Report finds therapy costs, contract labor squeezing home health agencies

Accounting and advisory firm Citrin Cooperman has released its 2024 Home Health Care Benchmark Analysis, a detailed look at cost, staffing, and utilization trends drawn from Medicare cost report data. The report offers a snapshot of how agencies across the country are performing — and how regional pressures are playing out in New England.

Nationally, RN and therapist cost-per-visit remain elevated, with the Northeast feeling those impacts more acutely. The analysis also points to strong therapy-driven utilization and rising contract labor costs, particularly for PT, OT, and speech services — trends that echo the workforce and reimbursement strains reported by many Massachusetts providers this year.

Key findings from the 2024 benchmark analysis

1. Therapy continues to drive a major share of utilization

Across Medicare and total visits, PT and OT account for more than one-third of all activity.

• Medicare PT: 32% of visits
• Total-visit PT: 25% of visits
• Strong reliance on therapy suggests sustained demand for rehab-focused staff and contract labor — an ongoing challenge for Massachusetts agencies.

2. LUPA rates remain low, but high-acuity cases are meaningful

Low-utilization payment adjustment (LUPA) episodes remain stable at about 1.6%. Outlier episodes — higher-resource cases — reach nearly 7%, signaling a heavier-acuity patient mix and higher cost burdens for agencies.

3. PS&R visits per full episode remain near nine

• Full-episode average: 8.78 visits, consistent with PDGM expectations and useful as a benchmark for clinical productivity.

Outlier episodes require 18+ visits on average, becoming a major driver of cost in complex cases.

4. Direct salary costs show continued upward pressure

Average hourly payroll costs (analysis data):

• RN: $56.29/hr
• PT: $70.05/hr
• OT: $66.49/hr — keeping therapists among the most expensive disciplines on payroll.

5. Contract labor is even more expensive — especially in the Northeast

Contract therapy rates outpace direct staff costs across disciplines:

• PT contractors: $71.11/hr
• OT contractors: $62.57/hr
• Speech contractors: $67.23/hr

The gap underscores ongoing workforce shortages and a continued dependence on contract therapy, particularly for smaller and rural agencies.

6. Cost-per-visit remains elevated across disciplines

Examples from the analysis column:

• RN cost-per-visit (CPV): $176.25
• PT CPV: $172.74
• OT CPV: $167.12
• Home health aide (HHA) CPV: $85.59

These higher visit costs point to a tighter financial squeeze under PDGM, particularly when reimbursement rates are flat or lagging.

7. Home health aide utilization remains low

Aides account for a relatively small share of overall volume:

• 4% of Medicare visits
• 9% of total visits

The numbers continue a national trend of declining aide utilization and supply, a concern for agencies that rely on personal care to keep patients safely at home.

8. Supervisory nursing roles carry the highest hourly payroll cost

• Nursing supervisors: $60.38/hr

Higher costs for supervisory RNs add to overhead and factor heavily into leadership staffing models and span-of-control decisions.

9. Medical social work remains a small but costly service line

• Medical social work represents just 1% of Medicare visits.
• CPV is high at $254.84.

For agencies serving patients with complex social needs, the combination of low volume and high cost remains a pressure point.

Implications for Massachusetts providers

• High therapy costs and utilization mirror Massachusetts’ rehab-heavy case mix, especially in post-acute transitions.
• Contract labor is a significant driver of expense and is likely more pronounced in a high-wage region like New England.
• Outlier and high-acuity cases increase resource strain without always bringing proportional reimbursement.
• Persistent home health aide shortages track with statewide workforce challenges across the long-term care and community-based sectors.
• Rising cost-per-visit figures continue to collide with PDGM and stagnant payer rates in a competitive certified home health market.

For agencies looking to benchmark their own operations, the analysis offers side-by-side comparisons of direct salaries, contract labor rates, visit mix, episode types, and CPV across multiple disciplines — tools that can inform budgeting, workforce planning, and strategic decisions heading into the next fiscal year.

The full 2024 Home Health Care Benchmark Analysis is available online:  https://url.us.m.mimecastprotect.com/s/eTe5Cwp7ZRfgXmATyuXCJ-DQ3?domain=homecareallianceofmassachusetts.growthzoneapp.com