it's an awful experience for the employee, but also for you, the owner, now you have these support tickets and employee concerns and potential churn. And so the quality of the vendor and also the quality of the coverage that you're getting is really, really important. And looking to see what options they have to support employees with out of network coverage or cash pay options and zero deductible and.
Miriam Allred (41:14)
Yes.
Joe (41:35)
virtual care options and the quality of those is really, really important because three months down the road, caregivers will call you really, really angry. one, you essentially lose revenue. But two, on the employee perspective, it's an awful, awful experience. But also to the business, you will be spending support and from that, you're paying back between them and the agency. So that's the bare bones.
like compliance for part A. Part B of the fine is you only pay the fine for that individual employee that goes to the exchange. And these plans are typically more costly. So once you get to the, call it 200 mark, usually that's when it makes sense in most agencies that we work with, start to consider two things. One, offering an option like a,
high quality major medical option for their office staff. Because now the owner is no longer doing everything. They've added support layers to help with the administrative costs. what I typically recommend is go find, like ICHRA is an amazing fit for those front office staff because the decision point for the owner is just setting a budget and then the employee can go and choose the plan that they want.
And the plans are, like name brand plans available in the exchange. And oftentimes if you offer a small group plan, like the rates that they would get are awful if they can get anything at all. but they could also consider a level-funded major medical option. But again, the rates will be quite costly. And we offer those options as well. But what we've been recommending to agencies is largely, you know,
you will save a whole lot more money by offering individual contribution, health reimbursement arrangements to those office staff if you meet the classing requirements, which is having about 10 people in office. those are the, but that transition from 50 to, that's where we see a lot of agencies struggle because you kind of need to have different.
for each of the different classes of employees from your part-timers to your full-time equivalent hourly folks and caregivers and then to the full-time staff. And finding one vendor for all is quite challenging but I think also really important because you really want to partner on compliance that makes your life easier and also on helping use the budget that you're already spending to attract and retain talent and taking on the support load so you're not...
answering questions about networks and the long tail of things that dealing with the American healthcare system usually entails.
Miriam Allred (44:08)
And I think you just did a really good job of breaking that down. The 50 to 250, like this is the sticking point. And this is why a lot of people maybe take the chance and risk the sledgehammer is because it gets complicated because from 50 to 250, like you just said, you have to break it down. You have to break it down by part-time, full-time and office staff. And that puts an administrative burden on these home care companies.
But like you said, finding a vendor that offers all of these that's tailored to home care is really the key so that they can take advantage of the right fit plan for the right fit stage of a home care company. Let's go to the next size because again, there are some enterprise companies listening to this podcast and I want to address them. At that point, they've got the resources and likely the cash flow to be able to offer really flushed out health insurance plans.
Is that what you're seeing? have clients upwards of, I don't know, five, 10,000 caregivers. What are you seeing at like kind of the enterprise level that's working well or where there's maybe room for improvement of these larger companies as well?
Joe (45:00)
Yeah. Yeah.
No, that's exactly right. Like at that point, they usually offer a minimal essential coverage plan, a minimum value plan, and the major medical options for their office or HQ staff. And they might offer some voluntary benefits for the part-timers. And what we see is like two things. One, cost. You're spending this money, and oftentimes it's
Like the ROI is just, I mean, the ROI is that we have the plan and we've avoided compliance. when we partner with the larger employers to look at the makeup of the different options they have, either by implementing ICHRAs or layering in,
and fopping out the minimal essential coverage plans that they have in place. Usually they can save upwards of 30 % or more. And because of our direct primary care plan, they can increase the quality of benefits that they offer to their caregivers. But I think the most important thing, whether it's through Vitable or through another vendor, think the most important thing is you're spending this money and your margins are so constrained. Benefits are the second largest line item after payroll for most companies.
And what is it that you're getting for these and how do you both work with vendors to reduce the cost of coverage while also improving the benefits that you offer? Because for most of the MEC plans that are offered, they're just god awful plans and everyone knows it. But the reason they're awful, and actually this is like,
I was speaking with an owner with tens of thousands of caregivers, and the thing that they mentioned was just the amount of support calls that they get. So they've staffed a team of people just answering these questions, helping them navigate what is the network, what is not a network. It's actually the cost on support is so high because the plans are oftentimes awful.
the tools, like it's not technology companies that are building tools to make it easy for people to like navigate. It's so complex. like oftentimes if you look at the plan documents, it's like 10 different vendors that are used for the, know, like because what they're selling is just a document. They just say, we have this, we have this, but on the actual employee experience, it's so clunky that, ⁓ you know, you sort of need a PhD to navigate like, where do I go for what? And so the internal like HQ staff is also figuring it out and
It's not easy for them to do. it's just this Frankenstein that's been put together, and they say, this is the plan, and they can do these things. But it's awful. And our view, and I don't mean to point out without offering a solution, but I think part of it is just asking, what is the employee experience, and is this simple?
