In Home Health and Private Pay, It’s All About The Numbers.
Imagine you’re driving someplace you’ve never been before. You don’t have a map or a GPS but you do have a sense of where you are going. Instinct tells you to turn right and then left and then right again, but you end up miles from where you wanted to be. Hours later, you arrive at your destination exhausted, frustrated, and unable to enjoy your surroundings.
Running a Home Health or Private Pay agency without some kind of objective indicator to tell you how your business is really doing is a little like driving without a map. A professionally designed Dashboard (sometimes called a Scorecard) works just like a map and identifies clear signposts that tell you whether or not your agency is on the right track. A Dashboard helps you make informed decisions, implement course corrections, and gives you the information you need to keep your agency viable, on track, and financially healthy.
Frequently, when I go into an agency to assist with either a turnaround or to initiate an interim management contract, I find the agency administration has no real understanding of what is behind the financial reports they receive each month. They know they are not making their numbers but they do not really know why they are behind. In one recent case, the agency was experiencing a decrease in referrals and subsequent loss of financial reimbursements. However, no one on the team could figure out why. When I looked at their referral numbers, I became aware of the fact that two of their top referral sources had retired. However, the agency, while aware of the retirement, had not responded to the need to replace those sources with new ones. This, along with the fact that their case weights had been dropping, created a significance decrease in income. The Dashboard I developed for them tracked referrals, cost of referrals, monthly cost of visits by discipline, revenue by payor, discharges, case weight, average reimbursement per episode, the number of down coded cases, and associated lost revenues, gross revenues, and net revenues. This data gave them a heads up on where they were going and made it easy to make much needed course corrections.
In another recent contract, it was clear the agency was losing money, but there was no data that indicated where changes needed to be made. They had no idea of their productivity by discipline or the cost per visit by discipline, nor could they identify their average case weight and reimbursement per episode. Without this vital information, they did not know where to even start looking to fix the problems. I developed a Dashboard that collected and tracked that information. Within weeks, it became clear the field staff was taking twice as long as other staff in similar agencies to accomplish the same tasks, and their productivity rate was only two to three visits a day.
Another indicator the Dashboard identified was mileage. The average miles per day were about thirty. The Requests for Anticipated Payment (RAP) were thirty days out, however, the case weight did not reflect the acuity of the clients. All the data pointed to a lack of OASIS education for case management staff. Once the staff was educated, they could easily be held accountable for their case management responsibilities. This allowed case weights to rise and cost per visit to decrease. The ability to monitor data and review it on a weekly basis made it easy and feasible for managers to make smart corrections. As a result, the finances of the agency greatly improved.
In another agency, I was asked to review a specialty program to determine why it was losing money. The only information they were tracking was financial data. After reviewing the project and conducting extensive interviews with the program manager, I determined the real problem was not the non-skilled workers (as the owner had thought) but clinical staff productivity. Furthermore, after discussions with the CFO, it was clear that costs were being spread based on revenues, not on use of internal resources. This meant the data was so skewed that corrective actions to get the right results could not be made. If the manager of the program had been using a Dashboard, she would have known right away that the financial data was skewed and that her real issue was her clinical staff.
There is no absolute rule as to what should be on your Dashboard, but at minimum, it is wise to track your sales, the cost of those sales, the conversions, the average number of visits or hours attached to cases, and the average reimbursement each case generates for the agency. If you are a Medicare agency, you also want to track your average HHRG score and case weight, as well as the average reimbursement per episode of care tracked.
Regardless of what you track, your Dashboard is your weekly and monthly report card. Knowing where you are at all times can help Home Health and Private Pay agencies remain viable and successful. Keep your eye on your end goal as well as your emerging data, and your Dashboard will help you arrive at your desired destination on purpose and on time.
Category: Finances
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