“As inflation has continued to raise the cost of everyday purchases, it is having the biggest impact on those working at or close to the minimum wage. This is true across many industries including caregivers and other essential workers in the healthcare industry. This poses a significant issue to some healthcare agencies, especially Medicaid-reimbursed, given that service rates for these agencies remain static.”

Amid Inflationary Concerns, Healthcare M&A Creates Career Headroom for Employees, Stable Investments For the Market

Mike Moran

As inflation has continued to raise the cost of everyday purchases, it is having the biggest impact on those working at or close to the minimum wage. This is true across many industries including caregivers and other essential workers in the healthcare industry. This poses a significant issue to some healthcare agencies, especially Medicaid-reimbursed, given that service rates for these agencies remain static. Yet, the cost of labor is continuing to increase, further cutting into already-thin profit margins. As those employees face the squeeze from inflation, they may elect to look elsewhere for higher paying work, leaving providers in the position of having to raise wages while facing no increase in reimbursements.

As Medicaid rates vary from state to state, there are certain geographies where efforts are being made to increase those reimbursements. In Louisiana, for example, an I/DD organization I’ve recently gotten to know that is a provider for medically-fragile children is anticipating a rate increase which he’ll use to increase the wage of their direct care staff and others. Similarly, the APA (Alternative Payment Arrangement) in Pennsylvania through CBH (Community Behavioral Health) has expanded their funding through the end of the year, a program now that has been in effect since the onset of COVID. Contrarily, a large Home Care agency we represented in Texas, which sold in Q1 of 2021, has increased their direct-care staff rates to remain competitive. However, in this case the state has so far been reluctant to increase reimbursements.