5 Things... #2 KNOW YOUR NUMBERS

It sounds common sense.  You need to know the numbers that define your company.  My experience has shown that many home care agencies don't know the critical numbers that determine their success.  They manage by reacting to the biggest fire instead of planning, monitoring and managing that prevents fires.

THE FOUNDATION:  In the blog, ...#1 STRATEGY, we established that you have to have a purpose and nested goals that all roll up to the top company goal.  The next piece is to know where the company is at now...and now...and now (etc.).  Know where you are at now and you know what needs to be addresses.  Actionable information is the key, not just data.

KNOW YOUR NUMBERS:

1. budget
2. revenue
3. cost
4. cash flow
5. customer success

BUDGET:  Your budget comes from your strategic planning.  How much profit, revenue, cost are you planning?  What is your target profit?  What assumptions are you building into revenue and cost?  Reality will soon vet your assumptions.  Budgets are NOT an annual exercise to do at a company offsite/boondoggle.  It establishes the numbers you use to run the business.  The budget must be alive and part of daily and weekly decision making.  Quarterly or annually budget evaluation is too late.

REVENUE:  For home care, revenue must be understood by payor types (episodic payers, per visit and hourly).  Budget revenue by payor type and monitor it weekly the same way.  It will drive marketing activities, internal operations and clinical utilization.  Any agency that is 70% episodic payor, 30% everything else operates differently then an agency 30% episodic, 70% everything else.  Knowing revenue by payor type tells you if/how you're meeting revenue targets and provides insight into how costs data should look.

COST:  Cost must be understood by both direct (by discipline) and overhead.  There are good "rule of thumb" calculations that let a home care agency know if their direct costs and overhead costs are reasonable.  These rules should have been used in the budgeting process, but they also help management know where in the agency to look and manage to improve costs.

CASH FLOW:  As with the other areas of the business, cash flow has to be monitored.  Not just the reactionary "what can we bill right NOW to get in some cash", but knowing all A/R and completed episodes that are not yet available to bill.  Billers and managers must always have their finger on the pulse of the efficiency of the clinicians and operation because they drive the billing workload.  I have seen more  cash flow problems because of lack of accountability for clinical documentation (turn in & review) and lack of commitment to run down physician orders then due to problems in the billing office

CUSTOMER SUCCESS:  Home care must start viewing the industry as a service with internal and external customers and less like a requirement.  Yes, we have to take care of the clinical need and meet all of the regulatory and financial realities of the industry, but we must also view all of our touch points as customers.  Healing the patient and ticking off the family and physician in the process is a loss in aggregate.  Customers must be understood and monitored.  HHCAPS is one way, but satisfaction surveys , MBWA and other more formal methods should also be used.  I'm not talking about a once a year big questionnaire because that is too obtuse.  This means having a company culture that is defined and monitored both internally and externally.

Knowing the numbers is all about have data and information that is timely, accurate and accessible.  Optimizing systems (home care/financial software & organization/jobs/processes) understanding, setup ups, tools and reports are the keys to success.  Spend time getting the right tools and setting up the systems in an investment in success.  Managers must focus time and energy on analyzing the data, not trying to find it and wondering if it's accurate, or even worse, making decisions without it.

Steve

Act NOW - Waiting Won't Improve Things

Last week I presented to a large room full of home care and hospice agency managers.  I also attended the funeral of one of my favorite people, my uncle Mark.  This morning Linkedin sent me a great article, "14 Lessons From Benjamin Franklin About Getting What You Want in Life", which I read and appreciated.  These three events may sound isolated, but to me, they each reinforce the strong message of the importance of ACTION over words.

Through the 90 minute presentation at last week's Southwest Regional Home Care Conference the audience of 80 or so appeared engaged.  Responding with a knowing nod at all the right times.  No one fell asleep or left, as far as I could see.  Good presentation, right?  The answer is "we'll see".  I have presented at home care conferences for years.  At first thinking the "knowing nods" meant everyone understood and would go back to their agency and make the necessary changes.  I now know that is rarely the case.  There was hearing, reading, sometimes note taking and, or course, head nodding, but, if history is any indicator, very little action.

