Hospice Operational Comparisons by ADC
Insights & Interpretation:
The table above shows a fraction of the monthly data available to clients. 898 data-points with 922 cross-calculations are extracted from client systems monthly without additional work (except clicking on the upload button) as the data needed for benchmarking is the same as is used by TOP Hospices with operational results in the 90th percentile.
Realize that an average or median does not represent good or excellent performance. Average, Median, or any measure of central tendency, is mediocrity. Inspirational and High-Integrity organizations would be aiming for results in the 70-90th percentile range. It all comes down to operational practices.
The median MVI client size is 80.1% larger than the national median of 68.9a ADC. All this means is that MVI clients are more sophisticated, numerically-oriented and tend to become much larger.
Median client profitability has improved to 5.8% overall. Clients are doing better! This is with ZERO community support of course. With that said, implementation of just a few key practices can turn these into 12-14% margins. Higher margins in the 10-18% range are an indication of excellent management, regardless of tax status. Profits below 5.8% indicate poor or lower quality management. Of course, the human capacity for self-justification is virtually unlimited… Money is essential for fulfillment of the mission.
The smallest segment continues to do well, as a smaller Hospice is simply easier to manage. Usually a few people wear many hats. Also, if you’ve mortgaged your house to start the Hospice, there is a lot of skin in the game!
The profitability in the 31-90 ADC range has tanked over the last few years. Normally this is due to smaller Hospices “copying poor practices” from other Hospices, especially mimicking the number of FTEs needed to do specific Indirect functions. A few best known practices can solve this of course as Indirect costs can be quite low if quality is high.
Total Indirects are unimpressive at 36.04% of NPR. Larger Hospices should be in the 28-31% range if good operational practices are in place to create true Economies of Scale. The truth of Indirect practices are in the numbers. Average is average, and larger Hospices should have “dramatically” better profitability and lower Indirect costs.
We see Economies of Scale being realized by larger Hospice entities, with Net Income at 8.0% of NPR. But they could be nearly doubling that profit level just by operating all departments “a little bit” better than average. The aggregate of small efficiencies in each area would get them to 12-14%, as demonstrated by expertly managed Hospices.
Visit-Times are as expected. MVI measures time-use as one of the drivers of resource consumption. Because “large” can be more difficult to manage, the largest Hospices have the poorest Visit-Times. Longer Visit-Times do not translate into higher satisfaction from the Patient/Family chair.
Days of Cash is of concern. Although overall profitability has increased (as the highest profits and quality ever seen in the Hospice Movement are happening now), reserves levels are low. This indicates that these increased profits are over the short-term and not long-term, or a Hospice has depleted its reserves over a short period of time. When aggregated, Days of Cash (especially for larger entities) would be expected to be much higher. 6-9 months of operating cash/near-cash is MVI’s recommendation.
Cost per Visit – Varies wildly. A Hospice must have Expert Cost Accounting when dealing with sophisticated managed care entities like Medicare Advantage. Advanced cost views are built-in automatically to MVI’s systems so that a Hospice can know its costs for managed care by diagnosis, payer, referral source, health system, physician, team, clinician and other demographics. These advanced cost views are used for PMPM costing, risk assessment and such.
Best Known Practices learned from data will allow a Hospice to PRECISELY direct Energy and Resources… ANY Hospice that applies the “patterns” or “practices”— regardless of ADC— will succeed.
MVI is the Hospice operational data-leader over the past 25 years and provides Hospices and Home Health organizations low-cost, low-risk ACCESS to
1) the data,
2) the practices of the 90th percentile gained from our work with over 1,200 Hospices.
Plus we include doing your Hospice Medicare Cost Report!
Contact MVI today! Phone or email are preferred. Smoke signals don’t work when it’s windy…and we don’t have telepathy mastered YET! Ha! There’s NO risk with MVI. Just try it!