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All Staff Workbook

All Staff WorkbookThe Business of Hospice for All Staff

WORKBOOK 6: 3rd Edition

CEO Preparation for the Model – Workbook 1 Vision & Values – Workbook 2 Creating Your Model – Workbook 3 Alignment of Systems – Workbook 4 Model Workshop/BluePrint – Workbook 5 Model Curriculum – All Staff - Workbook 6 Model Curriculum – Leadership - Workbook 7 Model Curriculum – Board of Directors - Workbook 8

________________________________________________________________Multi-View Incorporated Systems

PO Box 2327Hendersonville, NC 28793

828-698-5885 or multiviewinc.com

©Copyright 2011 Multi-View Incorporated Systems: 2nd Edition of 88

All Staff Workbook

Table of Contents

Introduction to the Business of Hospice....................................................................................5Why is it important that I understand this?.........................................................................5Overcoming the “Great Dilemma”......................................................................................6Expectation Management and the Test.............................................................................6

Dropping the Patient Care Shield.............................................................................................7What is the Vision of this Hospice?.......................................................................................8What are the Values of this Hospice?...................................................................................9What is the Mission of this Hospice?...................................................................................10

The Subject of Values.....................................................................................................12The Visit..................................................................................................................................13What is Hospice?....................................................................................................................15How is Hospice Paid?.............................................................................................................18

Medicare Hospice Benefit................................................................................................18Physician Services.......................................................................................................19

The Reimbursement is Expected to Cover ALL Costs....................................................20Residential Care in Hospice............................................................................................20

What is Palliative Care?......................................................................................................21CAP – Aggregate and In-patient.........................................................................................21

When does CAP hit? Is it a version of Hospice Hell?.....................................................22Dealing with the Medicare Aggregate CAP.....................................................................23The Aggregate CAP is Good, but there is a Flaw............................................................23Monitoring Medicare CAPs..............................................................................................24

The Role of Financial Reserves in a Hospice.....................................................................25Reasons to be Profitable and Build Reserves.................................................................25The Medicare Threat.......................................................................................................27What Will Happen When Medicare Cuts Occur?.............................................................28Avoid being Dependent upon Community Support..........................................................28

Learning the Business of Hospice..........................................................................................29The Three Primary Categories of Cost............................................................................29The Use of Net Patient Revenue (NPR)..........................................................................30An Example of How to Compute NPR - Net Patient Revenue.........................................30

Classification of Costs.........................................................................................................32Understanding Hospice Measurements, Key Concepts & Definitions.................................33Lower Costs Are Not Always Better....................................................................................36The War of Single Percentage Points.................................................................................37

You Can’t Operate Your Hospice Based on Averages....................................................37Getting Comfortable with Measurement..............................................................................38

“You’re Just Focusing On the Numbers”.........................................................................39This Hospice’s Model..............................................................................................................40

Caseloads........................................................................................................................42





All Staff Workbook The High Caseload Myth.................................................................................................42The High Acuity Myth......................................................................................................42Visit Durations.................................................................................................................43Understanding the Impact of Longer/Shorter Visits.........................................................43

The Patient Mix.......................................................................................................................44Facility Mix.......................................................................................................................44Patients Living Over 365 Days........................................................................................44

Understanding this Hospice’s Costs....................................................................................45Hospice Homecare..........................................................................................................45Indirect Costs...................................................................................................................46In-patient Units................................................................................................................47Benefits............................................................................................................................47

What is the Model?.................................................................................................................48Why Should a Hospice Create a Model?................................................................................49

The Benefits of Creating and Using Models....................................................................50Breaking Down the Barriers.............................................................................................50Do patients and families care about how much we spend?.............................................51Financial Disdain for the Numbers, especially Money.....................................................52The Model Does Not Use Budgets..................................................................................52There is More than Enough to Fund World Class Hospice Care.....................................54

Examples of Model Designs...................................................................................................55The Four Areas of Design Work that Impact Everything.........................................................56The Model is NOT Financially Driven!....................................................................................57The Design of Care.................................................................................................................58The Key to Satisfaction...........................................................................................................59Design of the Team................................................................................................................61Visit Design.............................................................................................................................62

Model Your BEST!...........................................................................................................62Identify Your BEST Based on the Three Things!.............................................................62Avoiding “Death by Committee”.......................................................................................63Minimum Expectations....................................................................................................64

Product Design.......................................................................................................................67What is a product?...........................................................................................................67Examples of Products......................................................................................................67The Value of Well-Designed Products.............................................................................68The Importance of Caregiver Education..........................................................................68

Example Hospice Menu..........................................................................................................70No Budgets!............................................................................................................................73Gaining Perspective and the Reality Check............................................................................77

How can you get your benchmarking results?.................................................................78Open Access Hospice............................................................................................................80In-Patient Unit Financial Problems..........................................................................................81NEVER EVER SAY “WE CAN’T TAKE PATIENTS”...............................................................82





All Staff Workbook Hospice Finance 101..........................................................................................................83

Physician Billing...............................................................................................................84CAP.................................................................................................................................85Cost Report.....................................................................................................................85

Index.......................................................................................................................................86





All Staff Workbook

Introduction to the Business of HospiceWelcome to the world of hospice! You have probably already been exposed to the concept of hospice care and know what it is and have some ideas as to the role you will play. In addition to this general and discipline-specific training, you will also receive training in the business of hospice. That is, how care is provided, paid for, and most importantly, balanced at this hospice. This workbook is a tool to help you understand the financial and business concepts of providing hospice care.

Why is it important that I understand this?

This is a common question. Why should I know financial things especially if I don’t work in the financial area? The answer is simple:

This hospice places great value on people that have an incredible heart for hospice but also recognize the need for financial balance.

Everyone is a contributor in the effort. Everyone makes a difference. It makes sense for everyone to understand what is valued, what is expected, and what is measured so that everyone can be on the same page. No one should be surprised or say, “I didn’t know that!” at this hospice.

You are an important part of the team. You are here because you have talents and abilities to contribute to this great work...and this hospice is making an investment in your training because it believes in you.





MVI INSIGHT:

The MYTH: It is often believed that hospices that measure and seek a positive bottom-line are less compassionate and skimp on services for the sake of the almighty dollar. This is simply not true. In fact, the opposite is true. Hospices that measure important things and have high standards provide MORE and BETTER care than hospices that don’t. They also do vastly better financially.

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Overcoming the “Great Dilemma”

Many hospice people have trouble with the idea that hospice is a “business”. There is an “internal conflict” that some find disturbing as there is a perception that the linkage to money somehow lessens the commitment to the mission. We call this the Great Dilemma. This internal conflict must be resolved within our hospice cultures.

Many people in hospice think that profitability is wrong. They think that it is “evil” to do this work and make money. This mindset must go. It is not only right for our hospices to be profitable; it is the only way to survive! This anti-profit mindset is not compatible with reality. You must become comfortable with operating within a sound business model.

It is important that individuals at our hospice come to an understanding of the importance of money. If an individual working at a hospice does not receive a paycheck at the end of a pay period, the individual will probably not continue to work for the hospice as personal financial obligations must be met. The same idea applies to the hospice. If the hospice does not receive enough money to cover ALL of its obligations, it will not continue as an entity. Not only should there be enough to cover the expenses in both the personal and the hospice example, but there should be money left over for savings. Common sense would tell us that it is good to have money set aside for the unpredictable future.

It should also be understood that money translates into capability. We need money and resources to be a World Class hospice. We should not waste our resources, but rather be wise stewards and invest in individuals and initiatives that will help us serve patients and families better…providing a World Class hospice experience.

Expectation Management and the Test

You may be given a short test after the completion of this workbook. Do not be scared or put-off by this requirement. It is part of the learning experience.

There is a reason that schools, universities, and other educational institutions test students. Testing works! It provides the individual and others an indication of our level of understanding. As we will learn from this course, if something is important, it should be measured. This applies to everyone at this hospice.





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Dropping the Patient Care Shield Too many times, any mention of productivity, finance, or profit brings forth the “universal hospice defense mechanism” -- the Patient Care Shield. This defensive tool is one of the most formidable tools ever devised in Hospiceland. It can withstand all assaults and actions. It can part the seas and clear the skies. However, it can also cause a hospice to be Third World in its operations as good ideas about bringing balance to a hospice are often repulsed. The suggestions are as such:

Can’t we document immediately after our visits? Why can’t we do On-Call differently? It seems that other hospices have lower medication costs…can’t ours be reduced? Could nurses do 20 visits a week? Why can’t Social Workers do the same?

The questions or suggestions are the same in many hospices. And the Patient Care Shield is raised in each case. What is on the front of the Patient Care Shield?

Patient Care will Suffer!This statement is the ultimate defense. Yes, the patient/family is the primary focus of this hospice. However, this statement should be used with careful consideration so that a needed change or improvement in “balance” is not discarded for the sake of avoiding the issue. Therefore:





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What is the Vision of this Hospice?Write the Vision in the space provided below. What are your thoughts?

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□ Is the Vision compelling?□ Does it use sensory images?□ Does it excite you?

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What are the Values of this Hospice?Write the Values of our hospice below. What are your thoughts?

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□ Are the Values easy to understand?□ Do they make you feel good?□ Is a clear financial element present?

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What is the Mission of this Hospice?If your hospice has a Mission Statement, write it below. What are your thoughts?

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All Staff Workbook Definitions:

Vision : Defines where the organization wants to be in the future. It reflects the optimistic view of the organization's future.

Mission : Defines where the organization is going now, describing why this organization exists.

Values : Beliefs that are shared among the stakeholders of an organization. Values drive an organization's culture and priorities.

There are many ideas and opinions regarding the ideas of Vision and Mission Statements. Most hospices summarize goals and objectives in a Mission and/or Vision Statement.

MVI tends to see the Vision Statement as the overall direction of your hospice. It is a point of FOCUS. We prefer a short, “memorable” phrase that creates a statement of current and future positions. We do know that in order to become a World Class hospice, a compelling Vision needs to be cast. In our world view, simple is not only best…it is genius! However, be aware that Vision Statements can be short or long; it is a matter of effectiveness and preference.

While the existence of a shared mission is extremely useful, many strategy specialists question the requirement of a Mission Statement. Vision Statements are often confused with Mission Statements; however, they can serve complementary purposes. There are many models of strategic planning that start with Mission Statements. Therefore, it is useful to examine textbook explanations here:

A Mission statement tells you what the hospice is now. It concentrates on present; it defines the customer(s), critical processes and it informs you about the desired level of performance.

A Vision statement outlines what a hospice wants to be. It concentrates on future; it is a source of inspiration; it provides clear decision-making criteria.

The Vision describes a future identity and the Mission describes why it will be achieved. A Mission Statement defines the purpose or broader goal for being in existence or in the business. It serves as an ongoing guide without time frame. The mission can remain the same for decades if crafted well. Vision is more specific in terms of objective and future state. Vision is related to some form of achievement if successful.





A Vision Statement is a vivid idealized description of your hospice that inspires, energizes and helps you create a mental picture of your future. It can include an element of NOW that is part of traditional Mission Statements. It’s OK to break the rules to fit your

Vision.

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If your hospice chooses to have a Mission Statement, it should not resemble the Vision Statement as this would confuse people. The Vision Statement can galvanize the people to achieve defined objectives, even if they are stretch objectives. A Mission Statement provides a path to realize the Vision in line with its Values. These statements have a direct bearing on the Model.

To become effective, the hospice’s Vision Statement must (as theory states) become assimilated into the hospice’s culture. Leaders have the responsibility of communicating the Vision regularly, creating narratives that illustrate the Vision, and acting as role models by embodying the Vision, creating short-term objectives compatible with the Vision, and encouraging others to craft their own personal Vision that positively impacts the hospice.

