benchmarking: drive change through financial and ... · benchmarking comparing expected performance...

Benchmarking: Drive Change Through

Financial and Operational Metrics

Presented By:

Tiffany Karlin, Partner and Director of Healthcare

Jeanette Bax-Kurtz, Partner and Director of Not-for-Profit

& Regulatory Services

20

18 ANNUAL CONFERENCE

& SOLUTIONS EXPO

Full-service CPA firm with a specialty in Senior Living (IL, AL, SNF, HH&H & CCRCs)

Identified benchmarking as an area of interest and need through our work as consultants and fractional CFOs

Our goal is to provide practical solutions and insight that can be applied in your organization

Preferred Providers of Value1st

20


& SOLUTIONS EXPO

#20


& SOLUTIONS EXPO

Introduction

Why Benchmark?

CREDIT- CONTEXT – COMMUNICATION

20


& SOLUTIONS EXPO

Access CreditCreate

Context

Communicate to Stakeholders

The Mindset2

01

8 ANNUAL CONFERENCE& SOLUTIONS EXPO

The Mindset2

01


• Healthcare silos

• Flat or declining revenue

• Population being served within

brick and motor healthcare

services

• Inconsistent, unpredictable

cash flow

• Unmanaged receivables and

payables

• Weak or unproven internal

controls

• Extensive training time

• High employee turnover

• High dependence on a few

individuals

• Limitations on the availability

of meaningful, timely financial

information

• Keeping the status quo and

staying stagnant

• New pressures in a changing

healthcare system

• Planned revenue growth

• Population being served

wanting to stay at home and

maintain an active lifestyle

• Predictable and improved cash

flow

• Managed working capital

• Strong internal controls

• Consistent service quality

• Streamlined and documented

processes and procedures

• Happy, diversified, and skilled

workforce

• Meaningful, timely information

to manage the organization

• Increased organizational value

• Using research, benchmarking,

and vision to guide the

organization.

TOFROM

Common Questions In what areas could my organization improve and become more efficient? Is my organization prepared to manage a skilling nursing population under

Medicaid Managed Care? How is my organization controlling an aging population? How vulnerable is my organization to fraud and employee theft? How does my organization compare to others within my industry? Is my organization meeting the needs of the future of healthcare and

senior services delivery? How can I delegate more responsibility to my team without giving up control

of key decisions? What areas should I focus on to receive the largest return on my investment of time,

energy and money? Am I missing out on any “best practices” within my industry? Am I appropriately balancing the day-to-day operations with strategic planning for

the future?

Are my employees appropriately trained?

Is my organization staying relevant in the changing market?

20


& SOLUTIONS EXPO

How Do I Unlock Opportunities?

Benchmarking

Comparing expected performance to actual (& understanding gaps)

Reviewing key processes

Assessing business and operational risks (impact vs. likelihood)

Collaborating with management team members

Planning strategically and tactically

Fostering relationships with key advisors (CPA, attorney, banker, insurance, financial planner)

Exploring partnerships

Strategic planning

20


& SOLUTIONS EXPO

20


& SOLUTIONS EXPO

Benchmarking

What is Benchmarking?

The process of identifying and capturing data and evaluating this

data against oneself or an outside party (internal or external).

Types of benchmarking

Performance (e.g. financial)

Process (e.g. best practices)

Strategic (e.g. comparison to competitors)

20


& SOLUTIONS EXPO

Why is Benchmarking Important?

Identify opportunities to reduce and/or manage costs

Identify competitive advantage

Identify opportunities to increase quality of service

Gain insight into relative strengths and weaknesses compared to

other organizations

Combat organizational complacency and the perception that

current performance is acceptable

20


& SOLUTIONS EXPO

Why is Benchmarking Important?

(Continued)

Change the way it views its performance by providing both

qualitative and quantitative measures of effectiveness

Move beyond an assessment that is based solely on opinion

Avoid reimbursement penalties

Revenue and reimbursement optimization

Prepare for new payment models

Support the need for a transformation of processes or

even an entire organization

20


& SOLUTIONS EXPO

Common Financial Ratios and

Performance Indicators

Financial ratios

Comparative analysis

Not-for-profit metrics

Healthcare specific metrics

20


& SOLUTIONS EXPO

Financial Ratios

Current ratio

Quick ratio

Cash ratio

Days working capital

Accounts receivable days/Receivables turnover

Debt-to-net assets ratio/Debt service coverage

Interest coverage ratio

Revenue growth

Net operating margin

Efficiency Ratios

20


& SOLUTIONS EXPO

Comparative Analysis

Current month to prior month

Current month to same month in prior year

YTD revenue and expense

Current YTD to prior YTD

Trailing twelve month (TTM) revenue and expense

Budget-to-actual

Variance reporting (monthly and budget-to-actual)

