Don’t price from the payer’s rate and back into a margin. Price from your fully-loaded cost per service hour — wages, payroll taxes, benefits, PTO, training, and overhead — then keep only the contracts and payer mixes that clear it.
A caregiver’s wage is only part of what an hour of care costs you. Add employer payroll taxes, workers’ comp, benefits, paid time off, training and onboarding, unbillable travel, scheduling and admin overhead, and non-productive time. The true number is often 25–40% above the base wage.
You can’t judge a contract until you know this figure. Price against the wage alone and you can be “busy” and losing money at the same time.
Reimbursement rates differ across Medicaid, waiver programs, MCOs, VA, and private pay — and so does the cost to serve each one. Track contribution margin per payer and per client, not just agency-wide. It’s common to find a handful of contracts quietly subsidized by the rest.
Once you can see it, you can act: renegotiate, shift capacity toward better-margin work, or decline renewals that never cleared cost.
Set a minimum acceptable rate — your cost per hour plus a target margin — and treat it as a floor for new work. Revisit it whenever wages, benefits, or mileage move, because a rate that worked last year may not cover this year’s cost of care.
NavSuccess does this for home care & healthcare agencies — see Fractional CFO & advisory.
There’s no universal number, but you should first cover fully-loaded cost per hour and then add a deliberate margin for reinvestment and risk. The key is pricing from cost, not from the payer’s rate.
Know exactly how much each rate covers, watch your payer mix, and make sure better-margin work (or scale efficiencies) offsets thin contracts rather than hiding losses inside the average.
At least annually, and any time wages, benefits, workers’ comp, or mileage change materially — those move your cost per hour and can quietly erase a margin.
Book a free 30-minute consultation. We’ll look at where your books and compliance stand and show you exactly what we’d take off your plate.