The Subject of Values

The subject of values doesn’t receive enough attention in most organizations. Values are normally not on people’s minds. How many people who apply for positions at your hospice ask, “What are the values of your organization?” It is a rare bird indeed! At this hospice, Values are taken very seriously.

Values are essentially the core beliefs of the organization. Values impact behaviors including interactions and decision-making processes. They are what people believe in your organization. Values are demonstrated in staff behavior. Our hospice has deliberately crafted the Values we foster and they are recognized as acceptable behavior. Values are a tool used to shape the culture of our hospice.





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The Visit

One of the primary problems with most hospices is that there is great variability in care.

The Model is a modern approach to hospice management. It is used by the most progressive and advanced hospices in our country, both in terms of quality and financial balance. The basic idea behind the Model is that of intentional design of hospice services. That is, rather than rely upon a somewhat organic operational approach, which most hospice have, the hospice would create a high-quality predictable experience through intentional design of each service component. The most important design area is the Visit.

There are two huge problems in hospice today.

We have a quality problem, and

a financial or business problem.

We have already discussed the financial problem in hospice to some extent. The problem is that so many hospices cultures have tended to recoil from anything that associates or links hospice to the idea that it is a business. However, we all know that the economics of hospice have to be done in a balanced way, starting with patient and family in mind. The Model works backwards and translates the care experience into quantifiable measurements along with all of the supporting administrative functions. The Visit is the cornerstone.

The quality problem stems from the fact that there huge variability issues in hospice…among hospice providers as well as among individual clinicians in each hospice. A patient/family can have a great hospice experience with Nurse A and a mediocre experience with Nurse B. A





MVI INSIGHT:

The Visit is the most important aspect of our work. It is what we do. It is the primary way we deliver our specialized and unique care. Therefore, we must make our visits great.

All Staff Workbook patient/family can have a good experience with Hospice Aid A and a crappy experience with Hospice Aid B. The Model systemizes the experience into teachable and predicable stages that increases the overall average of care. Not all visits will be perfect. However, to the degree that the experiential variation is decreased, the better the experience. This is achieved through a balance of prescribed procedures combined with reliance on the clinician’s professional judgment. We are not creating robots or mindless activities, but rather creating a supporting structure that helps clinicians keep important aspects in focus so that important things are not overlooked…even in the BUSY and often complex world of human interaction. We all need structures to help us organize and be confident. The Model Visit will help a clinician be more confident.

Visit ExampleThe following is an example of a Model visit. It breaks the visit down into different teachable stages and highlights the important points of each phase.

Each discipline should have its own Model visit. They will differ slightly for each clinical discipline. However, they should have an overall flavor so they are harmonious with the spirit of the rest of the organization. Cohesion among disciplines is important.





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What is Hospice?According to the NHPCO (National Hospice and Palliative Care Organization),Hospice is considered to be the model for quality and compassionate care for people facing a life-limiting illness or injury. Hospice and palliative care involve a team-oriented approach (Registered Nurse, Physician, Certified Nursing Assistant, Social Worker, Chaplain) to provide expert medical care, pain management, and emotional and spiritual support expressly tailored to the patient's needs and wishes. Support is provided to the patient’s loved ones as well (such as Bereavement Counseling).

The focus of hospice relies on the belief that each of us has the right to die pain-free and with dignity, and that our loved ones will receive the necessary support to allow us to do so. The focus is on caring, not curing and in most cases, care is provided to you in your own home. Hospice can be provided in freestanding hospice facilities, hospitals, and nursing homes and other long-term care facilities. Hospice is available to persons of any age, religion or race.

Hospice focuses on caring, not curing and, in most cases; care is provided in the patient's home.

Hospice care also is provided in freestanding hospice centers, hospitals, and nursing homes and other long-term care facilities.

Hospice services are available to patients of any age, religion, race, or illness. Hospice care is covered under Medicare, Medicaid, many private insurance plans,

HMOs, and other managed care organizations.

How Does Hospice Work?

Hospice care is for any person who has a life-threatening or terminal illness. Most reimbursement sources require a prognosis of six months or less if the illness runs its normal course. Patients with both cancer and non-cancer illnesses are eligible to receive hospice care. All hospices consider the patient and family together as the unit of care. (Note: the 2009 rate for Routine Home Care was $135 per day)

The majority of hospice patients are cared for in their own homes or the homes of a loved one. “Home” may also be broadly construed to include services provided in nursing homes, hospitals and prisons.

Typically, a family member serves as the primary caregiver and, when appropriate, helps make decisions for the terminally ill individual. Members of the hospice staff make regular visits to assess the patient and provide additional care or other services. Hospice staff is on-call 24 hours a day, seven days a week.





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Who is the Hospice Team?

Hospice care is a family-centered approach that includes, at a minimum, a team of doctors, nurses, social workers, counselors, and trained volunteers. They work together focusing on the dying patient’s needs; physical, psychological, or spiritual. The goal is to help keep the patient as pain-free as possible, with loved ones nearby until death. The hospice team develops a care plan that meets each patient's individual needs for pain management and symptom control.

It is important to find out what the role of the patient's primary doctor will be once the patient begins receiving hospice care. Most often, hospice patients can choose to have their personal doctor involved in the medical care. Both the patient's physician and the hospice medical director may work together to coordinate the patient's medical care, especially when symptoms are difficult to manage. Regardless, a physician's involvement is important to ensure quality hospice care. The hospice medical director is also available to answer questions you or the patient may have regarding hospice medical care.

The team usually consists of:

The patient' s personal physician; Hospice physician (or medical director); Nurses; Home health aides; Social workers; Clergy or other counselors; Trained volunteers; and Speech, physical, and occupational therapists, if needed.

What Services Does the Hospice Team Provide?

Among its major responsibilities, the interdisciplinary hospice team:

Manages the patient’s pain and symptoms; Assists the patient with the emotional and psychosocial and spiritual aspects of dying; Provides needed medications, medical supplies, and equipment; Coaches the family on how to care for the patient; Delivers special services like speech and physical therapy when needed; Makes short-term in-patient care available when pain or symptoms become too difficult

to manage at home, or the caregiver needs respite time; and Provides bereavement care and counseling to surviving family and friends.





All Staff Workbook In many cases, family members or loved ones are the patient's primary care givers. Additionally, hospice recognizes that loved ones have their own special needs for support. As a relationship with the hospice begins, hospice staff will want to know about the primary caregiver's priorities. They will also want to know how best to support the patient and family during this time. Support can take many different forms, including visits with the patient and family members; telephone calls to loved ones, including family members who live at a distance, about the patient's condition; and the provision of volunteers to assist with patient and family needs.

Counseling services for the patient and loved ones are an important part of hospice care. After the patient's death, bereavement support is offered to families for at least one year. These services can take a variety of forms, including telephone calls, visits, written materials about grieving, and support groups. Individual counseling may be offered by the hospice or the hospice may make a referral to a community resource.

How is Hospice Paid?________________________________________________________________

Multi-View Incorporated SystemsPO Box 2327

Hendersonville, NC 28793828-698-5885 or multiviewinc.com


All Staff Workbook Hospices are not unlike most modern healthcare organizations in that they are paid for their services by Medicare, Medicaid, and Commercial Insurance as well as from private individuals. Most hospices receive 75-95% of its patient revenue from Medicare. Since Medicare is the primary source of revenue, we will focus our attention the Hospice Medicare Benefit.

Medicare Hospice Benefit

Under the Medicare Hospice Benefit, Medicare pays for hospice care normally on a daily basis, except for Continuous Care which is reimbursed on an hourly basis. These are referred to as hospice “levels of care.” There is a set rate for each day of the patient's election of hospice care. There are four dominant levels of payment that may be made, depending on the type of care provided on a given day. The daily rates (normally referred to as the Per Diem) are set on a regional basis and are adjusted for the costs of providing care in that area. The cost variations generally relate to the cost of labor. Hospice services are covered under Medicare Part A.

Routine Home Care (RHC) - This daily rate covers care provided to patients who are at home (defined as the patient's own home or wherever the patient considers home, such as a nursing home). The Routine Home Care Per Diem is by far the most frequent level of care. At least 80% of the total (aggregate) days of care provided by a hospice program must be at home. The average hospice receives $135 per day for RHC.

General In-patient Care (GIP) - This daily rate pays for in-patient care when necessary for pain control or acute or chronic symptom management that cannot feasibly be provided in other settings. Hospice programs are responsible for providing general in-patient care directly or for making arrangements with an appropriate provider (a hospital, a nursing home with 24 hour RN coverage, or another hospice provider with in-patient capability). The average hospice receives $518 per day for GIP.

In-patient Respite Care - This care must be provided by the hospice program in an approved facility (hospital or nursing home with 24 hour RN coverage) when necessary to provide a respite to family members or others caring for the hospice patient. Respite cannot be provided for more than 5 consecutive days. Though this is part of the Medicare Hospice Benefit, it is, by far, the least utilized as most hospices only receive approximately $10 extra per day to cover normal hospice costs AND cover the costs for the facility which the patient temporarily stays. If there is a flaw in the hospice Medicare Benefit, this is it. It just doesn’t work or make sense. The average hospice receives $140 per day for Respite Care.

Continuous Home Care - This is an hourly rate rather than a daily rate and covers care at home during a period of crisis. At least 8 hours of Continuous Care must be provided in a 24





All Staff Workbook hour period that begins at midnight and ends at midnight. At least 50% of the care must be provided by nursing (RNs or LPNs) with an RN supervising. The other 49% MAY be provided by Hospice Aides. If a hospice fails to meet any of these criteria, a Routine Home Care rate is billed.

These are the 4 fundamental levels of care and ways that hospices get paid. However, there are other forms of payments from Medicare beyond these. These pertain to payments for various physician services.

Physician Services

Hospices have always had physician involvement. However, physician services are becoming more and more common and extensive in hospice. Therefore, it is good to have a basic understanding of hospice physician reimbursement.

Medical Director Services - Physician services related to oversight of the plan of care by the hospice program's medical director are covered in the daily rates paid to the hospice program. There is no additional reimbursement for hospice medical directors and this oversight function.

Attending Physician Services – Attending physician services for clinical care to the patient and family are not covered under the Hospice Benefit. These services can be billed directly to Medicare Part B as normal. All other hospice services are paid through Medicare Part A.

Consulting Physician Services – If a physician specializing in an area of medical practice is needed, these physician services are called consulting physician service. Since the hospice is being paid to professionally manage the care of the patients, Medicare dictates that the payment for such services comes through the hospice. In other words, the hospice bills Medicare and then pays the consulting physician based on its contract with the physician. There should be a contract between the consulting physician and the hospice regarding the terms of payment. This “pass-through” from the hospice is a form of control for the hospice to oversee the care.

Hospice Physician Visits – Visits by a hospice physician are paid in addition to the normal daily rates. It is common, especially for hospice with In-patient Units, to bill for physician visits. However, an increasing number of hospices are billing for physician services provided in the home setting. Normally, patients at a GIP level of care are visited daily by a physician.

The Reimbursement is Expected to Cover ALL Costs





All Staff Workbook It is important to understand that the Medicare Hospice Benefit is expected to cover ALL costs associated with providing hospice care including nursing, hospice aides, social work, spiritual care, bereavement services, volunteer services, and all medications, durable medical equipment, medical supplies, mileage, therapies, as well as other patient-related items in addition to ALL overhead such as rent, administration, utilities, computer expense, et cetera. The hospice is paid these set rates (normally referred to as Per Diems) regardless of the costs associated with providing hospice care. Even if it costs a hospice $10,000 a day to provide services for a patient, the hospice will only receive the rate set for the level of care. Hospice is a true managed care system. Therefore, a hospice must manage its reimbursement well.

