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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.
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 7000 subscribers.
Private Duty Today is
a permission-based newsletter.
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There are two ways to make more money with your private
duty home care company. They are the same two methods used by
every other company on the planet; grow revenue, reduce expenses!
This week we're going to look at the expense side of your profit
report.
When making decisions about expenses, companies tend to mistakenly
focus on the dollars spent. This can be a mistake. Hacking
and slashing your way through your annual expenses is a great way to
slow the growth of your business. There are two factors that
should grab more of your attention, scalability and expenses per hour
of service.
Your single biggest expense is caregiver wages and other expenses
related to providing care. This is a great example of scalability
because as your revenue increases these expenses should increase
directly proportional. If you're spending 60% of revenue on
caregiver wages, benefits, and travel then you can expect that when
your company grows you will continue to spend 60%.
Overhead, however doesn't scale as
nicely.
Here's an example. You hire a full-time scheduler. It's a
big expense, but as your company grows the expense per hour of service
gradually comes down. At some point, however, your company grows
to the point where you need to hire a second full-time scheduler.
Your new efficiency and profitability based on scheduling has gone out
the window. You've gone from one overworked scheduler to two
underworked schedulers. Your growth curve is slower than your
expense curve.
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People are Difficult to Scale
Before hiring a second scheduler focus on ways to make the
first scheduler more productive.
- Does the scheduler have
duties that can be outsourced or redirected to other staff?
- Will new scheduling
software improve their productivity?
- Are there changes to
physical facilities or ergonomic changes that can make this
individual more productive?
Focusing
on productivity of an individual position creates far more value
because eventually, when you must hire, the second and third
individuals will also benefit from these improved productivity methods.
One strategy frequently used is hiring one person for two jobs.
With the right person in the right jobs, this works. In my experience,
more often than not, it's a short-term solution to a long-term problem.
Hiring a new person to spend 50% of their time as an administrative
assistant and 50% as a scheduler seldom works. Inevitably the
person is more proficient at one or the other position.
Additionally, management is less efficient because effectively managing
one person with two jobs takes just as much time as managing two
people.
When making a new hire, focus that person on one group of tasks that
utilizes a specific skill set. Identify a person that has these
skills. Then spend your time focusing on how to improve those
skills and improve the productivity of the tasks.
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Building a Team, Inside and
Out
 Stephen Tweed has helped
companies build high performance teams for nearly three decades.
He studied the best. He's learned from corporate CEOs,
championship sports coaches, and high impact small businesses.
Three factors will always ring true:
- Great teams are built on
great talent.
- Great teams create more
value than the sum of their parts.
- Great teams are led by
great leaders.
Stephen
Tweed can help you build your core executive team or build a highly
effective team of marketers and salespeople. First, Stephen will
help you identify the qualities needed for specific roles in your home
care company. Then he will help you get the most from each member
by aligning tasks with skills. Finally, he can work one on one
with the owner or CEO to develop leadership strategies that will get
your company ready for the future.
Call Stephen
Tweed today at 1-866-209-5101 and ask him about teambuilding as just
one aspect of Private Duty Planning and Coaching.
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Workers' Compensation
Experience Modifier
I got smarter the other day! One of my clients asked
me a question about workers' compensation coverage. I called my
go-to guy for all things insurance, David Dickie of The Solutions Group.
I didn't realize that workers' comp insurance could be such a
significant factor in competitive advantage. It can have a huge
impact on profitability. David explained the Workers'
Compensation Experience Modifier which, over time, can reduce your
workers' compensation costs by nearly 40% or increase your costs by
200%!
I asked David to give me a write up to share with my subscribers.
If you own a home health agency or no-medical home care company and
have an insurance question, David can be your go-to guy, too.
Give him a call at 1-800-866-2682.
Understanding
the Experience Modifier
by David Dickie
A workers' comp. experience modifier serves to adjust your workers'
comp. expense based on your particular workers' comp. claims history.
It is a number either above or below 1.0 that is calculated by
comparing your claims against the average claims in each class code in
which you have payroll. Aggregate claim amounts that are higher than
the average will increase your modifier. Conversely, aggregate claim
amounts that are lower than the average will decrease your modifier.
The experience modifier is multiplied against the standard rate, and
generates either an increase or decrease in premium. For example, if an
experience modifier is 0.88 and the standard premium is $10,000, the
modified premium becomes $8,800. Conversely, if an experience modifier
is 1.12 and the standard premium is $10,000, the modified premium
becomes $11,200.
Key Point: Good claim experience over time can significantly
reduce your workers' comp. cost! We have seen experience
modifiers as low as 0.62 (Wow!) and as high as 2.05 (Yikes!).
Usually three years of loss experience are used to determine the
experience modifier for a workers' compensation policy. The three years
typically include not the immediate past year, but the three prior. For
instance, if a policy expired on January 1, 2008, the data included on
the experience modification would be comprised of the period from to
January 1, 2004 to January 1, 2007.
Key Point #2: If you use a PEO or other employee leasing
arrangement, your claims experience will not flow through to your own
modifier! You will not get any benefit from your own good claims
history, potentially costing you thousands over the years.
If you would like help in deciphering your experience modifier, or if
you want to find out if you even have a modifier, please let us know.
More information can be found on our web site - www.homehealthins.com/WorkersCompensation.html.
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