Hospital adventures in home care

Hospital adventures in home care

The question "How are hospital-owned home care companies doing?" requires that our answers be drawn from a primarily historical viewpoint. However, the important question to be answered is "How will hospital-owned home care companies do in the future?" Putting all the anti-trust issues aside, the survivability of hospital-owned home care companies will be measured by their ability to manage their bottom line. Win in the courtroom they may...win at managing their business for profit is another issue.

Once hospitals made the decision to get into the home care business, they were confronted with two basic strategic models: start up and manage the business themselves; or engage in partnership with a management firm. In either model, some hospitals have had the same management and operational difficulties. These "difficulties" may sound familiar to you:

* Unachievable budget projections

* Inarticulate management and financial reporting

* Quality of care documentation and execution problems

* Accounts receivable collection problems

* Absence of inventory control and asset management

* Key hospital discharge tracking reports unavailable to determine home care capture rates.

In summary, the above difficulties can be traced to an unrealistic expectation on the part of the hospital and/or its mangement partner about the home care business. There are many hospitals out there that have found that the home care business is not the profit center they had expected. Furthermore, the hospital's involvement in the management of their home care operation has grown and not diminished over time. This hospitals that have, or still are struggling with their home care operations, have found home care to be a very expensive business.

There are indeed hospital-owned home care companies that are doing very well. By examining their success, a lesson is to be learned about how they are able to take advantage of the unique management and operational styles in the hospital-owned home care environment.

The first key to their success has been their ability to manage and adapt change. The most significant change is one of transition between a hospital/acute care management style to a home care/long-term care management style. The net result of their ability to manage change is reflected in their ability to prepare for patient types, reimbursement trends, inventory and other asset requiremetns.

The successful hospital-owned companies have been skilled at recruiting good managers. A good home care manager is well balanced clinically, is business-minded, learns quickly, adapts to the environment and is highly skilled at networking both inside and outside the hospital. I can't emphasize the networking skill enough because it is through networking that they develop their referrals. These managers don't lay their entire business on the door step of the hospital. They have expanded their referral opportunities into the general market place as well.

From an operational perspective, the successful hospital-owned home care companies have learned the importance of the following:

Concise mangement and

financial reporting

In the home care equipment side, this relates to regular reporting and "trending" of patient census. This is important to the hospital-owned home care company due to the more frequent incident of indigent referrals, as well as equipment types and intake/pick-up activity. The tracking of revenue until it has become billable is another important system vital to accurate and proer revenue management. From these two areas, managers extract trends and key productivity and performance indicators.

Documented and practical

Quality of patient care

Documentation is not only the key to proper patient care, it is also often the key to reimbursement. The practicality of the QA procedures are a by-product of user friendliness, reimbursement criteria and quality practices used within the local medical community.

Prompt and proper

management of assets

The two largest assets in home care are inventory and accounts receivable. Successful hospital owners have realized that their accounts receivable is the mirror image of their company. If the entire revenue cycle from patient intake to cash receipts is managed properly, they have gained a positive reflection in the accounts receivable mirror.

Effective staffing and

utilization

An example is in the accounts receivable department, where poor staffing and management offsets bad debt expense. Successful hospital companies have recognized a better utilization of expenses through staffing rather than through bad debt.

The above key success indicators are not just unique to hospital-owned home care companies, they are industry-wide success indicators. So what makes a hospital-owned home care company unique?

Primarily, it is their access to patients and availability of vital patient information, quality of care guidance and training, the fact that they have and follows a written mission statement and a goal established at the onset of the company, and finally the availability of legal support, as well as fully developed personnel policies. These are the raw tools provided to a hospital-owned company. Once provided, the successful refining and utilization of those tools distinguishes the successful from the struggling home care operation.

The future of these companies will be the future of home healtcare companies industrywide, meaning that hospital-owned entities are part of a large, well established industry. Their acceptance with in that industry has been marginal to data because of the perceived threat they pose to small independent home care providers.

However, it is time for the home healthcare industry at large to recognize that hospital-owned businesses have had a positive impact; they have increased the consumer awareness and the appetite for home healthcare services. Granted that growth in consumer appetite canand has had an impact on the payment and policies of third-party payers. However, it is up to the industry at large to manage this growth through coordinated and consistent involvement with local and natonal policymakers and payment sources.

The author is president/CEO of Medical Reimbursement Systems (MRS), Highlands Ranch, CO. As an industry consultant, she has worked with numerous hospitals trying to gain a handle on the home health market.

COPYRIGHT 1990 J.B. Lippincott Company
COPYRIGHT 2004 Gale Group