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Private Duty Today
Welcome to Private Duty Today, the bi-weekly electronic newsletter for Private Duty Home Care Leaders from Leading Home Care ...a Tweed Jeffries company. In this issue, we bring you ideas, information, and insights to help you grow your Private Duty Home Care business.
Private Duty Today is a permission-based newsletter. It is only sent to our recent customers and those individuals who have requested it, or who have given permission for their address to be included on our list of subscribers.
I'm Jason Tweed, Director of Business Development for Leading Home Care, and Editor of Private Duty Today.
Private Duty Today is published every other Wednesday, and currently goes to over 6000 subscribers. |
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What is Your Limiting Factor?
Private duty home care is not a complicated business. We recruit clients, caregivers, bill payers and deposit the profits in our personal bank accounts. That's in a perfect world. I'm not sure about you, but I don't live in a perfect world.
The reality is that private duty home care is a simple business until it gets complicated. When it gets complicated, this is when you run into what we call a Limiting Factor.
Your limiting factor is probably in one of The Three Pillars of Private Duty; Promotion, People, Profitability.
Promotion becomes your limiting factor when you don't bring in enough clients to balance the natural attrition. In this case, you either need to increase client numbers, or decrease attrition. This could mean increasing your advertising budget, increasing your sales team, or increasing effectiveness of your entire marketing engine.
People, specifically caregivers, become the limiting factor when you can't recruit enough caregivers to balance turnover. Again you need to increase recruiting, or reduce turnover. One of the most effective ways to balance this is by increasing the Average Length of Service.
Profitability becomes a limiting factor when costs increase disproportionately to revenues. We typically see this in small agencies who are profitable, or marginally so, that expect simply by increasing revenues they will increase profits. This isn't always the case. A company with an unprofitable business model will continue to be unprofitable even as it grows.
We're going to take an in-depth look at each of these limiting factors in the next three issues of Private Duty Today. We're also going to offer you suggestions to get your business over any of the three hurdles. |
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How do you determine your Limiting Factor?
Your limiting factor is determined by analyzing critical measures of your success. While there are many data points that ultimately influence your success, here are some of the most common that can limit your growth.
Caregiver Retention -- Many home care companies talk about high turnover. We focus more on high retention with our clients. Turnover is only one aspect, the critical number is actually Average Length of Service. Increasing the average length of service by improving selection or improving retention will lead to greater profitability over time. While increasing recruitment can be important, we liken it to placing your thumb in a hole in the dam. Increasing recruitment will only prolong the inevitable plateau in caregivers, and ultimately in revenues. Additionally, as you increase recruitment the cost of recruitment for new hires often goes up, so profits will grow at a slower rate than revenue.
Sales Force Efficiency -- What is the closing rate of your sales team? Salespeople are limited by the number of hours they can work per week. Increasing individual salesperson effectiveness and efficiency prolongs the plateau in revenue. As you develop good systems that increase sales effectiveness, you can bring new salespeople into the system for virtually unlimited growth.
Cost per Unit of Service -- Generally speaking, your costs of providing care are relatively stagnant. There are little things you can do to increase efficiency but ultimately caregiver salaries make up the vast majority of the cost of providing care. Your Cost per Unit of Service is a different number, however. This is your total cost including office staff, overhead, advertising and salaries of management. These costs can dramatically impact profitability. Developing strong systems for increasing efficiency here drops money directly to the bottom line.
While we will discuss each of these in-depth in the future, there is one key lesson for today: It is impossible to determine your limiting factor without data. You need to track lots of data to give yourself the ability to identify your limiting factor. Until you identify your limiting factor, you cannot change it.
We have several tools to help you track the data that is important to your private duty home care company. I hope you'll visit our website, www.privatedutytoday.com, and click on the link that says Toolbox. The toolbox contains five different Excel spreadsheets that help you track critical data points. |
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Non-Owned Auto Insurance, Driving Risk and Which Insurance Fixes Your Employee's Car
By David Dickie
Non-Owned auto liability insurance is designed to protect an insured entity for the risk of having employees drive their own vehicles, or a client's vehicle, on company business. An easy scenario to illustrate the risk: An employee is driving a client to an appointment and runs over a pedestrian; the pedestrian is dead and the client is injured; the employee is at fault. The dead pedestrian's family hires a smart attorney who then sues both the employee and the employer for damages sustained. The client also sues for damages. You now have a non-owned auto claim.