My uncle Mark was a great guy.  A thinking, challenging, fun, contrarian, awesome guy.  He was a monk in training, a Marine, a professional photographer, a poet, a writer and many other things.  He believed there is a type of evolution to society.  That every generation was supposed to "learn from the previous generation by taking the good stuff and building on it while getting rid of the bad stuff."  Change and evolution are natural so the world requires action.  While others talked he acted with purpose.

The Linkedin article link about Benjamin Franklin ( www.businessinsider.com/14-action-inducing-lessons-from-benjamin-franklin-2012-4 ) sounds like it was written precisely for the current challenges of today's home care industry.  The author of the article introduces the lessons this way, "Here are 14 action-inducing lessons from him:".  I guess it is human nature to fear action and to fear change.  I won't list them all out here but it is a great Monday morning eye opener.

Hopefully, as you read this, and the Franklin article, you nod along in agreement.  Take the following quote to heart and when you've finished reading the last line then ACT.  "Well done is better than well said.", Benjamin Franklin (although it could have been said by uncle Mark).

If you don't know how then ask.

Steve

5 Things...#1 STRATEGIC PLANNING

Every business must have a documented mission and routinely update, in writing, short and long term strategies and actions.  Just like no plane would take off without a flight plan, no home care or hospice agency should operate without a documented plan.

First, don’t get hung up on the terms.  What’s important is to have a documented mission, whether or not it meets someone’s definition of “mission statement” or “vision statement”.

Why it matters:  I see agencies with stand alone mission statements that hangs on the wall or live in a dusty binder somewhere on a shelf.  I am sure it was drafted with the best of intentions and might even represent what the agency thinks is important, but if it does not drive every action in the agency then it is just pretty words.  A good mission is the heart for the agency, and if used, it is powerful!  

Here’s a simple process for establishing and supporting a documented mission.

1. Document your goal.  What is the most important goal your agency is trying to achieve?  It is OK to sound like Miss America here.  Whatever you put here will be vetted when you create your flight plan and the details are flushed out.
2. Document your flight plan.  Now start asking yourself “How are we going to accomplish our goal?”.  This should be a short list of bullets points.  Now, address each bullet point and ask again, “How are we going to accomplish it?”.  Do this as many times as you want.  At some point you start getting into actions and outcomes.  These are the details of the structure, tools and numbers that will be used later to manage the agency.
3. Now evaluate your work.  Does your documented goal still represent the agency’s highest goal?  Do the details flushed out in step 2 represent your agency’s actions and setup?  If they don’t then you can either change what you wrote or change the agency so it can achieve the goal.
4. Formalize it!  Once you have the goal and the first level of the flight plan where you want them then make it official, this is your documented mission!   Keep all levels of detail you created for the flight plan.  They will be used later.
5. Now use it!  Post it, quote it, ensure everyone knows it.  Open meetings by quoting it, “This agency is here to ...  We will accomplish that by ....”.  That is a best way to ensure you are accomplishing the agency’s work and not just busy work.  Use it to start interviews with prospective employees.  Use it when you market to the community.  Use it when you update processes, job descriptions, business planning, etc.  Use it!

EXAMPLE:  Our goal is to be the largest Medicare home care provider in the service area.

We will achieve our goal by:

• helping our patient’s achieve the best possible outcomes; we will achieve this by...
• hiring and retaining highly skilled and caring clinicians
• providing all training, mentoring and tools required 
• etc...
• continuing to grow our Medicare home care patient base; we will achieve this by...
• helping patient’s achieve the best possible outcomes
• hiring and retaining highly skilled and caring marketing staff
• etc... 
• running a successful business
• be knowledgable
• be efficient
• etc...

Even though this is just an example, you can see that the goal and first level of the flight plan (in bold) is the documented mission of the agency.  It can be said in less than 30 seconds so it can be easily used.  It can be expanded to define actions and metrics to allow the agency to be managed to achieve its mission.

Let me know if you have any questions (steve@phcm.net).  Next we’ll get into STRUCTURE.

IMPORTANT NOTICE
(provided by Joie Glenn, Executive Director of the New Mexico Association of Home and Hospice Care)

CMS Issues Revised Notice of Medicare Non-Coverage (NOMNC)

and Detailed Explanation of Non-Coverage (DENC)

It is a requirement that Medicare beneficiaries who are receiving services from a skilled nursing facility (SNF), home health agency (HHA), hospice, or comprehensive outpatient rehabilitation facility (CORF) be given a notice to inform them that their Medicare covered services are ending, which gives them the opportunity to request an immediate, independent review of the proposed discontinuation of the covered services. When a review is requested, an additional notice is given to provide a more detailed explanation as to why the coverage is ending.

