I do not intend to be overly dramatic, but I think it is good practice to explore the reasons why many hospices either go out of business or get themselves into deep financial difficulties.I do not want to create fear, but it is far better to be aware than to be non-existent!
These “killers” are always rooted in good intentions, and typically, at least one is necessary. But the question is, how do they affect focus, and what impact do these programs/elements have on the sustainability of our hospice organizations? With that said, let’s dive in and look at the ways these common Hospice Killers can be made successful parts of your organization.
Some IP Units have sucked the life out of hospices energetically and financially and have become for those programs a “hospice killer.” The following may help a hospice avoid this.
A hospice with an Inpatient Unit (IP Unit) can provide a level of service that patients and families really appreciate. There was a time when I was not in favor of Inpatient Units, as my first experience with them was negative in financial terms. However, after working with over 140 of them, I have changed my mind.They are good for a hospice and can be good financially as well, if properly managed. Note that I am NOT speaking about Residential Units. Residential Units are financial losers, as they almost have the SAME costs as IP care if there is a mix of IP and residential patients. A pure play residential unit CAN be operated differently, but beware; you make yourself a potential competitor to some of your most important referral sources by opening one. Currently, the typical IP Unit loses 11% of IP Unit NPR. However, the top IP Units (that operate in the 90th percentile regarding profitability) operate with a 14% “positive residual.”
Why Have an IP Unit?
There are at least three reasons to have a hospice IP unit:
- Mission Fulfillment – It should be your goal to serve everyone that could benefit from hospice services in the market you have chosen.
- Competitive Edge – If your hospice has one and the others don’t, you have an edge. Patients and families love these units.
- Increased Revenue Opportunity – Properly managed units provide good financial results.
The Three Major Factors to IP Unit Financial Success:
- Design of Unit/Location of the Unit
- Clinical Leader
- Bed Management
- Staffing within the Mode
- Control of Patient-Related Costs
- Clinical Practices of Unit Physicians
The #1, most important, super factor of an IP Unit’s success is the Leader of the Unit! Never overlook this! I have been fooled in my career with over-familiarity with a leader and crossing this off my list early when a unit is underperforming. This leader needs to be a great relationship builder, salesperson, aggressive (calling the health systems on Thursday/Friday to fill the unit up before the weekends) understands “heads in beds” and understands how to flex staffing as needed.
Inpatient Unit Financial Problems
There are more hospice IP units being built or implemented than ever before. Even For-Profit hospices are building units and are not just leasing space. Why? They’ve figured out how to make IP units financially viable, understand their importance with the aggregate CAP and how much communities appreciate them. However, there are a growing number of hospice IP units associated with very established hospices that are falling on tough financial times…through their own doing with the median loss being over 11% of NPR of IP Unit revenue at the time of this printing.
Most of the problem is in staffing. There is a trend in hospice IP units to reduce staffing ratios for RNs and CNAs to 4:1 and sometimes even less. Think about this. Where else in healthcare do you find these ratios? Consider what staffing is like in ICUs and Critical Care Units. Hospice units are often staffed at similar levels. The question is,“Is this the way it needs to be?”Or perhaps the better question is, “Is this the way we want our hospice IP unit staffed?”The standard in hospice IP units is one RN and one CNA per 6 patients, translating to 3 patients per team member, excluding SW and Chaplains. Less than 5:1 ratios for RNs and CNAs does not “pencil” very well. 5:1 works in “rare” situations. Some hospices add additional staff when the census is at capacity, as the revenues generated can easily cover the additional positions. Spiritual Care and Bereavement are treated just as a hospice would serve Nursing and Assisted Living facilities. A 12+ bed unit needs a full-time, devoted SW [more on this later].
The other contributing factor is bed management. You must“design”your intake processes so that you keep the IP census at an acceptable level. This means weekend admissions, tracking nurses to identify ones who are not referring patients to the unit, evaluating your criteria, looking at how you have “trained” your referrals sources, et cetera. Do your clinicians really understand the value and benefits of the unit? Patients and family REALLY love them!!!!
BEST PRACTICE: Your hospice needs to find the average propensity of a clinician to refer to the IP unit and then design an “exception report” to identify clinicians who are not referring patients. ALL clinicians statistically should be referring a proportion of their patients to the unit based on need. If you discover that a clinician is not referring patients to the IP unit, you have a Lone Ranger! These clinicians basically are doing their own clinical practice and are dangerous on many levels. Just the fact that you are monitoring this will cause IP census to increase. I usually recommend that each case manager, within a 30-minute drive-time range of the unit, send a minimum of 4-5 patients to the IP unit every quarter. I do not know the ideal number and it may depend upon the unit.