Residential Care in Hospice

Though not part of the Hospice Medicare Benefit, many hospices engage in the practice of providing “residential care” in hospice facilities. Residential care is where a hospice patient “resides” or lives in a hospice facility. Hospice is paid the normal daily routine care per diem and also charges the patient/family or other sources for the room and board (R&B) services. The amounts hospices charge to “residents” in hospice facilities ranges widely from $100 to $400 per day. Many hospices have great difficulty collecting R&B charges. Hospices that are successful in their R&B collection effort are deliberate, explain the charges clearly before a patient is admitted to the hospice facility and often collect 2-3 months payment in advance.





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What is Palliative Care?Palliative Care (pronounced PAH-LEE-UH-TIVE). For the last thirty years, palliative care has been provided by hospice programs for dying Americans. Currently these programs serve more than 1 million patients and their families each year. Now this very same approach to care is being used by other health care providers, including teams in hospitals, nursing facilities and home health agencies, in combination with other medical treatments to help people who are seriously ill.

To palliate means to make comfortable by treating a person’s symptoms from an illness. Hospice and palliative care both focus on helping a person be comfortable by addressing issues causing physical or emotional pain, or suffering. Hospice and other palliative care providers have teams of people working together to provide care. The goals of palliative care are to improve the quality of a seriously ill person’s life and to support that person and their family during and after treatment.

Hospice focuses on relieving symptoms and supporting patients with a life expectancy of months, not years, and their families. However, palliative care may be given at any time during a patient’s illness, from diagnosis on.

Palliative Care Programs can take a variety of shapes in hospice including any combination of those listed below and more! Palliative Care is much less defined than hospice at this time.

Physician and Advance Practice Nurses/Nurse Practitioner Hospital-based Nursing Home-based Centralized Office – where patient come to a single place for palliative care

CAP – Aggregate and In-patient Medicare has two forms of capitation for hospices: The In-patient CAP, which does not allow total GIP patient-days to exceed 20% of total Medicare days. I have personally never witnessed a hospice exceed the In-patient CAP. The highest I have seen a hospice run is about 19%. The other is the Aggregate CAP, which is the maximum amount of cash a hospice can receive from Medicare during a period that runs from November 1st to October 31st. The Aggregate CAP is computed by multiplying the number of Medicare admissions from September 28th to September 27th by an annual rate set by CMS, currently $23,014. If a hospice exceeds either of these CAPs, the “excess” monies must be returned to your FI (Medicare Fiscal Intermediary – the folks that send your Medicare money). Usually, payment plans can be set up if you don’t have the cash, but it is not pretty in any case. ALL Medicare





All Staff Workbook payments to the hospice are counted including Routine, General In-patient, Respite, Continuous Care, Consulting Physician, Medical Director payments, et cetera.

Too many hospices take pride in saying “we are far under CAP ”. Well, the truth of the matter is that this is not a good thing. It means that we are providing perhaps “brink of death” care and that we haven’t gotten the message out that the best hospice care is when we have patients for longer periods of time. Hospices need to be managing “to CAP” and not away from it. Whoever thought of the idea of an “Aggregate CAP” should be commended. While there are certain entities that want to complain about the CAP (usually folks who have gone over) and call it “unfair”, it is, in the MVI mind, a good thing. However, it should be managed! Here are some questions to ask yourself: Is our hospice uneasy about keeping long living patients? Do we understand that to make the fiscal model work, we must have long living patients to

off-set short living patients? Could our documentation education process be improved so that the documentation

would support keeping more patients on service? (Think of Clinical Educators as revenue makers!)

Are we training the medical community to refer late by the types of patients we admit or don’t admit?

When does CAP hit? Is it a version of Hospice Hell?

Hospices exceed the aggregate CAP when times are GOOD. The financial statements couldn’t be better. Census is at an all-time high. Everybody is feeling great! Then the LETTER arrives stating that your hospice has exceeded the aggregate CAP and that you need to return $XXXXX to the FI. Not only do you owe for the last CAP year, you are already into the NEXT CAP year…and unless you take some immediate action, you will owe even more! Then, if the FI is in the mood and feels that their CAP calculation methodology was incorrect in prior years, they might even dig back into past years to see if you exceeded the aggregate CAP according to the new calculations. I would say that this definitely lends itself to a flavor of Hospice Hell.

Perhaps we should look at what leads to CAP issues, not as an admissions problem, but a discharge problem. Hospices need to admit patients that meet criteria, but determining “when their time will come” is far from an exact science. Therefore, it is better to err on the side of admitting the “grays”, gaining a firsthand experience and history with the patient, and then discharging if necessary according to the facts that you know. If the discharge process or utilization review is flawed, then you could face a CAP problem.





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Dealing with the Medicare Aggregate CAP

If you’ve hit the Aggregate CAP, here are some suggestions: Pump up Admissions. The closer you get to Sept 27th the MORE valuable each

admission becomes. Get an admission on September 27th and you redeem $23,014 in CAP money. Hire more marketers. If they get two admissions, they’ve almost paid for themselves. Goal: MAXIMIZE admissions!

Chances are you have a disproportionate percentage of patients who are not declining and may need to be discharged. The closer you get to Nov 1st the LESS valuable it is to discharge patients. Earlier discharges are better. You must always do the right thing. Palliative Care is a good backdoor.

Open an IP Unit! It would have to be a quick deal, but theoretically it would work. IP units draw short-living patients. Optionally, run more IP in qualified facilities. This would be your best bet in an excess CAP situation.

It is important that we recognize that CAP is calculated on “cash” payments from the Medicare System. It is NOT based on the accrual basis or on your Accounts Receivable.

“As far as CAP is concerned, all Medicare admissions are good. It doesn’t matter if we are only able to serve the patient for 1 day, 1 hour or 1 minute! Each admission frees

up about $23,014 of CAP headroom, plus it should be part of our mission.” AR

Here is an illustration of the Medicare CAP calculations.

• Aggregate– MCR Admissions X CAP Rate– Example: 200 X 23,014 = $4,602,800

• In-patient– Less than 20% of MCR Patient-Days can be at the GIP Level of Care– Example: If MCR Patient-Days total 20,000 in a year, then only 4,000 days can

be at the GIP Level of Care

The Aggregate CAP is Good, but there is a Flaw

I think that the hospice CAPs are good. They help to protect the industry from abuse. To remove the CAP would be a mistake. If there is a flaw in the Aggregate CAP, it is that the CAP amount is not indexed by service area. A hospice in California being paid a routine rate of $240 a day will use up its CAP more quickly than someone in Corn County, Iowa, who is





All Staff Workbook getting $112 per day. This could easily be fixed by indexing the Aggregate CAP amount in the same way that CMS sets the other level of care rates.

Monitoring Medicare CAPs

I rarely see a hospice with an In-patient CAP problem. But I have seen many hospices have problems with the Aggregate CAP. The Aggregate CAP can creep up on an unsuspecting hospice and turn “what appeared to be a great year” into a “nightmare year.” A healthy hospice has a “residual” of long-living patients. They are needed to off-set short-living patients. However, this residual “build-up” of patients is what catches hospices off guard. And then one day, you exceed the CAP. The key is to deal with it early or even better, remedy the situation BEFORE you have an Aggregate CAP problem. Here is how to monitor the CAP: An indication that you may be close to the Aggregate CAP is to calculate the Median LOS

on LIVING patients…NOT terminated patients. If your hospice is close to 170 days, you’re very close to trouble. ALOS based on terminated patients is of no value here because the patients driving the CAP are not included in the calculation! Think about it.

Calculate and forecast your CAP amount. Multiply the number of Medicare admissions by the rate. You can also prorate the rate when doing an interim calculation. This is the “earn as you go” method. It works. It is simple and effective. NOTE: To be conservative in your estimate, EXCLUDE all patients that have previously elected the hospice Medicare benefit. Even if you are going to receive a pro rata share of the CAP amount for a patient, it is better to err on the side of conservatism.

In your patient management system, look for a CAP report. All scripts used to have one as well as other major systems.





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The Role of Financial Reserves in a HospiceReserves play an important role in a hospice. Reserves are a symbol of strength and capability. They decrease stress and anxiety. They provide a physiological as well as a very real material advantage. Hospice leaders need to have a clear idea of the value of having financial reserves. They are part of the Vision of a World Class organization.

How much does a hospice need? These are important questions. A hospice needs enough money to fund its Vision. This may sound like an easy, pat answer, but it is the truth. Some hospices need $100,000,000 in the bank. Some need $10,000,000. Many need less. A hospice that has cash in the bank can rapidly move on projects such as in-patient units, new programs, drive competition into the ground, et cetera. Not having cash reserves may eventually mean the end for many hospices.

Reasons to be Profitable and Build Reserves

This section is repeated in many of the MVI materials because it is so important. The reason a hospice needs to be profitable and thus build reserves is simply the fact that an organization cannot survive in the long run without reserves. An event or combination of events WILL occur in the future of every organization that will test its capabilities. No hospice is immune to these challenges. Money makes things easier.

We also need to have top-of-mind awareness of the reasons why we need reserves so that we respond to daily decisions with balance. This is part of the culture shift. Every staff member should be aware of WHY being profitable and building reserves is critical. Here is our stock list of reasons:

Can your hospice outlast changes in Medicare? Changes in Medicare can last a long time, even decades before relief comes after over-reactions by those in control. A hospice needs to have reserves to outlast these seasons.

Can your hospice outlast ADRs (Additional Data Requests) and focus edits? Intense FI (Fiscal Intermediaries) focus edits and other revenue withholding mechanisms can severely disrupt Medicare payments for the better part of a year when combined with sequential billing.

CMS is actively seeking to reduce Medicare payments. Reviews of cost reports, ADRs, CR5567, phase-out of the budget neutrality act all point to an effort to reduce reimbursement. If history means anything, in the future our rates will be decreased.

There are ever-increasing competitive pressures in hospice. At present, there are more hospices or “hospice-like” services.





All Staff Workbook Costs are increasing. Consider DME: It is an area that is increasing rapidly due to a

limited number of vendors and higher operating costs like the cost of gas. Nursing costs will continue to increase due to the nursing shortage.

A hospice needs funds to weather PR (Public Relations) disasters. If your hospice is accused of killing a person, I guarantee that you will have a few “dry” years in the community support department. We have seen large hospices cease to exist in a matter of months after major PR disasters.

A hospice needs funds to take advantage of opportunities that arise. This could be the purchase of a nursing home that could be converted into an In-patient Unit or to acquire a hospice in a contiguous service area. Money in your pocket is a great thing.

A hospice needs reserves for “management surprises.” What if accounting has done a poor job of reporting Pass-Through expenses? Pass-Throughs can be substantial amounts…even millions. We have witnessed cash-short hospices merge or cease business over Pass-Though surprises.

Lawsuits are becoming more of a problem in hospice. They can be VERY expensive and also lead to a PR disaster if mishandled.

Occasionally, a hospice can have a “super duper” high cost patient. If you have money salted away, you can weather the situation. If not, you may be looking for a partner to merge with.

Hospices need money to possibly undercut competitor margins by introduction of additional products and services.

Hospices need funds to take care of indigent patients. This has been the classic response…and it is as true today as ever.

Some hospices are one patient away from bankruptcy. It is just good common sense to build reserves. It is a “nice feeling” to be able to afford to care for high cost and indigent

patients or to build an In-patient Unit and say, “No problemo!” It just feels GOOD!





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The Medicare Threat

CMS and Medicare Fiscal Intermediaries can place incredible burdens on a hospice. They can shut down a hospice overnight or choke it to death by truncating cash flow. Here are examples of how CMS and Medicare FIs can put a hurt on a hospice:

Medicare ADRs (Additional Data Requests) – Tons of time and effort go into sending documentation to the FI to review. A hospice will not get paid for these claims until the FI has made a determination in favor of the hospice. If a negative determination is made, the hospice must appeal the case to an Administrative Law Judge (ALJ). In my experience, most ALJs rule in favor of the hospice. So, it is worth fighting declined billing.

