Three Questions You Should be Asking about Benchmarks
Posted On: December 10th, 2013
Former Vice President, Product Marketing and Strategy, McKesson (Retired)
Financial benchmarking is critical for home health and hospice agencies that want to grow their bottom lines. Comparing your agency’s business processes and performance metrics to industry best practices can help guide your organization to use reliable and fundamental financial management, say Robert Simione and David Berman from Simione Healthcare Consultants. The financial information and insight gained from using benchmarking better prepares healthcare agencies for the challenges and opportunities they face.
Here are three questions your agency should be asking about home health benchmarking:
1. How are benchmarks used?
When establishing home health benchmarks as agency goals, it’s important that all benchmarks are consistent and easily attainable. Simione and Berman say that all of your agency’s budgets should be built from reportable benchmarks. All dashboards should be well-organized and include current data as compared to the goal/benchmark.
2. Where can one find data?
A wealth of data can be beneficial to your agency, so Simione and Berman recommend starting with the basics. These include CMS data sets, cost reports, claims data, data analytics companies and national/state association survey results. When considering this data, remember to identify areas of comparative differences: for-profit versus non-for-profit, free-standing versus hospital-based, location and payer mix.
3. How should an agency make priorities?
Simione and Berman say that a high-level analysis is a good starting point when reporting prioritization. Begin by asking questions like “Do I have enough cash?”, “How are my profit margins?” and “How is our agency spending its money?” If your organization has multiple business lines and/or locations, each of these should be broken down separately (hospice, private duty, other location). When considering your agency’s priorities, Simione and Berman say to focus on what you can most control, such as direct costs and patient volume. Prioritizing investments is vital to the success of healthcare agencies. Most successful agencies invest heavily in information technology and marketing.
To take advantage of financial benchmarking, agencies should continually measure their financial and operational performance. An agency’s ability to make better business decisions improves when operational performance and goals are continually monitored. Constant evaluation of management and staff performance can help identify weaknesses and determine if those weaknesses are internal, external or both.