Productivity has traditionally been lower than it should be in hospice since the first day I started… with the visit average usually one less than it should be. IP units are following the same path.We have to be strong leaders and managers. We have to listen to our staff, but we have to make it work economically…or move over and let someone else do it.
Hospice IP Management Declines
There is a noticeable trend in hospice IP unit financial performance…downward. We are finding that hospice units that have historically performed well financially are struggling. Why? Managers aren’t leading and expectations aren’t high enough. Here are the major problems:
- Coddling Staff – Lowering standards, more pay for less work, lowering patient/staff ratios. It needs to be at least 5:1 for Nurses and Hospice Aides – 6:1 is better – 4:1 has never worked financially.
- Rampant Overuse of PRN – There is an epidemic of PRN use in units. This is another “coddling” issue. Why are we often paying more for PRN and letting them set their schedules as well? Hmm… Could our incentives be out of whack?
- Bed Management – If the census in the unit is down on Monday mornings, we may have an admission problem. As an organization, we may not be training staff on how to utilize the unit. Some paradigms of care may need to be changed.
Insights into Inpatient Unit Operations
- Design/Location of the IP Unit. If you mess this up, your hospice will NEVER be profitable. Our rule of thumb is that people will only drive, at maximum, 30 minutes to IP Units. Not 45 minutes, but 30 minutes or less. The size of the “pods” is important, which we will cover in a subsequent section. However, the distance from the nursing station to the furthest room in that pod makes all the difference between burning people out (both physically and emotionally) or having a sustainable environment. I have heard that 90 feet is a maximum, but you will want to check with an expert.
- The Leader of the IP Unit is the Primary Factor in making a Hospice IP Unit Successful. I have seen time and time again, the positive impact of having a person that understands“heads in beds”, management of labor and patient-related costs. Units that have hemorrhaged cash for years can change almost overnight when a good IP Unit leader come on the scene.These people do not have to have a clinical background, though it helps, especially with the admission process. With smaller units in the 6-8 bed size range, an RN leader is ideal as this person can help with admissions. You might explore leaders that come from the hospitality industry such as hotels chains. People from the hotel business understand occupancy and labor management. BEST PRACTICE: If you are the CEO of a hospice with an underperforming IP unit, temporarily move your office into the unit.You will be surprised how the unit will “magically” fill up and be better managed!
- Physician Practices. When you hire a physician for an IP Unit (normally you will need 1.5 FTEs for a 14 bed unit), be aware of their ideas regarding clinical practice. You may be paying a very high wage for the physician AND the physician may be bringing an additional $250,000 in extra therapies and practices…and perhaps an attitude to boot! KEEP YOUR PATIENT-RELATED COSTS at 13% of IP NPR. You Docs that get this, keep on rockin’!
- Market it as a “Specialty Unit.” If you don’t want to create ill-will with nursing homes and other KEY referral sources, you must not market the unit as anything that would possibly compete with them. Your language and wording are important.This is a specialty unit that serves patients at an acute level of care. Even if you have a patient or two who are residential, it is still primarily an IP unit. Relationships with nursing homes and ALFs are vital to a hospice’s existence. To unintentionally damage these relationships would be foolish and can be avoided. NEVER call your unit “the Hospice House” or “Residence. Call it a “Care Center” or “Comfort Center” or IP Unit. Be creative! Don’t set yourself up to be perceived as completion for nursing homes and ALFs. Set the right Mindset and Expectations regarding use of the unit. If I were building a unit, I would state, “The unit is exclusively an Inpatient Unit.” I realize that this may not be the case with every hospice due to CONs and regulations. However, failure to make this point clear will result in a financially sick mix of residential patients. Now, if you have a strictly Residential Unit, this is not an option, but too many hospices that fail to define the use of the unit, suffer.
- Units allow a hospice serve a new class of patient. These are patients we call the “dumps”…where you get a patient facing imminent death. Often you only serve these patients for a day or two, sometimes only hours which is a shame. Certainly we have “the dumps” with home care hospice as well, but hospices that build units will testify about this new class of patient. These patients are referred late, often by other healthcare entities. As a hospice, we should welcome this new class of patient as it fulfills the mission.
