LHC #129 - Opportunities in Private Duty Home Care 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Opportunities in Private Duty Home CareWhy Certified Agencies Struggle with Non-medical Home CareFebruary 6, 2008~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~In this issue...-- Opportunities in Private Duty Home Care-- THE Four Big Barriers to Success in Private Duty with Your Certified Agency-- New PPS Teleseminar Series is a Huge Success! - There's still time to register.-- Seven Steps for Growing Your Hospital Based Home Health Agency-- Power Home Health Referrals-- About the Author-- Permission to ReproduceWelcome,
. . . to Stephen Tweed's Leading Home Care Report, the premier online newsletter for CEOs and executives of America's leading home health agencies.
In this issue we'll look at one of the fastest growing trends in home health care . . . agencies who are moving into Private Duty Home Care (non-medical, private pay) or who are working to grow their private duty business.
Opportunities in Private Duty Home Care~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I'm a trend watcher. One of my roles in home health care is to pay attention to the patterns of change taking place in our industry, and to use this information to help clients who want to grow their business.One of the hottest trends in home care is the growth of Private Duty Home Care, or private pay non-medical home care. And one of the hottest trends within this trend is the number of Medicare Certified Home Health Agencies who have identified private duty as part of their growth strategy.
Well over half of the certified agencies we work with either currently have a private duty business, or they are starting into this business. We've actually created a Private Duty Planning & Coaching model to help our clients start, or grow, a private duty business.
As I have examined this trend more closely, I have observed two major elements:
- Private Duty companies affiliated with certified agencies tend to be larger than free standing companies.
- Private Duty companies affiliated with certified agencies tend to be much less profitable than free standing companies.
The data from the Decision Health 2007 private duty survey shows that the median size private duty company was $1.8 million, and had a net profit of 13%. Anecdotally, I see many of our certified agency clients who have private duty divisions that are significantly larger than $1.8 million.
On the other hand, most of the private duty businesses affiliated with certified agencies lose money or barely break even. I don't have enough data to give you a median or mean on either size or profitability. But the main reason we're called in to work with private duty companies connected to certified agencies is that they are not growing, or they are losing money, or both.
THE Four Big Barriers to Success in Private Duty with Your Certified Agency~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I have been studying this issue for nearly 10 years. In 1999, I served as the Interim President and CEO of a $25 million home care company here in Louisville. We had a private duty business that was doing about $5 million, and was losing money. The team got the entire company turned around and hired a new CEO. Since then, they have done very well.Since that time, I have observed this phenomenon and have worked to understand how come. I've come up with THE Four Big Barriers to Success:
1. Overcoming the Lack of Entrepreneurial Leadership
It begins with leadership. If you want to have a growing, profitable private duty business in your agency, you need to find the right person to run it. As I have gotten to know the owners and administrators of fast growing profitable private duty companies, I see a certain entrepreneurial style and a real sales and marketing focus.
The certified agencies I've worked with tend to promote a nurse or a manager from their certified agency into this role, and the person usually does not have the attitude, style, and experience to be an entrepreneur.
2. Overcoming the Medicare Mind Set
Too often the person running private duty in your agency comes from a Medicare home health background. They have been focused on meeting the Medicare COPs - Conditions of Participation. Then, they try to run the private duty business like their Medicare business. It gets way too complicated and way too costly.
The results are:
A. Customers are confused by the complicated rules and policies.
B. The manager comes from a charitable background and is uncomfortable asking clients for money. So, they set their prices too low to cover their direct cost of care and their gross margins are too low.
C. Employees make decisions that add cost and complexity to the process.
D. Overhead expenses get out of control and eat up all of the gross margin dollars. The company ends up losing money.
I'm working with a very successful home health company right now, with a profitable home health and hospice business and a sterling reputation in their marketplace. In 2007, they generated nearly $1.6 million in private duty revenue and lost nearly $400,000.
3. Overcoming the Nursing Mind Set
Please understand, I mean no disrespect to nurses. I love you all. Nurses are the heart and soul of home health care. AND, home health nurses usually do not make good managers of private duty businesses.
Again, the primary reason is that home health nurses tend to focus on skilled care in private duty, and the fastest growing and most profitable sector of private duty is non-medical private pay. That means companion care or personal care.
The client I just mentioned lost their money on skilled care to Medicaid patients and other skilled services to payers that paid at a rate that left very low gross margins.
I had another client who was contracting with the home health department of their company for a nurse to do initial assessments for private pay cases. He began looking at the intra-company charges and was shocked. It one case, a male RN took 3 1/2 hours to do an assessment for a client who was wanting to purchase only 3 hours of care to accompany a client to the doctor's office. Three and one half hours of a nurses salary at no cost to the client, in order to accept a case for 3 hours at $20 an hour. You do the math.
Having said all of this, I also see a trend increasing the use of Geriatric Care Managers in private duty. Those private duty companies who use a Geriatric Care Manager model in their business tend to grow faster and be more profitable than those that do not.
4. Overcoming the Back Office Integration Mind Set
It is the tendency of certified agencies to say:
- We have a marketing department ,so we'll let them do marketing for private duty.
- We have an HR department, so we'll have them handle recruiting of private duty caregivers.
- We have a finance department, so we'll let them handle billing and collections.
- We have an IT department, so we'll let them make decisions about scheduling software.
The net result of this is that work does not get done on a timely basis because those departments are already busy doing other things. And, they usually have policies that are right for the certified agency, but don't work for private duty.