Getting a Medicare FI Ticked Off – If you get on the bad side of a Medicare FI, watch out! I don’t care how big your hospice is or how long you have been in business -- don’t do it. They can crush you. If you are having problems with an FI, the best thing you can do is hop on a plane and see them. Tell them how great they are and how stupid you are. “Teach me how to do it right,” you should say. It is all about the relationship.

GIP and Continuous Care are being scrutinized for abuse. Post-Payment Edits – These are requests for immediate recoupment of funds. This is

where an FI demands immediate payment of long-living patients. They are usually large, from $100,000 to $300,000. This can hurt the hospice that is short on cash. You have 10 days to remit payment.





All Staff Workbook Medicare is reducing rates. It is inevitable considering the nature of government to overspend and sometimes make poor decisions with unintended consequences. Here are some ideas to consider:

1. It has happened historically (look at the other modes of healthcare).2. The government will not allow any mode of healthcare to make too much

money.3. The tendency of government is to introduce more regulation for control

purposes. There is an inherent loss of innovation (freedom) of “how” hospice care is delivered with more regulation.

What Will Happen When Medicare Cuts Occur?

When Medicare decreases hospice reimbursement and rates, at least 3 things will happen:

There will be a decrease in the number of new hospices Financially weak hospices will fold or seek merger partners Financially competent hospices will adjust models, keep on trucking and see it as a

huge opportunity

Avoid being Dependent upon Community Support

Hospices that have not built adequate reserves and that are reliant upon community support are ONE public relations disaster away from being bankrupt. If a very negative accusation, whether true or untrue, is disseminated in a community, community support will drastically diminish and even “dry-up”. In these cases, it is almost impossible for a hospice to change its mode of operations and culture fast enough to outlast the situation. This is one of the primary reasons why it is so critical for a hospice to learn to operate with only Medicare, Medicaid, Commercial Insurance, and Self-Pay revenues.





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Learning the Business of Hospice

The Three Primary Categories of Cost

There are three major categories of cost in hospice. We might think of these as the “overall” or comprehensive view. They are:

Direct Labor Patient-Related Indirect Costs

Here are some definitions for each:

Direct Labor - Labor expense that is directly involved with the provision of care such as RNs, LPNs, Hospice Aides, SWs, Chaplains and visiting physicians. It does NOT include supervisors or managers even if they perform occasional visits. Bereavement, Volunteer, Triage, Admissions and On-Call areas are also considered Direct Labor. The staff of these areas provides direct care. All other labor costs are considered Indirect Labor.

Patient-Related Costs – Costs such as Medications, Medical Supplies, Therapies, DME, et cetera. These are sometimes referred to as Ancillary Costs. Other Patient-Related costs are: Ambulance, Bio-Hazardous Waste, Clinical Mobile Phones, Clinical Pagers, Lab, Outpatient, Mileage, et cetera.

Indirect Costs – Costs other than Direct Labor and Patient-Related costs. They can be categorized into three sub-categories:

o Indirect Labor – All labor that is NOT Direct Labor: CEO, CFO, Clinical Managers, Medical Director, QI, Education, Medical Records, HR, Finance, IT, Housekeeping, Maintenance, et cetera.

o Facility-Related – Costs related to your building or structure from which your organization coordinates or provides services. Included are: Rent, Utilities, Building Maintenance, Building Depreciation, Property Taxes, Building Loan Interest, et cetera.

o Operating Expense – This category of Indirect Costs include all costs that are not Facility-Related or Indirect Labor. These costs include: Answering Service, Bank Service Charges, Audit Costs, Office Supplies, Printing, Postage, Telephone, Marketing Supplies, Continuing Education, Dues and Subscriptions, Computer Support, Computer Expense, et cetera.





All Staff Workbook Each of these areas can be denominated by a number. For Model purposes, we use a percentage of Net Patient Revenue (NPR). These percentage amounts should be clearly established and compared to actual performance, at least on a monthly basis. They might be as follows:

Cost Category Example of Your Model

MVI Suggested Model

Average Hospice

Direct Labor 40% 38% 42%Patient-Related 16% 18% 19%Indirect Costs 28% 30% 35%

The Use of Net Patient Revenue (NPR)

MVI encourages the use of Percentages of Net Patient Revenue rather than Patient-Day costs for hospice financial measurement. This deviates from traditional hospice practice and the explanation will follow. However, first we must define Net Patient Revenue.

Net Patient Revenue – Revenue earned for the provision of services to patients from sources such as Medicare, Medicaid, Commercial Insurance and Private Pay. It is less contractual allowances and bad debt. It does NOT include pass-through income such as: Nursing Home Room and Board, Contracted IP, Contracted Respite or Consulting Physician Services. It also DOES NOT include Community Support or Fundraising. It is very important that you have a clear understanding of this term because most comparison data is based on a percentage of Net Patient Revenue (NPR).

An Example of How to Compute NPR - Net Patient Revenue





Medication costs are $25,000 for the month. Net Patient Revenue is $300,000.

To compute Medication costs as a Percentage of Net Patient Revenue, you would divide $25,000 by $300,000.

$25,000 divided by $300,000 = .083 (rounded)

Convert .083 to a percentage (multiply by 100) and you get 8.3%.

Medication costs in this example are 8.3% of Net Patient Revenue.

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Why should have hospice use Percentages of Net Patient Revenue rather than Patient-Day costs for hospice financial measurement?

• Comparability – Percentages are comparable with other hospice programs to help us gain perspective (the difference between Professional versus Amateur hospice leader). Patient-Day amounts are OK for a few areas, like Patient-Related. They fall apart when comparing differing areas of the country, especially anything that relates to salaries and wages. Salaries and wages can vary widely throughout the country. These differences, however, are often off-set by reimbursement that takes these labor factors into account such as CBSA codes for Medicare. Thus, the Percentages of Net Patient Revenue would be more similar while Patient-Day amounts would vary greatly.

• Creation of a Model – Percentages are better suited for the creation of a Model. Percentages are “scalable,” meaning they can be used by any size of hospice. In addition, when rate changes occur, percentages easily translate to operational measures.

• People Understand Percentages – Most people can conceptualize percentages pretty well. If everyone knows that the pie is 90% (10% set aside for profit), they can understand that if something is increased something else has to decrease.

We are not saying that Patient-Day measurement is wrong or that it should not be used. It works very well with Patient-Related costs. However, recognize its short-comings whenever there is a labor component.





MVI INSIGHT:

The superior hospice would not simply emulate a model based on the “averages” of other hospices. It is much better to create your own based on what would truly benefit patients and families in your respective service area.

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Classification of CostsClassificationItem

Patient Revenue

Direct

Labor

Patient-Related

Pass-ThroughRevenue

Pass-Through Expens

e

Indirect Labor

Operational Expense

Facility-Related

Other Program

Dev

Example: Medicaid Routine Revenue

X

1. RN Salaries X2. CNA Salaries X3. Medications X4. DME X5. Therapies X6. Medicare

Routine RevenueX

7. Medicaid Room & Board Revenue

X

8. Contracted Medicare IP Revenue

X

9. CEO X10. Finance Salaries X11. Rent X12. Development

SalariesX

13. Pediatrics Salaries

X

14. Admissions X15. Director of

NursingX

16. Medical Director (oversight function)

X

17. Physician (performs visits)

X

18. Office Supplies X19. HR X20. Clinical Team

LeaderX

21. Computer Expense

X

22. Telephone X23. Continuing

EducationX

24. Education Salaries

X

25. QI/PI/Compliance

X

26. Utilities X27. Nursing Home

Room & Board Expense

X

28. Community X





All Staff Workbook ClassificationItem

Patient Revenue

Direct

Labor

Patient-Related

Pass-ThroughRevenue

Pass-Through Expens

e

Indirect Labor

Operational Expense

Facility-Related

Other Program

Dev

Bereavement

Understanding Hospice Measurements, Key Concepts & Definitions Patient Days = ADC multiplied by the number of days in the period, OR the

aggregate number of days patients were on hospice services for a period of time. Patient-Days are the most common hospice financial measurements. They are relatively easy to compute and are accepted in other forms of healthcare such as hospitals and nursing homes. Patient-Day measurements are inferior to Percentage of Net Patient Revenue.

ADC or Average Daily Census = Total patient days in a period/number of period days. This is the standard measurement of hospice size.

FTE or Full-Time Equivalent = Working hours in a period/the number of FTE hours. Normally, the number of annual hours used to compute an FTE is 2080. On a monthly basis, the average is 173 hours. On a weekly basis, it is normally 40 hours. If an employee worked 1040 hours, they would be considered half an FTE or 0.5. An FTE of 1.0 means that the person is equivalent to a full-time worker, while an FTE of 0.5 signals that the worker is only half-time.

Average Length of Stay (Terminated Patients) = Total patient-days for terminated patients/The number of terminated patients. Average Length of Stay (ALOS), like most measurements, has its flaws. ALOS should be looked at suspiciously. First, does the measurement number include the In-patient Unit? This will skew overall hospice numbers downward. Also, low ALOS in the In-patient Unit isn’t a bad thing. You want EVERY patient -- whether they live one minute or one hour for CAP purposes. However, you want Hospice Homecare ALOS as high as possible without exceeding CAP. Second, ALOS, as most hospices compute it, only counts terminated patients via death or discharge. Therefore, some patients will NEVER be included in the calculation! It can be a dangerous measurement to rely on and it has misguided many hospices into millions of dollars in CAP paybacks.

Median Length of Stay (Living Patients) - This measurement has importance when CAP is a factor. It provides a truer picture of the overall mix of patients. It is NOT in the standard reporting of most patient management systems. The best way to obtain this





All Staff Workbook measurement is via an export of a list of your current patients on census with each patient’s respective SOC (Start-of-Care) date into Excel. Subtract the current date (today) from the SOC date in a separate column. Then use Excel’s =Median(cell range) formula to calculate your Median LOS.

Number of Visits Per Week – This is the count of the number of visits per clinician per

week (see the chart for goals). This practice provides a sense of respect for the professionalism for each discipline and allows clinicians to “take as long as needed to do a World Class visit.” However, it also should be stressed that the minimum expectation is the minimum. If the minimum is 20 visits a week for an RN, then 19 is not acceptable on a routine basis.

Number of Admissions Per Week – This is the count of the number of admissions per Marketing FTE per week. Weekly measurement has become the Best Practice for monitoring effectiveness. All admissions (not referrals) from the assigned “paper routes”, accounts, or territories are credited to the Marketing person. A top hospice marketer will produce 8-12 admissions per week from their assigned territories or accounts. Five would be a minimum.

Number of Visits by Discipline per 8-Hour Day = Total number of visits/(Total time worked/8). This is the best way to judge clinical productivity on a daily basis, in our opinion, as it converts all time worked into an 8-hour day. The focus should be on WEEKLY visits. However, to determine what is needed on a weekly basis, a daily amount is often needed. Avoid communicating productivity in daily terms.

Visit-Hours by Discipline per 8-Hour Day = Total number of visit-hours/(Total time worked/8). This measurement provides the best measurement of visit-hours of clinical staff. This measurement helps productivity and is critical if a hospice wants to understand costs by patient, diagnosis, payer, referral source, physician, clinician, et cetera.

Computed Caseloads = ADC/(Salaries/Average Hourly Rate/FTE Hours) NOTE: Normally an FTE is 2080 hours annually or approximately 173 per month. Salaries would be for a specific discipline such as RNs, CNAs, SW, et

cetera. This measurement cuts through “perceived” or reported caseloads which tend to be exaggerated by 2 to 3 on average. It provides a “real” caseload per FTE.

Days in Accounts Receivable = Accounts Receivable/Annual Revenue X 365 or Period Days/AR Turnover Rate which is Net Patient Revenue divided by Patient Accounts Receivable. This is a measure that most managers and leaders should be at least familiar with. It provides the average number of days it takes to collect a bill.

