How Does Your P&L Compare to the Rest of the Home Care Industry?


Home care is a very competitive industry with hidden opportunities to cut down on costs and create efficiencies over time. While the cost of overhead is not as high as other healthcare businesses, the service of providing the care required presents some unique challenges

Most home care businesses suffer from higher than average turnover in both their clients and their caregivers. This puts added pressure on the sales and marketing team and continually places a need to have focused plans in marketing, recruitment, and staffing and a need for innovation and innovative thinking

4 Ways to Compare Your P&L to the Home Care Industry

Your P&L (‘profit and loss’ statement) is more than just a financial statement that summarizes the revenues, costs, and expenses incurred during the year. The numbers on this document not only provide information about the company’s ability (or inability) to generate profit by increasing revenue, reducing costs or both, but also a window into what is happening in your feedback loop of business decisions

To better understand how your agency’s P&L matches up with the industry, we encourage you to review these 4 things:

1.) Labor as a Percent of Revenue

Typically for the home care industry internal labor is around 15% but can be as high as 30% if it’s more of a startup and benchmarking depending on the business cycle. Now that the caregiver wage is on the rise this year, it is more important than ever before for a care agency owner to tighten the budget to make way for future price hikes.  There are important considerations to review before adding (or reducing) internal staff members.

2.) Quarterly Trends

The home care industry considers January through April the “busy season.” In this time, the revenues will be much higher operationally if the “seasonal” business trend can be captured.  So, if you find that your budgets are being maxed out in the first quarter, know that this is normal. On the other hand, consider that there is a trend and you should be aiming to reduce the total costs again during Q2 through the end of the year.

3.) Total Miscellaneous Expenses

Most home care agencies have little opportunity to save when it comes to their fixed costs. However, there are many new technologies that are taking over the home care sector, setting a new standard for agencies to track and manage their miscellaneous expenses. For example, there are systems for budgeting, tools to indicate where fund levels are lower than normal, electronic signature tools to keep spending in line on things like events, office supplies, vendor contracts, phone systems, etc. If you choose the right technology, you will be able to identify new opportunities to save on total costs.

4.) Marketing Costs for Lead Generation

Last, but certainly not least, is your marketing expense. Every agency Sixth Sense Solutions has consulted with usually has a significant portion of their marketing budget allocated to lead generation tactics. They set their own set of benchmarks for things like the cost per lead, conversion rate, and close rate. But what business owners need to realize is that these metrics are supposed to be getting better over time, therefore, bringing down the total marketing budget needed Also, keep in mind model match and target clients that are brought in by these activities and what the data may be telling you. But more on that later!

How Sixth Sense Solutions Can Help

Our consultants have worked with many home care organizations and are intimately familiar with the P&L of these organizations. The expertise, insight, and solutions we can bring to the table will be able to make a big difference in your organization. We have a proven process that makes it possible to find hidden areas of opportunity that are not easy to see when you are in the business every day.

Engage Sixth Sense Solutions today for a better tomorrow. Start by scheduling a complimentary discovery meeting here.


About Keith Freeman, MBA

A dynamic thinker with a great sense of humor, Keith Freeman, MBA, is a Strategic Consultant offering unique solutions to transform healthcare organizations such as hospitals, hospice/palliative, home health, and home care, RCFE/assisted living and skilled nursing facilities and professional healthcare staffing services that support them.

Leave a Reply

Your email address will not be published. Required fields are marked *