The True Cost of DSP Turnover in Developmental Disability Services

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

Non-profit organizations supporting adults with developmental disabilities fulfill their missions and promise to individuals and families by employing a dedicated group of people, Direct Support Professionals (DSP). The evergreen challenge to attract and retain DSPs adds hidden costs and increases an organization’s exposure to risk. Below we outline these challenges and questions to raise with a National Best Practices insurance agency.

DSP are aids who help intellectually disabled adults live in the community by teaching individual living skills and providing supported living services. While this role offers a rewarding contribution to one’s community, the DSP turnover in many states has hovered between 40% and 50% for many years due to low wages. Employers struggle to address the issue as Medicaid reimbursement rates have not kept pace with inflation or local wage markets, meaning agencies cannot simply raise pay to compete for talent. In addition, the vacancies force agencies to operate short-handed with heavier workloads for remaining employees.

There is a cost to the turnover that rarely makes it into public conversation. Every departure means another round of onboarding including background checks, training, and CPR/First aid certification. Industry estimates commonly put the full loaded cost of replacing a single DSP well into the thousands of dollars once recruiting, training hours, and lost productivity are factored in. One large service provider reported incurring $300,000 over a 12-month period on job board postings alone.

The inexperience gap can also cost the agency in the form of insurance claims. Without proper guidance and onboarding, new staff are statistically more likely to incur workplace injuries, driving up workers’ compensation insurance claim frequency as well as auto and professional liability exposures. A spike in claims frequency can mean higher premiums at renewal, compounding the very budget pressures faced in the first place.

Given how turnover directly feeds into claims exposure, an experienced business insurance agent can provide valuable guidance at the pre-renewal meeting and throughout the policy term. A few questions worth bringing to that conversation:

• How is our workers' compensation experience mod trending, and is turnover a visible driver? An agent can summarize and present data, so leadership sees the direct link between staffing churn and premium cost.

• Do our limits and coverage lines reflect current exposure,  particularly abuse/molestation coverage, professional liability, and auto/non-owned auto liability for client transport?

• What loss-control or risk-management resources do the carrier and insurance agency offer? Training modules, toolbox talks, safety app, HR compliance, and incident-reporting tools can help get new hires up to speed faster and reduce early-tenure incidents.

• Is our incident reporting uniform and strong enough to support aggressive underwriting at renewal? Agents can advise on claims reporting lag and best practices that help demonstrate leadership’s commitment to safety and partnership with the insurer.

• How do we get favorable pricing that considers our hiring practices, below average turnover rate, and safety training? Underwriters want to learn of an agency’s structured onboarding programs, defensive driving certification, or de-escalation training that could offset costs while also improving employee retention.

• How are we positioned for a hard market cycle in liability lines, given the sector's exposure to abuse/molestation and professional liability claims?

There is no easy solution to the DSP staffing crisis, but organizations that understand the connection between workforce stability, risk management, and insurance costs are better positioned to navigate the challenges ahead. Taking a proactive approach today can help protect both the population served and the long-term sustainability of the organization.

If you have questions about any of the topics discussed in this article or would like to talk through your organization's unique circumstances, please contact me at (619) 937-0175 or sbrown@ranchomesa.com.