Facility Mix = Total number of patients in nursing homes and assisted living communities/Total number of hospice patients. This is a key measurement that can





All Staff Workbook have a huge bearing on a hospice’s profitability. It measures the percentage of patients residing in nursing homes and assisted living communities.

Patient Mix over 365 Days = Number of patients that have been on hospice service for more than a year/Total number of patients. An often overlooked measure that is vital to financial success. An adequate number of patients must live for extended periods of time to off-set short-living patients.

Revenue Per Payroll Dollar = Net Patient Revenue/Total Payroll Dollars. Since payroll is the primary key to mastery of hospice finance, then the relationship between revenue and payroll costs is significant.

Death Service Percentage = Total Program Deaths/Total Deaths in Service Area. This is the true indicator of hospice penetration.

Admission/Inquiry Percentage = Total Number of Admissions/Total Number of Inquiries. Notice this is NOT Referral/Admissions. Many hospices live in the world of excuse and “sanitize” their conversion numbers. All inquiries should be counted.

Same Day Visit Percentage = Total number of admission or informational visits in a day/Total number of Inquiries in that same day. This is an important measurement that provides some indication of the ability to “sell” services. The goal of Intake is to get same day visits.

Pass-Through - A Pass-Through is where the hospice bills on behalf of another entity that cannot bill for itself, due to government regulations. The hospice then reimburses the contracted entity (hospital, nursing home, consulting physician) based on the contract between them. There are four major types of Pass-Throughs. They are:

o Nursing Home Room & Boardo General In-patient in Contracted Hospitalso Consulting Physician Services.o Respite Care in Contracted Facilities

What is the best practice discovered for treating Pass-Throughs and why?

Pass-Throughs are controlled by grouping them in the Patient-Related section of the Chart of Accounts. An account is created for each Pass-Through revenue and expense so they can be analyzed for specific problems. The “net” amount is displayed on the Statement of Income and should be mathematically explainable. If Pass-Through revenue is used in calculation of Net Patient Revenue, it has historically caused hospices to falsely believe their financial





All Staff Workbook performance is better than it actually is, as the off-setting expenses have not been properly accrued.

It can also materially diminish comparability with other hospices based on Net Patient-Revenue, as the inclusion of Pass-Throughs inflates revenue. Grouping the revenue and expenses provides an easy and practical “control” for users of financial statements. The wording also creates questions from Board Members and others that allow an educational opportunity. Not using this type of control has resulted in numerous hospices closing their doors as they operate with artificially inflated bottom-lines.

Development Return Ratio = Total revenue from community support and fundraising/Total expense for the Development Function. This measurement is basically a ROI (Return on Investment) calculation. It measures the number of dollars returned from each dollar invested in the attempt to garner community funds.

Contribution Margin - Contribution Margin is computed by subtracting Direct Expenses from Direct Revenue. It is used to measure the performance of revenue producing hospice segments like homecare teams and in-patient units. The “contribution” is the amount of excess from direct operational costs left to pay for Indirect Costs and provide for some level of profit. 36-40% is solid Contribution Margin for a hospice team.

Measurement Average Acceptable Excellenta.

Average Length of Stay (Terminated) 63 90 ??

b.

Median Length of Stay (Living) 120 160

c. Days in Accounts Receivable 46 45 42d.

Revenue Per Payroll Dollar 1.50 2.00 2.50

e.

Facility Mix 36% 35% 50%

f. Patient Mix over 365 Days 10% 15%g.

Death Service Percentage 36% 40% 50%

h.

Admission/Inquiry Percentage 65% 75% 85%

i. Same Day Visit Percentage 100%j. Development Ratio 3:1 4:1 6:1





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Lower Costs Are Not Always BetterWhen reviewing the Percentage of Net Patient Revenue financial measurements in the following sections, please understand that we tend to look at lower costs as better. However, this is not always the case. In fact, many times it is better for some costs to INCREASE. The point is that there is a need to lower costs in some areas and increase costs in others to create a World Class hospice. If you could lower ALL costs and still provide World Class care, it would be great. However, that is usually not the case. Example: If you believe that increased CNA services are World Class, then this cost would increase. If you believe that Open Access involves increased Therapies expense, then you would plan on this element of cost increasing. However, at the end of the day, the bottom-line needs to be producing at least 14%.

The War of Single Percentage PointsYou may not think a single percentage point variance is a big deal. But each percentage point is a big deal. As we look at profitability in the hospice world, it often boils down to single percentage points. So many times, a hospice is doing well financially, but the operational profit is not due to one area of excellence. Rather, it is a percentage here and a percentage there and the CUMULATIVE effect is surprising. Now, this may be fine and all…but if a single area or category of cost goes out of control, the entire positive residual may be in jeopardy. If your profit is due to a percentage point here and a percentage point there…and you know it, then you know just what a balancing act you are performing!

“Building reserves is a war of single percentage points.” AR

Many people think that profitability is about having great cost controls in one or multiple areas of a hospice. That is not usually the case. It is more about having good costs in MOST areas…and it comes down to single percentage improvements. It is easy to self-justify if we are over industry averages in a cost category and rationalize that it is not a big deal. But it is. It is this attitude that robs us from performing to our full capabilities.

One thing that you should realize is “what” is possible. A hospice can achieve a 20% Operational Net Income WITHOUT compromising quality.

“We must realize that most hospices waste tremendous amounts of money.” AR

You Can’t Operate Your Hospice Based on Averages





All Staff Workbook In the following charts of hospice costs on a Percentage of Net Patient Revenue, you will notice that the total of averages does not match the totals for categories such as Direct Labor, Patient-Related or Indirect Costs. All data points in our benchmarking systems are independent calculations, including totals for categories. In our validation processes, we EXCLUDE elements that we believe are suspect. However, just because a data point is excluded does not mean that the TOTAL is invalid. It may mean that data points may not be segregated and therefore are lumped together so that individual data points are not accurate, but the total is. Most hospices have a combination of areas that are higher or lower than the averages. It is the mix that is important. Realize that you must have some areas that are below the reported averages to be financially successful.

Getting Comfortable with MeasurementIt is important to recognize that measurement is critical in the implementation of the Model. The old saying, “What gets measured gets done,” is true. But more importantly, measurement provides a basis to judge our performance.

There are several ideas surrounding measurement that are worth considering:

Hospices that measure outperform those that don’t. MVI has been tracking hospice performance for more than a decade and this fact is inescapable.

All measurement is flawed. Accept that all measurement is flawed and do not reject measures and data just because you perceive a degree of inaccuracy or flaw. Measure the best you can with what you have NOW. In most situations, a frequent measurement of flawed data will still yield meaningful and useful perspective of performance. Chances are that your frequent measurements will be “consistently” flawed which makes it comparable. By all means, seek to improve data collection and processing efforts to increase accuracy. But NEVER stop measuring important things just because the data has flaws.

Measure what is important. It is not important that we measure everything. It is important that we measure the things that truly help us get to World Class. Our computerized systems can give us so much information that we can be overwhelmed. Being overwhelmed distracts us and diminishes our FOCUS. Laser beam focus is what we need regarding the important things. We don’t need more distractions. We want to be able to put our limited energy into the things that will really have impact. So what is really important? What should we measure?

Give people measurements as often as possible. Some people want to “shoot” the data saying that it is not “accurate” enough or “reliable” enough. This is a cop-out. (A weenie-ism?) All measurement and quantification has its flaws. Measurement is a tool





All Staff Workbook to help us positively change behavior. If data is measured frequently it becomes valid and reliable. If things are measured frequently, trends are created that are meaningful.

Measurement tells us that “we” are important. Believe it or not, people want to be measured. Individuals WANT to know on a frequent basis how well they are doing. They even want to be able to access their measures themselves if possible. To NOT be measured gives people a sense of insignificance and can create apathy. If a hospice wants to create a more satisfying work environment, give everyone the chance to be measured.

Measurement communicates to the organization what is important. This point is too often overlooked. If something is being monitored, especially with an expectation attached, people within the organization tend to make special effort to conform or reach the measurement. Measurements provide very clear messages regarding what is important.

Give people their scores. Don’t hide individual or group scores. Make them available so that everyone can see what is happening. You want EVERYBODY to be interested in what we are trying to do and how we are doing. This could be team productivity, compliance, the financial model, et cetera. Post the scores. This is about making the quantified performance public. There is no hidden agenda at our hospice. Posting measurement puts everyone on the same page.

When clear goals are combined with consistent measurement and aligned behaviors, results will come.

“You’re Just Focusing On the Numbers”

This is an attitude that is not acceptable at this hospice. Many traditional hospice people feel the ideas of “numbers” and measurements don’t align with the goals and ideals of hospice. In their hospice experience, the idea of measurement was probably not explained well. Measurement and quantification are simply indicators of the care that we provide. The next time you hear an ill-informed clinician or hospice worker say, “You’re just focusing on the numbers,” reply, “That is not true. I am intensely passionate about the care that we are providing and am interested in the numbers because they tell me how we are doing.”

All quantification and measurement is flawed in some way, but as long as we are measuring important

elements, we have something that can tell us how we are doing. So measure with the best you have!





All Staff Workbook The rule is really this:

If measurements are flawed, MEASURE ANYWAY!!!

This Hospice’s ModelAt this hospice, every area works within a Model. There are no exceptions. Everyone is given a simple set of measurements and expectations. It is part of our “way.” These measurements tell us we are important and how we are doing.

Below is an example of a Model Card. A Model Card shows the activity expectations for Nursing, Hospice Aides, SW, Spiritual Care, and Admissions for homecare and nursing homes/assisted living. Model Cards are general GUIDELINES regarding caseload, visit duration and weekly visit expectations.

It is necessary for all hospices that are serious about the business of hospice to establish a common point of reference for measurement and evaluation of performance. Use of EXPECTED AVERAGES or MINIMUMS provides such common measurements. Minimums are absolute. On the other hand, averages provide clinicians more latitude. It should be understood that individual cases or situations would necessitate more or less time and effort. An average takes this into account. An average provides a GUIDELINE.





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Example Model Card

*Some numbers may be rounded up for ease of memorization.





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Caseloads

Caseloads are part of the organization of most hospice clinical disciplines. It is the number of patients or “cases” that a clinician is expected to serve. The caseloads set by this hospice have evolved over time based on the Best Practices of top clinicians. They are achievable and reasonable.

At this hospice, we use a formula called Computed Caseloads to arrive at actual caseloads.

The calculation is as follows:

ADC_______________________________________

(Salaries Total ÷ Average Hourly Discipline Rate ÷ FTE Hours)

The High Caseload Myth

Many people believe that the number of patients assigned to them is the caseload. It is true that these patients are your responsibility. However, from a staffing perspective, it does not paint a true picture of caseloads. There is a perception that caseloads are much higher than they are in many hospices. “Reported” caseloads are almost always inflated as clinicians look at the number of patients on the “boards” and think that is their actual caseload.

What is not figured into most caseload numbers is the “additional” help needed. This help comes in the form of PRN, “float” staff, and (in worst case) agency staff. As a rule of thumb, 2 or 3 patients can be subtracted from the caseloads to arrive at a more accurate figure.

The High Acuity Myth

For individuals that have been in hospice for a long time, it is often stated that patient acuity is increasing. However, overall, this is not the case. Patients are living longer than ever on hospice services. Yes, there are complex cases that require more attention, but this has always been the case.





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Visit Durations

The average duration for RN, LPN, SW, and CNA visits is approximately 75 minutes. PC visits are usually 64 minutes and Admission visits are 120 minutes. Here are some things to keep in mind regarding visits:

Visit time includes direct time, documentation time, and travel time.

Visit time starts when the clinician travels to the patient’s residence and stops when the clinician starts to travel to the next visit.

