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Private duty is a large and ever increasing slice of the home care pie. Its exact size is unknown, but the National Association for Home Care estimates that private pay accounts for about a quarter of the $40 billion annual home care market.1 With Medicare payments now in a Balanced Budget Act of 1997-driven tail spin, experts agree that private duty is the growth segment of home care.
The term "private duty" means different things to different people, and there is an almost dizzying array of expansion possibilities, from live-ins to wake-up and bed-down services and everything in between. While such options create great opportunities, successfully developing private duty services that meet market needs and fit with your current product lines and organizational competencies is a delicate balancing act.
Program marketing, hiring, and service demands must grow together; if one outweighs the other, your expansion effort may fall flat on its face, warn experts. So carefully selecting and planning services is critical.
"You have to pick the niche that can happen in your market," says Linda Nelson, president of Wichita Falls, TX-based Help Source, a home care business consulting firm.
Finding your niche starts with a market analysis that determines the total size of the market and demographics such as age and income distributions, says Stephen Tweed, CSP, principal with Tweed Jeffries, a health care strategy firm in Louisville, KY. Such information is available at local libraries and over the Internet. "There’s no pat number [to indicate a demographic and income] critical mass, but most communities have a population that will sustain private duty," he notes.
Your research should not only identify potential rivals, but also assess their (as well as your own) competitive advantage, Tweed advises. This is especially important for organizations making first-time forays into private duty. For example, "a hospital-based agency may have done a demographic, economic, and consumer choices evaluation, [but it also needs to ask itself] can we compete with a mom and pop private duty agency that only does self-pay private duty? What’s the source of our competitive advantage?’" he explains.
Even with your market analysis game plan, deciding just where to step onto the private duty playing field is not necessarily clear-cut. One approach is to segment the market and develop services based upon clients’ resources, Tweed adds.
o Clients who can and will pay.
Serving high-end customers who pay out of pocket or have long-term care insurance can be very lucrative, Tweed says. "Some people will pay nursing rates to [have nurses] do paraprofessional services. [These cases] drop huge amounts to the bottom line, which offsets some of the negatives and difficulties of serving that population," he adds.
Such programs are not for everyone. "People try to get into this and fail because they’re not prepared with staffing, recruiting, or marketing," Tweed warns. "You have to have good people who want to be there, who have a good use of language, and are comfortable dealing with high-income people," he continues.
Similarly, intake staff should be extremely flexible. "They should be prepared for almost any request, and accustomed to jockeying all kinds of requests, rather than just traditional private duty," Tweed advises.
Marketing such services involves building relationships with accountants, attorneys, bank estate officers, and others who may assist wealthy clients with financial and health care decision making.
o Clients who can but won’t pay unless convinced.
The vast middle market of private duty has resources, but these people are reluctant to spend money unless they’re convinced it will help themselves or their loved ones, Tweed says.
Packaged programs that combine several services may appeal to those seeking value. While probably less demanding than high-end boutique care, "this is not a high-volume, low-margin line extension of Medicaid waiver business," so close customer attention is important, Tweed notes.
Both potential clients and their distant-living children are marketing targets for packaged "rise and shine," "fluff and tuck," and care manager programs, he says.
o Clients who can’t pay.
Medicaid waivers and other government-funded programs that serve a largely elderly population offer many private duty service opportunities. While providers are naturally interested in meeting client needs and providing good customer service, such programs are more a contractual relationship with intake a business-to-business transaction rather than customer-focused, Tweed notes. Efficient management and good staffing are essential for these high-volume, low-margin programs.
While it may be tempting to dabble in all three private duty segments, the different marketing and operational issues of each may confound such efforts, at least initially. Those with truly nascent private duty services may do well to stick close to home by first moving into Medicaid waivers and Area Agency on Aging programs, Tweed advises. The referral process and operational and customer service issues are not that far removed from Medicare, he explains.
Organizations expanding existing private duty operations should focus on no more than four middle-of-the-road services, according to Tweed. A good product mix might combine basic companion services and personal care attendants for the disabled with more specialized and packaged programs like bathing or rise and shine services.
In the early stages of private duty development, it may be tempting to take all comers. However, sources advise against saying yes to every service request, especially if it isn’t consistent with your expansion target or current expertise.
"You have to balance your zest for entre-preneurship with good business practice. One [expansion] approach is to say I’ll grow the business as requests come in.’ But the downside is that you may not be able to meet [customer] needs, especially if the service is untested. If a request comes in for something you don’t perform often, you have to ask Can I put it together easily?’ If you’re truly not performing it, it’s better to say so and refer [the client] elsewhere," says JoAnne Ruden, MPA, RN, president and chief executive officer of the Visiting Nurse Association of the Delaware Valley in Trenton, NJ.
"It’s better to be as focused as possible getting started but with a willingness to work with people as requests come in," Tweed agrees.
Regardless of the services you choose, finding the right manager is the key to success, sources add. "You need to find an individual who has competency running a small business, who understands the elderly market, and who is motivated to grow the business. [She] should not be a nurse coming out of Medicare home care. [She’ll] tend to run it that way, and this is not a medical model; it’s a social model," Tweed notes.
"You must have someone entrepreneurial," Nelson agrees.
With a strategic direction and business-minded manager on board, develop clear goals and a realistic budget, and exercise some patience, Nelson advises.
"Front-end planning is critical. You can count on six months of a private duty director’s salary to get a program up and running, [and] don’t think [your manager] can do two things. You can’t do it half way," she adds.
While the private duty director needs latitude to expand services, she also needs your support. "The biggest strategic mistakes people make [are] trying to run self-pay [operations] out of the same entity as their other business and not giving [the director] the resources needed to market and staff the program," Tweed notes.
The program director’s entrepreneurial bent and organizational support, notwithstanding, staffing can be the Achilles’ heel of success. "It’s never easy. You have to make sure you have staff who are willing to work hourly shifts and are available to work anytime when getting started. You don’t know when the business will come in," says Alisha Britt, training specialist at Help Source.
1. National Association for Home Care. Basic Statistics About Home Care. Washington, DC; 1997.