Common-sized financials

Footnotes explaining fluctuations in revenue and expense

Fixed vs. variable costs

Direct vs. indirect costs

20


& SOLUTIONS EXPO

Not-for-Profit Metrics

Program efficiency

Operating reliance

Fundraising efficiency

Investment yield

Days cash reserve

20


& SOLUTIONS EXPO

Healthcare Specific Metrics Census

Occupancy

Patient / resident days

Payer mix

Reimbursement rates / published rates

Medicare RUG optimization

Labor turnover

Overtime

Admissions, transfers and discharges

Hospital readmissions

Source of admissions

Length of stay

20


& SOLUTIONS EXPO

Healthcare Specific Metrics (Continued)

Bed holds

Wages

Food costs

Supplies

Purchased services

Pharmacy

Five Star Quality Rating criteria

Nursing hours per patient day

Managed care contract rates

20


& SOLUTIONS EXPO

20


& SOLUTIONS EXPO

Benchmarking

Data

Sources of Benchmarking Data

Internal

Historical financial data

Budgets and forecasts

Tax returns – Form 990

As filed Cost reports

External ProfitCents

D&B First Research

GuideStar

Charity Navigator

Ziegler, CAIN Bros (Financial

Institution of choice) Research

CMS cost reporting data

CMS Public Use File (PUF)

Certification And Survey Provider

Enhanced Reports (CASPER)

Medicare.gov

20


& SOLUTIONS EXPO

Sources of Benchmarking Data (Continued)

Other External

Five Start Quality Rating

eHealth Solutions/PointRight

Data.Medicare.gov

Strategic Healthcare Programs (SHP) Data

CARF International

AHCA, LTC Trend Tracker

CMS Enterprise Portal

Provider Statistical Reimbursement Analysis Report (PS&R)

National Investment Center (NIC)

State Websites or Department of Health Contacts for State Cost Reporting Data

20


& SOLUTIONS EXPO

Tools and Resources2

01


Source: CARF Financial Rations & Trend Analysis Report (2017) National Investment Center Seniors Housing & Care Performance Report

ProfitCents

20


& SOLUTIONS EXPO

ProfitCents

20


& SOLUTIONS EXPO

Statement Of Activities

Last 12

Months 2016 2015

Last 5

Years

All

Years

Program Service Revenue 53.55% 53.55% 82.11% 76.40% 74.47%

Contributions 28.35% 28.35% 11.50% 10.66% 9.43%

Government Grants 0.00% 0.00% 0.50% 1.22% 5.17%

Investment Revenue 5.38% 5.38% 0.10% 5.59% 4.98%

Membership Dues 0.00% 0.00% 0.00% 1.62% 0.28%

Other Operating Revenue 11.73% 11.73% 2.93% 2.93% 4.45%

Net Assets Released From

Restrictions 0.99% 0.99% 2.85% 1.58% 1.22%

Total Unrestricted Revenue 100.00% 100.00% 100.00% 100.00% 100.00%

ProfitCents

Statement Of Activities

Last 12

Months 2016 2015

Last 5

Years

All

Years

Total Unrestricted Revenue 100.00% 100.00% 100.00% 100.00% 100.00%

Program Service Expenses 76.57% 76.57% 78.07% 76.21% 82.50%

Fundraising Expenses 0.38% 0.38% 1.08% 0.70% 0.85%

Administration Expenses 8.58% 8.58% 13.64% 12.02% 12.19%

Other Operating Expenses 1.76% 1.76% 9.86% 9.22% 5.48%

Total Operating Expenses 94.54% 94.54% 102.65% 98.15% 101.02%

Operating Yield (Net Operating

Gain/Loss) 5.46% 5.46% -2.65% 1.85% -1.02%

Other Inflows -0.41% -0.41% -0.85% 1.61% 1.83%

Other Outflows 0.00% 0.00% 1.67% 1.86% 1.30%

Total Change In Unrestricted Net Assets 5.11% 5.11% -5.17% 1.59% -0.49%

20


& SOLUTIONS EXPO

D&B First Research

20


& SOLUTIONS EXPO

20


& SOLUTIONS EXPO

20


& SOLUTIONS EXPO

Skilled Nursing Trends

Source: National Investment Center Seniors Housing & Care Performance Report

20


& SOLUTIONS EXPO

MP “CMS Cost Reporting Data

Compare”Client Data

(PPD)