- A Well-Managed IP Unit makes Money. Notice that I say Inpatient and not Residential. Currently, hospice units have the ability to make money, or at least break even, IF THEY ARE PROPERLY MANAGED and are not “structurally” defective. Hospice IP units should do well financially. Reimbursement is high enough and we have figured out how to better design and manage them. Therefore, they should make money. Mixed units of inpatient and residential patients usually lose money due to the fact that it normally costs the same for inpatient as it does residential…for one-third of inpatient revenue. Yes, there are some differences, but they are minimal. Staffing usually costs 60-65% of IP Unit NPR.You may think that acute patients will receive more care…not the case… I see residential patients ringing for the nurse or aide every 5 minutes just for attention! Patient-related costs differ modestly. This is due to the fact that “patterns of care” develop where inpatient ideas regarding care get mixed with residential ideas of care. (It’s just easier to treat everyone the same, right?) Usually Patient-Related costs are about 13% of IP NPR. I think the biggest factor in profitability is the increase in IP reimbursement relative to salary increases. It’s easier to make the numbers work in today’s environment.
- Units provide an alternative for families that are uncomfortable with their loved one dying at home. A certain percentage of families and caregivers will not want the death in the home.Whether it is due to the memories, ghosts or the resale value of the home…this reality exists. A unit provides a comfortable option.
- The Magic Number. Many clients know that I refer to the “magic number” regarding units.This is the one additional bed average that is expected to be filled annually ABOVE breakeven. The magic number has to be discovered…and discovered in the planning stages. Some hospices have built units that were one bed short and as a result, they lose money all the time or struggle at best. Let’s face it, once a unit is built you just can’t snap your fingers and add a room. This is a “structural” problem. The magic number has to be found.The difference that one additional ongoing occupied bed can make is tremendous. I did a pro-forma the other day and the magic bed moved the model from a loss of $35,000 per year to a gain of $150,000. Now, which would you rather have? I suggest that MVI clients look hard at the IP Unit Costing Model [mentioned in the last section] and discover the magic number. Within a few minutes or hours, you can know your “magic”number.This number is burned into the brain of the unit leader.
- Ideal Size of Units.This topic is closely related to the “magic number.” A unit that does not have“enough”beds will be a continual cash drain on the organization. The governing factors are: (1) state regulations and (2) scope of beds clinicians can serve. The design of the unit is critical. Large areas are more difficult than smaller ones…common sense stuff. I think that 7bed increments are the ideal number for Inpatient Care. You are shooting to have 6 beds occupied at the GIP level of care continually. Having the 7th bed allows a hospice pod to have a “transitional” bed to be able to maintain 6 continuously. A 6-bed “pod” is a bit light and a full pod of 8 beds can be a bit much. However, I would go for 8 instead of 7, just to have the headroom if the state required it. Less than 6 is difficult to “pencil” (make work financially).
- Staffing Model. Normally, for a 6-7 bed pod, there is an RN and CNA team. Usually if the unit has at least 12 beds, there is also a single SW. At night, many hospices work with less staff, depending upon the size of the unit.
- Mix of Patients (Inpatient vs. Residential). The mix is critical.This is where the IP Unit Costing Model comes into play. Mix has to be managed. It only takes one patient to knock you off your magic number. Your goal is 100% GIP level of care or to maintain an ultra-high percentage. It is surprising how a “few”residential patients will affect break-even.
- Start the Discharge Process on the Day of Admission. That’s right. Failure to do this will result in an unhealthy mix of Inpatient and Residential patients. You will have patients who need Inpatient Care and NOT be able to access it if you accumulate residential patients. The SW, or whoever owns the responsibility at your hospice, has to be looking at discharge right from the start.
- Educate your homecare staff about the unit. Hospice homecare staff members need to understand and appreciate the unit. They need to be educated about the value and benefits that patients and families can derive. ALL clinicians should refer a proportion of their patients to the IP unit as stated previously.
- Billing Options? Across the country, hospices are billing for Inpatient and Continuous Care (Crisis Care for the more savvy hospices) in their units. Patients in residential beds where CON restricts the number of IP beds can possible bill Crisis Care. In fact, if your CON limits the number of GIP beds, then you can use your Crisis Care billing as evidence to support your case and file a “special needs” petition to get more GIP beds. Most hospices already have the staff to do Crisis Care. We are not “gaming the system” here. There are legitimate reasons why patients need Crisis Care. Crisis Care was created for a purpose…and to deny patients access to the care they need is wrong. So, if your IP beds are full, resort to Crisis Care for the patients who have more than residential needs. NOTE: If your unit is full, you can also contract with qualified nursing homes (24hour RN coverage, et cetera) and bill at an IP level of care. Many hospices are doing this…and are splitting the rate with the NH. It is wise to have spillover contingency plans.
