House calls

In-home care givers form cooperative to provide
vital service for elderly, disabled in rural Wisconsin

By Margaret Bau and
Dianne Harrington

Editor’s Note: Bau is a cooperative development
specialist with USDA Rural
Development in Wisconsin; Harrington is
a Wautoma, Wis.-based elder care specialist
who is coordinating efforts in Wisconsin
to address issues relating to long-term
retention of care givers.

aren Taylor likes helping people. Ever since she was a little girl, it seems Taylor has always been there to help an elderly neighbor with household chores, or to help a relative recuperate from a hospital stay. Nearly 30 years ago, Taylor decided to make this calling to help others her life’s work by becoming a certified nursing assistant (CNA), specializing in providing inhome care.

Taylor swears that the elderly and people with disabilities feel healthier and more alert when they live in their own homes. “When a person can come home and sit in his favorite chair, eat his favorite home-cooked foods and get up or go to bed when he wants to, those little things help make a person happy,” Taylor says.

Her observations are supported by research. As one study suggests that home care maintains the recipient’s dignity and independence, qualities that are all too often lost even in the best care institutions. Through assistance with dressing, bathing, feeding, shopping, meal preparation and housework, the elderly and people with disabilities can, and do, live independently in their own homes.

In Waushara County, Wis., a new, worker-owned cooperative formed by in-home care providers is helping more elderly and disabled people remain in their homes, providing them with a preferred alternative to a nursing home while also improving pay and benefits for care providers.

Demand growing
for in-home care
Besides maintaining a person’s dignity and independence, in-home care is much more cost effective than institutional care. Typical annual cost for home-care services is just under $5,000, which compares favorably to the $55,000 average annual cost for a nursing home stay.

Most people want to live in their own homes as they age. In a 1998 survey conducted by the American Association of Retired Persons (AARP), eight out of 10 people over age 65 said they want to stay in their own home and never move. Most people live according to their wishes. Only 4 percent of those over age 65 live in nursing homes (though that number increases to 20 percent for persons 85 and older).

Demand for home care will only increase as the population ages, especially as the baby boom generation nears retirement. By 2030, one in five Americans will be over the age of 65. In many rural areas, the elderly already have reached this critical mass.

Critical shortage of
in-home care workers
Despite the growing demand and cost effectiveness of in-home care, there is a serious shortage of home care workers and CNAs. Low wages and lack of benefits provide a disincentive for people to enter into this profession. Nationally, the average in-home care employee works 29 hours per week at a median hourly wage of $7.58. Workers often receive few, if any, benefits. Turnover within the industry is very high, between 40 and 60 percent annually.

The nature of the work can lead to a sense of isolation. Most caregivers work one-on-one with elderly and disabled clients and rarely have contact with fellow caregivers. They have only occasional contact with supervisors, other health professionals and the client’s family.

Providing care is a physically demanding occupation. Care providers must move clients for bathing, toileting and positioning in and out of bed. Jobrelated injuries, especially to the back and neck, are a constant threat. Elders suffering from Alzheimer’s disease or other cognitive impairments can sometimes physically strike out at a worker.

The work can also be emotionally draining. Some clients with Alzheimer’s or those adjusting to a disability feel anger, which they may direct at the caregiver. Various cognitive impairments may cause paranoia, leading a client to accuse a caregiver of stealing or mistreatment.

At times, workers are exposed to sexual comments or advances on the part of a client or family member. Sometimes clients or their families treat caregivers as maids or domestic servants.

Many caregivers also report feeling a lack of respect that society in general does not appreciate their work. The nature of care giving requires a special disposition and a sense of calling to serve the elderly and people with disabilities. In a tight labor market, individuals can easily work in less stressful retail or service industries for similar wages. Given the low wages and lack of benefits, the demands of the job and the low status society places upon care giving, is it any wonder that home care workers are in short supply?

Meeting care needs
in Waushara County
Waushara County, population 23,000, is a scenic area in east-central Wisconsin. The landscape is dotted with glacial lakes, sandy soils and evergreen forests. Few industries exist, so people make a living growing Christmas trees, working in tourism or traveling 40-50 minutes to urban areas for employment. The largest city, Wautoma, boasts a population of 2,000 and four of the county’s five stoplights. In one important aspect, Waushara County reflects the future of America: one out of five residents are over the age of 65.

To serve the rural elderly, the Waushara County Department of Human Services (DHS) developed the In-Home Providers Program. For more than 20 years, DHS paired homemaker and personal care (CNA) providers with low-income, disabled adults and frail elderly residents who qualified for state-funded programs or Medicare. In this arrangement, care providers were not county employees, but rather considered domestic workers hired by the service recipient and paid by a third party fiscal intermediary.

This arrangement stretched limited public resources, but it left care providers without workers compensation and benefits. Compounding the situation, state and federal funding has not kept pace with cost-of-living expenses, resulting in lower than average wages.