TX State

Compare Data

(PPD)

DifferenceNational Compare

Data (PPD)Difference

Cap-Rltd Costs-Bldgs. & Fixtures $38.20 $29.37 -$8.83 $26.80 -$11.40

Cap-Rltd Costs-Movable Equip $1.50 $2.28 $0.78 $3.37 $1.87

Employee Benefits $8.11 $20.82 $12.71 $29.86 $21.75

Administrative & General $11.55 $37.36 $25.81 $48.48 $36.93

Plant Operation, Maint & Rep $16.67 $13.17 -$3.50 $13.93 -$2.74

Laundry & Linen $0.60 $2.73 $2.13 $3.52 $2.92

Housekeeping $6.65 $5.97 -$0.68 $7.77 $1.12

Dietary $20.11 $16.47 -$3.64 $21.08 $0.97

Nurs Admin $1.06 $9.21 $8.15 $10.42 $9.36

Med Records & Library $0.00 $1.21 $1.21 $1.63 $1.63

Social Service $2.47 $2.51 $0.04 $4.15 $1.68

SNF - Participating $80.54 $61.44 -$19.10 $73.47 -$7.07

MP “CMS Cost Reporting Data

Compare” (Continued)

20


& SOLUTIONS EXPO

Current Prior

CY Total PY Total Difference From PY to CY Occupancy % Occupancy %

Total Admissions 224 240 16 99.56% 77.14%

Total Discharges 171 254 83

CDP Licensed Beds 91 91 0

SCU Licensed Beds 0 0 0

OLTC Licensed Beds 698 98 (600)

Type CY Admissions PY Admissions CY Discharges PY Discharges

Medicare 130 111 121 114

Medicaid 0 0 0 0

Self-Pay 94 0 50 0

Managed Care 0 0 0 0

Other 0 129 0 140

Total 224 240 171 254

CY Medicare Average Length of Stay 24.74

PY Medicare Average Length of Stay 23.59

CY Total PY Total Difference From PY to CY

Medicare Census 2,993 2,689

Medicaid Census 0 0

Self-Pay Census 22,272 0

Managed Care Census 0 0

Other Census 0 22,934

Total Census 25,265 25,623 446.39%

Days in Receivables 57.98

Acid Test 0.07

Current Ratio 0.30

LTD to Assets 0.11

MP “CMS Rugs Compare Data”LE2 3500 29 450.40

LE1 3600 43 376.78

LD2 3700 22 432.87

LD1 3800 43 362.76

LC2 3900 17 380.29

LC1 4000 34 320.69

LB2 4100 14 361.01

LB1 4200 18 306.67

CE2 4300 13 401.32

CE1 4400 14 369.77

CD2 4500 11 380.29

CD1 4600 20 348.74

CC2 4700 11 332.96

CC1 4800 23 308.42

CB2 4900 10 308.42

CB1 5000 17 285.64

CA2 5100 14 261.10

CA1 5200 26 243.57

BB2 6300 14 276.87

BB1 6400 11 264.60

BA2 6500 12 229.55

BA1 6600 11 219.03

PE2 6700 17 369.77

PE1 6800 13 352.24

PD2 6900 18 348.74

PD1 7000 16 331.21

PC2 7100 18 299.66

PC1 7200 20 285.64

PB2 7300 13 254.09

PB1 7400 11 243.57

PA2 7500 15 210.27

PA1 7600 12 201.50

AAA 9900 32 201.50

Behavior

Symptoms &

Cognitive

Performance

Reduced

Physical

Function

Special Care Low

Clinically

Complex

20


& SOLUTIONS EXPO

Worksheet S7

STATE National

Total Facilities 12,620

Total MCR Days 53,559,790

RUG-IV Group

CMS

LINE #

Facility

Days

Facility

rate

Avg.

days /

facility

Federal

rate

RUX 100 82 804.35

RUL 200 60 786.83

RVX 300 35 715.94

RVL 400 30 642.32

RHX 500 22 648.65

RHL 600 19 578.54

RMX 700 20 595.02

RML 800 15 545.94

RLX 900 32 522.56

RUC 1000 883 609.79

RUB 1100 1,200 609.79

RUA 1200 579 509.88

RVC 1300 361 523.13

RVB 1400 374 453.02

RVA 1500 256 451.27

RHC 1600 133 455.84

RHB 1700 109 410.27

RHA 1800 86 361.19

RMC 1900 75 400.46

RMB 2000 53 375.92

RMA 2100 41 309.31

RLB 2200 10 389.35

RLA 2300 5 250.88

ES3 2400 331 734.35

ES2 2500 36 574.85

ES1 2600 22 513.50

HE2 2700 32 495.97

HE1 2800 29 411.84

HD2 2900 26 464.42

HD1 3000 23 387.30

HC2 3100 22 438.13

HC1 3200 20 366.26

HB2 3300 18 432.87

HB1 3400 22 362.76

Rehab Plus

Extensive

Services

Rehab

Extensive

Services

Special Care

High

MP “Clinical Compare”2

01


MP “Labor Turnover Compare”

