Difficult decisions faced during financial crises
Difficult decisions faced during financial crises
Closing, changing services may be best move
It's a tough time to be a hospice manager. For years, you've implemented new processes designed to strengthen your agency, but it's hard to fight an economic environment that is forcing all industries to re-evaluate how they conduct business.
Even when management has taken steps throughout the years to position the agency for financial health, changes in the marketplace, in reimbursement levels, and in the cost of doing business are forcing managers and boards of directors to make tough decisions.
Sometimes the decisions affecting the home health services come from another entity, says Terry Cichon, CPA, director of homecare operations for FR&R Healthcare Consulting in Deerfield, IL. "We have hospitals in the Chicago area that are selling their home health businesses," she says. "Unfortunately, a home health agency is a small piece of the hospital's business, so even if the home health agency is not making money, the rest of the facility's business can underwrite the home health agency." If, however, financial pressures are affecting the hospital overall, home health becomes a logical choice for a service that can be discontinued, she adds.
Closing an office
Another tough decision is the closing of a branch office. Linda Leone, RN, president of Prairieland Home Care in Fargo, ND, says, "It was not an easy decision, and it was not made over a six-month time period. The branch office had not been making money for years." Increasing economic and staffing pressures initiated the process to evaluate the closing, she adds.
"The office was in a sparsely populated area of North Dakota and served a 50-mile radius," explains Leone. This meant that driving from one side of the area served to the other side meant a 100-mile trip, and patients were spread throughout the area, she says. "Unfortunately, the office was also located in North Dakota, which receives the lowest level of Medicare reimbursement, a case mix of 0.76," she explains.
Staffing costs were a drain
Staffing also was an issue. "It was hard to find nurses who were willing to drive the distance required to the office and pay for their gasoline if they did not see a patient on the way into the office," says Leone. "If they did see a patient on the way to the office, we paid for the commute, which increased our costs."
Steps taken to reduce the driving time of the nurses included placing a fax machine in the nurses' homes so schedules and patient information could be faxed to the home. "We also had some nurses with computers, so they could access the office computer for schedules and to scan their forms," she says.
Even with these cost-saving measures, the board of directors agreed that the fiscally sound decision for the agency was to close the office. The 11 employees at the office served 300 patients annually, and part of the difficulty of the decision was the knowledge that these patients didn't have another option, Leone says. Agency management focused on quick, honest communication with patients, referral sources, and staff members to notify everyone of the closing and explain what would happen in the three months between the decision to close the branch and the date of the closing, she says.
Patients were discharged on schedule during the three months, and the agency offered assistance to find other providers for patients who required service after the closing date, says Leone. It was not possible for employees to be offered positions at other branch offices, because they were several hours from other offices, but agency management made sure that employees got information they needed to prepare for their personal financial situation as soon as the decision to close was made, she adds.
It's a tough time to be a hospice manager. For years, you've implemented new processes designed to strengthen your agency, but it's hard to fight an economic environment that is forcing all industries to re-evaluate how they conduct business.Subscribe Now for Access
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