This arrangement posed a potential liability to Waushara County. Another rural Wisconsin county with a similar arrangement was recently sued to cover medical costs incurred by a caregiver’s injury on the job. Despite the existence of a third-party fiscal intermediary, the IRS has ruled that counties in this arrangement are the true employers and therefore liable for workers compensation and payroll reporting.

Could a co-op work?
Faced with these issues, a light bulb clicked on in the mind of Lucy Rowley, director of the Waushara County DHS. For years, care providers had asked the county for higher wages and benefits, but tight budgets had tied Rowley’s hands. She was aware of a worker-owned, inhome care co-op in the south Bronx, N.Y., called Cooperative Home Care Associates.

Rowley wondered if it would be possible for rural Waushara County caregivers to form a similar worker-owned co-op. The county, she figured, could sign a contract with the co-op to continue providing services to low-income elderly and disabled residents. As a private company, the co-op could also serve counties beyond Waushara and care for private clients. By combining public and private revenue sources, would it be possible for a worker-owned co-op to offer much needed benefits and perhaps higher wages?

Over three years, Rowley wrote applications for $50,000 in grants from the Community Links fund, administered by the State Department of Health and Family Services, to explore the worker-owned coop option and other workforce enhancement projects (see sidebar).

Co-op exceeds expectations
After a year-and-a-half of steering committee meetings, co-op education efforts, market analysis, advice from collaborators and a myriad of related business start-up tasks, Cooperative Care commenced operations on June 1, 2001.

The co-op has proven successful beyond anyone’s dreams. Initially, 61 workers in the In-Home Providers program joined Cooperative Care. Membership now stands at 81.

Current benefits for member-owners include increased pay, workers compensation, time-and-a-half pay for working holidays, 10 days of paid vacation or sick leave, travel reimbursement and health insurance. The co-op pays 75 percent of the health insurance premium for individuals and 50 percent for family coverage.

Care providers currently earn between $7.50 and $9.75 per hour. Benefits add the equivalent of $2 per hour more and patronage refunds add an extra 50 cents to a worker’s hourly wage. Though no one will ever grow rich earning the equivalent of $9.75 per hour with benefits, a full-time CNA has the potential to earn near Waushara County’s per capita income of $18,144.

Financially, Cooperative Care has exceeded fiscal projections. Year-end profits for 2001 exceeded $41,000. After prepaying part of the business loan and setting aside funds for capital reserves, cash patronage refunds were distributed at the first annual meeting. Checks averaged $440, but were as high as $2,000, based on the number of hours worked.

At the end of the co-op’s second year of operation, net earnings totaled more than $65,000. Of this, $25,000 was set aside in reserve and about $40,000 distributed in patronage refunds, again according to hours worked.

Patronage checks
thrill worker-members
Co-op Executive Director James Gawne recalls the first time the member-owners learned about the power of patronage refunds. “It was Feb. 12, 2002, at the first annual meeting. As the business meeting drew to a close and people were preparing for a meal, more door prizes and music, Board President Donna Tompkins called every member forward to receive a sealed envelope with her or his cash patronage refund check. Soon, audible gasps were heard around the room as people opened the envelopes and realized they had received the equivalent of a two-week paycheck. That day, it felt like Christmas in Waushara County.”

Turnover among co-op memberworkers is virtually nil; two members were terminated for cause and one resigned when her client died. This stable workforce provides continuity of care for the clients. In fact, the 125 county clients retained their original workers, providing a seamless transition for care provider and recipient.

Client and caregiver surveys conducted in 2002 by The Management Group, an independent consulting firm, demonstrated overall satisfaction with co-op ownership.

A less tangible achievement is the leadership and personal development of workers who served on the steering committee and the board of directors.

The board consists of five CNAs, four of whom had never held a position of power in any organization. These women have negotiated contracts, rented office space, hired administrative staff, developed policies and procedures and represented the co-op at conferences and community events.

As for the general membership, members report feeling less isolated in their work thanks to training, meetings, the co-op newsletter, ice cream socials and pay-day events. In fact, caregivers have been known to bring their clients to member social events.

As Board President Donna Tompkins observes, “We still have a ways to go in educating the membership on what it means to be a co-owner of our own business. But given that one out of five workers is caring for a disabled family member, we are pleased to see the level of participation at annual meetings and social events.”

Cooperative Care has garnered public attention. The local Waushara Argus newspaper has been particularly attentive in running stories and photos about co-op events. Policy makers across the state and country are observing the progress of Cooperative Care and wondering if the model could be replicated in other rural areas. Inquiries from Washington, Hawaii, Montana, Kentucky, North Dakota and Vermont have arrived, and co-op organizers, staff and members have shared the Cooperative Care story at a variety of conferences and with office visitors.

Harvard’s John F. Kennedy School Government named Waushara County and Cooperative Care as one of 99 semi-finalists (out of a pool of 800 applicants) in the prestigious 2002 Innovations in American Government Awards. Recently, Wisconsin Rural Partners named Cooperative Care as Wisconsin’s Top Rural Development Initiative for 2003.