EMPLOYEE TURNOVER REPORT

(2) (3) (4) (5) (6) (7) % %

BEGINNING # EMPLOYEES EMPLOYEES ENDING # HOW MANY FROM (5) ARE: EMPLOYEES TURN- RE-

SALARY CLASSIFICATION OF EMPLOYEES HIRED TERMINATED OF EMPLOYEES FULL-TIME PART-TIME RETAINED OVER TENTION

ADMINISTRATOR 1 0 0 1 1 1 0.00% 100.00%

CO-ADMINISTRATOR 0 0 0 0 0.00% NA

OTHER ADMINISTRATIVE 1 0 0 1 1 1 0.00% 100.00%

PLANT OPERATING 0 0 0 0 0.00% NA

DIETARY 0 0 0 0 0.00% NA

LAUNDRY 0 0 0 0 0.00% NA

HOUSEKEEPING 0 0 0 0 0.00% NA

DON 1 0 0 1 1 1 0.00% 100.00%

REGISTERED NURSES 3 1 1 3 3 2 33.33% 66.67%

LPN 8 1 2 7 2 5 6 26.67% 75.00%

LICENSED M/H TECH 0 0 0 0 0.00% NA

AIDES 23 10 11 22 18 4 14 48.89% 60.87%

PHYSICAL THERAPIST 0 0 0 0 0.00% NA

SPEECH THERAPIST 0 0 0 0 0.00% NA

OCCUPATIONAL THERAPIST 0 0 0 0 0.00% NA

RESPIRATORY THERAPIST 0 0 0 0 0.00% NA

PSYCH THERAPIST 0 0 0 0 0.00% NA

RECREATION THERAPIST 0 0 0 0 0.00% NA

RESIDENT ACTIVITY 2 0 1 1 1 1 66.67% 50.00%

SOCIAL WORKER 0 0 0 0 0.00% NA

MEDICAL RECORDS 1 0 0 1 1 1 0.00% 100.00%

OTHER HEALTH CARE 0 0 0 0 0.00% NA

TOTAL ALL CLASSIFICATION 40 12 15 37 28 9 27 38.96% 67.50%

40 12 15 37 28 9 27 38.96% 67.50%

(I) OK OK OK OK OK OK OK OK OK

20


& SOLUTIONS EXPO

Labor Turnover:

• Lowered Productivity

• Overworked remaining staff

• Lost knowledge

• Training costs

• Interviewing costs

• Recruiters

Rug Potential2

01


Source: Ability Network: RiskWatch

AHCA LTC Trend Tracker2

01


AHCA Length of Stay Statistics for

2017Q1 - preliminary release

Median Length of Stay

CMS

Certification

Number Total Admissions Actual Median Expected Median

Risk-Adjusted

Median

015009 86 21 24.4 19.8

015010 328 18 23.5 17.6

015012 156 21 24.4 19.8

015014 27 39 32.1

015015 69 22 27.8 18.2

015016 302 21 25.3 19.1

015019 109 38 29 30.1

015023 69 21 30.5 15.8

015024 228 22 26.2 19.3

015027 192 21 27.5 17.6

015028 53 21 28.9 16.7

015031 463 21 26 18.6

015032 265 21 27.1 17.8

015034 70 21 30.1 16.1

015035 165 21 27.2 17.8

015037 20 27 26.5

015040 87 26 31.1 19.2

015042 83 21 27.2 17.7

015043 97 21 27.7 17.4

015044 11 63 39

015045 49 22 31 16.3

015047 26 26.5 34

AHCA LTC Trend Tracker2

01


Medicare Compare

#20


& SOLUTIONS EXPO

Source: Medicare.gov/nursinghomecompare

Managed Care

Contracts

#20


& SOLUTIONS EXPO

Managed Care Contracting

#20


& SOLUTIONS EXPO

Managed Care

Contracts


#20


& SOLUTIONS EXPO


#20


& SOLUTIONS EXPO

Casper Report

#20


& SOLUTIONS EXPO

Quality Measures (QAPI)

