The Home Health Benchmarking Report -...

The Home Health Benchmarking Report 1

The Home Health Benchmarking Report:Know how your agency stacks up against the competition

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Sharon S. HarderPresident, C3 Advisors, LLC

The Home Health Benchmarking Report:Know how your agency stacks up against the competition

The Home Health LandscapeThis is a time of unprecedented opportunity for home health care providers.

Home care in all of its forms represents an $82 billion market with an ever growing number of potential customers. Home health services represent approximately 3 percent of health care expenditures today and will grow, particularly as the number of Medicare beneficiaries increase. Indeed, with record numbers of baby boomers turning 65 each year, fully 20 percent of Americans will be eligible for Medicare services by the year 2020. And, let’s not forget that high quality home health services represent the option of choice because services provided in a client’s home are far less expensive than those provided in an inpatient or skilled nursing facility.

Industry focus is clearly on rewarding those that can achieve more efficient and effective ways of improving outcomes of care, while also avoiding unnecessary ER visits and hospitalizations. Accountable Care Organizations (ACOs) and Managed Care Organizations (MCOs) are truly interested in working with agencies that can show financial viability, a stable and qualified workforce, demonstrable and sustained quality of care, and the ability to readily exchange information across a network of linked providers.


On the other hand, there are meaningful challenges that are dampening some of the growth market prospects. Regulatory pressure is intensifying and reimbursement is shrinking. Pay for performance and greater reimbursement risk tied to outcomes is the wave of the future. In order to survive, agencies must become more efficient and cost conscious. And, those that truly prosper will be the agencies singularly focused on structure, process and productivity improvements that will set them apart from the competition.

There are a number of things going on that deserve our close attention. CMS has made it abundantly clear that there are too many Medicare home health providers, citing a 62 percent increase in the number of certified home health agencies between 2000 and 2011. Several regulatory tools in the CMS arsenal are being used to weed out weak providers and predictions are that the number of Medicare certified agencies will likely shrink by half in the next few years. How will it happen? A number of agencies, particularly small ones, will succumb to reimbursement pressures that make it impossible for them to continue in operation. This will happen as a result of basic inattention to curable operating inefficiency as revenues decrease and expenses remain unabated. The issue of dual eligibles (those beneficiaries eligible for both Medicare and Medicaid health benefits) will result in additional revenue reductions due to a shift of benefits from the Medicare program to Medicaid with, traditionally, lower reimbursement thresholds. Many will also be hit hard by new survey protocols and the potential for monetary sanctions imposed on underperforming agencies. Indeed, the monetary penalties for inattention to Medicare Conditions of Participation and uncorrected deficiencies will be serious enough to put some agencies out of business for the simple reason that they will not have enough cash to survive the effects of large fines or payment suspensions.

Benchmarking for Success Now, more than ever before, leadership teams in high performing agencies are working to understand how their agency’s performance stacks up against industry bests and thecompetition. This involves looking at and improving business processes, addressing idealstaffing levels, emphasizing employee engagement, underscoring continuous qualityimprovement and focusing on improving key financial indicators. Most certainly, a keyelement of their strategic planning involves the use of analytical benchmarking

CMS cites a 62% increase in the number of certified home health agencies between 2000 and 2011


techniques. It is a fact that agencies which emphasize efficiency and build financial strength now will be those poised for the greatest growth as the coming market consolidation gains momentum in years to come.

So, what is benchmarking and how can an agency use it? In practical terms, benchmarkingis the process of comparing an agency’s business processes and performance metrics

to the industry “bests” that are being reached by high performers. Once we are able to understand what behaviors and characteristics define high performance, we can begin to identify where and how our own business improvement strategies should be directed. The graphic below shows the major elements of the process.

This paper sets forth three aspects of what agencies need to know in order to plan for and achieve success using benchmarking as a strategic tool.

1. A snapshot of key industry metrics at the close of 2013 using published CMS financial and quality data.2. Characteristics of high performing agencies. Using this information every agency will be able to evaluate current performance and identify areas for focused improvement.3. Ideas for workable high performance strategies.

