Bayada transitions from for-profit to nonprofit to save its mission-driven culture

For almost a decade, the future weighed heavily on J. Mark Baiada’s mind.

The founding CEO of Bayada Home Health Care, one of the nation’s largest home health companies with about $1.4 billion in annual revenues, was searching for a way to protect the values legacy of the company he founded by preventing its sale to profit-driven buyers.

Baiada nixed the options of going public or private equity because he didn’t want to take on investors nor did he want to pass it on to his five children, telling the Courier Post in 2016 that, “It’s hard to have a hereditary system that produces the competencies required to meet the demands of the public and the organization.”

Mission has been at the heart of the company since the genesis of Bayada.

His solution: to go nonprofit, a move unprecedented in the home healthcare industry. Moving from sole-ownership to nonprofit by donating the entire company to a newly created charitable foundation ensures Bayada will remain family-guided, if not family-owned, but that it cannot go public or be sold. Baiada said it was the only way to ensure that the mission of the company, best summarized as “compassion, excellence and reliability,” would continue to take precedence over profits.

Mission has been at the heart of the company since the genesis of Bayada. It was while working for the American Thread and then Avon corporations after graduating from grad school that Baiada saved $16,000 and went searching for a business to open. He had a few criteria: It had to help others (selling alcohol or cigarettes, for example, were non-starters); it had to be replicable across the country and it had to be sustainable.

“I wanted something that would serve long-term needs, and not be a flash in the pan,” he said in an interview with Generocity.

(Photo by Randy Scribner Jr. via Flickr)

That was 1975. Today, Bayada Home Health Care is one of the largest home health companies in the United States providing nursing, rehabilitative, therapeutic, hospice, habilitation, primary care and assistive care services to children and older adults. Baiada now serves as chairman of the board of trustees, and his son, David Baiada, who has worked with the company since 2002, assumed the role of chief executive officer in August 2017. Bayada currently employs about 26,000 workers across 22 states. It also maintains operations in Germany, India, Ireland and South Korea.

With insurance companies pushing home care over hospitalization, an estimated 10,000 people turning 65 every day and almost 37 million Americans with some form of physical disability, the future of the company, in terms of patient demand seems assured.

But employee supply is another story.

Direct support personnel is one of the fastest growing occupations in the country with a million jobs expected to be added between 2016 and 2026 according to the Bureau of Labor statistics, but it is also a field where wages, currently averaging $12 per hour, have stagnated.

Each state sets the rate Medicaid pays for its services including wages for home health aides.

Attracting and retaining talent in this reimbursement environment is challenging David Baiada, who wants to continue growing the company while positioning Bayada as an employer of choice. A one-time $20 million gratitude gift last year to be shared among employees, past and present, garnered both praise and publicity.

But Bayada, like the rest of the industry, is in the middle of a contentious wage battle.

One on side are the activists who are successfully increasing the minimum wage. On the other side are low Medicaid reimbursement rates that constrain the salaries of direct care workers and keep them some of the lowest paid workers in the country.

Each state sets the rate Medicaid pays for its services including wages for home health aides. For the past decade Medicaid reimbursement has stagnated in many states, putting large numbers of home health aides in the ranks of the working poor, with 25 percent of these workers living below the federal poverty line.

Last year, in an effort to avert a strike of Connecticut’s direct service workers, the governor signed legislation offering an increase in the minimum wage to $14.74 from about $11 per hour. However, Pennsylvania legislators are ill-disposed to raise Medicaid reimbursements. In 10 years, Medicaid reimbursement per patient has increased 4.2 percent, while costs have risen 7.3 percent. The resulting low wages lead to the burn out of employees and unreliable care for clients.

“We have been advocating for better pay for Pennsylvania’s home health aides for years,” Laura Ness, Bayada’s area director of government affairs, told Generocity via email. “Low Medicaid rates have made it increasingly difficult for us to provide our caregivers with adequate wages, benefits, training, and supplies while still competing with other industries that can pay more.”

“Working in home care undoubtedly requires a higher degree of compassion and commitment than working in fast food or retail,” Ness added. “Bayada is seeking the state’s support in a wage increase so that we can continue to recruit and retain aides and keep them attracted to the industry. After all, Pennsylvanians are getting older and the demand will continue to increase. It’s time to make a change now so that our seniors and adults with disabilities can remain at home and an aide shortage doesn’t drive them to costlier settings like nursing homes.”

So what wage does Bayada currently pay its home health aides? According to Alisa Fox, public affairs senior manager at Bayada, “Pennsylvania’s Medicaid program reimburses for aide services at four different rates based on geography. Additionally, there are different rates based on the acuity and location of the case, overtime, and weekend/night shift … But all things considered, the average wage would be between $10.50 to $11 per hour.”