Understanding the Impact of Longer/Shorter Visits

Do you think averaging 5 minutes less each visit makes a difference? The cumulative impact is significant.

If an RN spends 5 minutes less each visit and the RN performed a minimum of 20 visits a week, the nurse would save 1.66 hours a week for other activities. Over the course of a year that adds up to 86 hours (about 11 days). If you have 20 RNs, it would be 1,720 hours (216 days)! So really, every minute matters.

The question is “Would reducing visit-time by 5 minutes decrease the quality of the visit?” Conversely, “Would increasing the visit-time add quality?” There is a law of diminishing returns the LONGER a visit lasts. A 3-hour visit does not equate to a higher quality visit or a more satisfied patient and family. On the other hand, we don’t want really short visits that make us Home Health Plus. A “flash” visit is probably not a great hospice visit. The key, as always, is balance.

Much of the solution to low productivity comes down to basic ORGANIZATIONAL SKILLS. Most people have not really been taught the organization skills of top performers. Yet, each hospice usually has a few top performers. How do your best clinicians and staff prepare for the week, let alone the day? How do they become masters of “follow-through”?

This is all the more reason for each hospice to model its care through Visit Design work and the creation of a Hospice Menu. Both of these intelligent directions cause a hospice to crystallize its collective thinking into a coherent scope of services and products. These do as much good for the hospice internally as they do for the patients/families and referral sources externally.





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The Patient MixThere are several Model ideas regarding the ‘mix” of patients we serve. Mix refers to characteristics of the types patients we serve. There are many types. Here are a few “mix indicators” that are important relating to the business of hospice.

Facility Mix

Hospices need goals regarding the percentage of patients residing in nursing homes and assisted living. In the example below, the mix is 50/50.

Patients Living Over 365 Days

With approximately 1/3 of our patients dying with the first few weeks after admission, it makes sense that a relatively large percentage of patients live over a year. This “balances” the high cost of short-living patients.

Patient Mix Patients Over 365 Days

LOS 0-3033%

LOS 31-36442%

LOS 365+25%

Documentation is key. Do not be afraid to keep patients on services AS LONG AS THERE IS DOCUMENTATION TO SUPPORT IT.





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Understanding this Hospice’s CostsHospice Homecare In the table below are costs expressed as percentages of Net Patient Revenue (NPR). Average, acceptable and excellent amounts are displayed for each measure.

Cost Category Average Acceptable Excellenta. Total Direct Labor 42% 38% 33%b. Total Patient-Related 19% 18% 16%c. Contribution Margin 39% 44% 51%d. Total Indirect Costs 35% 30% 26%e. Indirect: Salary Costs 23% 19% 17%f. Indirect: Operational Costs 8% 7% 6%g. Indirect: Facility-Related 4% 4% 3%h. Net Operational Income 4% 14% 25%

Direct Labor (Benefits included, 22%)

i. Nursing 17.90% 16% 13%j. CNA 6.29% 6% 6%k. SW 4.76% 4% 3%l. PC 2.06% 2% 1%m.

Physician 1.28% 2% 2%

n. On-Call 3.86% 3% 3%o. Admissions 3.09% 3% 3%p. Bereavement 1.54% 1% 1%q. Volunteer 1.21% 1% 1%r. Other

Direct Labor Subtotal NA* 38 33Primary Patient-Related Items

s. Medical Supplies 1.49% 1.5% 1.25%t. Therapies & Outpatient .77% 3% 2%u. DME 4.55% 4% 3.5%v. Imaging & Diagnostics .07% .06% .15%w. Ambulance .35% .35% .4%x. Pharmacy 6.90% 7% 6%y. Lab .15% .15% .12%z. Mileage 2.99% 3% 2.5%

Pass-Throughs & Other 1% .5%





All Staff Workbook * - Each benchmark average is an independent calculation including totals; their sum rarely equals the sum of the data points in a category. Some numbers may be rounded up for ease of memorization.

Indirect Costs

In the table below are costs expressed as percentages of Net Patient Revenue (NPR). Average, acceptable and excellent amounts are displayed for each measure. Salaries INCLUDE benefits.

Indirect Salaries (Total Organization) Average Acceptable Excellenta. Administrative Salaries ** 6.16% 3.5% 2.5%b. Clinical Management Salaries ** 5.73% 5.5% 5%c. Compliance/QAPI 1.17% 1% 1%d. Education .82% 1% 1%e. Finance Salaries 2.77% 2.25% 2%f. HR 1.14% .75% .5%g. Marketing Salaries 2.29% 2% 2%h. Medical Director 1.47% 1% 1%i. Medical Records Salaries 1.26% 1% 1%j. MIS Salaries 1.20% 1% .5%k. Other .61% 0% .25%

Indirect Salaries Subtotal NA* 19Indirect Operational (Total Organization)

l. Computer Expenses .76% .7% .5%m.

Continuing Education+ .74% 1.3% 2%

n. Dues, Licenses & Subscriptions .34% .3% .3%o. Insurance .68% .65% .6%p. Office Supplies .43% .35% .3%q. Postage/Mailings/Printing .41% .38% .35%r. Telephone .58% .5% .5%s. Marketing .65% 1.5% 1%

* - Each benchmark average is an independent calculation including totals; their sum rarely equals the sum of the data points in a category. Some numbers may be rounded up for ease of memorization.

** - These areas are the most “messy” regarding benchmarking because accounting can lack sufficient breakout. Administration can also be impacted substantially by economies of scale. A hospice’s Administrative Salaries DECREASE with size. Clinical Management Salaries can also decrease with increased census, although sometimes it is less impacted than Administrative Salaries.





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In-patient Units

In the table below are costs expressed as percentages of Net Patient Revenue (NPR) for a typical Hospice In-patient Unit. Average, acceptable and excellent amounts are displayed for each measure.

Cost Category Average Acceptablea. Total Direct Labor (includes all unit staff) 64.93% 60%b. Total Patient-Related 12.72% 12%c. Indirect Costs 29.39% 24%d. Contribution Margin -7.04% 4%

Direct Labor (Benefits included, 22%)

e. Nursing 40.54% 33%f. CNAs 13.25% 15%g. SW 2.42% 2.5%h. Physician 3.86% 4%i. Admissions 2.05% 2%j. BC, VC, PC Other 2.5% 3.5%

Indirect Labor (Benefits included, 22%)

k. Administrative Labor (manager, ward clerk, et cetera.) 14% 12.5%Primary Patient-Related Items

l. Medical Supplies 1.87% 2%m.

Therapies & Outpatient 4.19% 4.15%

n. DME .43% .4%o. Oxygen .46% .4%p. Ambulance 1.04% 1%q. Pharmacy 4.04% 4%r. Linen .96% 1%s. Food 1.75% 1.5%

* - Each benchmark average is an independent calculation including totals; their sum rarely equals the sum of the data points in a category. Some numbers may be rounded up for ease of memorization.

*Some numbers may be rounded up for ease of memorization.

Benefits





All Staff Workbook Benefits are usually 22% of Salaries and Wages.

What is the Model?

The Model is an approach to operating a hospice as an integrated, coherent and coordinated system where all entities and persons involved experience something special and World Class. The Model approach is needed by hospices for many reasons ranging from quality issues to changes in the hospice economic environment. The Model forces a hospice to define itself, measure performance and challenge itself to be an ever-improving organization.

MVI provides the conceptual framework and many of the supporting systems needed to create and sustain the Model at your hospice. This is “the formula or recipe” we recommend based on years of experience assisting, observing, and measuring hospices. This cumulative and collective insight has led us to the belief that the culture of a hospice is the heart of the matter...and it will be the inability of many hospices to change culture that will be their demise in future years. All other things are subservient to the culture as culture shapes the thinking





MVI INSIGHT:

The Model is a big concept to understand and it is covered in many of our other workbooks, audio messages, and films. You will also want to listen to the audio message “The Model,” which is only 14 minutes long. This message will get you up to speed regarding this modern approach to hospice management.

The Model is the intentional design of a hospice culture that simultaneously balances purpose and

financial realities to create a sustainable World Class experience.

All Staff Workbook and behavior of an organization. The definition of the Model displayed above conveys the key concepts.

Why Should a Hospice Create a Model?There are two primary reasons for a hospice to create a Model:

To Provide a Predictable High-Quality Experience. To Operate a Financially Viable Hospice Now and in the Future.

The hospice industry faces two huge problems. We have a Quality Problem and a Financial or Business Problem. The Quality Problem stems from the tremendous variability of care within our industry. This variability exists among different hospices as well as among the clinical staff within each hospice. Patient and families can have a great experience with one clinician and a horrible experience with another. The Financial or Business Problem is that too many hospices are not building sufficient financial reserves by operating sound business models. In fact, most hospices have a severe cultural problem in that many detest the idea that they are real businesses with the same financial realities as other enterprises such as payrolls needing to be met, supporting functions needing to be performed, infrastructures maintained, and money set aside for the financial “surprises” that loom in the Medicare reimbursement system. The hospice world is constantly changing. It seems that change is the nature of the universe. Rather than viewing change as negative, see it as the natural order of things and that change is really the only hope we have for a better tomorrow.

There are many changes and issues in the hospice environment that make the adoption of a sound and intentional Model important.

Proposed Medicare rate cuts Proposed changes to our payment system Increasing governmental scrutiny Ever-increasing competition CAP

All of these major factors point to a need to increase quality and decrease overall costs. It is important to understand that, for most hospices, there must be an “overall” decrease in costs. It is important; however, to understand that many areas of cost will need to be increased to provide a World Class experience. Others will need to be decreased. The key word is always BALANCE.





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The Benefits of Creating and Using Models

There are many reasons for a hospice to adopt a Model. A good Model should include financial and operational measures. What will it do for your hospice? It will dramatically improve everything…internally and externally. Here is a partial list of benefits:

It causes a hospice to think about what it specifically provides or aspires to provide ideally.

It defines the work of the hospice. It can be used to get everyone on the same page. It provides “optimal” measures to compare against actual performance. Either you are

“in” or “out” of the Model . They are flexible and change with fluctuations in patient volume. With a Model, “budgeting” takes hours and not months. It helps a hospice build reserves. It will improve your value proposition to referral sources and consumers. A hospice can grow larger by operating with precise information rather than on gut-

feelings or opinions.

Breaking Down the Barriers

There are “barriers,” silos and invisible divisions in hospice. Aren’t we supposed to be the interdisciplinary, role respective and caring compassionate people that make the world a better place? Hospice needs to be a united team, where everyone is on the same page, moving in the same direction. But that is not what happens in many hospices. There are “us versus them,” “clinical versus administration,” “care versus the dollar” mentalities that separate people. These separatist ideas and attitudes are stupid, childish and have no place





MVI INSIGHT:

We must leave behind the idea that there is a direct correlation between spending and quality. Spending more money in areas does NOT mean that higher quality will result. Giving areas attention WILL increase quality.

All Staff Workbook at this hospice. It is about “us”… all of us, each performing his or her duties with professionalism and grace.

Think about it. This is the way it must be as reimbursement decreases and competition increases. The great thing about competition is that it forces us to grow or become extinct. It forces us to THINK through solutions to our problems.

Do patients and families care about how much we spend?

The reality is that patients and families DON’T CARE how much you spend! They want a RESULT…ZERO pain if possible, affordable services, prompt response to needs, the ability to determine level of service, et cetera. If you spend $25 a patient-day on Medications, does it make the patient happier? They don’t care if you spend $25 a day or $7.50 a day as long as their pain is at the desired level (gone if possible) and they can do the things they want to do! SPENDING MORE DOES NOT TRANSLATE INTO BETTER CARE. It translates into waste.