Industry SnapshotThe View from WashingtonThe Medicare Payment Advisory Commission (MedPAC) published its annual report toCongress in March 2014 citing 2012 cost report information as the basis of severalinteresting, and surprising, statements about the condition of Medicare certified homehealth providers in general.

MedPAC concluded that, because there were more than 700 new home health agencies certified in 2011, the nation’s 12,311 providers in 2012 must have adequate access to capital. MedPAC’s 2013 report stated that “for smaller non-public entities the entry of new providers indicates that access to capital for privately held agencies is adequate.”

Identify Problem Areas

Measure High Performer

Results

Redesign Processes to Achieve Like

Results

Implement Improved Business Processes


With respect to operating margins, MedPAC’s report stated that, in 2012, net income posted by freestanding home health agencies (all that are not part of a hospital organization) averaged 14.4 percent of net revenue. The report concludes that this is partially the result of fewer visits per episode and lower growth in operating costs in all agencies across the board. In fact, based on its measurement of targeted rebasing and current industry trends, MedPAC predicts that margins will still be “high” at approximately 12.6 percent in 2014.

Another report published by Avalere Health, LLC takes a slightly less enthusiastic view of industry trends, noting in its review of SEC information that some of the largest providers in the market realized margins of only 2.8 percent in 2012, which represents a 63 percent decline over a four year period.

Taking a Second LookOur experience with agencies, both large and small, in recent years suggests that, contrary to published reports, margins are eroding very quickly. And so, we set out to look at CMS data ourselves to either confirm or challenge commonly held beliefs as tothe overall health of the industry. Rather than measuring data as though it came from one large agency which, as the National Association for Home Health and Hospice has pointed out, is a meaningful flaw in the approach taken by MedPAC, we decided to take an “apples to apples” approach to measuring the data. In order to be able to achieve a more reliable picture of a typical agency and its challenges, we set certain parameters for our review. By looking at the data in a way that compares similarly situated providers to their peers (at least in terms of overall revenue size) we were able to isolate and quantify the characteristics of the most effective agencies in terms of their operational metrics. Based on their metrics compared to all others, we were also able to identify strategies that could be used by others to reach targeted growth and efficiency targets. Thus, for purposes of our review, we segmented the data as follows:

• Only freestanding home health agencies were included in the sample. Chain organizations, government agencies such as county health departments and hospital-based agencies were excluded because their operating challenges and

MEDPAC suggests the industry is on solid footing...


metrics are often very different from those of freestanding agencies.

• Agencies with less than $500,000 and more than $25 million in annual revenues were excluded; however, this still provided a very wide range of measurement. As a result, we segmented providers into four categories of net revenue to further differentiate overall findings and conclusions.

• Finally, in order to be included in the sample, the agencies measured were required to have data on file for all four years that we reviewed – 2010 through 2013. None of the agencies in our sample reported low or no Medicare utilization for the years under review. Also, because CMS data releases for 2013 are not yet complete, of necessity we omitted from our sample any agencies for which 2012 data was the most recently available. Reports with obvious errors in key fields and/or key data omissions were also eliminated from our sample.

Using the segmentation noted above, we ended up with an array of 2,400 agencies to review. On average, the agencies we studied had been in business approximately 13 years.

What the Study RevealedMost financial metrics are in varying states of decline suggesting that agencies, on the whole, are becoming weaker in terms of their overall financial viability.

• Cash: At least two-thirds of agencies in our sample had less than a month’s worth of expenses represented by cash on hand at the end of 2013. The smaller the agency, the worse the problem gets with 80 percent of very small agencies having less than a week’s worth of operating cash. In contrast, at the close of 2010 the average agency had sufficient cash on hand to operate for 33 days.• Accounts Receivable: Average days revenue held in accounts receivable moved from 44 days in 2010 to 68

days by 2013, representing a 54 percent increase over the four year period. • Working Capital: Average values for working capital declined by almost 65

percent, although median values showed that while working capital is weakening

Category Annual Revenue

1 – Very Small Agencies $500,000 to $1 million

2 – Small Agencies $1 million to $4,999,999

3 – Mid-Size Agencies $5 million to $9,999,999

4 – Large Agencies $10 million and up

TABLE 1 – PROVIDER CATEGORIES BY ANNUAL REVENUE SIZE

Most financial metrics are in varying states of decline


for many agencies, at least half are still able to show a 1:1 ratio between current assets and liabilities.

