Home Health and Hospice Industry News and Blog

Home Health Costs Will Go Up, While Medicare Payments Come Down…..Plan Now!

by Bobby Robertson

So, you’ve started thinking about how to deal with the inevitable revenue cuts (Medicare payment cuts).  I know this, because in June my company implemented software for almost 20 new companies and July was about the same.   All of these companies are preparing for the coming cuts by looking for efficiencies to be gained by web-based software and point of care documentation.  I’m asking all of these agencies, and you, “Have you started to think about how to deal with looming increases to your costs that could be just as, or more, significant?”

Recently, I had an opportunity to attend a conference with CEOs of approximately 80 different industry leading companies.  One of the speakers was a well known economist and he framed up a scenario that I feel compelled to share with not only my company’s 1200 + customers, but with the entire home health and hospice industry.  His message, and my concern, was one of the impending inflation. 

I’m not going to try to explain the reasons why this leading economist believes that we will see indications of inflation by early 2011, with a surge in inflation over the next couple of years.  You can do web searches or listen to the news to form your own opinion.  However, for the purposes of this blog, let’s assume inflation will happen.

The single biggest cost for home care companies is people (payroll).  In times of inflation, the cost of people increases sharply.  Here is why:

Inflation raises the cost of living for your employees.  Your employees can cut back on entertainment and other discretionary spending, but they still have to eat and drive to work.  If they’re paying more for food and gas, they have less money for monthly payments on their cars and homes.  If they are struggling with monthly payments on their cars and homes, they start to panic and begin looking for jobs that pay more.  If they find a job that pays more, you’ll have replacement costs for recruiting, and you’ll be recruiting other home health employees that won’t make a move to you unless they can get paid more (just like your ex-employee did).  It’s a cycle that occurs very quickly during times of inflation and you need to start getting ready for it now. Next week, I will share with you some ideas on how you can prepare.

 

Bobby Robertson is the President and Chief Executive Officer of HEALTHCAREfirst, Inc., a company that provides the nations’ most complete set of software and service solutions to the home health and hospice industry, and the recipient of the 2008 Frost & Sullivan Healthcare Innovation Award for Emerging Technologies.  Over 1200 home health and hospice companies use HEALTHCAREfirst software and services daily.  Bobby was one of the first industry leaders in homecare to recognize the industry’s need for high quality home care software applications accessible over the worldwide web and has 15 years of healthcare performance improvement and business process experience.  Bobby also serves on the Board of Directors for Continuity Health, a company that develops technology associated with remote patient monitoring via the web.