Consumer Direct Care Network Announces Largest US EOT

In a transaction that dramatically expands the scope of employee ownership trusts (EOTs) in the United States, Consumer Direct Care Network (CDCN) announced Friday that an EOT now owns over 30% of its shares and is on a path to cover up to 60,000 employees within three years.

CDCN provides self-directed, in-home care in 14 states for people with disabilities, chronic illness, or age-related needs. The EOT will cover all of CDCN’s employees, including its administrative staff and directly employed caregivers. The majority of CDCN’s employees are caregivers, most of whom are unionized and represented by locals of the Service Employees International Union. CDCN kept representatives of the SEIU informed and consulted with them about the design of the EOT. (An additional 75,000 caregivers who use CDCN as a fiscal agent are employed directly by individual care recipients, not by CDCN, and cannot be covered.)

In its press release, CDCN described the purposes of the trust, saying it…

• “Recognizes caregivers as essential partners by valuing their contributions and including them in the company’s future success.
• Protects the mission and integrity of care by ensuring that company decisions remain focused on people over profit.
• Secures long-term sustainability through a thoughtful ownership transition that strengthens CDCN in a competitive care landscape.”

Those three purposes describe the reasons that an EOT was a good fit for the company. CEO Ben Bledsoe told the NCEO, “We operate in some ways like a non-profit organization in that we’re very employee-centered.” That focus shaped the company’s exploration and rejection of other options, such as going public or being acquired by a private equity investor. Bledsoe said the executive team was concerned that those options would impose a rigidity of reporting to outsiders who might not share their values. “I understand the importance of creating a return for shareholders, but what if the shareholders were employees?" he said. The company also considered an ESOP, but at least for now, Bledsoe believes that the flexibility offered by an EOT is not replaceable.