High cost is not an indicator of quality. There is no direct relationship between cost and quality. Quality has a cost…but it is not excessive in financial terms. The real cost to achieve quality is the cost of effort in establishing and maintaining high expectations. High costs often just equate to sheer waste. This does not mean we should not spend more or increase resources in areas where we feel it is justified and will further our goal of Word Class. We must be wise and pick our areas well.

Can patients and families really judge whether or not they are receiving top hospice care? The sad truth is that in the vast majority of cases, the answer is “no.” Once pain is under control (preferably gone), and “some” visits are being made, most patients and families are





FACT: The hospice of the future will provide superior products and services at

LESS cost than now.

All Staff Workbook satisfied…that is UNTIL they are educated enough to know differently! This is where marketing needs to focus.

Financial Disdain for the Numbers, especially Money

Without oxygen, humans do not survive. Money is the oxygen equivalent in the hospice world. It is important that we value and embrace the idea that it is OK to think about care AND financial balance. On a personal level, if the hospice stopped paying you for your efforts, your life might become a little more uncomfortable. For most people, this would be more than an inconvenience; it would threaten our ability to continue. The same logic applies to our hospice. Here are some great reasons to be profitable and build reserves:

Medicare Reimbursement Cuts Ever-Increasing Competition Public Relations (PR) Disasters Increasing Costs Management Surprises Ability to Take advantage of Opportunities To Care for Indigent Patients To Care for High Cost Patients

The Model Does Not Use Budgets

As a hospice staff member, the Model will represent a departure from traditional management approaches. Two areas of special note are:

The Non-Use of traditional Budgets, and the Use of NPR or Net Patient Revenue as the primary financial measurement

Don’t be alarmed at the thought of not using a budget. These ideas are tried and true and have an almost magical impact on a hospice. Let’s discuss both of these points.

When you think about traditional budgets, they do not make much sense. The process is started about mid-year, they take months to complete, they require huge portions of time and even emotional energy, people submit greatly exaggerated amounts because they know their submissions are going to be wacked by the CFO, and then the organization gets three months into the budget year and patient volume is materially different than projected. Then come the calls for a re-stated budget as the volume variance masks the efficiency variance, so that no one can tell whether the variances are volume-based or efficiency-based. Ultimately, the budget and budget process end up being one of the most non-value adding





All Staff Workbook activities for most organizations. When, by contrast, a hospice could create a Model that could be used perpetually as simply adapt when necessary or advantageous.

With a Model approach, the best attributes of the traditional budget process are kept such as census goals and standards. However with the Model, the period to period financials are flexed according to the census based on standards. This totally eliminates the patient volume variance problem. All that is left is the efficiency variance which is compared to actual hospice performance. If a budget is needed for external use such as governmental reporting or for foundations or other entities, a budget can be produced by projecting the current Model 12 months into the future. Once established, the Model is used perpetually and as is modified as needed. Thus, all of the time and effort is saved. But this is not the big win. The greater benefits come from:

the clear establishment of operational standards for all areas; simplicity of the business model, in that the same measurements can be used for long

periods of time, thus saving communication and educational problems; unification of the hospice; and organizational transparency.

When operational standards are clear, then accountability becomes a matter of monitoring and addressing performance with rewards and consequences. Most hospices have an accountability problem. The Model goes a long way towards solving this problem.

The Model simplifies the hospice business, segregating the various components into logical groupings and classifications so that informed decisions can be made based on precise information. We have found that hospices that do less have higher satisfaction scores than hospices that try to do a lot sloppily.

The Model uses NPR or Net Patient Revenue as the primary unit of financial measurement at the hospice. There are many other measures of course, but NPR is what you will use as a staff member to judge financial performance as part of your fiduciary duty of care.

Your hospice should have or be developing its NPR amounts. As a staff member, you need to become familiar with these amounts. So learn the Model NPR amounts and use them to evaluate your hospice’s performance.

The mathematical equation to calculate NPR is quite simple. We can take any financial revenue or cost amount and divide it by Net Patient Revenue. This amount is only Medicare, Medicaid, Commercial Insurance and Private Pay. It is less Bad Debt and Contractual Allowances. It does not include Pass-Throughs or ANY community support. That is, it does NOT include any donations, memorials, fundraising or any gifts. It is strictly earned revenue. It helps us answer the question, “Could our hospice make it without community support?” Because community support can go south. Experience one really bad PR disaster, whether





All Staff Workbook substantiated or not, and see what happens to community support. And it will happen. There are community hospices that were dependent upon community support with hundreds of patients a day that have been wiped out in a matter of months due to inadequate cash reserves and dependency upon community dollars.

There is More than Enough to Fund World Class Hospice Care

Let’s just say this…there is more than enough money in hospice to fund a world class experience right now. But it has to be intelligently directed, which brings us back to the Model.

With every area of the hospice denominated by these NPR amounts, two wonderful things happen. One, the organization is unified (people see that their actions impact each other and that no one lives in a solo) AND, two, a powerful organizational transparency is created almost immediately. Remember, the SAME financial formats and reports are used throughout the entire organization with NPR amounts clearly associated with each area.

You can be certain about this…the Model is that it will never go out of style or not be en vogue. The Model is built for change. It is built for Medicare rate cuts. It is built to withstand competitive pressures and quality challenges…and your hospice is doing it or you wouldn’t be using this workbook!





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Examples of Model DesignsThere are many examples of hospice overall Models. For convenience, when discussing Models, we often use three consecutive numbers which represent the various major categories of cost. For example, 38/18/30 would mean:

The MVI Model – 38/18/30 This used to be 38/22/30. However, so many hospices can achieve the 22% Patient-Related goal that it needed to be lowered. This produces a profit of 14%.

Typical Hospice Model – 42/19/35 A typical hospice will have a Model of 42/20/35. This is often an “organic” model of business that has evolved over time. This produces a profit of 3%.

Andrew’s Model – 38/17/27 Many people think that the MVI Model is Andrew’s Model. However, it is not. The MVI Model is a model that is “achievable” for a typical hospice. Andrew’s Model would be 38/17/27 which would render an 18% profit. Key deviations would be:

Increasing RN/Nursing/SW/PC Caseloads Doubling Hospice Aid Services Doubling Volunteer Services Adding Homemakers as a service component Patient-Related costs would be reduced to the 80% percentile by using select vendors Most all Indirect Costs would be slightly less than the MVI Model producing a

CUMULATIVE 3% savings.

Maximum Efficiency Hospice Model – 32/12/23 How efficient can a hospice become? We don’t know. However, a hospice can provide a high quality service for far less cost than most hospices’ can imagine.





38/18/30

Direct Labor Patient-Related Indirect Costs

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The Four Areas of Design Work that Impact EverythingAt the heart of the Model are four areas of design work that are essential to truly successful Model implementation. They are:

Team Designo What disciplines, caseloads, costs?

Visit Designo What is the visit structure/teachable stages of the visit? How many, how long?

What are the key messages and communication? What does the documentation need to look like and when is it done?

Product Designo What are the physical products such as teaching/communication tools used to

enhance the experience? Supporting Services Design

o What are the supporting services/functions, costs, specific practices?

The first three of these areas (Team, Visit and Product Design) focus on patients and families since this is the heart of what we do. The design of Supporting Services is important as these functional areas are necessary to serve the people on the frontlines of care, providing help and assistance to make the provision of care possible. When a Model is properly implemented, it results in superior hospice care which is balanced. As we dream about “what” and “how” hospice care can be provided, the Model tools give us a great indication of the financial implications of our design choices.





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The Model is NOT Financially Driven! Many people may view the Model as simply a financial tool to monitor and control costs. Though this is true and many hospices will use it expressly for such purposes, the true goal of Model implementation is to create a high-quality predictable experience.

It is important that our consciousness regarding hospice finances is heightened and is proportionally balanced with the purpose of hospice. Purpose is still the primary reason we are in hospice. Financial aspects are secondary, albeit essential.





MVI INSIGHT:

The Model begins at the frontlines of care and all other functions are viewed in relation of how they support that care. The Model should not be communicated as financial tool or your hospice will only derive a small portion of the Model’s value. The Model is not just about NPR amounts. It is about the intentional design of care to create a high-quality experience that is financially balanced.

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The Design of CareLet us now take some time to dream about “what” hospice care could be like ideally. If you had few or no constraints, what would ideal hospice care look like? Take the next 30 minutes to write your thoughts on the matter. Write your ideas as they occur to you. Then rank them in order of importance. Use another sheet of paper, if necessary, to capture all of your ideas.

Rank

(1) ________________________________________________________________________

(2) ________________________________________________________________________

(3) ________________________________________________________________________

(4) ________________________________________________________________________

(5) ________________________________________________________________________

(6) ________________________________________________________________________

(7) ________________________________________________________________________





MVI INSIGHT:

For those of you that have personally experienced hospice care, draw on your experience. What could have been added or taken away to make it a better

experience? These personal experiences often contain the most powerful possibilities of improvement.

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The Key to SatisfactionAs the design of care is unfolding in the Model development process, it is important to understand the critical role of “expectation management” and its direct link to satisfaction.

Expectation Management is the #1 factor in satisfaction.

Illustration:

Situation A: Dr. Smith calls Nurse Jones on Monday wanting to speak with her regarding some ideas about hospice. Nurse Jones is busy at the moment, but tells Dr. Smith that she will call him on Tuesday. Nurse Jones calls Dr. Smith on Thursday instead because she was busy on Tuesday and Wednesday. Situation B: Dr. Smith calls Nurse Jones on Monday wanting to speak with her regarding some ideas about hospice. Nurse Jones is busy at the moment, but tells Dr. Smith that she will call him next week. Nurse Jones calls on Monday of the next week.

Which situation will produce a more satisfied Dr. Smith?

Situation: _____________

Why?





MVI INSIGHT:

A hospice can provide a narrower scope of services and products can actually have more satisfied patients/families/referral sources due to better

expectation management.

All Staff Workbook Expectations are cast by:

Words we use Our actions The materials we provide The communication or image cast by others (referral sources, families, word of mouth,

media pieces, articles, other hospices, et cetera.)

How can our hospice more effectively manage the expectations of patients?

How can our hospice more effectively manage the expectations of families?

How can our hospice more effectively manage the expectations of referral sources?





MVI INSIGHT:

Start with the AD…then create the product. By writing the AD first, it will create a vision of where we are going. It should be exciting and stir our hearts and

imaginations.

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Design of the TeamThe disciplines, or elements, within a team can vary widely between hospices. Ultimately, hospice services need to be designed to best meet the needs of the particular service area. Typical Disciplines are:

Nursing (the dominant Model in hospice today) CNAs SW PC Volunteer Bereavement

However, many hospices are adding additional disciplines or are emphasizing the role of key disciplines where there is a market demand such as:

Homemakers Alternative or other Therapies Sitter Services Yard Help Critter Care

This focal point should be based on your marketing approach, what is valued by patients, families and referrals sources as well as the hospice’s ideals…being true to who you are and what your hospice stands for.

Most hospice models have “evolved” over time and are usually nursing models…that is nurse dominated. There are hospices that have intentionally designed models of care that truly value other disciplines. Some even recognize and promote certain disciplines that the service area values in particularly.





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Visit Design Because the visit is the primary way of delivering our compassion and care, deliberate Visit Design is perhaps the most important work that needs to be done in hospice. The implications of THE VISIT are far reaching from quality of care to financial. Few hospices have intentionally designed the visit for each discipline. Often, there is great variability of quality among hospice team members. We have an entire workbook devoted to this subject matter which is part of this program. Here are the high points that everyone needs to understand regarding visit design work.

Model Your BEST!

Who are the top performers at your hospice? Who is simply GREAT at what they do? Some will be inclined to say, “Everyone is great,” but that is simply not true. If this were true, why would there be a preference for some clinicians over others? The point is that there are “epitomes of excellence” walking in your halls. Often they are not even aware of their excellence because it comes so naturally to them. These are the clinicians that one wishes they could replicate. The quickest and perhaps the most effective way to start is to identify your ideal clinicians and create a Model based on their examples. You have to be a producer and “draw-out” how they do it!