Assuming that the employee was driving his/her own vehicle, which insurance policies are in play, and in what order?
- The primary auto policy that is in place on the vehicle being driven is always the first in line for liability, and is the only policy that will fix the employee's car.
- After the limits of liability on the personal auto policy are exhausted, then the non-owned auto liability policy takes over. Most non-owned auto policies are written on a duty to defend policy form, which means that the insurance company provides the defense attorneys and manages the claim from beginning to end.
- Assuming that the case settles or the insured loses in court, then judgments are paid in the following order: 100% of the judgment against the named insured, subject to policy limits, then 100% of the judgment against the additional insured employee, again subject to policy limits.
The order of policies and their intent brings up several issues in a home health care setting, as follows:
The employee needs to make sure that their auto insurance will extend to incidental transportation for a work purpose. It is recommended that each employee contact their insurance company and let them know the extent of their on-the-job driving. Some insurance companies will require a business use rider, which will specifically endorse the policy for incidental business use of a personally owned vehicle. The best time to clarify with an insurance company is prior to an accident, not when the vehicle is a smoking wreck and the insurance adjuster is searching for any way to squirm out of paying the claim.
The employer needs to protect against an employee NOT KNOWING that they are at risk of an unpaid personal auto insurance claim. Share this information with employees upon hire. As long as an employer can show that employees were notified of the issues involved, you should be protected against a liability claim filed by an employee.
Make sure your liability insurance package includes non-owned auto coverage! Typically coverage is added by endorsement to a general liability policy. Non-owned auto claims do nothappen very often, but when they do they tend to be large. The insurance industry classifies these claims as 'Low Frequency/High Severity'; in layman's terms that means if you are unlucky and it happens to you, it can wipe you out if you do not have proper insurance.
Be certain that you are complying with your insurance company's requirements for non-owned auto. Most insurers require at least a DMV check upon hire and some sort of standard for accidents and tickets. Some require caregivers to carry higher limits of insurance on their personal auto policy. Ask your broker what the requirements are for your particular insurance company.
About the author: David Dickie is President of The Solutions Group, based in San Antonio. His insurance company covers home health care companies and non-medical home care companies in all 50 states. To learn more about The Solutions Group, or to contact Mr. Dickie, visit The Solutions Group sponsorship page on our website. |
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Coming up in May in Private Duty Insider
Beginning on May 1, 2008, Private Duty Insider, the leading publication for non-medical home care owners and CEOs published by Decision Health, will become Stephen Tweed's Private Duty Insider. We have entered into a new Strategic Alliance with Decision Health to become the editors of Private Duty Insider, and designers of the National Private Duty Insider Business Builders Conference.
In each issue of Private Duty Today, we'll give you some highlights of the in-depth articles and research reports that you will find in Private Duty Insider. While Private Duty Today will continue to come into your email in-box at no charge, we are now offering much more value and deeper content in the subscription newsletter, Private Duty Insider.
Coming in the May issue:
- Welcome to Stephen Tweed's Private Duty Insider
- The Private Duty Business Builders Model
- 27 elements of Private Duty Home Care
- How to turn clients and families into referral sources
- Which size company are you?
Subscribe to Stephen Tweed's Private Duty Insider. |
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Join me in San Antonio for Private Duty Sales Conference
By Stephen Tweed
I'm really pumped about next week's Certified Private Duty Sales ProfessionalTM workshop in San Antonio, Texas. If you are not signed up to be there, you're missing an amazing event.
Last September, Michael Giudicissi and I had the pleasure of working with Dr. Tray Dunaway to kick off our inaugural sales training certification program for home health agencies. It was fabulous, and we came away on an adrenaline high after spending three days with high powered home health sales professionals.
Immediately, Jonathan Stern of Decision Health, the publisher of Private Duty Insider, asked us to design a similar program for Private Duty sales professionals. Well, Michael and I have put all of our best material together to create a high-impact, in-depth program for Private Duty sales professionals.
We'll be rolling up our sleeves and digging in for two days of interactive sales training and coaching. We have a wonderful group of Private Duty owners and sales pros coming, and we're going to have a blast. There's nothing more fun than spending two days with enthusiastic, energized, pumped up sales people.
It's not too late to join us in San Antonio . . . April 14 and 15. See you at the Alamo!
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