Here are some examples:
- an agency that takes two weeks to get a caregiver candidate in for an interview
- an agency that can't implement the telephony software it already owns because the IT department has a two year backlog on projects
- the agency that lost over $50,000 last year, and it was all in uncollected receivables that the finance department had not collected
- agencies that are not growing their private pay business because the only marketing is done by home health and hospice marketers
If you are a CEO or executive of a successful Medicare certified home health agency, and you want to grow your business and get ready for the future by venturing into Private Duty Home Care, take these four big barriers to heart.
Private Duty Home Care is a huge opportunity for certified agencies, yet our experience is that very few do it well. If you want to do it well, we can help.
Feel free to give me a call at 502-339-0653 to discuss how we can help you develop and implement a focused action plan to profitably grow your non-medical home care business.
New PPS Teleseminar Series is a Huge Success! - There's still time to register.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~On January 17th, Judy McGuire and I kicked off a new three-part audio teleseminar series on Sales & Marketing Strategies for PPS Performance.We were delighted by the number of companies who dialed in to the call, and to the number of participants at each location. Even more so, we were delighted with the in-depth questions that came our way during the Q & A session.
During our next teleseminar on February 7th, 2008 at 1:00 p.m. eastern time, Michael Giudicissi and I will be discussing how you can use this information to help your sales representatives be more focused. We'll describe in detail how to guide sales reps to the referral sources with the most profitable referrals.
AND, in the third teleseminar, Michael will describe how to measure the results of your sales activity in Sales Per Hour. And Judy will demonstrate how to link case mix weight and revenue per episode to your sales and marketing results.
It's not too late to register. Even though you may have missed the first session, you can still register for the series. Dial in LIVE to sessions two and three. We'll send you a complimentary set of audio CDs from all three programs. You won't miss a thing. Match up a growing Sales Per Hour Ratio from your sales reps with an increasing case mix index and more Revenue Per Episode, and this teleseminar series will pay for itself in the first two weeks. It's Not Too Late!
Seven Steps for Growing Your Hospital Based Home Health Agency~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~If you are the Director of a hospital based home health agency, you face some unique challenges.Your colleagues who run free standing home health agencies think you have it easy. Since you're part of the hospital, they think you get all of the referrals without having to compete for them.
Yet we know that it's not as easy as it may seem. You must balance running a profitable agency with helping the hospital manage charity care and discharge difficult cases while covering your share of the hospital's overhead. You must coordinate your programs and services with other departments in the hospital and with the medical staff. And you must justify your costs with people who don't really understand home health care.
We'd like to help you grow your hospital based home health agency by giving you seven strategic steps you can use. This is a process that was proven by Judy McGuire as she managed and grew the largest hospital home health agency in the state of Hawaii.
Join Judy McGuire and me for a three-part audio teleseminar series specifically for directors and managers of hospital based home health agencies. Beginning on March 3, 2008, we'll share with you the specific details of these seven proven strategies, while tailoring the information to the unique challenges and opportunities facing your agency.
Engage: Seven Steps to Grow Your Hospital Home Health Agency
For the very reasonable fee of $499.00 you'll receive:
- Thursday, March 13, 2008 - 1:00 p.m. Eastern Time - Seven Strategic Steps to Grow Your Hospital Based Home Health Agency
- Thursday, April 3, 2008 - 1:00 p.m. Eastern Time - Assess Your People Strengths, Empower Your Team, and Engage Your Hospital
- Thursday, April 24, 2008 - 1:00 p.m. Eastern Time - Involve Your Professional Advisors, Promote Your Agency in the Community, and Measure Your Success
For additional information on this teleseminar, or other services for hospital based home health agencies, click below.
- Three 90 minute live audio conferences including Q & A
- Individual learning guide for each participant
- Facilitator's guide to lead an on-site discussion of the material
- Continuing Education contact hours for nurses and other professionals
- Three audio CD recordings of the live teleseminar for later review
Power Home Health Referrals~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~The leading conference on marketing and business development in home health care is the Power Home Health Referrals conference presented by Home Health Line and Decision Health. I've been working with the folks from Home Health Line for over 20 years and I've spoken at this conference numerous times.There is no better place to get the knowledge you need to get more referrals that turn into admissions. As you know, Dr. M. Tray Dunaway, our colleague and faculty member in the Certified Home Care Sales Professional program will be the opening keynote speaker. Dr. Dunaway is a magical presenter who inspires audiences while giving practical, take home information about how to sell your services to physicians.
I'll be following Dr. Dunaway, and then we have a terrific line up of industry professionals who will share their insights and expertise. You don't want to miss Power Home Health Referrals 2008, February 11-13 at Caesar's Palace in Las Vegas.
See you there!
About the Author~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Stephen Tweed, CSP, is Chairman and CEO of Leading Home Care ... a Tweed Jeffries company. For nearly 25 years he has been a recognized leader in strategy and leadership development for home care companies and associations. He is the author or co-author of five books, four of which were written specifically for the home care industry. He has served on the boards of directors of three not-for-profit home care agencies, and has served as interim President & CEO of a $25 million home care company.
Stephen is a past-President of the National Speakers Association, a 3500 member international society of experts who speak professionally. He is also the father of a 37 year-old son who is physically disabled and uses the services of home care on a daily basis.
Permission to Reproduce~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Permission is granted to healthcare publications, associations and companies to reproduce this article in your publication, or to distribute copies to your leaders, on the condition that you reproduce the credits and contact information as follows: "Reprinted with permission from Stephen Tweed's Leading Home Care Report. Copyright 2008 Stephen C. Tweed. To receive a FREE subscription to this newsletter, log on to www.leadinghomecare.com."
Contact Leading Home Care~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~email: stephen@leadinghomecare.comphone: 1-866-209-5101~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~