Guides
How home care agencies calculate break-even hours
See how home care agencies compare franchise and company-owned models, account for wages and travel costs, and calculate break-even hours using your figures.
What to take away
- For home care agencies, franchise and company-owned models publish different numbers, so compare like with like before you copy a rate.
- Fill rate, caregiver turnover and gross margin per visit are the three figures that tell you whether a rate card works.
- On-costs (payroll taxes, workers' compensation premiums, mileage, unpaid travel between clients) sit on top of the caregiver wage, not inside it.
- Break-even client hours = fixed monthly costs divided by (hourly rate minus caregiver on-cost per hour). Substitute your own figures.
- The U.S. Department of Labor treats travel between clients as hours worked for domestic service employees, which changes what a visit really costs.
What the big names actually run
Home Instead and Visiting Angels both franchise, so their public material describes a brand standard rather than one operator's books. A franchisee pays a royalty on revenue and buys the brand's training and scheduling systems. That model spreads fixed costs across many owners but caps how fast one territory can change its service menu.
BAYADA Home Health Care and Interim HealthCare run company-owned branches and hold payer contracts, often for skilled nursing and therapy alongside personal care. Their margin depends on contract rates set by Medicare or Medicaid, not on a private hourly rate the agency sets itself.
Honor and TheKey built software-first models: an app matches caregivers to shifts, and the agency charges families a private hourly rate. Addus HomeCare and Elara Caring lean on government-funded personal care, where volume is high and the rate per hour is fixed by the payer.
That split matters when you read a competitor's rate. A private-pay agency quoting a higher hourly rate is not necessarily more profitable than a Medicaid-heavy operator billing a lower one.
Reading a competitor's public numbers
Start with wage data. The BLS Occupational Employment and Wage Statistics tables publish home health and personal care aide wages by state and metro area. Pull the figure for your market before you set a rate, because caregiver pay is your largest cost line.
Then check what a visit actually costs to deliver. The DOL fact sheet on hours worked for domestic service employment sets out when travel between clients and waiting time count as compensable hours. If your schedules back-to-back visits across a city, that travel time is paid time you may not be billing.
For the business side, the SBA business guide covers licensing, insurance and hiring steps in one place. Use it as a checklist for what your state requires, then confirm the specifics with the licensing body that issues your permit.
| Figure | What it tells you | Where to find it |
|---|---|---|
| Fill rate | Share of requested shifts you staffed | Your scheduling software |
| Caregiver turnover | Annual leavers divided by average headcount | Payroll or HR records |
| Gross margin per visit | (Billed rate minus caregiver on-cost) per visit | Billing and payroll reports |
| Break-even client hours | Fixed monthly costs divided by margin per hour | Your own arithmetic |
The arithmetic behind a rate
Set the caregiver wage first, then add on-costs: payroll taxes, workers' compensation premiums, paid travel, mileage and any benefits. Call that total the loaded hourly cost.
Now subtract it from the hourly rate you charge. The difference is your gross margin per hour, and it has to cover rent, scheduling staff, software, marketing and owner draw.
Break-even client hours = fixed monthly costs divided by gross margin per hour. If your fixed costs are 12,000 a month and margin is 8 an hour, you need 1,500 billed hours to break even. Substitute your own figures; the formula does not change.
Run that number before you add a service line or open a second territory. Expansion that outruns supervision shows up as unfilled shifts and complaint escalation long before it shows up in the margin.
Common questions
Why compare franchise and company-owned agencies separately?
A franchisee's public numbers reflect one territory and a royalty structure, while a company-owned chain reports across many branches and payer contracts. Mixing the two gives you a benchmark that fits neither. Pick the model closest to yours.
What is the single most useful number to track monthly?
Gross margin per visit. Fill rate tells you whether you can staff the work, and turnover tells you whether you can keep staffing it, but margin per visit tells you whether the work is worth having. Track all three; margin is the one that decides.
Does travel between clients count as paid time?
The Department of Labor fact sheet linked above explains when travel and waiting time are compensable for domestic service employees. The answer depends on your schedule and the worker's duties, so read the fact sheet and check with your employment adviser before you build a route plan around it.
Can I copy a competitor's hourly rate?
No. Their rate reflects their payer mix, wage market and overhead, none of which match yours. Use published wage data and your own cost arithmetic to set a rate, then check it against what local families actually pay.
