Analysis conducted by Kinnser Software and C3 Advisors examines the business strategies employed by the most successful home health agencies, providing unique, data-driven insights applicable to companies of any size.
AUSTIN, TEXAS – October 29, 2014 – With more than 10,000 Americans turning 65 every day, the home health industry is poised for rapid growth over the next decade. A report released today from Kinnser Software and C3 Advisors looks at what home health agencies need to succeed in this rapidly changing industry.
The Home Health Benchmarking Report studies the best practices of the industry’s leading agencies and offers practical advice for how these best practices can be replicated across the market in order to provide the highest quality care while reducing overall costs.
“Within the next decade, home health is going to become the heart of the country’s healthcare system, eclipsing hospitals and onsite care facilities as the primary source of health care in the U.S.,” said Chris Hester, president and founder of Kinnser Software. “However, with this growth comes a number of challenges, both organizationally and regulatory. The Home Health Benchmarking Report investigates these issues and what the industry’s best agencies are doing to ensure long-term growth and sustainability.”
Upcoming regulations such as the Centers for Medicare & Medicaid Services (CMS) ICD-10 will present particular challenges for the home health industry, requiring agencies of any size to adapt to new standardized reimbursement and billing procedures. In many cases, these processes will result in longer time between payments, making an agency’s cash on hand even more important to financial viability.
“Home health organizations that are going to thrive in this ever-changing market need to understand three key things: where they are now in terms of clinical, operational and financial results, where they’re going, and how they plan to get there,” said Sharon Harder, president of C3 Advisors, LLC. “Benchmarking is a strategic imperative, allowing agencies to compare against their peer set and see what’s happening across the industry. It also allows them to take inspiration from industry leaders and improve processes accordingly.“
Some of the Home Health Benchmarking Report’s highlights:
Cash on hand is critical: Top performing agencies had an average of 30 days of operational revenue available. Experts predict ICD-10 billing delays will mean agencies will need about 10 months worth of operating costs to survive in this new environment. Accordingly, agencies need to adjust strategy now to improve cash flow through better revenue cycle management.
Top agencies accurately and efficiently manage billing: Industry leaders had 6 percent less revenue but 98 percent more net income, demonstrating effective revenue management. Agencies need to look to this model and better understand market share and potential competitive advantages.
Reduce costs by boosting productivity and managing overhead: The most defining characteristic among top performers was that administrative salaries and benefits represented less than 50 percent of net revenue, highlighting clear control of staffing expenses. Expanding agencies should look at variable costs and see where adjustments can be made. Many agencies have problems with employee overtime — this can be addressed through proactive advanced scheduling to ensure shifts are covered, employees are correctly utilized and extra expenses aren’t being incurred due to poor planning.
Harness the power of technology: Industry leaders have not only implemented technology, but also truly embraced its power to automate — or in some cases eliminate — certain tasks. Systematizing processes such as patient intake and admissions, scheduling, payroll processing, and billing management has proven to drastically reduce overhead costs across the home health industry. In particular, the home health industry stands to benefit dramatically from cloud-based technologies, which enable collaboration from widely dispersed teams and offer enhanced security measures over server-based infrastructure.
“Home health is an $82-billion industry, and growing daily. As the industry grows, it will be subject to the same market dynamics as any other, but there are some factors that are unique to this space in particular,” continued Hester. “Successful home health agencies will need to manage costs and employees, while ensuring consistent quality care outcomes across the board. We’re committed to working with agencies to help streamline processes and make the transition to ICD-10 as seamless as possible so agencies can continue to deliver quality in-home care while managing costs.”