LHC #146 - Home Health Care and $2.00 Gasoline

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Home Health Care and $2.00 Gasoline

The roller coaster ride of home care economics

November 12, 2008

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In this issue...

-- Home Health Care and $2.00 Gasoline

-- Seven Sources of Competitive Advantage in Home Health Care

-- Leading Your Executive Strategy Retreat

-- November is National Home Care & Hospice Month

-- About the Author

-- Permission to Reproduce

Welcome,

. . . to Stephen Tweed's Leading Home Care Report, the premier online newsletter for CEOs and executives of America's leading home health care agencies. (For strategies and insights on how to grow your Private Duty non-medical home care business, we invite you to subscribe to Private Duty Today, our newsletter for non-medical home care.)

As a leader of your home health agency, your role is to grow your business and get ready for the future. We're here to help!


Home Health Care and $2.00 Gasoline

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On Monday evening, I was driving back to Louisville from Gatlinburg, Tennessee, where I had been speaking to the Tennessee Association for Home Care at their annual fall meeting. I was listening to a radio talk show on investments and mutual funds, and the host was saying, "In a short time, we may be seeing $2.00 gasoline."

I wanted to call him and say, "It's here." I had just filled up the tank and paid $1.94 per gallon.

What a contrast to July when I was working in Pasadena, California, and paid $4.75 per gallon for gas. What caused this precipitous drop in gas prices?

Supply and demand.

With the shake up of the economy around the world, the demand for gasoline has plummeted and the price has dropped accordingly. The credit crisis has caused China and India to be short of cash to buy oil, and therefore the pressure on the world's oil supply has shifted, and the price of a barrel of oil has plummeted as well.

Although home health care is not a commodity like oil, the law of supply and demand still applies. When demand for home care exceeds supply, there is lots of business to go around. However, as the number of home health agencies explodes, there are more and more competitors reaching for that same patient referral.

There are more home health agencies doing business today than any time since 1997, just before the Balanced Budget Act and the catastrophic damage to the industry caused by the Interim Payment System. According to NAHC's report on Home Care Statistics, there were 9,284 Medicare Certified Home Health Agencies at the end of 2007 and 3,257 certified Hospices.

In 1997, there were 10,444 agencies and that fell to 8,080 in 1998 and down to 6,861 in 2001. Then the numbers started to rebound, until today.

That means that this business is more competitive than it has been in nearly a decade. I'm sure you're seeing it.

So, what makes your agency unique. What do you use to differentiate your agency in the minds of your referral sources? Why should a physician or discharge planner refer to your agency instead of the dozens of others calling on them?


Seven Sources of Competitive Advantage in Home Health Care

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In my work with home health agencies in strategic planning over the past 26 years, I have identified seven sources of competitive advantage, and a number of ways that you can apply these principles in your marketplace.

1. Product Differentiation

If your product is an episode of care, you can differentiate it in several ways; quality of outcomes, innovation of new specialty programs, program packaging and promotion, selection and availability.

2. Service Differentiation

We're in a service business. How you deliver the product can make all of the difference in the world to your referral sources. Speed and responsiveness, ease of access, convenience, and method of convincing the customer to buy are methods of service differentiation.

3. Narrow Market Focus

You can separate yourself from the pack by focusing on a narrow segment of the marketplace. Perhaps you choose to focus on heart care, or orthopedic care, or wound care. Perhaps you choose to focus on specific referral sources or types of patients.

4. Relationships

All things being equal, people would rather do business with a friend. You can gain competitive advantage by developing person-to-person and organization-to-organization relationships.

5. Exceptional Customer Experiences

You can go beyond product, service, and relationships and focus on the total customer experience. Like Disney, Starbucks, or Cabela's, you can examine every moment of contact between your agency and your customers and create exceptional, memorable experiences.

6. Common Values

We are seeing clear patterns in our country of differing values, and there is a growing strategy to focus on customers and referral sources who share your common values. The most common example of this is faith-based health care providers.

7. Low Price

Low price is not relevant to home health, since the consumer nor the referrer pay the bill. But it is one of the seven sources of competitive advantage so we need to acknowledge it. Low price does come into play when you are competing for managed care contracts.

In our Executive Strategy Retreats, in our Marketing Planning Sessions, and in our Certified Home Care Sales Professional workshops, we explore these seven sources of competitive advantage. Then we guide groups through the process of selecting the sources that are the best fit for their agency, and how to develop strategic plans to create competitive advantage in the marketplace.

If you want to continue to grow your agency, you'll need to be clear about how your agency is different from your competitors.


Leading Your Executive Strategy Retreat

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Most of the home health agencies we know of set aside some time each year for their senior managers to go away and focus on strategy. These executive strategy retreats are designed to give the agency leaders uninterrupted time to examine the forces and trends shaping the industry, assess their current reality, and develop strategies to gain competitive advantage, grow the business, and get ready for the future.

Here are some suggestions for planning your next Executive Strategy Retreat:

  • Set aside a day and a half or two days of uninterrupted time in a comfortable setting
  • Actively involve your leadership team
  • Get input from your staff
  • Use an experienced faciliator
  • Use storyboarding or another technique to make ideas visible and stimulate creativity
  • Focus on the action you will take to implement your plan
  • Execute with excellence
  • Set up a scorecard to measure your success

Remember, "A mediocre plan brilliantly executed will always out perform a brilliant plan poorly executed."

If we can help you plan, organize, and facilitate your next Executive Strategy Retreat, call Julie Raque at 502-339-0653 to set up a telephone appointment with Stephen Tweed to discuss strategic planning in home care.


November is National Home Care & Hospice Month

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November is the time to celebrate home care and hospice in America. This is a great time to celebrate the important work we do, and to communicate the benefits of home care and hospice to your stakeholders.

Here are some tips to make this month special:

  • Hold an open house at your agency
  • Hold your annual employee awards event during November
  • Give awards to employees who have gone the extra mile for your patients
  • Take a reminder gift to your key referral sources
  • Submit an article to the local news media
  • Be a guest on a local TV morning show
  • Be a guest on a local radio talk show
  • Do a mailing to all of your referral sources, prospects, and community leaders
  • Do a special mailing to all of the families of your patients and clients
  • Rent a billboard along a major street or highway

November is the month to celebrate Home Care & Hospice, to celebrate your agency, to celebrate your employees, and to celebrate your patients and their families.

More ideas to celebrate Home Care and Hospice


About the Author

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Stephen Tweed, CSP, is Chairman and CEO of Leading Home Care ... a Tweed Jeffries company. For over 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 an adult son who is physically disabled and uses the services of home care on a daily basis.

Meet the entire Leading Home Care Team


Permission to Reproduce

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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

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phone: 1-866-209-5101

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