The Cost of Caregiver Turnover and How to Increase Caregiver Retention

by | May 3, 2018

The Problem

80% of caregivers who leave in the first year, will do so within 90 days. If you’re running a home care agency, you are going to lose some of your caregivers – that is just the reality of this industry. But how many? And at what cost?

Caregiver turnover is one of the biggest issues for your home care agency. Whether you are an established agency with hundreds of employees, or just starting out with only a few caregivers, one hurdle you will constantly face is caregiver retention and reducing your caregiver turnover rate. On average, a home care agency will lose nearly two-thirds of their caregivers within the first year – a number that has only increased over the past three years. Let’s pretend you are opening an agency today, and you take the time to recruit, hire and train 100 new caregivers. Well, chances are that 66 of these caregivers will no longer be with your agency by the end of this year. So you actually need to hire and train 166 caregivers within the first year just to maintain a 100 caregiver agency!
With the rising caregiver turnover rate of 66% threatening home care providers today, it is not only important your agency understands the financial impact of losing caregivers but is also equipped with some tools to help reduce caregiver turnover. Here, we’ll explain the total cost and explore solutions so you can be proactive about this ongoing problem.

The Cost

The Center for American Progress suggests the real cost of losing a caregiver would be around 16% of annual salary. If your agency is paying your caregivers the median rate of $10.50/hour, and they work 30 hours per week, then their annual salary would be around $16,000. The total cost of losing one caregiver would be around $2,500. Why so high? Well, this total includes the cost of recruiting, hiring and training a replacement, in addition to the time lost in productivity and servicing your clients. But again, this is only the cost for one caregiver. If your agency loses 66 caregivers then that would cost you over $160,000!
The total cost of caregiver turnover can vary depending upon which industry report you look at, but the numbers are alarming. To make things easier for your agency to assess, consider that each time a caregiver leaves you are losing between $1,000 and $2,500.

So when will my caregivers leave?

According to the 2018 Home Care Benchmarking Study, 57% of caregivers that leave within the first year will actually leave within the first three months. So, hypothetically, out of the 66 caregivers leaving your agency this year, 38 caregivers would be gone within the next 90 days! That’s the equivalent to losing over $30,000 a month during this time!
The table below illustrates when your first-year caregivers are most likely to leave your agency.

Percent of Caregivers Who Quit During the First Year of Employment, 2017

If your agency hires and trains 100 new caregivers today, you will actually need to hire and train an additional 66 caregivers this year just to remain the same size agency. You need to hire and train 166 caregivers within the first year just to maintain a 100 caregiver agency! The total turnover cost of losing 66 caregivers would amount to over $160,000!
Since these statistics are astonishing, home care agencies are going to want to have some cost-effective ways to retain their caregivers. Here are some solutions that might help:


It doesn’t matter if your agency is very established or brand new, turnover and retention of caregivers will always be a challenge. However, there are some ways to combat these issues. Agencies can use positive reinforcement and online training courses for caregivers to help reduce caregiver turnover and increase caregiver retention.

Positive Reinforcement

Positive reinforcement can often be overlooked, but a caregiver’s daily routine is demanding and a simple “thank you” or saying “great job” after completing training can go a lot further than you may realize. Thousands of caregivers have year-after-year selected “verbal recognition” as the number one preferred method to be recognized, so why not listen?

Top 5 Ways Caregivers Prefer to be Recognized

  1. Verbal recognition by supervisor
  2. Vacation time, bonuses, perks, gifts cards
  3. Pay raise
  4. Recognition by client
  5. Company-wide recognition
For the last three years, the “Top 5 Ways Caregivers Prefer to be Recognized” has not changed. Three out of the five reasons your caregivers prefer to be recognized will not cost your agency anything. In fact, verbal recognition has been the number one answer over any monetary compensation. So how can you use this to your advantage?
Below is a list of suggestions that your agency can use to engage your caregivers and express your appreciation:
  • Texts and emails are a great way to give your caregivers a daily dose of support and motivation. Let them know they are doing well and really making a difference in their clients’ life with a quick text or a thoughtful email.
  • Phone calls are another way to show your caregivers they matter; they can be quick and motivational or longer and personalized, especially if you do not want to go the route of online recognition (ex. a public leaderboard).
  • Thank you notes are also a great way to show your caregivers you care about them. Depending on how big your agency is, writing thank you notes or printing them out can be a very thoughtful gesture and caregivers will, without a doubt, appreciate it.
  • Employee of the week/month is also a great way to recognize your caregivers when they do amazing work. Home care agencies could have extra perks for people who win employee of the week/month, giving caregivers incentive to do their best work to win within a given week or month.


There has been a proven correlation between the number of hours of orientation training and reducing the caregiver turnover rate. A 2015 survey across thousands of caregivers found caregivers that complete at least five hours of initial training are 20% less likely to leave your home care agency. If you are an agency of 100 caregivers, and can reduce your turnover rate by 20%, then you could save up to $58,500 per year! And that is just by offering initial training. Even if your agency is located in a state that does not require at least five hours of initial training, you should seriously consider still offering this level of training for your caregivers.
An initial study suggests that offering caregivers online training classes from CareAcademy may also reduce caregiver turnover. In 2016, a large home care agency randomly selected a group of its caregivers to have access to one CareAcademy class. In the subsequent year, the agency’s turnover rate among the caregivers who had been randomly selected to have access to this class had a turnover rate of 10%; a large decrease compared with the agency’s average annual turnover of 38 %. By allowing the chance for caregivers to review training from their home or on their phone with an online training class, this agency was able to reduce caregiver turnover by 74%.


Since a huge portion of the caregivers agencies hire are likely to leave within the first year, agencies need ways to increase retention. The size of the agency is irrelevant since they can always benefit from keeping their employees. Retention is such a big problem in this industry, agencies need to have cost effective ways to increase retention and decrease turnover. Some helpful ways to increase caregiver retention are positive reinforcement and making sure your caregivers get the right training.

Get up and running with CareAcademy!

Subscribe to our blog

Stay up to date with the latest training, recruiting, and onboarding tips and news in home care and home health.

We’re committed to your privacy. CareAcademy uses the information you provide to us to contact you about our relevant content, products, and services. You may unsubscribe from these communications at any time.

Pin It on Pinterest

Share This