• Revenue: Revenue for the four year period was essentially flat. Total average net revenue from all sources was $2.8 million each year between 2010 and 2013 for our sample agencies. Median revenue values actually declined by just over $100,000 during the four year period. While diversification of revenue sources improved slightly, estimated median values for Medicare revenues as a percentage of total net revenue stood at 54 percent in 2013, down 5 percent from 2010 estimated values.

• Operations: Average and median values for administrative salaries as a percentage of operating expenses held steady at about 60 percent for the entire four year period. Most agencies that experienced declines in revenue (about half our sample) took action to cut operating expenses in an attempt to avoid losses, but generally shied away from major reductions in salaries and benefits for administrative employees. In fact, over one-third of agencies that experienced revenue declines while still producing some semblance of positive net income were moved to increase administrative salaries by an average of 6 percent by 2013.

• Episode Management: Episodes per patient went up slightly and visits per episode moved downward as agencies attempted to better manage costs.

• Quality: Agencies with higher visit costs were also more likely to have high quality and satisfaction scores. More than a third of these agencies were also top performers in terms of overall revenue growth and profitability.

CashIrrespective of the provider revenue category, available cash at the close of 2013 was a problem for the majority of agencies. In fact, at least two-thirds of agencies in all revenue categories had less than a month’s worth of available cash on hand. As Table 2 shows, the smaller the agency, the bigger the problem.

Over the four year period, median values for Days Cash on Hand declined for all revenue categories, but the most significant, and surprising, decline was for large

Revenue Category

Average Days

Cash on Hand

Median Days

Cash on Hand

Percent

< 30 days

Percent

< 7 days

1 – $500,000 - $999,999 25 7 80% 47%

2 – $1,000,000 - $4,999,999 29 10 76% 43%

3 – 5,000,000 - $9,999,999 31 13 71% 37%

4 – > $10 million 35 15 67% 31%

TABLE 2 - CASH ON HAND 2013


agencies that saw a 46 percent drop in cash reserves as measured by operating expense requirements.

Even with respect to average cash reserves, values declined over the four year period in all categories, although the rates of decline were not as widely distributed. Large agencies, on average, saw a decline of approximately 15 percent, followed by the smallest providers at 14 percent.

Only the top one percent of agencies enjoy cash balances sufficient to cover at least 30 days of operations along with fewer than 35 days revenue outstanding in accounts receivable and a ratio of administrative salaries and benefits to net revenue of less than .5:1. In our measurement of the top performing agencies in this area, there was at least one surprise. Size does not necessarily matter. Of the top one percent, only one agency was large, four were mid-sized agencies and 19 – the majority – were small.

0

5

10

15

20

25

30

MEDIAN DAYS CASH ON HAND BY REVENUE CATEGORY

2013

2010

Category 1 Category 2 Category 3 Category 4

DA

YS

051015202530354045

AVERAGE DAYS CASH ON HAND BY REVENUE CATEGORY

2013

2010

Category 1 Category 2 Category 3 Category 4

DA

YS


Days Revenue Outstanding in Accounts Receivable To measure success in managing Days Revenue Outstanding in A/R (DSOs) we looked for agencies that met or exceeded what is largely believed to be an industry best standard of 35 days. We found that 10 percent of our sample of 2,400 agencies met the criteria and we noted that the population of each revenue category for our DSO winners very closely matched the spread of the total sample population as shown in Table 3 below.

Not surprisingly, very small agencies are more heavily reliant on revenue from Medicare and, as a result, the most efficient providers in this category are able to manage their DSOs rather well because most are very accustomed to episodic billing. As revenue grows, however, DSOs are likely to creep up as the percentage of reliance on Medicare revenue goes down, although we do note that the midsize agencies in our pool of top performers enjoyed the lowest DSO values in the entire segment. Nonetheless, median DSOs went up significantly for group four even though this group’s Medicare population was significantly lower. This seems to support the known challenges associated with billing and collecting from Medicaid, managed care and other third-party payers, and the longer payment intervals that occur with pay sources other than Medicare.

