Leadership in Home Health: Elevating · Benefits package Contract rates 29// 2013 NAHC Annual...

Leadership in Home Health:Elevating Everyone’s Role

November 2, 2013

2013 NAHC Annual Conference 1


experience clarity //

CPAs & ADVISORS

(Session 609)

p y //

2013 NAHC Annual Conference

Mark P. Sharp, CPA

ObjectivesIdentify how to drive accountability and incentives for financial and clinical success throughout the organization

Recognize how to optimize engagement of employees by aligning financial and clinical operations metrics

Identify best practices for managing the numbers to reduce costs, improve care quality and improve patient capacity

2 // 2013 NAHC Annual Conference


November 2, 2013


Medicare Home Health – Where Have We Been

Change in Market Basket Loss in Rate

Year

Change in Medicare Base

Rate

Market Basket (Inflation in

Costs)

Loss in Rate Compared to Market Basket

2008 0.25% 3.00% ‐2.75%

2009 0.15% 2.90% ‐2.75%

2010 1.75% 2.00% ‐0.25%

2011 ‐5.19% 2.10% ‐7.29%

2012 2 39% 2 40% 4 79%2012 ‐2.39% 2.40% ‐4.79%

2013 ‐2.00% 2.30% ‐4.30%


Freestanding Medicare Margins – Nation Wide

2008 2009 2010 2011

15.2% 15.3% 15.8% 12.2%



November 2, 2013


Hospital‐Based Medicare Margins – Nation Wide

2008 2009 2010 2011

‐5.3% ‐5.8% ‐5.2% ‐12.1%


Freestanding Overall Margins – Nation Wide

2008 2009 2010 2011

4.0% 5.3% 4.8% 2.8%



November 2, 2013


Medicare Home Health – Where Are We Going

Forecasted Forecasted Forecasted

Year

ForecastedChange in

Medicare Base Rate

ForecastedMarket Basket (Inflation in

Costs)

Forecasted Loss in Rate Compared to Market Basket

2014 ‐1.50% 2.40% ‐3.90%

2015 ‐2.00% 2.50% ‐4.50%

2016 ‐2.00% 2.50% ‐4.50%

2017 ‐2 00% 2 50% ‐4 50%2017 2.00% 2.50% 4.50%

2018 1.50% 2.50% ‐1.00%


Impact on Margins

Base

No Efficiency Gains

2011 2012 2013 2014 2015 2016 2017 2018

Rate Change -2.39% -2.00% -1.50% -2.00% -2.00% -2.00% 1.50%

Inflation in Costs 2.40% 2.30% 2.40% 2.50% 2.50% 2.50% 2.50%

Payment per episode $2,500 $2,440 $2,391 $2,355 $2,308 $2,262 $2,217 $2,250

Cost per episode $2 200 $2 253 $2 305 $2 360 $2 419 $2 479 $2 541 $2 605Cost per episode $2,200 $2,253 $2,305 $2,360 $2,419 $2,479 $2,541 $2,605

Margin per episode $300 $187 $86 ($5) ($111) ($217) ($324) ($355)

Margin % 12.0% 7.7% 3.6% -0.2% -4.8% -9.6% -14.6% -15.8%



November 2, 2013


Impact on Margins

Base

Efficiency Gains Offset Inflation in Costs

2011 2012 2013 2014 2015 2016 2017 2018

Rate Change -2.39% -2.00% -1.50% -2.00% -2.00% -2.00% 1.50%

Inflation in Costs 2.40% 2.30% 2.40% 2.50% 2.50% 2.50% 2.50%

Payment per episode $2,500 $2,440 $2,391 $2,355 $2,308 $2,262 $2,217 $2,250

Cost per episode $2 200 $2 200 $2 200 $2 200 $2 200 $2 200 $2 200 $2 200Cost per episode $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200

Margin per episode $300 $240 $191 $155 $108 $62 $17 $50

Margin % 12.0% 9.8% 8.0% 6.6% 4.7% 2.7% 0.8% 2.2%


Elevating Everyone’s Role

Watching the Bottom LineChanging the Bottom Line



November 2, 2013


Bottom Line Translated to Behaviors

Margin

Revenue

Episode Payment Volume

Expenses

Indirect Costs Direct Costs

Case mix weight

Episode adjustment

Episode per patient

Admin hours per visit

Visits per episode

Direct costs per visit


Changing the Bottom Line

Benchmark • At an agency level

Drill Down • To a staff level

Target Performance • Changing the numbers

Monitor Performance • Accountability



November 2, 2013


Overall Profitability

HP/BK

D Median

7 5% us/BKD Median

15 6% Others Median

2 8%

Consists ofRevenues (payments)

