The Basics & Benefits of Benchmarking
If you don’t measure it, you cannot manage it. This longstanding adage for sound business practice remains true with the increasingly complex operating environment required of home care and hospice. Rob Simione, CPA, Vice President, Simione Financial Monitor, works with hundreds of providers to help them improve their performance using benchmarks to evaluate their cost structure and operations.
“Home health and hospice agencies are in a difficult place dealing with issues from regulatory changes that have increased cost and created cash flow concerns to Medicare rebasing that has reduced reimbursement. Agencies must know where they stand through the use of analytics and benchmarks,” Simione says. His blueprint for financial accord starts with developing key revenue and cost indicator reports and comparing them to industry benchmarks.
Key indicator reports should be simple and focused, highlighting the most important areas. Agencies should truly know what drives their bottom line. Overall, an agency should include 8-10 overriding key indicators, along with 3-5 key indicators to track each department’s performance. The agency must hold its staff and teams accountable for their performance, while setting realistic expectations through benchmark comparisons. “Financial performance improvement requires everyone to work as a team,” says Simione, “from executives and clinical directors to financial staff, the governing board and even direct caregivers. When you have buy-in from many disciplines, you can better analyze what might happen in scenarios based on industry changes if all cost remained the same.”
For staff, benchmarking provides feedback on performance, parameters for goal setting, and a basis for developing incentive programs.
For boards and owners, benchmarking provides an overview of key measures in home health and hospice and a comparison to industry trends.
For agency management, benchmarking provides context, identifies strengths and weaknesses, and assists with prioritization and decision-making.
For the industry, benchmarking offers accurate information to guide discussions, decisions, policy and practice, to support advocacy, and to foster an understanding of data that can impact regulations.
Benchmarking resources include our national associations, CMS cost report data and companies, including Simione Financial Monitor, that specialize in helping home care and hospice agencies understand data elements and calculations. “Wherever you get your data, be sure you are making apples to apples comparisons, and always strive to be in the top 10-20 percent. Remember, benchmarks are the median,” Simione explains.