Challenges on the road ahead
All this attention may seem rather heady, but there is more work to be done. As a new business, Cooperative Care has experienced its fair share of growing pains, including the resignation of its initial executive director to run a family business and the removal of a board member for work-related performance issues.

Cooperative Care’s contract with the county enables its member-owners to earn a living wage and receive benefits. Initially, this cost the county 40 percent more than the previous system. “This system is not for public bodies looking to save on costs,” says Lucy Rowley of DHS. However, if an agency is interested in developing a sustainable pool of committed care providers, then this might be an option. Not only should public agencies assure quality care for clients, we must create a better standard of living for low-income people.”

Currently, the county contract comprises 90 percent of the co-op’s revenue stream. Due to a state budget crisis and a resulting budget crunch for Waushara County, DHS has twice renegotiated downward the reimbursement rates to Cooperative Care. The board and executive director are keenly aware of the need to increase the number of private pay clients to sustain revenue and maintain member benefits and wages.

The rapidly rising cost of health insurance is another major concern. Prior to forming the co-op, 31 per cent of care providers said they had no health insurance. On the advice of a local insurance agent, the business plan allotted $2,000 per year, per person for basic coverage. This quickly proved inadequate, with a 25-percent rate increase in 2001 and 16-percent rate increase in 2002. Presently, only 14 members out of an anticipated 35 carry insurance through the co-op due to a high out-of-pocket expense.

Board Treasurer Karen Taylor is proud of the accomplishments of Cooperative Care. “For so long, I have worked hard to help people to stay at home,” she says. “It is nice to finally have health insurance and benefits like a paid vacation and mileage reimbursement. But what I really like is that we care providers are also taking care of each other.”

Board President Donna Tompkins echoes Taylor’s sense of accomplishment. “When my brothers, who are in business, heard that I was elected board president, they couldn’t believe it. They wanted to see the business plan and the financial statement to make sure this was for real. After all, I raised seven children. What did I know about business?”

“I have enjoyed getting to know my fellow care providers over the past few years as we worked together to develop Cooperative Care,” Tompkin continues. “It has been an exciting experience forming our home care business.”

Co-op development stages & timeline

Concept: September 1999 Waushara County received a grant from the Wisconsin Department of Health and Family Services to creatively address recruitment and retention of long-term care workers. Agency Director Lucy Rowley contracted with Social Worker Dianne Harrington to explore the idea of a worker owned cooperative. Cooperative Development Specialist Margaret Bau of USDA Rural Development agreed to provide education and technical assistance in co-op development.
Exploratory meeting: November 15, 1999 Project coordinators (Harrington and Bau) met with workers of the Waushara County In-Home Providers program. Coordinators introduced the cooperative concept, reported on other home care worker co-ops across the country, answered questions and gained approval to proceed with exploring this project.
Potential member survey Care providers were surveyed to determine desired wages, benefits, distance willing to travel, experience and skill levels. This information was key to the direction of the co-op and the business plan.
Steering committee Interested care providers volunteered to serve on the steering committee. This group met monthly for 15 months to provide guidance and feedback to the coordinators as the initiative evolved.
Market analysis, feasibility study, business plan: November 1999 to January 2000 With funding from the state grant, a private consultant was hired to write these studies. After months of delays, the final product was flawed. Project coordinators re-wrote the business plan with the assistance of Amy Pietsch at CAP Services (a nonprofit community action agency in Waushara County).
Vote to incorporate: January 17, 2001 Project coordinators presented an overview of the business plan to care providers. At the meetings, care providers voted to incorporate.
Elected board of directors Five-woman board picked from a slate of eight candidates.
Adopted bylaws-Bylaws were drafted by Bau and the steering committee.
Collected membership fee-Members paid a $40 membership fee. Due to tight finances, some paid in two installments. Co-op starts with 63 original members.
Articles of incorporation filed: February 5, 2001 Cooperative Care becomes a legal entity under Chapter 185 of the Wisconsin statutes.
Financing: March 2001 Cooperative Care signed a contract worth $800,000 with Waushara County to provide home and personal care services. Locally owned Farmers State Bank of Waupaca loaned the new business $125,000, based on confidence in the county contract, local leadership, the business plan and a modest $4,000 in member equity.
New business start-up activities: Spring 2001 Board of directors rented office space, opened bank accounts, acquired a tax identification number, explored insurance options and hired the executive director Don Grothe and other administrative staff. Fred Harasha, a retired executive of the local Adams Columbia Rural Electric Cooperative, served as a key advisor in developing the financial systems, hiring staff and supporting the newly elected board.
Begin operations: June 1, 2001 Commenced payroll for worker-owners.
Board training and guidance: February 2001 to present Bau uses the LEADing Board video series (produced by the University of Wisconsin Center for Co-ops, with funding from USDA Rural Development) for board training workshops.
Annual meetings: February 2002 and 2003 Report on operations, bylaw revisions, board elections, patronage refunds distributed, awards ceremonies and social event.

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