SH

7.5%

Best 25%

18.4%

PPS Plu 15.6%

Best 25%

25.6%

All O 2.8%

Best 25%

10.8%

Expenses (costs)

Payer mix

Program mix


Medicare Profitability

HP/BK

D Median

20 9% us/BKD Median

25 4% Others Median

10 4%

Consists of

SH

20.9%

Best 25%

28.3%

PPS Plu 25.4%

Best 25%

28.9%

All O 10.4%

Best 25%

23.2%



November 2, 2013



Medicare Payment Per Episode

HP/BK

D Median

$2 708 us/BKD Median

$2 803 Others Median

$2 670

Consists of

SH

$2,708

Best 25%

$3,141

PPS Plu $2,803

Best 25%

$3,054

All O $2,670

Best 25%

$3,115



November 2, 2013


Average Case Mix Weight

BKD Median

BKD Median

hers Median

SHP/B

1.3444

Best 25%

1.4722

PPS Plus/B

1.3571

Best 25%

1.5459

All Oth

1.3128

Best 25%

1.5193


OASIS

Managing Case Mix Weight

accuracyPainting the right picture – of the

patient & the POC

Clinician Training –initial & ongoing



November 2, 2013


LUPA Episode Adjustments

HP/BK

D Median

9 5% us/BKD Median

9 9% Others Median

6 4%

SH

9.5%

Best 25%

5.1%

PPS Plu 9.9%

Best 25%

6.6%

All O 6.4%

Best 25%

2.9%


Managing LUPA Episode Adjustment

Fewer LUPAS

Proper discharge planning

Clinical oversight of POC

Thorough clinical

assessment



November 2, 2013


Episodes per Patient

HP/BK

D Median

1 3 us/BKD Median

1 4 Others Median

1 6

SH

1.3

Best 25%

1.6

PPS Plu 1.4

Best 25%

1.4

All O 1.6

Best 25%

2.3


Managing Episodes

Team collaboration

ManagedCare

POC oversight

Good discharge planning

Optimum Managed Episodes

Care Managment clinical

outcomes



November 2, 2013



Direct Cost Per Episode

HP/BK

D Median



$1 243

Consists of

SH

$1,170

Best 25%

$1,025

PPS Plu $1,148

Best 25%

$1,069

All O $1,243

Best 25%

$991



November 2, 2013


Visits per Episode

HP/BK

D Median

14 9 us/BKD Median

15 2 Others Median

16 9

SH

14.9

Best 25%

13.7

PPS Plu 15.2

Best 25%

12.1

All O 16.9

Best 25%

14.3


Episode Management

POC oversight

Good clinical &

Care Management

Team collaboration

financial outcomes



November 2, 2013


Episode ManagementCare

Management POC Oversight Team Collaboration

• Patient involvement

• Care managed by episode, not by visit

• Outcome: self

• Cultivate clinical reasoning

• Every cost must add value to the

• Best skill mix for the POC

• Frontload CARE to reduce ACH

• Optimize management outcomes

pbetween visit progress


Direct Cost per Visit ‐ Nursing

HP/BK

D Median



$68 73

Consists ofDirect labor – wages, benefits and contract

SH

$77.89

Best 25%

$62.17

PPS Plu $72.59

Best 25%

$58.84

All O $68.73

Best 25%

$49.49

Direct travel



November 2, 2013


Direct Labor as a % of Revenue

HP/BK

D Median

47 9% us/BKD Median

39 0% Others Median

44 6%

Consists ofWage rates

SH

47.9%

Best 25%

39.9%

PPS Plu 39.0%

Best 25%

35.7%

All O 44.6%

Best 25%

34.6%

Employee productivity

Benefits package

Contract rates


Per Visit Pay Rates ‐ Nursing

FP Median

$36 64 NFP Median

$40 00

HB Median

$40 00

Salary, hourly or per‐visit

Market appropriate

$36.64

Best 25%

$33.00

$40.00

Best 25%

$32.00

$40.00

Best 25%

$32.91

pp p

Experience mix



November 2, 2013


Compensation ModelsAdvantages Challenges

Non‐exempt hourly •Allows flex time pay • Paying by employee’s report of hours workedhours worked