Top performing agencies that are successfully managing billing and collections are also more likely to have significantly greater profit margins. As Table 5 shows, the most efficient agencies in this category had 51 percent less A/R, 46 percent better cash flow from collection of receivables, 6 percent less revenue and 98 percent more net income.

TABLE 3 – TOP DSO PERFORMERS

Revenue Category

Top

Performer %

Sample

Data %

1 – Very Small 23% 26%

2 – Small 62% 60%

3 – Mid-Size 11% 10%

4 – Large 4% 4%

TABLE 4 – DSO AND NET INCOME COMPARISONS

Top Performers Median DSOs

Income % of

Revenue

MCR % of

Revenue

1 – Very Small 25 Days 5% 97%

2 – Small 25 Days 5% 83%

3 – Mid-Size 22 Days 7% 76%

4 – Large 30 Days 7% 33%


Working CapitalWorking capital values are also suffering for most agencies. In 2010 our sample agencies had $1.54 in cash and accounts receivable for every dollar of current obligations. In 2013 that coverage eroded to only $.54 for every dollar of current liabilities on average. Median values weren’t quite so disturbing for our sample group, however, and we noted that at least half the agencies we measured are holding their own with $1.07 of current assets for every dollar of current liabilities in 2013.

With so many providers on the negative side of their working capital calculations (current assets minus current liabilities), we once again draw attention to MedPAC’s belief that agencies have adequate access to capital. The vast majority of agencies do not have sufficient access to external sources of capital. Average accounts receivable balances grew for our sample by 57 percent between 2010 and 2013 without commensurate growth in net revenue or reduction in operating expenses. With cash thinning, AR balances moving up and net income going down, the result is a looming working capital squeeze that agencies must, if they are to survive, consider carefully.

TABLE 5 – DSO TOP PERFORMER PROFILE

Median

A/R

Median

DSOs

Median

Revenue

Median

Income

Median

MCR%

Top Performers $139,468 25 $1,932,428 $96,065 61%

Total Sample $288,163 45 $2,060,502 $48,494 58%

Variance ($148,695) (21) ($128,074) $47,572 2%


Half the agencies measured have at least a 1:1 ratio of current assets in the form of cash and cash equivalents to current liabilities. The remainder would be hard pressed, we believe, to acquire access to credit and may be limited to much more expensive arrangements, such as factoring, to accelerate cash flow.

RevenueAs noted previously, revenue is simply flat when one looks at the composite of the sample. Average revenues were stable at $2.8 million for all four years of our measurement period.

The period between 2010 and 2013 was a very tough time for many. Half of the agencies in the sample (52 percent) had no growth or a revenue decline. A total of 298 providers actually had revenue declines of more than $1 million and 50 percent of those same providers ended up with a 2013 loss as a result. For 171 of the 298, the drop was especially sharp as 2013 revenues were more than 50 percent less than net revenue just four years earlier.

There are, however, a few bright spots on the horizon. About two percent of our sample – 48 agencies – more than quadrupled in size over the four year period. There were no very small agencies that hit this threshold. The majority were comprised of small to midsize agencies (43) and five were large providers. Over 200 agencies doubled or tripled in size and the bulk of them (72 percent) were also small to midsize agencies. Finally, 193 agencies grew between 50 and 100 percent during the four years.

While overall revenue is flat, more than 500 agencies, representing 21 percent of our sample, have grown their revenue on average by at least 10 percent per year.

TABLE 6 – REVENUE GROWTH LEVELS BY PROVIDER CATEGORY

REVENUE CHANGES 2010-2013 CAT 1 CAT 2 CAT 3 CAT 4 TOTAL

MAJOR – > 4x Revenue Growth 0 36 7 5 48

SIGNIFICANT – 1x to 3x Revenue Growth

49 123 24 6 202

VERY GOOD – 50% to 99% Revenue Growth

42 120 21 10 193

GOOD – 40% to 49% Revenue Growth 15 40 11 1 67

FAIR – 10% to 39% Revenue Growth 62 240 59 30 391

LOW – < 10% Revenue Growth 44 141 39 21 245

LOSS – Revenue Decline 403 741 77 33 1,254

TOTAL 615 1,441 238 106 2,400


Aggregate revenue is declining for many but there are definitely many top performers in this area.