- Utilizing existing facilities. Many communities have existing facilities that may be converted to hospice units. These should be explored. The community may very well welcome such a move. However, understand that there are cases where these units do well and cases where they don’t. It’s a mixed bag. It depends upon the relationship between the hospice and the entity providing the facilities. I have seen many hospital-converted IP units go away over time (usually within half a decade) due to the dynamics of the relationship. But that may be OK. It allows you to test the water and see if a unit is right for your community. Other units have thrived for years…creating a win/win for all involved. You may even have your own IP unit and contract for beds as well as an “entrenching” strategy. It really depends upon your vision and the needs of your community. One thing to keep in mind is that hospice staff and facility staff will probably talk about compensation and work issues through the course of interaction. Rarely is the situation equal and thus, one side may feel that they are not being paid enough or some other factor could adversely affect morale. A hospice should think through ways to minimize this situation. If the hospice’s work environment and pay is better than the facilities, the facility may lose staff to the hospice and the relationship could be damaged or vice versa.
- Contributions Usually Increase. Normally, community contributions increase with the construction of a “hospice building,” whether it is an Inpatient Unit or administrative offices. We attribute this to the awareness that a physical structure brings to the community.
- How do you pay for your unit? Raise it, borrow it, use reserves or just plan on paying for it through earnings. It seems to me that if well managed units are making money, it is a good business move and fulfills the mission. Even proprietary For-Profit hospices are building units. Obviously, a NFP should have a capital campaign and raise as much money as possible. It’s nice to have the structure paid for up front. However, there are NFP hospices that have decided to forego capital campaigns since their prior units are doing so well…high earnings are their rationale. Now, if you are doing a capital campaign and do not have an incredible Development person on staff (and I mean incredible!), use a professional. We like local companies with proven track records of success. They should already have the relationships with the people from whom you will get 80% of your money. I’m not saying that fundraising firms from the “outside” can’t do the job. Many have done an excellent job. But the relationship factor is a critical piece and outsiders have a lot of learning to do to know your area… Also, get your fundraising software in place and learn to use it. If you know whom you’ve served in the past that can contribute, it’s an ideal opportunity. HOWEVER, your hospice needs 6-9 months of cash or near-cash in reserves with or without an IP unit.
- Use Pros. Regarding design, experience is king. Enough units have now been constructed that they’re getting pretty good at it. Early units were too “spacious” and grandiose… no wonder they lost money. Often, I walk into some hospices and can tell you immediately who designed it. You can hear the “sucking sound” when you walk down the halls as the unit is bleeding the hospice dry. The expertise of a pro in design work will result in clinicians who will be happier and less tired and patients who get better care. The physical layout is critical.
- Build something that is marked by Excellence! If you are going to build something, give your community something to be proud of. You are making a statement about your vision and the type of organization you are. It will affect your staff and how they feel about the organization…so why not create something special? I’m not saying to be dumb and build something you can’t afford. But I will say this: “Usually we can go farther than we originally think.” I think that the unit should“fit”your community.The style of the unit should be accepted in your community. For hospices doing the “Model” – people should “feel” the intention behind the design of the unit. Wow them with intention!
- 12-Hour Shifts. Any time you have to change shifts, you have communication transfers, miscommunications and nonproductive time. We recommend the 12-hour shift to minimize the negative effects of the change. How you handle the 4-hour difference is up to you. Have them work it or factor it into their pay. There are creative ways to do it. Many times a hospice will mix a number of 8-hour shifts in with the 12-hour shifts.