you're investing this money and you will be answering these employee questions. having some empathy for the future benefits team to say, well, how do we simplify this and make sure that the employees can understand what they're getting? And actually, there'll always be questions. But when there are questions, it's easy to resolve them. And oftentimes, layering in really powerful care navigation and direct primary care option enables
the routing because they take care of 70 % of the healthcare needs and then can handhold the employee whenever they need the downstream services, huge on reducing the number of benefits tickets that come in. Employers we've worked with closer to 60 to 70 % of tickets just go away because it's one place that they go, it's not just a plan document and you're left to figure out, what is a network? And you'll just go to the place before you seek any help. But largely, if I was to summarize,
It's you're spending this money and how can you use it to actually deliver, how can you increase the value that you're delivering while reducing costs? And it's largely looking at alternative sort of plan designs, whether it's ICHRA or level-funded plans that layer in direct primary care because the impact is you'll have lower costs. But by layering in the care navigation and direct primary care as a front door, you actually reduce the, you know,
cost for your employees and the amount of tickets that your benefits team is getting that are frustrated.
Miriam Allred (49:23)
glad you're addressing this rollout and you're addressing it what it looks like at scale, but I think rolling out new benefits at any stage is key. And this is where benefits go south is it's bad coverage. So people opt themselves out because it's just straight up bad coverage. They don't know what even is offered to them and what you're just talking about, they can't make sense of what's offered to them. Like when you hear...
Agencies say that their caregivers don't want health insurance. It's those three things. It's not that they don't want it. They don't know what's offered. It's bad coverage or they don't know how to make sense of what's offered. And so you just talked about how important that rollout is. You have to do the due diligence, the internal preparation, make sure you've got it like a resident expert on this type of thing so that when you roll it out, it is successful and it doesn't all turn south and you waste a lot of time and a lot of money on something that your employees don't actually want.
Joe (50:17)
That's exactly right.
Miriam Allred (50:20)
This has been awesome, Joseph. I want to end by talking about this, this big, beautiful bill, like what's coming down the pipe. Like the next couple of years are going to be really interesting with what happens with Medicaid and that directly impacts our aging population, but also our workforce.
Any additional thoughts on just what companies need to be thinking about and preparing for with what's coming?
Joe (50:43)
I think one, for the additional work requirements, I think, and this is what we're doing with our clients, is we're going to help those caregivers that could qualify for Medicaid apply and keep their Medicaid coverage. And I think that's really important for employers to have a vendor that they work with to help their caregivers do that. And then two, for those that will no longer qualify,
owners being proactive about how do you help them get access to coverage. And it does lead to a rethinking of the current benefit structure because they've underwritten that only a sudden percentage of their employees will have access to care. And those that need it will go on Medicaid. And I think that needs to be rethought. because you...
You don't want caregivers reducing substantially the number of hours that they're providing to you so that they can qualify. So there needs to be a certain threshold of just pro-activeness on the employer end to meet and help those employees that will no longer qualify for Medicaid. And also, how can they meet those needs while still maintaining, living within the budgetary constraints and the margin constraints that exist?
⁓ But I think that like less about what is done how it's done is like them I think the agencies that lead with empathy and care will win because the you know in times of stress especially like an uncertainty it's the agencies that are going it's I think it's going to you know my sense is the agencies are proactive and like going to be a resource for their caregivers on these changes will ultimately win more people over and where caregivers go so does revenue and the clients
So I think that those are the sort of two and a half things that I'd recommend.
Miriam Allred (52:23)
Yeah, I love that. My last piece of advice too is just be talking to your caregivers, be surveying them regularly. What your caregiver population wants, six months, may change six months later. The demand and the interest in certain benefits changes frequently because your demographic changes. so my two cents as well is just make sure you're talking to your employees regularly, asking what they want, asking what they prioritize, and then do your best to meet those needs.
but then also be nimble and adaptable as things change. You may go all in on PTO or on sick leave or on profit sharing. You might spin your wheels on certain things, but know that things will adjust and adapt with time, but know what your employees want. Joseph, what is the best way for people to get in contact with you or the team at Vitable or if they wanna learn more information, what's the best way for them to do that?
Joe (53:12)
Just go to vitablehealth.com or reach out to me at joseph@vitablehealth.com And even if it's questions just about benefits for caregivers and agencies or ACA compliance or the one big beautiful bill, we'd be eager to help. And the last thing I'll say is all of our plans include free TB testing and free physicals as well, which for specific markets.
are really important to onboarding caregivers faster, and it's a one step instead of two steps. part of what we do is just help employers. How can we help them just with all of the health care needs that they might have for caregivers? But Miriam, thank you so much for having me. This has been a treat.
Miriam Allred (53:53)
Absolutely, Joe. Thanks for joining me in the lab. Again, like you said before, I don't know anybody else that's doing what you're doing. so congratulations to the success. And I hope to stay in contact with you and just continue to see how we can serve these employers together. So thank you so much.
Joe (54:04)
Thank you.