Operations & ProfitabilityThe single largest component of operating expense is the cost associated with administrative salaries and benefits which have held steady at just over 60 percent in recent years. Our review of the data suggests that most agencies have attempted to significantly reduce operating expenses over the last four years, but administrative salaries have not been the primary source of cost reductions.

At the same time, average net income as a percentage of net revenue declined from 6.2 percent to 4.6 percent. Median values moved from 4 percent in 2010 to 2.5 percent in 2013. This is demonstrable evidence that smaller providers are not exempt from the findings published by Avalere Health earlier this year, regarding receding profit margins of the very largest publicly traded companies.

The 1,254 agencies that experienced declines in revenue between 2010 and 2013 generally took action to reduce operating expenses. Of the 1,254 agencies, 719 were still able to produce a profit in 2013 by reducing total operating expenses at a rate of approximately twice the revenue decline. Interestingly, however, even in the face of other expense cuts 258 of the 719 (35 percent) still managed to increase administrative salaries by an average of 6 percent. The 536 agencies in this group that were not profitable also reduced operating expenses but only 20 percent of the reductions came from administrative salaries. It becomes clear that even in times of declining profit, most agencies are very reluctant to disturb administrative salaries and benefits even though they generally comprise the single greatest component of total operating expense.

Of the agencies that grew revenue in some fashion, there were only 417 that produced net income of between 5 percent and 15 percent and approximately half of those realized the growth in net income due to reductions in administrative salaries. Of the 66 that reduced salaries (more than 10 percent) only 11 experienced growth in total operating expenses. Most of these agencies, even though revenue was growing, were still looking at ways to reduce expenditures.

In 2013 the 50 top performers, two percent of our sample, were able to:� Post average revenue growth of 5 percent over 2012 levels,� Reduce operating expenses by 5 percent when compared to 2012,

The single largest operating expense is administrativesalaries & benefits


� Reduce administrative salaries and benefits by 10 percent over 2012 expenditures, and,� Increase net income by an average of 43 percent as compared to the prior year.

Table 7 shows the average profile by revenue category. Note that all four revenue categories were represented with group two (revenues between $1 million and $4,999,999) having the most successes (31) and group four (revenues over $10 million) having the fewest (2).

Episode ManagementIn response to financial pressures, the number of visits per episode is dropping and the number of episodes per patient is going up. As mentioned previously, the reliance on Medicare, at least from the standpoint of visit volume, is diminishing slightly. The graphs below show the trends for our sample.

TABLE 7 – 2013 REVENUE AND EXPENSE MANAGEMENT TOP PERFORMER PROFILES

# OF AGENCIES REVENUE

REVENUE GROWTH OP EXP

OP EXP

DROP NET INC

NET INCOME

GAIN SALARIESDROP IN SALARIES

Category 1 8 $762,829 6% $632,789 6% $132,811 33% $426,134 9%

Category 2 31 $2,125,706 5% $1,799,358 5% $330,815 40% $1,168,443 12%

Category 3 9 $7,583,096 5% $5,870,437 4% $1,758,637 64% $3,913,809 8%

Category 4 2 $19,625,515 0% $19,119,773 3% $1,666,911 32% $13,462,275 3%


Agencies with slightly more diverse sources of revenue are more apt to have slightly more revenue growth and be profitable than those who rely on Medicare as a single source of reimbursement.

Quality & Clinical IndicatorsOf our sample, approximately 9 percent or 209 agencies exceeded CMS national quality benchmarks.

When comparing quality and satisfaction scores to visit costs by discipline we found, generally, that higher performing agencies in terms of their overall quality scores also have higher visit costs. This is not altogether surprising considering that more qualified clinicians would be receiving higher visit pay and achieving better clinical outcomes. The table below shows the cost versus quality comparison by discipline.