Prior to March 2012, different notices were given depending on whether the beneficiary had original Medicare or was enrolled in a Medicare health plan. This was confusing, not only for the beneficiaries, but for the health care providers. In March 2012, CMS announced that they were issuing a revised, combined NOMNC and DENC.

Providers are required to begin issuing the new combined notices as soon as possible, but no later than May 1, 2012.

Providers can access the notices on the CMS website at http://www.cms.gov/Medicare/Medicare-General-Information/BNI/FFSEDNotices.html or http://www.cms.gov/Medicare/Medicare-General-Information/BNI/MAEDNotices.html.

Steve

5 Things Every Agency (Business) Must DO To Succeed

The home care and hospice industries are unique and special, even within the health care industry.  They work with people in their homes, helps them regain quality of life and maintain dignity of life.  As special as the services of home care and hospice are, they are still businesses.  In order for these services to be provided, and done well, the business must succeed.  This is one of the biggest challenges of home care and hospice in 2012.

The work “DO” in the title is highlighted because this blog post is all about actions, not theories and not platitudes that are done once and forgotten. There are five (5) core actions every agency/business must take to be successful.  If the actions are done right, then the business puts itself in a position to succeed and be able to support the services of home care and hospice.  

The core actions are:

1. STRATEGIC PLANNING:  Every agency/business must have a documented mission and routinely updated, in writing, short and long term strategies and actions.  Just like no plane would take off without a flight plan, no home care or hospice agency should operate without a relevant, well throughout out and documented strategy.
2. CONTINUOUSLY EVOLVING STRUCTURE:  Structure is the operation of the agency; organizational chart, jobs/tasks, processes, tools, metrics and reports.  The structure must be efficient for the agency to function, grow and survive industry change.  It also must continuously evolve to remain efficient.  
3. EFFICIENT USE OF TOOLS:  Software is the most important tool available to agencies.  It organized, controls, monitors and runs the business and everything that contributes to the business success.  Without using these tools successfully the business will not survive.  It is not good enough to have tools like good software.  The tools must be understood, efficiently used and optimized.
4. KNOW THE NUMBERS:  There are a relatively small number of metrics that an agency needs to monitor to know how it is performing.  It all boils down to ongoing, frequent monitoring of cost, revenue and cash-flow compared to a budget and other goals.
5. MANAGE TO THE NUMBERS:  It is not enough to know the numbers, to be successful an agency must manage to the numbers.  This means learning what makes up cost, revenue and cash-flow.  It also means knowing what to do when a data is not meeting the goals.

For the core actions to be successful they must be driven by the agency leadership.  This includes the traditional business leaders (e.g. CEO, CFO, COO, Administrator, owner), but it also must include the clinical leadership.  THIS APPLIES TO FREE STANDING, HOSPITAL BASED, NOT-FOR-PROFIT AND FOR-PROFIT AGENCIES.

More detail on each of the core actions will be discussed in future blogs.  This is a great place to start understanding the businesses of home care and hospice. 

Steve

Hello World!  This is the first blog for PHCM - Home Health and Hospice Success.  The purpose of this blog is to pass along progressive and relevant solutions to the challenges facing the home care and hospice industry.  Information will come from a variety of industry experts and non-industry experts.  Management, operational and financial topics will be primary, but solutions are routinely cross-functional so every component of home care, hospice and business will be touched at one point or another.  I will attempt to update the blog weekly.

Here are the fundamentals beliefs behind this blog.

• Health care is a basic human right.  Access to quality health care should not be dependent on age, race, economic status or community.
• Home care and hospice are vital segments of the health care continuum.
• Medium and small providers are the backbone of the home care and hospice industries.  
• The label of "medium" or "small" does not mean "less professional" or unable to compete with "large"
• Home care and hospice industry changes REQUIRE providers to operate progressive and efficient businesses as well an provide quality care.

Many of the concepts and business theories will be shared with other blogs (e.g. Kinnser) and will be expanded on in presentations and seminars throughout the year.  See www.phcm.net for more information.  Let the adventure begin!

Steve