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Fleet Challenges Faced by the Home Care & Hospice Industry

Is the Affordable Care Act causing your home care or hospice organization pain? Medicare payment to home healthcare providers has been cut by 3% or more. This caused a lot of upset within the industry. According to the National Association for Homecare & Hospice, by their calculations more than half of home care agencies will be paid less than the cost of care by 2017. 

According to the Executive Director of the National Council on Medicaid Home Care, William Dombi,

“Access to home health care in a number of states is on the precipice of collapse.”

In fact, CMS (Centers for Medicare and Medicaid Services) estimated 11,781 home health agencies were caring for Medicare beneficiaries in 2014. According to a recent Modern Healthcare article, by July of 2015 that number had dropped to 11,432. Home health providers are clearly struggling and changes need to be made for these organizations to survive.

So where can we begin?

A large concern with managing home care and hospice is getting nurses, aids and other caregivers to and from the homes in which they provide service. When organizations choose to reimburse employees for the use of their personal vehicles this results in managing multiple expense reports and reimbursement checks. Plus, this usually leads to issues such as exaggerated miles reported and unexpected breakdowns. This can become costly for your organization.

Conversely, by switching to company provided vehicles you can cut costs, reduce risk, and be sure your vehicles are properly maintained to avoid costly breakdowns. While managing a fleet may sound overwhelming at first, working with a fleet leasing company can actually simplify your life and save you time and money.

Reducing Administrative Tasks

Having a company provided fleet means one easy monthly payment to a fleet management company instead of multiple checks to reimburse employees for use of their vehicles. Additionally, you’ll feel secure knowing the best choices for your fleet are being made by professionals with experience managing fleets. Plus, managing vehicle maintenance or repairs is easy when you have a fleet management partner to monitor things for you. This can also cut costs because fleets can often get discounts on maintenance and repair parts when ordering in bulk as opposed to managing this on an individual basis per vehicle.

Savings in Every Mile

The current government rate for reimbursement to employees is about 56.5 cents per mile on average. Because of this, many home care companies are seeking out other options and looking for turnkey fleet management solutions. In fact, with insurance, leasing and outsourcing the management of company vehicles cost only about 35-36 cents per mile. This means significant cost savings per driver per mile. In addition to this, you no longer have to risk paying employees more than necessary as a result of improperly reported or exaggerated miles. When miles aren’t reported accurately it can end up costing your company a lot in the long run. However, reported business mileage goes down by 30% when employees are no longer being reimbursed and are instead driving company-provided vehicles.

Safe, Well-Maintained Vehicles

Proper periodic maintenance is less expensive than costly repairs due to maintenance being put off. Many employees see a vehicle allowance as part of their personal income. This means when it comes time to repair or replace their vehicle, the employee may purchase the cheapest vehicle possible or put off necessary maintenance, in order to keep part of the allowance. This can lead to accidents or unexpected and costly breakdowns all of which take your caregivers off the road and take away their ability to provide care. 

Sending the Right Message

Another benefit of company-provided vehicles is that they send the right message to customers. When a caregiver shows up to a home in an un-safe or poorly maintained vehicle it can convey the wrong message about their views on safety and their commitment to their job. Plus, by providing vehicles the company can use space on the vehicles for additional branding and advertising opportunities.

Recruiting and Retention

Finally, company provided vehicles can be a powerful tool for recruiting and retention. A company provided vehicle is seen as a benefit to many employees. It usually means a more comfortable commute, safer vehicle and often a more fuel efficient vehicle as well. In fact, when companies move away from company provided vehicles and into reimbursement it results in an average 10% loss in workforce

So, whether you’re dealing with entirely employee-owned vehicles, or a fragmented combination of company vehicles and reimbursement due to acquisitions, get on the right path to managing your fleet and the pain caused by the Affordable Care Act. Consider switching to a company provided fleet of vehicles to better manage your costs, cut administrative tasks and even take a few things off your plate.

Additional Resources:

Blog Post: Top 6 Ways Outsourcing Fleet Management Makes Your Job Easier  
Blog Post: How to Hire (and keep!) Reliable Drivers 
Blog Post: 4 Hidden Costs of Driver Reimbursement 
Blog Post: 5 Reasons Reimbursing Drivers Costs You More
Infographic: The Dangers of Driver Reimbursement

Image courtesy of:

Driving Reimbursement Infographic