TABLE 8 – VISIT COST COMPARISONS BY DISCIPLINE FOR HIGH VERSUS

LOW QUALITY PERFORMERS

DISCIPLINE CATEGORY HIGH PERFORMER COST LOW PERFORMER COST DIFFERENTIAL

SN 1 $154 $146 5%

2 $140 $129 8%

3 $139 $116 17%

4 $153 $138 10%

PT 1 $231 $184 20%

2 $167 $167 0%

3 $155 $143 8%

4 $155 $139 10%

OT 1 $209 $180 14%

2 $164 $163 1%

3 $156 $136 13%

4 $157 $140 11%

SP 1 $260 $195 25%

2 $167 $168 -1%

3 $154 $138 10%

4 $182 $145 20%

MSW 1 $235 $213 9%

2 $172 $190 -10%

3 $186 $179 4%

4 $199 $198 1%

HHA 1 $92 $62 33%

2 $64 $55 14%

3 $62 $48 23%

4 $56 $57 -2%


Interestingly, as agencies perform better on their scores for ER visits and hospital admissions, they seem to fare less well with patient satisfaction and scoring for all other quality measures when compared to national averages. For example, in all four categories, patient satisfaction scoring was higher when the percentage of ER visits and/or hospitalizations was higher.

Finally, with respect to visit costs, we note that smaller agencies are much more likely to incur higher costs associated with therapy services and surmise that the differentiating factor is the ability of larger providers with more volume to attract and retain therapists in employed positions rather than having to rely on more expensive contracting arrangements.

Top performing agencies posting both significant revenue growth and sustained profitability are also more likely to be among the high scorers on quality measures. Nearly one-third of the sample’s top performers on financial measures also scored above their peers on quality measures.

Industry Bests – Characteristics of Top Performing Agencies Top performing agencies have a dozen measurable characteristics in common.

� >30 Days of Operating Cash� Quick Ratio of 1:1� Days Revenue Outstanding <35� Timely & Accurate Billing: <15% of AR Outstanding >90 Days

� Sustained Top Line Growth � Pay Source Diversity

� <50% of Operating Expense in Admin Salaries & Benefits� <1% of Revenue to Bad Debt

� Net Income Before Taxes = >15%

� RAP within 7 Days� Final Billing within 10 Days of Episode End � Quality Scores Exceeding State/Natl/Local Benchmarks� Higher Visit Costs

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{WORKINGCAPITAL

REVENUE

EXPENSES

PROFITABILITY

EPISODEMANAGEMENT

QUALITY


Strategies for successOnce an agency’s management team understands where and how its operations compare with industry norms and best practices it can begin to address strategies for greater success.

Success Drivers for 2014 and Beyond � Grow Sales

� Maximize Cash Flow

� Reduce Administrative Costs

� Improve Productivity

� Optimize Technology

� Implement a Strategic HR Program

Maximizing Revenue• Invest in sales training programs for marketing staff and those who are

representing the agency in the community. Develop goals for each member of the marketing team.

• Understand the agency’s position in the markets that it serves. Know your market share and understand the strengths and potential weaknesses of competitors. Use information about the competition to explore potential competitive advantages in your market(s) such as underserved areas, competitors that may be exiting the market, etc.

• Consider developing specialty programs in areas that are underserved by others such as wound care or psych.

• Manage payer mix and be sure that you know what the reimbursement will be and how billing is to be handled before clients are admitted for service.

• Be proactive when it comes to determining which third-party payers your agency


wants to work with. Get contracts and manage them proactively!

• Work to develop additional referral sources through proactive demonstration of desired patient outcomes, quality measures, compliance programs and ability to share data.

• Improve the intake process – make the effort to confirm that you will be paid before the referral is accepted for service by ensuring that there are no consolidated billing issues, “frequent flier” problems, or other impediments to third-party reimbursement such as ineligibility for benefits.

Improving Cash Flow – Revenue Cycle Management • Understand the billing requirements of all third-party payers that your agency

works with and establish documented billing processes for submitting and following up on claims to ensure timely payment.

• Focus on timely billing with fewer than 7 days to RAP and 10 days following closure of Medicare episodes for final billing. Institute standard, weekly processes for regularly monitoring RAP and final claim submissions that are outside the range and follow up with responsible staff for needed documentation or other information that will permit release of RAPs and claims.