•Reinforces poor performer•Wage & hour laws•Requires much managing

Exempt salary •Consistent pay amount• Exempt from overtime pay

•Requires much managing for productivity

P ‘ ’ P i l f d i i I i i ki i iPer ‘event’ pay • Paying only for productive time,defined by agency

•No productivity standard • Productivity not managed

• Incentivizes making visits•Requires firm structure for episode management, oversight for POC


Nursing Hours per Nursing Visit

HP/BK

D Median

2 0 us/BKD Median

2 2 Others Median

2 0

Productivity standardsVisits per day/week

SH

2.0

Best 25%

1.5

PPS Plu 2.2

Best 25%

1.4

All O 2.0

Best 25%

1.2

Caseload

Accountability

Incentivize



November 2, 2013


Productivity

• Encourage increased caseload• Visit standard counterproductive

Align incentiveVisit standard counterproductive

• Decrease need to be in office• Optimize technology

Support efficiency

k b l bE f • Make accountabilities objective• Establish, enforce consequences

Enforce accountability


Benefits as a % of Salaries

HP/BK

D Median

18 3% us/BKD Median

13 8% Others Median

15 2%

Market appropriate

Shop packages

SH

18.3%

Best 25%

13.5%

PPS Plu 13.8%

Best 25%

12.69%

All O 15.2%

Best 25%

11.0%

p p g

Full time vs. part time

Use of contract services



November 2, 2013


Transportation as a % of Revenue

HP/BK

D Median

2 9% us/BKD Median

0 8% Others Median

1 5%

Mileage, zone payment or fleet

GPS technology

SH

2.9%

Best 25%

1.6%

PPS Plu 0.8%

Best 25%

0.1%

All O 1.5%

Best 25%

0.0%

gy

Market appropriate


Medical Supply Cost Per Episode

HP/BK

D Median

$29 us/BKD Median

$27 Others Median

$27

Supply management

Secure storage

SH

$29

Best 25%

$18

PPS Plu $27

Best 25%

$19

All O $27

Best 25%

$8

g



November 2, 2013


Indirect Cost per Episode*

HP/BK

D Median

$814 us/BKD Median

$591 Others Median

$1 069

ConsistsAdministrative costs

SH

$814

Best 25%

$558

PPS Plu $591

Best 25%

$270

All O $1,069

Best 25%

$731

Capital costs


* Before hospital overhead allocation

Administrative Costs as a % of Revenue*

HP/BK

D Median

34 7% us/BKD Median

31 3% Others Median

39 3%

Consists ofIndirect labor – wages, benefits and contract

SH

34.7%

Best 25%

26.2%

PPS Plu 31.3%

Best 25%

22.6%

All O 39.3%

Best 25%

29.5%

Employee productivity

Back office management




November 2, 2013


Administrative Hours per Visit

HP/BK

D Median

1 2 us/BKD Median

1 4 Others Median

1 3

Productivity standards

Accountability

SH

1.2

Best 25%

0.8

PPS Plu 1.4

Best 25%

0.9

All O 1.3

Best 25%

0.9

y

Incentivize


Capital Costs as a % of Revenue*

HP/BK

D Median

2 7% us/BKD Median

1 5% Others Median

3 4%

Appropriate space

Proper equipment/technology utilization

SH

2.7%

Best 25%

2.1%

PPS Plu 1.5%

Best 25%

1.5%

All O 3.4%

Best 25%

2.3%

p q p / gy




November 2, 2013


Performance Incentive Sample (Attachment)


SummaryManaging financial performance critical in current environment

Everyone plays a critical role in performance management

Study current state of your revenues and expenses

Help establish performance targets

Monitor ongoing performanceMonitor ongoing performance

Hold staff accountable for achieving the targets



November 2, 2013


Thank youy

Mark P. Sharp, CPA // [email protected] // 417.865.8701

Leadership in Home Health: Elevating · Benefits package Contract rates 29// 2013 NAHC Annual...

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