There are several essential steps for home care businesses to take in order to get ready for working under provisions of the Medicare Prescription Drug, Improvement and Modernization Act (MMA). Whether these preparations will be a re-evaluation of standard procedures providers already have in place or something entirely new, they are essential for continuing success in the changed environment of HME.
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Get Accredited — The new law requires that all Medicare DME providers become accredited. The law is not definitive on the timing, but we know that once the Health and Human Services Secretary determines standards, the accrediting organizations the government designates will have one year to include those standards in the accreditation requirement. The choices are not if, but when. Wait if you want, but the wait list could have thousands of providers on it. I am with comedian Larry the Cable Guy on this one, so “GIT-R-DONE.”
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Review and Adjust Your Company's Strategic Plan — For all practical purposes, whatever strategies a company has been executing just got flushed. Any management team that is to be highly effective will update its competitive intelligence, anticipate the effects on and reactions of others in their environment and adjust their strategies accordingly.
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Revise the Operations Plan — Even though being a low-cost provider in this industry does not produce competitive advantage, HME businesses will have to behave like low-cost providers. That means developing business models, business processes and control systems that rival the best of those in commodity industries.
Revising your company's operations plan is the start. The revised plan must reflect your business strategies, which, in turn, should reflect the vision and values of the people involved. Divide the plan into process groups such as customer processing, vendor processing, employee processing and accounting processing. Each of these groups actually may represent several processes, but every one, as it currently stands, should be suspected of being inefficient.
The revised operations plan should justify why every person performs every activity. No action can be justified by the statement, “that's the way we've always done it.” To assess processes and activities, ask questions like, “Why do we go to the file room or cabinet?” or “Why can't we have the charts on our computer screen on demand?”
Whatever you have heard or read about industry norms and benchmarks became irrelevant when MMA was signed into law. Now we must create new and better benchmarks. For example, productivity of $118,000 per full time equivalent employee is a figure that will no longer indicate whether a company may be profitable. The number will be bigger, so you cannot use current industry norms as the basis for revising the operations plan.
Finally, when you are considering your company's operations, note that there is a huge opportunity to remove costs from this industry through greater technology investment. Processes can be automated, knowledge can be expanded and management information can be consolidated.
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Refocus the Marketing Plan — The primary objective of a provider's revised marketing plan should focus the company on acquiring the best customers for the future, not the next customers. Second, the plan should incorporate precision targeting of customers and the referral sources connected to them. It is too expensive to use ads and reps for blanket coverage of a county or metropolitan area. Use precision marketing techniques to select certain customer characteristics and target your message to them through the most pointed communications that are practical.
Third, the marketing plan will enable the company to be an effective “differentiator.” The most important contribution that differentiation will make is to reduce customer acquisition cost. But it will, at the same time, increase the rate of referrals.
The basic steps to being a good differentiator are: (1) hearing what the market says is most important in the selection of a provider; (2) figuring out how to measure the criteria; (3) measuring and managing the criteria; and (4) reporting the success to the interested parties. Even though providers must have operations that are as efficient as those of a low-cost provider, marketing must present the company as the best overall solution.
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Tweak Your Corporate Culture — Continuous process improvement should be woven into a provider's business culture. It has been easy to be committed to continuous improvement in clinical and customer service processes, but now the culture must extend that notion to every business process.
Reward employees for finding better ways to bill, deliver, warehouse and receive, etc. The corporate culture needs to reward those who take appropriate risks, even if they fail, especially when the failure provides a valuable lesson.
Wallace Weeks is founder and president of The Weeks Group Inc., a Melbourne, Fla.-based strategy consulting firm. He can be reached at 321/752-4514 or by e-mail at wweeks@weeksgroup.com.
