Home Health Profitability, Part II: Control RNs

[NRSKarenRN, BSN, RN]

Home Health Profitability, Part II: Control RNs

From the editors of SUCCESS In Home Care magazine Apr 29,

2002

Last week you discovered the main drivers of home health profitability. This

week, dig deeper into the data collected by Fazzi Associates, Northampton,

Mass. and analyzed by SHC.

For maximum profitability, the most important area to exert tighter controls

is RN visits -- profitable agencies provide a median of 9 RN visits per

episode while unprofitable agencies provide 13.

Home health consultant Bobby Dusek, Dusek CPA Inc., Amarillo, Texas, says

his most profitable clients have definitely put the pressure on utilization.

"Labor costs are the primary part of my revenue and expenses -- if I can

control that, I can be profitable," he notes.

You should run monthly efficiency reports that show how each nurse is doing

compared to your visit quotas and other clinical/financial benchmarks, says

clinical and operations consultant for American Express Tax and Business

Associates, Timonium, Md. Note average length of visits, caseload changes

and other factors that affect productivity, Sevast adds. Also, perform team

conferences to help nurses move toward utilization goals.

Consultant Pat Laff, Laff Associates Inc., says his top-performing client

HHAs hold bi-weekly case conferences on all patients -- helping them

maintain an average of 17 to 21 visits per episode. Case managers review

care plans and challenge any findings that significantly deviate from the

agency's standard of care.

Just be careful to back-up clinically your decisions to trim visits or

change the clinician you're sending, Sevast adds. Her clients use clinical

pathways and disease management programs to streamline visit patterns and

utilization rates.

Profitable agencies carefully manage not only how many visits they make, but

also exactly how much it costs them to make each visit. Profitable HHAs

spend a median of $106 on each nursing visit compared to $112 per nursing

visit spent by unprofitable agencies.

Of course, that finding butts up against the reality of the home health

nursing shortage. But our experts say you don't have to cut salaries to

reduce your cost per visit. You can try pushing for improved productivity --

even if it's only a half-visit per day on average, Sevast notes.

One particular profitability drain on the nursing front is paperwork.

Fazzi's study shows that nurses at the most profitable agencies ($300 or

more per episode), spent only 25 minutes per visit on paperwork. Nurses at

unprofitable agencies, on the other hand, spent an average of 33 minutes on

the same task. The solution may be specialized assessment nurses,

point-of-care automation or better training for your clinicians -- all of

which have worked for Boyd's top-performing clients.

But if you're among the 22% of HHAs who aren't profitable now -- or you

discover your profits are shrinking in the future -- you may have to

re-evaluate your nursing staff, Dusek notes. One of his now-profitable

clients faced this tough choice a few months ago. After six months of a 4%

net loss each month, the agency performed a top-to-bottom review of

personnel needs, requiring every supervisor to justify every position. It

ended up getting rid of one office (a branch office that employed 9 RNs to

care for 12 patients), cut a few clerical workers and a few supervisors, and

nearly doubled the number of patient cases managed by each nurse. "Over the

years, the ratio had crept down to 14 [patients per nurse]," Dusek admits.

Now the agency requires nurses to carry a 25-patient load, and it's back in

the black with a few percentage-point profit.

Other ways to reduce visit costs: Consider telemedicine. One major study

funded by the Dept. of Commerce and run by the VNA of Philadelphia found

that telemedicine saved $697 per episode on treatment of diabetic patients.

Or you can try a more low-tech approach -- move to geographic teams to help

nurses travel less. Profitable agency nurses go an average of 11.8 miles and

are on the road about 19 minutes for each visit. Nurses at unprofitable

agencies travel an average of 12.4 miles and spend nearly 24 minutes to get

to each visit, according to Fazzi data.

The story is much the same on the supply side. Profitable agencies spend

only $37 per episode on patient supplies, while unprofitable agencies spend

more than $39 -- a $2 per episode difference that adds up.

And don't forget your administrative overhead, say our experts. In Fazzi's

data, profitable agencies only need an average of 3.5 administrative workers

to handle every 100 patients (see box, p. 10). Unprofitable agencies, on the

other hand, have higher admin costs, with 4.4 administrative staffers for

every 100 patients on their census.

One solution for administrative staffing woes: Automation. Alacare Inc.,

Birmingham, Ala., has managed to reduce its data entry and support staff by

several positions by implementing an electronic patient record, says CEO

John Beard. Now billers just download charts and don't need extra help

chasing down notes, forms, etc.

Editor's note: Look for more on how assessments can affect your profits,

next week.

[hoolahan, ASN, RN]

I read this article on my home health yesterday, and I have to say, the headline serioulsy rubbed me the WRONG way!!! God Forbid a nurse should only have 14 pt's in her caseload!! There is a HUGE difference between having even 20 versus 25. We are only supposed to have 25, I now have 30, and I have only 2 sure bets for d/c next week, with 3 other potential d/c's. Which will bring me to 25, and of course there's always the cases who come out of the hospital who I will have to resume. I have 1 pt I know well, and 1 I haven't met yet in the hospital. I'm telling you, my head is spinning!! My really sick chronic pt's go back and forth to the hospital like a revolving door. I have one poor man with sickle cell who's lived to 62, even tho they said he'd never see 35. I am afraid his time is drawing near, b/c he's in and out q week for transfusions, very unstable. The paperwork is so much worse with PPS, we need less pt's in our caseload to keep our heads above water. 25 should be the absolute max!! Not one pt more! And 3.5 admin workers per 100 pt's?? I'm not so sure about that. Does that mean supervisors and secretaries? Some valid points, like the 9 nurses for 12 pt's?? That would never happen at my agency!! LOL