Source: CASPER Reports & Ability Network: CareWatch

#20


& SOLUTIONS EXPO

Hospital Readmissions: Track and Analyze

#20


& SOLUTIONS EXPO

Claims Errors

Source: Ability Network: UBWatch

#20


& SOLUTIONS EXPO

“MP” State Specific Medicaid Quality PaymentsQuality Assurance Supplemental Payments (QASP)

Quality Measures 2017-2018

Please complete cells in green only

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Grand Scoring

Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Total Point

Medi-Cal Bed Days

1 Fee for Service Medi-Cal bed days 25,876 Eligible

2 Managed Care Medi-Cal bed days 3,216

Total Eligible Bed Days -

MDS Clinical

3 Pressure Ulcers: Long Stay 0.97% 0.00% 0.49% 11.1110

4 Physical Restraints: Long Stay 0.00% 0.00% 0.00% 11.1110

5 Influenza Vaccination: Short Stay 97.93% 97.93% 97.93% 5.5558

6 Pneumococcal Vaccination: Short Stay 86.98% 86.98% 86.98% 5.5558

7 Urinary Tract Infection: Long Stay 1.30% 1.30% 1.30% 11.1110

8 Control of Bowel/Bladder: Long Stay 53.66% 53.66% 53.66% 11.1110

9 ADL Decline: Long Stay NA NA NA 11.1110

10 Self-Report Pain: Short Stay 13.04% 13.04% 13.04% 5.5558

11 Self-Report Pain: Long Stay 3.05% 3.05% 3.05% 5.5558

12 30-Day Rehospitalization: Short Stay 14.25% 15.79% 15.02% 11.1110

13 Staff Retention 78% 11.1110

14 Raw Points (Before MCBD and Staffing Standards) 100.0000

15 Facility Total Points 100.0000

16 Payout Tier Tier 3

Staffing

17 Nursing Hours per Patient Day (NHPPD) 3.96 Eligible

18 Number of Non-Compliant Days 0 Eligible

Citations

19 A/AA Citation Eligible Eligible

Incentive Payment

Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible

Amount 33,567.00 35,892.00 69,459.00 416,754.00

Improvement Payment

Previous Year Eligibility (1 = Eligible) 1 1

Performance Year Eligibility (1 = Eligible) 1 1

Previous Year Raw Points 58.3300 58.3300

Improvement Score 41.67 41.67

Score in Top Percentile (1 = Yes) 1 1

Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible

Amount 4,567.00 6,767.00 11,334.00 68,004.00

#20


& SOLUTIONS EXPO

Benchmarking Process Steps

1. Analyze financial and operational

benchmarking data

2. Identify potential opportunities

3. Consider financial impact of implementing

opportunities identified

Cash flow

Reimbursement

4. Consider non-financial impact of

implementing opportunities identified

5. Make “go” or “no-go” decision

6. Document decision

7. Implement

8. Monitor

9. Continuously improve

#20


& SOLUTIONS EXPO

Ways to Impact Revenue and Expenses

▪ Strive for timely, accurate financial information

▪ Share the appropriate data with the appropriate

people

▪ Utilize financial metrics and performance indicators

(e.g. revenue and cost drivers)

▪ Utilize clinical metrics and performance indicators

(e.g. revenue and cost drivers)

▪ Understand the root cause of variances identified

during comparative analysis

▪ Maximize billing and reimbursement rates

▪ Reduce billing errors

▪ Understand current and future referral sources

▪ Stay current on billing and collections

▪ Document and analyze root cause for rejected claims

#20


& SOLUTIONS EXPO

Ways to Impact Revenue and Expenses

(Continued)▪ Review / negotiate managed care contracts (rates, exclusions, etc.)

▪ Analyze contract profitability

▪ Utilize budgets and set goals

▪ Analyze fixed vs. variable costs

▪ Analyze direct, indirect costs and overhead

▪ Establish expense approval processes

▪ Centralize purchasing

▪ Pay attention to employee satisfaction and absentee trends

▪ Control overtime and excess capacity

▪ Review key processes for efficiency, waste and internal control

▪ Incorporate automation when appropriate

#20


& SOLUTIONS EXPO

Case Study

Fact pattern

Objective

What-ifs

#20


& SOLUTIONS EXPO

Questions?

#20


& SOLUTIONS EXPO

Thank You!

Tiffany Karlin

Partner and Director of Healthcare Services

[email protected]

314-480-1288

Jeanette Bax-Kurtz, CPA

Partner and Director of Not-for-Profit &

Regulatory Consulting

[email protected]

314-814-4943

mailto:[email protected]

mailto:[email protected]

benchmarking: drive change through financial and ... · benchmarking comparing expected performance...

Documents