• Monitor aging RAPs. Remember that some MACs are carefully looking at agencies with a track record of multiple RAP resubmissions. Institute a policy that all RAP cancellations and resubmissions must be approved by an authorized member of the management team to avoid the potential for RAP payment suspensions.

• Bill all other payers on a regular cycle, ensuring that all services are listed on each claim to avoid breaks or the need to resubmit due to late submission of visit information. One way to help this is to effectively schedule all planned visits based on established frequencies in the Plan of Care at the beginning of care.

• Focus on accuracy in billing. Capture every visit and make sure that the documentation is present and adequate before claims are released.

• Establish a collections process with a means for assigning and regularly following up on collection activity. No more than 15 percent of outstanding receivables should be aged more than 90 days.


• Establish a process for authorizing adjustments and write offs.

Improving Cash Flow – Disbursements and Payroll • Negotiate with vendors and lengthen payment times. Many of the businesses that

each agency deals with are now on 45 day cycles for their own payables, so see if you can make similar arrangements for the benefit of your agency’s cash flow.

• Consider payroll changes related to frequency and the possibility of splitting payments between visits and submission of acceptable visit documentation. If this type of program is enacted, do it carefully and with help of outside experts if you are not sure of the wage and hour requirements in your state!

Reduce Costs – Improve Productivity through Process Improvement • Most agencies, particularly those that have been in business for a number of

years, can greatly benefit from process redesign. » Perform a process review and eliminate unneeded manual steps,

duplication of effort by multiple staff members, and process bottlenecks that consume extra time and money. Review each position to determine if positions can be combined or eliminated if duplication of effort exists or if job functions can be accomplished through use of technology or other approaches.

» Document all processes that “touch” technology applications and hold staff accountable for using systems as intended.

» Consider process redesign if you have staff members who are manually preparing worksheets or other materials that might be handled by the agency’s current software application. This includes census lists, financial reports, dashboards, daily/weekly statistical reports, etc.

» Look at compliance and build it into newly devised processes. Remember that for every outside audit or compliance issue, an agency will lose vital time and money dealing with unanticipated and/or avoidable compliance problems.

Get More from Your People • Adopt a strategic approach to management of the agency’s human resources.

Employee turnover generally costs up to twice a trained person’s annual salary and frequently the people who are leaving are not those that agency wants to lose.

• Implement a program that utilizes key performance indicators as a way of identifying high performers among your agency’s staff. Such a program will also


help you to identify and appropriately counsel those who are under-performing.

• Invest in employee engagement. Employees who are engaged and invested in the agency are more than twice as likely to be highly productive than those who are not.

• Implement staff training programs that focus on relationships with patients and families, proper use of technology, process reinforcement, compliance training and more.

Optimize Technology • Find areas where available technology solutions can be used to eliminate manual

work flow such as: » Intake and Admissions » Scheduling » Payroll » Billing

• Regularly review business intelligence information available from your software system and use it for decision making purposes.

• Always take advantage of available technology upgrades and functionality additions.

Conclusion By employing benchmarking techniques, agencies can understand their own performance metrics and compare their results to those of the industry at large and its top performers. Through a focused benchmarking program, areas that need improvement in order to achieve top performer status can be quickly identified for strategic emphasis.


C3 Advisors, LLC converges the three essential business elements—Process, People and Technology—to help home health and hospice providers thrive by improving profitability and reducing risk.

Process Optimization focuses on establishing formalized operational functions that facilitate increased productivity, mitigate risk, and provide the foundation for optimal profitability.

People Integration addresses staffing and workforce issues that are critical to the success of continually cost efficient, low risk, and productive processes.

Technology Maximization ensures the ROI on a technology investment is fully realized through complete use of systems functionality and business intelligence.

C3 Advisors, LLC has specific expertise in post-acute health care companies. For direct information about how C3 Advisors, LLC can assist your agency please call (630) 510-3181 or e-mail [email protected]. bp

ABOUT USKinnser Software® is the world’s smartest, most comprehensive solution for home care. Serving every line of business, including yours, we deliver efficiency, effectiveness, and ease to more than 2,300 home health, therapy, private duty, and hospice organizations every day.

For more information, visit www.kinnser.com or call toll free 877.399.6538

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