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Chicago home-care firm faces changes in the industry

by Katie Peralta
May 1, 2013


Wellspring

Katie Peralta/Medill

Wellspring Safety Net Systems Inc., based in Chicago's West Loop, does business as Wellspring Personal Care.

sheila2

Wellspring Personal Care website

Sheila McMackin, owner and founder of Wellspring Personal Care.


Katie Peralta/Medill

Sheila McMackin, Wellspring's founder, says long-term commitment to clients sets her firm apart. In this audio recording, she tells of one of her caregiver's dedication to a client who had fallen during a snowstorm.


The industry that provides care at home to aging seniors is on the cusp of major transformation, and a privately-owned Chicago firm, Wellspring Safety Net Systems Inc., is in the midst of the change.

The rollout of the Affordable Care Act, the aging of Baby Boomers and nurses who care for them, and the likely rise of low-price competition, all are factors that will affect the future of Wellspring as well as of the senior home care industry as a whole, according to Sheila McMackin, president and founder of the 18-year-old firm, which does business as Wellspring Personal Care.

“There’s going to be a thinning of the herd through natural forces in the marketplace,” she said.

The number of Chicagoans between 65 and 84 years of age is projected to double by 2040, according to the Chicago Metropolitan Agency for Planning’s GO TO 2040 data. Furthermore, the population of seniors 85 and older, which is the fastest growing group in the older population, is expected to triple by then.

James Swan of the University of North Texas, who holds a Ph.D. in sociology from Northwestern, said the increase in numbers of senior citizens will affect the care administered to them as well as how they will pay for it.

“In theory it should be a very great market,” he said.

However, he added, a nationwide lack of geriatric-specialized health care professionals adds to the uncertainty of the industry’s future.

“We’ve got the demand, but no supply and money,” he said.

Phyllis Mitzen, co-program director of the Center for Long Term Care Reform: Health and Medicine Policy Research Group in Chicago, said the Affordable Care Act also needs more doctors in primary care, which is less attractive than more lucrative specialties.

Swan said home care providers like Wellspring, many of them uncertain what to make of the ACA, could find themselves in a bind come 2014, when the legislation is slated to take full effect.

“Home care providers could be hit on both sides: no health insurance for under-insured and no insurance for their own problems,” he said.

McMackin, for instance, is still deciding whether to provide the employee insurance called for by the Act, or pay a fine. She feels the law could prompt some providers  to close their doors.

“The Affordable Care Act, I believe, will have a significant impact on the industry,” she said. “First of all, everyone is terrified of it. I’m worried about it and I feel pressure by it, but not terrified.”

Past success for Wellspring, McMackin said, has stemmed from the firm's heavy involvement in public policy, collaboration with other health-care providers, and a dedication to quality care.

McMackin, a social worker by trade, established Wellspring at a time when the industry offered far fewer options than it does today.  

“Our clients really wanted to stay at home,” she said. “The quality of what was available was fairly limited.”

At the time, McMackin noted, there were few standards of care, so Wellspring coordinated with the Illinois Department of Public Health to form a coalition of agencies to develop a license process for private-duty providers, known now as the Home Health, Home Services and Home Nursing Agency Licensing Act.

“For consumers, for industry, if you have all these people opening up doors without any oversight you run the risk of problems and things not being done correctly,” she said.

The West-Loop-based agency now employs 60, about two-thirds full-time and one-third part-time, who accompany clients to doctors’ appointments, pick up prescriptions, do light housekeeping, and provide companionship.

With an explosion of home care agencies opening over time, McMackin said, the competition is now fierce and has affected her agency’s business.

“When we started out, we were basically all by ourselves,” she said. “Over a 10-12 year period, it just exploded and I couldn’t keep track of how many agencies were opening up and it made it tough for us to distinguish ourselves in the marketplace.”

Wellspring has seen a decline in revenue since 2011, when it generated $2.5 million. In 2012, the firm reported $2.1 million, but anticipates an upswing to $2.4 million this year.

A weak economy and lower prices quoted by competitors are forces that often drive consumers to seek cheaper care, McMackin said. However, it's important to note, she says, is that two models of agencies exist in the industry: registry and employer-based.

Wellspring’s employer-based model employs its workers and is responsible for following the state’s employer-employee guidelines such as paying workers’ compensation and taxes. In a registry, however, a client compensates the caregiver directly, McMackin said, potentially then making the consumer the unbeknownst employer.

“The big difference that consumers see is in cost,” she said. “And that’s the largest problem we see in competition and in losing business.”

Wellspring charges $24 per hour or $275 per day for live-in care. Nationwide, however, charges average $14-$24 per hour and $112-192 daily, according to a 2012 “Cost of Care” survey by Genworth Financial Inc. McMackin said prices in urban areas, and charges by privately-held firms with a commitment to quality, tend to be higher.

“Our care is expensive. I’m not always sure it’s accurate to say it’s cheaper to take care of people in their own homes,” McMackin said, referring to a commonly held belief that nursing-home care is more expensive home care.

Mitzen said the high cost of long-term care insurance leaves many seniors unprepared to pay when the time comes, underscoring McMackin’s concern about losing customers to cheaper homecare options.

“The reality is that at some point in your life, you’re going to need some kind of long-term care, and I don’t mean just nursing homes,” she said.

Despite higher prices of care, McMackin said the agency’s profit margins are “incredibly tight.”

“People don’t do this to get wealthy,” she said, noting the gratification of the work.

Carole Bryant, a Wellspring nurse assistant, has been with the agency almost 14 years and with the same client for eight years. She said long-term care is one thing she values about working for a privately-owned agency.

“You have a tendency to get closer to the client and understand their needs,” she said. “It’s kind of difficult going to a strange client to learn new ways.”

Inspired by caring for her grandmother as a teenager, Bryant said, she had long wanted to become a nurse. She said there is always going to be a need for nurses, especially for seniors.