Your Financials are Your Most Important Measurement
I cringe a bit when I make this statement…and I can feel everyone reading this perspective “tense” up. But the brutal reality for any business organization is the worn-out expression, “No Money, No Mission.” I avoid using the phrase, but it is true. One does not completely understand this until the day one watches a hospice close its doors and become assimilated by the Borg hospice. The foundational dreams of compassionate care at one of the greatest transitional periods in life are lost as the hospice becomes another cog in the wheel with little-to-no voice in its future. This is why, when setting up a new hospice platform, the first system we implement is the financial system.
There are two numbers/measurements I want to re-emphasize:
14% and 6-9 Months
If you have been reading the Flashpages and listening to the messages, you should instantly know what I’m talking about.
- 14% – the target percentage of Hospice Homecare Operational Income for a typical program.
- 6-9 Months – the amount of cash or near-cash your hospice will need to withstand the intentional financial constipation that is coming…the remedy for thinning out the number of hospices in our country.
Purpose executed with quality should be the dream that drives us in our important work. Purpose for me is to simply make my small corner of the world better to the best of my abilities and to minimize suffering any way I can. Most true-blue hospice people have similar goals. However, financial considerations are secondary…but are recognized as essential to the fulfillment of the vision. This is the heart of the “balancing purpose and profit” theme that MVI continues to emphasize. This theme is also a tool to destroy the mindset that great quality and optimal financial results are mutually exclusive goals. Quality as a business strategy should be the plan…and with a solid business foundation, the enterprise is sustainable… especially in the approaching times filled with vast opportunities in hospice along with payment system reform.
Benchmarking and the Model are key. Benchmarking gives you powerful perspective…so that you can always judge your hospice’s performance in relation to the rest of the hospice world. It also elevates amateur hospice leaders to the ranks of professionals in the business dimension quickly, as they can easily point out areas of excellence as well as areas that need work.
NOTE: We highly recommend providing a copy of the Executive Dashboard report to your leadership team on a monthly basis using an unfiltered selection criteria. Measure yourself against ALL hospices in the database first. THEN use the filters such as ADC, region of the country, tax status, patient-management system, and other filter criteria for secondary information and to answer specific questions. You want your leaders to be able to speak from a confident “national” perspective and understand your proprietary Model. If significant deviations exist in specific areas from the 50th percentile, leaders and ideally all staff should understand why and how your hospice achieves these results. At this point, you truly know your hospice is working within the Model approach.
Where is your hospice in it’s Model implementation? The quantified results of hospices that have truly bought-in to the idea of the Model and have implemented it well have been wildly successful, resulting in hospices building stunning cash/near-cash levels within a single year! The Model, which is based on the idea of working intentionally, will never go out of style. The idea of creating a high-quality predictable experience, systemic in nature and that is financially balanced, is just good business. These successful results boost everyone’s confidence in the organization…and only confident people render confident service.
14% and 6-9 Months…where is your hospice today?
You have many of the tools via MVI that you can use to augment your hospice operations. There are the training programs. There are the on-site visits where I manage the clock and make sure that each critical component of your proprietary Model is explored with objectives assigned. Now there are visual examples and the use of IRMs™. We are dedicated to the highest ideals of hospice, contributing in the specific areas within the confines of our expertise and talents. Let’s get at least 14% from core hospice homecare operations! Let’s build at least 6-9 months of reserves! Above all, let’s do our work with compassion and extreme intention so that the people our hospices have the privilege to serve experience the highest quality organization of their lives.
– by Andrew Reed