- The Over Looked Value of IP Units on the Hospice Aggregate CAP. A hospice with an IP unit can have a larger hospice homecare census than a hospice without one. Why? Because an IP unit naturally attracts patients that live for very short periods of time. Even though you are receiving an increased per diem for this level of service, the stays are short. These short stays help you keep homecare patients longer. So when you review financial statements and the IP unit is losing a“bit”(NOT 11% of NPR) or is at breakeven, do not lose track of the impact of the unit on the Medicare Hospice Aggregate CAP. And of Course, ALWAYS use the “Streamlined” method instead of the “Proportional” method of aggregated CAP calculation. NEVER select the Proportional method unless you want to lose complete control of your ability to manage the Aggregate CAP and devalue your hospice by millions of dollars of value with a single move. Remember, a hospice provider (number) can only have 20% of its Medicare patient-days at the GIP level of care. That is, the maximum number of IP days that your hospice can be reimbursed from Medicare is 20% of your total Medicare days. Thus, if you have an average census of 20 for the year with an 80% mix of Medicare patients, you will only be able to get paid for 3.2 patients or 1,168 patient-days for the year at the GIP level! Going over the CAP results in a payback to Medicare, which can be quite painful.
- Use the MVI F9 IP Unit Planning Tool to Manage Your Unit on an On-Going Basis. MVI has an excellent IP Unit planning and management model called the Inpatient Unit Costing Model that works with F9 (the most powerful financial report writer in the world that MVI sells and supports). For your convenience, we’ve included the latest IP Unit Planning Model with this month’s FlashPage email.
I believe that hospices need to be involved with Palliative Care. It is unfortunate that this has become an issue. Perhaps we weren’t meeting the needs of our communities as much as we thought and we unintentionally created this beast through our own neglect. Hospice is Palliative Care. Here are my observations:
- Hospices need to be engaged in Palliative Care. To not be at the table can translate into being cut out of the referral stream. If you don’t do it someone else will. In some markets, it is imperative that you be involved.
- Palliative Care programs do not make money. I have not seen, even one, that shows a positive bottom-line. I recommend limiting the loss from Palliative Care to 2% of NPR in relation to Hospice Homecare. Your Palliative Care and all extracurricular programs need to be linked proportionally to your Hospice Homecare ADC and Net Revenue. You can grow your Palliative Care business segment and grow (Palliate) your way right out of business if the loss is not managed!
- If Palliative Care ever obtains a significant revenue stream, hospices will shrink faster than you can drop a rock. If this happens, most health systems will create their own program and hospice will be marginalized to more of a“brink of death”service than it already is… If a significant revenue stream is ever attached to Palliative Care, it will diminish hospice. This is our biggest threat! Right now, the smart health systems are partnering with hospices to minimize the losses from this business segment.The less enlightened health systems are plunging forward with a very “predictable” financial outcome and, after taking a beating, will eventually partner with the Palliative Care experts – Hospice. This is a further reason that hospices have to be profitable since they have to fund the losses of Palliative Care as this“expectation”has been implied throughout our sector of healthcare. [Note that I do not call Hospice an “industry” as we are still an evolving humane movement].
- It can be argued that the patients that “feed” into hospice contribute enough to make Palliative Care cost effective. Perhaps. But historically hospice “internal” referrals from other programs are poor due to the reluctance of clinicians of one program to relinquish patients to another program. This can be overcome through exacting and intentional training.
- Palliative Care programs can shorten LOS. Palliative Care clinicians tend to hold onto patients too long just like Home Health does. There is a mindset that by adopting a Palliative Care program LOS will increase going“upstream.”This may not be the case at all, especially if there is the reluctance to graduate patients from one program to another as described in the preceding bullet point.
- The highest conversion rate to Hospice we’ve seen is around 80%, which is extraordinary. Most run more around 50%. The big questions are “Would the patient have come into hospice without a special Palliative Care program? And if so, how much earlier?”
- Stats on Palliative Care are “sketchy” at best. We have been benchmarking it for years with monthly data from hundreds of providers. Frankly, the data is all over the map, except that Palliative Care programs lose money and lots of it. Palliative Care can come in all shapes and types. Some being truly “different.”
- Watch out for “Palliative Care Empires” where you train physicians and other specialists only to have them eventually say to patients “You don’t really need hospice, you have Palliative Care.”
- If you want to gauge how much your hospice is really putting into Palliative Care, look at how much time to spend discussing and addressing it.
- Physicians, the discipline that normally lead Palliative Care efforts, can be the most difficult discipline to manage (ask hospital systems that acquired many physician practices). Hey, laugh a bit with me here! Not all Docs are difficult to manage nor do all CPAs wear pocket protectors!
