I wouldn’t limit this little nugget to just Home Healthcare Agencies, as most smart run organizations know that efficiently utilizing your resources, deploying effectively, is really what creates competitive separation between you and your competitors.
In a recent Wall Street Journal Article “High Turnover of Home Care Givers Makes Life Precarious” it was revealed that the number one challenge home health agencies face is staffing. The challenge is staff recruiting and staff retention. If your in the home health care space you live this . What you might be missing though is how your largest competitors are winning the staffing war, which translates to more business for them. Can’t you just hear their pitch about how deep their bench , which is major consideration in choosing a home health care agency. Make no mistake about it , attracting and recruiting home health aides is THE competitive war right now.
These best run Agencies are using lucrative signing bonuses with vesting provisions to attract and keep home health aides employed by their home healthcare agencies. They are also increasing pay, and adding benefits to their most valuable, best performing workers. If you have your ear to the ground you may know this too. The question you may be asking yourself is where are they finding the money to do this with so much pressure on margins, especially if your income is capped by medicaide & medi-care.
For most it’s simply not in the budget. The numbers just don’t work, unless you know where to look; INSURANCE. Many of these home health care agencies asked a very simple question; if I can reduce my spend on my current insurance program by 15% to 20% that is a potential large pool of funds that I can then re-allocate into employee comps to attract and retain the best talent, WITHOUT a substantial impact on our budget.
Makes sense, however if it were that easy everyone would be doing that right? This is the differentiator. The home health care agencies that have been successful did not just contact 3 insurance brokers, flipping their loss runs, quoting their insurance programs in hopes of reducing their insurance spend by 15%. Been there, done that. Too much effort for not enough yield.
Wilda Diaz , CEO of Above & Beyond Home Care, based in Clifton N.J. revealed to us her experience.
“We had an idea how much all our open work comp claims were costing us , however we didn’t have the resources , bandwidth or insurance claims knowledge to capture the dollars we suspected were out there. By partnering with the right firm we saw an immediate impact. The savings we were able to harness from focusing on this expensive waste of resources we put towards our recruiting efforts, improving our financial results without increasing our budget”.
Home Healthcare Aide
Instead they reimagined the whole insurance purchase experience. Which would you rather have as the CFO of a Healthcare Agency, 15% savings on your insurance program or 3 to 5 point increase in your profit margin? The question is rhetorical as 3 to 5 points on your profit margin is a far bigger number. We suggest instead of letting the insurance carriers choose who your broker is; (lowest rates win the deal), you look deeper. Incidentally the broker with the lowest rates when you bid your program last just happen to have the “right” carrier in the “right” year.
What these forwarding thinking home health care agencies did was interview (2) competing brokers, the incumbent and one other they thought might be a good fit based on experience within their industry asking them to review their program and give them ideas on how they might approach the account. Naturally premiums due matter, however when these home health care agencies realized how much money they were leaking due to claims THAT became the biggest driver in their decision. The broker that could identify organization pain points, designed a plan to mitigate those pain points to help them reduce current claims reserves, close existing open claims AND future work comp & liability claims proved far more valuable to these home health care agencies.
What most home health care agencies don’t understand is how the industry (carriers & brokers) have a different set of goals than do the home healthcare agencies. When you put claims in what happens to your premiums; they go up! When premiums go up who makes more money; Brokers & Carriers! Who makes less money; home healthcare agencies. This is why their business model doesn’t lean into creating claims efficiencies for home healthcare agencies. Ask yourself , outside of a quarterly claims call rehashing past failures, how are they impacting our future costs? What’s the plan ?
In summary, if you have open work comp or liability claims within your current program, or you have an insurance program without ANY deductibles , often called first dollar plans, you are paying far more for your insurance program than the Home Healthcare Agencies that are using COMP CARE as a risk management platform to increasing their profit margins.
These Agencies understood there was money in them there hills. Reporting a liability claim or work comp claim for their home healthcare agencies was just the beginning of the process, not the end. It took them a year to realize the savings compressing the values on current open claims , which reduced their future insurance premium. They took these funds, put it into a pool, and began to focus on increasing the wages for their BEST workers, paying signing bonuses to recruit new workers which allowed them to take on more clients.
It’s very difficult to increase one expense component significantly and not decrease another within a similar range unless you are willing to sacrifice margin, which most home health care companies cannot .
Keith McNamara is a Home Healthcare Practice Leader for Metropolitan Risk. He can be reached at (914) 357-8444.
