The 2019 Home Care 100 conference recently took place in Scottsdale, Arizona and I was privileged to join CEOs, Presidents, CFOs and COOs from some of the largest home care and hospice provider organizations attending the event.
In addition to receiving a much-appreciated respite from the cold northeast weather, this conference devoted valuable speaker time to two trends that are forecasted to have serious repercussions for the home care industry and delivery of care: Patient-Driven Groupings Model (PDGM) and obstacles to organizational growth.
Patient-Driven Groupings Model (PDGM)
It’s been called the most sweeping reform to home care reimbursement in 20 years — the Centers for Medicare and Medicaid Services (CMS) introduction of the “Patient-Driven Groupings Model,” or PDGM. With an effective date of January 1, 2020, providers have less than a year to prepare for its implementation, and they can’t afford to sit back and wait. The time to develop a transition plan is now.
I’d say that the tension around this change is palpable. The biggest change is in payment methodology — with a shift from 60-day periods to 30-day periods. I envision this leading to better, more accurate time tracking. With the number of visits split in half, home health aides and their agencies will be under the microscope to deliver services based on value, not volume. They will have to be faster and more accurate and there is no room for error.
Tracking time will need to be precise because the delivery of services and reporting will need to be done faster to receive payment. Accelerating all of this could cause additional stress for the home health agency in terms of scheduling and making sure that scheduled workers actually show up patients’ homes.
Additionally, if the required number of visits isn’t completed in 30 days, payment is based on a standardized per visit payment instead of the episode payment for a 30-day period (called a Low Utilization Payment Adjustment or LUPA), reducing the expected payment amount. This can lead to further stress for aides who can’t afford to miss scheduled visits and who will no longer have the “fudge” factor of an extra 30 days to complete all their scheduled visits. And stress causes illness and absenteeism, which will affect billing and the bottom line.
We’ve seen time-tracking accuracy improve when employees are incentivized with a daily pay benefit. This was specifically discussed at last year’s Contact Center Week Executive Exchange, where call center thought leaders noted that an on-demand payment option reduces real-time adherence discrepancies. With the ability to transfer their earned pay to paycards and bank accounts, workers are more likely to accurately track their time so they can see their available balance grow.
In general though, cash flow will be harder and home care organizations will need creative ways to stabilize or create margin. Incentives like a daily pay benefit can lower turnover rates and improve employee recruiting without increasing pay.
Obstacles to Growth
Throughout the course of this conference, I heard many of the executives there say, “We want to grow, but we can’t because we can’t find people to provide the services.” Many home health care providers want to expand, particularly because margins are so low in this industry. But because finding talent in a tight labor market is so difficult and offering a higher hourly wage usually isn’t possible, most growth is accomplished through merger and acquisition. It’s just easier to pick up additional providers that are already staffed and absorb those workers.
Because home health workers take their patients with them (along with their billing) when they leave an agency, it’s in an agency’s best interest to find sustainable ways to retain its workers and avoid costly turnover. In this industry, labor constitutes the largest costs and turnover accounts for 30 percent of labor costs. Finding ways to increase employee engagement and retention is paramount to reducing turnover costs and maintaining a healthy bottom line.
When you’re dealing with a transient workforce, offering a daily pay benefit can be an extremely beneficial incentive that entices workers to stay. The ability to access pay earned at the close of a shift has proven attractive to workers who may need money for any number of emergencies or to avoid overdraft charges prior to their next scheduled payday.
When you’re dealing with a tight labor market and high turnover, and offering a higher pay is not a viable option, you need to find ways to keep your workers. Offering a daily pay benefit that gives your employees instant access to earned but unpaid pay is one way to do this.
It’s an alternative that costs you nothing in terms of additional capital, but it’s a benefit that buys your workforce financial security and the ability to exert control over their personal budgets and financial wellness — and it’s likely to keep them from jumping ship and taking their patients with them.
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(Credit for the image at the top of this article to Vivify Health on Twitter.)