The Backdoor of Palliative Care
Many hospices are looking to Palliative Care to go “upstream”.That is, to get referrals sooner. However, perhaps the more valuable direction of Palliative Care is “downstream.” That is, Palliative Care provides “a place to go to” when you have need to discharge patients. If your hospice adopts a more open and aggressive admissions mindset, a higher percentage of patients will probably need to be discharged after a history, based on your hospice’s first-hand observation, has been built. Some patients will be deemed to not meet criteria and your hospice must ALWAYS do the right thing. Many hospices have “trained” the referring community only to refer at the brink of death by virtue of the patients they admit or do not admit. These are powerful messages to referral sources. A Palliative Care program will send a message to refer earlier. But don’t overlook the value in having a program to discharge TO. This should embolden admissions staff to be more liberal about“who gets in”hospice. Sometimes only a first-hand history with a patient will tell you if they are dying. In addition, referring physicians often have insights gained over years of relationship with the patient. People die of not only strictly physical conditions, but from broken hearts…
Panicked Boards of Directors
The demise of most hospices, especially those of the NFP flavor is“panicked”Boards of Directors.This is a TRUE hospice killer. Community hospices have tremendous resilience even after making terrible strategic and operational decisions.
Most volunteer-based Board Members are the least knowledgeable and least vested group in a hospice.Yet they are charged with oversight and making strategic decisions that impact people that have dedicated their careers to their respective hospices. When troubled times come (which they will with all long-term organizations), many will seek the course of least resistance or possibility of damaging their personal reputations. Board Members need to buy-into the Vision and Values as much as team members.
I ask that you truly develop your board members so that they know what they are doing.We have the audio recording Becoming a Great Hospice Board Member which could be titled“all the things a CEO would like to say to a Board of Directors but can’t.” This message can be listened to on this website, or CD’s are available for $5 each. Model Workbook #8 which can also be found on the Model Portal is for Board Members.
No-Nos for Board Members
There are a number of “no-nos” for hospice board members. They are:
- allowing line staff to directly access the board, bypassing the organizational structure or other established communication processes;
- crossing the line between oversight and operational matters;
- placing unwarranted and excessive administrative burden on hospice staff; and
- creating a non-productive working relationship with the CEO for invalid reasons.
Does your hospice allow line staff to come directly to board members or is the chain of command followed? This is an important point. The most dysfunctional hospices, that I’ve witnessed, allow line-staff to come directly to board members, thereby undermining the efforts of the CEO. If this is common practice at your hospice, the hospice is not going to be a stable organization and needs to mature. How can a CEO move things forward, especially if the situation is challenging…doing what really needs to be done, without upsetting a few people? The great hospice CEOs are always making changes that advance the hospice…and the changes are not always appreciated.
As a board member, you have to distance yourself from the line-staff…though, of course, in a courteous and graceful manner, and interact directly with the CEO. It is the CEO that you will be holding responsible. Now in the course of your involvement, you may hear jabs or complaints from staff, but you have to be fair-minded and know that you are only hearing half of the story. Now, sometimes you will get insight that may be helpful, but you have to maintain your objectivity and deal with the situation and manage the expectation. Most of the time, this type of interaction is inappropriate (the board member and staff member have probably crossed the line into meddling). Both staff and board members need to be educated as to what is appropriate, as well as what is not appropriate.
Relationship Trouble with the CEO
From time to time, there will invariably be relation-
ship issues between board members as well as with the CEO’s relationship to specific board members. It will happen. Some people just do not work well together and as a CEO, it is difficult to gauge
versa, then the board member or the CEO needs to leave the organization. High trust is paramount for healthy organizations. The decision as to who should leave should be made after careful consideration of the entire organization. In most cases, it is the board member, unless the CEO’s performance is disappointing. Here are some basic questions that should be answered in light of the progress the hospice has made over time:
- Is the morale of most staff high?
- What is the opinion of top leadership of the CEO and the hospice?
- Have quality measurements improved?
- Has the census increased?
- What impact has the CEO had on the donor community? (If an NFP)
- Is the CEO building cash reserves?
Most of the time, if a CEO is making sufficient progress in these areas and a board member/CEO relationship is of a low-trust nature, the board member should gracefully resign.
All CEOs Make Mistakes
With this said, all leaders make mistakes. Some mistakes of judgment can be forgiven. Others that put the public trust in the organization at risk cannot. A leader will learn his or her most profound lesson through their mistakes and ultimately be a better leader.
So those are the big hospice “killers!” Each of these situations or a combination of the above can start the “death spiral.” Be aware, plan and keep building your cash reserves to 6-9 months of cash/near-cash AND get high credit lines in place while times are good. Economics are the primary thing that drives hospices out of business.
by Andrew Reed, CPA