Selling or not, here’s a checklist for adding value to your home health or hospice organization
EDITOR'S NOTE: Today’s post is the first in a series of blog posts based on industry insight and analysis shared during Simione Healthcare’s recent Leadership Summit 2020.
Thinking about selling your home health or hospice agency? Even if a sale isn’t in the works in 2020 or early 2021, it’s important for decision-makers to consider ways to shore up overall value this year, boost profitability and better position the organization with greater options for the future.
“The role of leadership is to continuously look for ways to add value to the organization,” mergers and acquisitions expert David Berman told attendees at last week’s Leadership Summit 2020, an online event hosted by Simione Healthcare Consultants.
It can be all too easy for stakeholders to look at an agency’s value from the wrong perspective, according to Berman, a Simione Principal who heads mergers and acquisitions for Simione. Berman has more than 20 years experience in business integration and financial improvement initiatives.
Market share, key personnel and leadership are key aspects of an agency value, Berman said, and he cautioned Summit attendees against making common mistakes in each area.
Market Share and Growth Trajectory
Even if your agency is currently dominating your local home health or hospice market, it’s worth taking a look at where improvement could occur and how your agency’s growth compares to industry standards. Berman said a consistent 10-20 percent growth per year is highly desirable and preferable to higher, one-year growth rates. Maintaining a growth curve in proximity to national norms over a period of years is more attractive because buyers tend to value predictability and consistency, Berman said.
If you’re wearing too many hats at your agency, you may be saving on administrative costs such as salaries and benefits while devaluing the overall worth of the organization.
“Remember, when you leave the agency, your expertise goes with you,” Berman said. "Buyers know that, and it makes your organization less appealing."
Prospective buyers look at key employees as assets, and quickly lose interest in agencies without qualified personnel to continue operations as smoothly as possible following a transfer of ownership. The more qualified your team, the more valuable your agency, Berman said.
Do you have a strategic plan in place for your agency’s growth? It’s an asset Berman said every agency needs – and can contribute to an agency’s overall value even when circumstances such as the Covid-19 pandemic delay or interfere with the execution of the plan.
“Potential buyers will definitely look at how well you have mitigated the downturn caused by Covid-19,” Berman said.
Having a strategic plan in place, and being able to show that your agency reacted to the unexpected market change with timely adjustments, demonstrates the effective leadership prized by buyers, Berman said.
A CHECKLIST FOR ADDING VALUE
Berman recommends focusing on these areas to immediately add value to your agency’s overall worth:
1. Re-evaluate your revenue stream. Are you maximizing reimbursement or are you leaving money on the table? Expert coding and OASIS review services can help agencies achieve the right balance to support timing, accuracy, and clinical effectiveness, boosting the revenue cycle and providing a strong return on investment.
Learn more about how outsourcing can impact your agency’s reimbursement during a complimentary webinar Simione will host on Oct. 29 to explain the impact of ICD-10 coding and OASIS review on quality and revenue capture. Register here.
2. Diversify your referral sources. Ideally, an agency’s sources will consist of a mix of community physicians, hospitals, nursing homes and other facilities.
3. Make talent a priority. Does your agency offer talented and well-qualified personnel to prospective buyers? Each position you fill with the right talent adds value to your bottom line. Berman recommends filling all available positions and trying to prohibit costly and disruptive staff turnover by working on effective retention efforts at the same time. Low turnover makes an agency stand out as particularly attractive to potential buyers.
4. Update your agency’s policies and procedures. One of the first areas a potential buyer will look at is an agency’s policies and procedures, as this area is an important marker for both compliance and efficiency.
5. Set up regular compliance audits. Every agency needs to be conducting regular internal audits, not just for survey readiness and Medicare compliance but also for human resources issues such as pay structure. Hospital-based agencies in particular may be prone to overpayment when the organization’s pay structure was determined by acute care standards rather than home health. Yearly audits conducted by a professional outside source add value to an organization, Berman said.
6. Re-examine processes for maximum efficiency. From care delivery to billing and referral management to coding and OASIS review, every aspect of operations impacts the financial health of your home care and hospice organization. Prospective buyers are particularly interested in processes affecting an agency’s revenue growth, such as intake and referral. It can be highly beneficial to work with a consultant to make certain your agency’s processes are in tip-top shape in order to add maximum value to your organization.
Need our help?
Simione Healthcare Consultants can help your agency shore up revenue management, improve processes, develop a strategic plan for growth and maintain compliance. Give us a call at 1-844-215-8823 to get started.
Increase your agency profitability with training
A well-trained staff can increase your agency’s profitability. Check out the helpful staff training products in The Solutions Shop, the online store for Home Health Solutions, a Simione Coding Company.
Our “Focus of Care” package is currently on sale for just $34.99. It consists of a 60-minute webinar explaining how PDGM’s new 30-day billing periods impact changes in the agency’s focus of care and when it is necessary to complete the RFA 05 OASIS. The package includes a sample Significant Change in Condition (SCIC) policy and a staff handout with specific patient examples. Visit the Solutions Shop to read more.