By Chris Hester, CEO and founder, Kinnser Software
The great graying of America is officially underway. Nearly 300,000 of us are retiring every month and will do so until at least 2033, according to the U.S. Census Bureau. That’s a big deal. For the first time in history, there will be more Americans over 60 than under the age of five.
From a purely logistical perspective, caring for this demographic will represent one of the greatest challenges we’ve ever faced as a nation. And while hospitals and care facilities will certainly bear their fair share of this responsibility, it’s home health and in-home care that will play the largest part in caring for these aging Americans. In fact, according to our internal estimates, by 2020, home health will eclipse all other segments of the healthcare industry to become the primary source of care across the country.
Home care in all of its forms represents an $82 billion market within the U.S., and as we’ve already established, it’s growing by the hour. But this growth must be underpinned by sustainable practices that simultaneously improve care outcomes, while also ensuring the financial sustainability of home health agencies.
With a slew of new regulations and processes (such as ICD-10 and the Centers for Medicare and Medicaid’s recent final rule) coming into effect in 2015, home health agencies will face a completely different set of challenges than many are used to. Whereas in the past agencies have been reimbursed simply on their volume of care, under the Affordable Care Act (ACA), agencies will now be also be measured on care outcomes such as reducing readmission rates, avoiding unnecessary emergency room visits and overall patient well being.
Nearly every home health agency already evaluates itself on many of these criteria, but institutionalizing these factors will take time. In the interim, there’s a company to be run, with employees relying on agency managers to keep the doors open even while adapting to this new environment.
The key to success in the face of these new challenges will be identifying what matters and what doesn’t, and planning accordingly. Last month, Kinnser Software commissioned the Home Health Benchmarking Report, a national study that analyzed the best business practices of the country’s leading home health agencies.
Based on this research, below are five tips that every agency – large or small – can immediately implement in order to position themselves competitively ahead of 2015’s regulatory maelstrom.
- Make the effort to maximize the revenue: This sounds fundamental, and in some ways it is, but investing in sales training programs for agency marketing staff can have a rapid impact on an agency’s bottom line. Consider developing specialty programs in growing sectors and regions that are underserved by others. Equally important is to always understand your place in the market and your unique selling proposition, and to ensure that this is communicated agency wide.
- Get more from your people: Adopt a strategic approach to the management of your agency’s human resources. Turn your focus to your employees and invest in their engagement – employees who are engaged and invested in the agency are twice as likely to be highly productive than those who are not.
- Optimize technology: Find areas where available technology solutions can be used to eliminate manual workflows – and always take advantage of available technology upgrades. A great example of this is the trend toward cloud-based services, which allow distributed teams to all work from a single, dynamically updated portal, literally from anywhere with an Internet connection.
- Preserve, if not increase, working capital: In our research, we found that the majority of agencies surveyed held less cash on hand than they should. With the implementation of the ACA and ICD-10, CMS reimbursements are invariably going to take longer than ever before, which will put stress on agencies that don’t carry the requisite liquidity to make multiple payrolls without incoming revenue. To avoid this, companies must increase short-term cash flow while reducing overheads wherever possible.
- Streamlining processes: Most agencies, particularly those that have been in business for a number of years, can greatly benefit from process redesign. Initial steps can include performing regular process reviews, introducing a data-driven management approach (such as Six Sigma) and developing management techniques that document each “touch point,” enabling administrators to identify bottlenecks and best practices. These methodologies will also build accountability into your enterprise, providing managers and employees alike a transparent view of their roles and responsibilities.
Where many see challenges ahead for the home health industry, I see opportunity. As professionals, it’s our duty to chart a course through the next few years that’s both responsible to our businesses and sustains the level of care that our customers deserve. As a sector, we must rise to meet new regulations and standards as they come into effect, not months afterward when directives have already been imposed upon us. The home health industry is complex and complicated, but taking these first steps will give agencies five actions they can immediately take while assessing the larger market and their place within it.
About the author
Chris Hester is the president and founder of Kinnser Software, an Austin-based home health management platform. Hester has more than 15 years of experience at the intersection of information technology and health care.