Identify Your BEST Based on the Three Things!

There are three criteria that should be looked at when choosing whom to Model. They are:

Attitude Productivity Documentation

If you have someone that does ALL of them well, Model them! If you can’t identify ANYONE then you will have to build a “composite” visit based on your ideas. You should incorporate “ideals” regardless of whether a single person embodies all of the characteristics.

Attitude – Who is upbeat? Who lifts the spirits of all they encounter? Who is ready for a challenge? Who is excited about QAPI and the opportunity to make things better? A great attitude carries a person a long way in the pursuit of a World Class hospice.





All Staff Workbook Productivity – Who consistently performs a high number of weekly visits within defined work hours? Who is highly organized and efficiently uses their time? Also, be aware that there is a level of energy associated with productivity. If a person lacks sufficient energy, low productivity will result.

Documentation – Who documents well? Who can do it as succinctly as possible and still paint a true picture of the patient’s condition? Who documents to the diagnosis? Whose charts are “consistent” among the various disciplines involved with the patient/family? Clinicians that cannot document well are of no use to a hospice. The hospice will eventually cease to exist if documentation is poor. ADRs, Focused Review, and other forms of payment delays and denials will eventually force a hospice that does not document well out of business…even if great care is being provided.

Avoiding “Death by Committee”

To avoid “Death by Committee,” appoint an individual to lead the Visit Design effort. This person can and should use the input of others, but crafts the visit the way the trusted and appointed individual thinks best. It is this person’s duty to construct the ideal visit for his or her discipline WITH the input of others. It has been said that there is a certain wisdom of crowds. Also, know that it has been said that “committees are often the voice of mediocrity,” as great ideas are compromised as concessions are made to gain consensus rather than what is best or ideal. Although avoiding the dreaded “Death by Committee” situation is critically important in the Visit Design effort, understand IDG members are justifiably skeptical when non-clinical people, or people far from the frontlines, start tampering with visit design. Put the right person in charge and then quickly involve at least one representative from each discipline; failure to do so can be the kiss of death. Mixing line staff with managers is great, and don’t automatically assume that the manager needs to be the one in charge. Regardless of the mix, select individuals that have these characteristics:

Willingness to speak up Excellent problem solving skills Ability to see the big picture Respect of team members (for the right things!) Comfort with tackling the productivity issue head on—if you think that you can tiptoe

around it at the beginning and then add it on later, dream on.

It is important to establish CLEAR expectations. During the Visit Design process, the number of WEEKLY visits needs to be defined. To determine the number of weekly visits, the average visit duration and the average number of visits per day must be evaluated. Again, these should be based on your BEST clinical staff.





All Staff Workbook What is included in a visit and when do visits start and end?

Some definitions need to be clarified regarding visits. The two important questions are:

What constitutes a visit? When does a visit begin and end?

Here is what we recommend:

Visit time includes direct time, documentation time, and travel time. Though direct time, documentation time, and travel time are viewed as the

components of a visit, each of these segments of time is still measured separately. Visit time starts when the clinician travels to the patient’s residence and stops when

the clinician starts to travel to the next visit.

Minimum Expectations

Set a few minimum standards that MUST be settled in the beginning of the process. They are:

How many visits do we expect each week for each discipline? How long should the average visit-duration be for each discipline?

These could come from top staff, experts, or management. Do not allow low expectations to be adopted as they can be difficult to change later! A pragmatic approach must be used. If a day is 8-hours, how many visits “on average” would be reasonable for a TOP clinical person?You want staff to actually meet these expectations. We don’t want too many visits or too few. We don’t want visits that are too long or too short. We want clinicians to AVERAGE the standard. With this whole idea of “designing our visits,” your hospice can promote a higher ideal of professionalism. How a Clinical Leader introduces these expectations and standards to clinicians is critical. Specific language is needed. How things are said can make the difference. For example, you can say:

“Take as long as you need to do a great visit. Use your professional judgment. Just understand that by the end of the week you need to have made twenty visits.”





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Things to Keep in Mind When Doing Visit Design Work

Here are a few things to keep in mind when intentionally constructing visit guidelines:

The KEY to a satisfied patient/family is EXPECTATION MANAGEMENT.

“What can I do for you today?” Teach Organizational Skills - The best clinicians have a defined way of

planning not only their day, but their week! They prioritize, set time aside for important things, set time aside for emergencies; they use a Day Timer or Covey Planner, et cetera. Perhaps your hospice could develop the Sunny Day Planner…branded to your organization? Day Timers are fabulous resources for people who were born with the “organizational skills gene” and a practice in frustration for the rest of the world. Realize that many excellent clinicians are, by nature, somewhat disorganized. Our role as leaders is to help them develop work habits and approaches to compensate for their gene less state while at the same time making certain that they understand what is expected of them. Being organizationally challenged may not be treated as an excuse for underperformance. Coaching for this group is best done by people who are by nature rather disorganized—but have figured out how to work around their deficiency.

Dress & Appearance -- Comfort and care are actually provided by how you dress. Patients and families take comfort in seeing a professional and well-put together person. Anything that would take away from your credibility should be disregarded. Also, a hospice can brand itself by the way its staff looks.

Ultimately, all Visit Design Work will be incorporated into Media and Training/Indoctrination systems.

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Visit ExampleThe following is an example of a defined visit.





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Product DesignWhen we think of hospice care, normally we think of it in terms of clinical visits. However, to think of it only in this way limits what can be provided and holds us back from World Class. The World Class hospice intentionally adds “products” to its services.

What is a product?

A product is a tangible item that we provide to patients, families and referral sources that adds value to our hospice proposition. If done well, the product is branded to our specific hospice and creates an image of excellence.

An excellent Value that a hospice can adopt is that of Learners and Teachers (For more on this, see the Vision & Values Workbook Appendix). If our hospice has made this paradigm shift, then a logical direction would be to create World Class teaching products to facilitate our roles as teachers. In addition, products should be created that simply make life better for all that we have the privilege to serve.

Examples of Products

MVI has provided templates in the World Class Toolkit that can be used to help a hospice create its own products.

The Hospice Menu (Shaping the Experience) Deluxe Acknowledgement Tracking Logs Glossy Medication Tracking Sheets Caregiver Journals Caregiver Education

o Quick Guideso Diagnosis Guideso Bereavement Quick Guide

LifeDisk Recordings/Units Monitoring Units/Devices Deluxe Medication Boxes





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The Value of Well-Designed Products

Products such as the Hospice Menu and Quick Guides serve several key functions.

They force a hospice to “define” its services and products. This internal process forces a comprehension of the full scope of services and products so that we are conscious of what we provide.

They help patients, families and referral sources understand what we do or what we are capable of providing.

They serve as a reinforcement tool to remind us what we do. They can help clinicians perform standardized visits.

The Importance of Caregiver Education

The value of caregiver education cannot be overemphasized. A great deal of pain comes from “anxiety” issues. The result of “anxiety” issues are excessive On-Call, ER visits, unscheduled hospital visits and, above all, pain. The “unknown” is painful. Carefully-crafted caregiver educational products can facilitate the learning experience, help patients and families utilize our hospice, and paint an accurate picture of disease progression so that expectations can be managed better.

List some products that your hospice could provide to patients.

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________





MVI INSIGHT:

Keep in mind that products are used to manage expectations of patients, families and referral sources.

All Staff Workbook List some products that your hospice could provide to families.

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

List some products that your hospice could provide to referral sources.

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________





MVI INSIGHT:

The Hospice Menu is a teaching tool used to help a hospice define its scope of services and communicate these options to patients/families and referrals sources. A central idea in the creation of a menu is to give patients and families a choice as to “how they want to customize their hospice services based on their wishes”…perhaps for the first time in their healthcare experience. The creation of the Hospice Menu helps a hospice become more coherent internally as the exercise forces the hospice to define its services. It also becomes a great teaching tool as patients and families explain their options. “Hold the pickles and the mayo for me!” Both PROs and CONs of each selection should be explained as all decisions have positives and negative consequences. MVI has an example of a Hospice Menu that can be used as a basis to start the menu development process.

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Example Hospice Menu

Select the Items Pros/Cons Explained

CommunicationDaily Monitoring Calls (normally from 9:00am to 10:00am)

Pain & Symptom ReliefMedication Level No or minimal medication Some pain, but able to interact As little pain as possible, but conscious Knock me out!Physician TherapyRespiratory TherapyMassageRelaxation ExercisesBreathing Exercises





All Staff Workbook PrayerYogaGuided Imagery or VisualizationMusic Type: ________________________

House CallsWould you like a house call from a physician?Nurse As needed

CNA (Personal Care) 1x wk. 2x wk. 3x wk.

Homemaker 1x wk.

Social WorkerSpiritual Support (Chaplain)BereavementVolunteerDietary Consultant

Medical Equipment & SuppliesDo you want to stay in your own bed?Would you like a hospice person with you when the time comes?Would you like the standard array of medical equipment (wheelchair, et cetera.)?

Personal & Practical SupportPersonal Care – Bathing, laundry, changing bed linens, et cetera.Transportation to and from medical or other appointmentsVolunteer companionshipHelp with shopping and other errandsYard careCritter Care Services

Specialty ItemsHospice In-patient CareCrisis CareShort-Term Respite CareDreamsTravelPartiesSpecial EventsHair Care (styling, trims, shampoo, et cetera.)Would you like a Health Buddy?Future Notes/Milestone Messages





All Staff Workbook Other ________________________________

Spiritual CareDiscuss spiritual mattersRead spiritual materials to youPray with youWork with family clergyContact spiritual leaders for supportDigital recording of a family memberLife ReviewAssistance with funeral planningAssistance Balancing the checkbookReview insurance policiesOther ________________________________

Emotional SupportCoping with depression, anxiety, anger, nervousnessHelp resolve family conflicts and stressesAssistance with Medicare/MedicaidHelp with legal documents such as Advance Directives, Wills, Powers of Attorney, “Do Not Resuscitate” OrdersHelp children cope with fears, grief, or problemsIdentify community resources that can helpGrief Workshops, Seminars, Camps, and Other ActivitiesOne-time grief workshopSummer grief camp for kidsOn-going counselingGroup counseling





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No Budgets!

One of the most noticeable “shifts” a hospice will experience when implementing the Model is an absence of traditional budgets. Within a true Model system, the hospice does not use a budget for management. Rather, the hospice operates based on a dynamic and flexible system that allows a hospice to critically evaluate past performance as well as forecast the future.

The absence of traditional budgets is a big mindset change for many hospices, CEOs, Boards of Directors and especially CFOs. Many hospices will not be able to completely move to an operational world without budgets for several years. This is the direction that we encourage. Also, we realize that the “outside world” and many traditional Board members will still want “budgets.” The Model system can produce a traditional static budget as needed to appease adamant individuals. The Model can also satisfy other entities such as banks, governmental & regulatory organizations, related organizations, et cetera. The budget will be based on the current Model projected into the future.





All Staff Workbook There are many reasons why the modern and progressive hospice will not use the traditional static budget.

Almost Instantly Outdated – Static Budgets often lose their comparative value with fluctuations in patient volume. Any increase or decrease in census will cause material overage or underage in census-sensitive areas. Often the budget will have to be “revised.” Also, static budgets are normally all but ignored by the end of the year! All focus is on “next year’s budget.”

A Waste of Time – Most hospices spend tremendous time (months) creating the budget. It is truly one of the most wasteful uses of resources and energy in most hospices. A budget is usually outdated within the first months unless census approximates the budget (as mentioned above).

The Idea of Budgets is Negative – Budgets do not excite people. They are not motivating. They are the opposite. Budgets are limiting, truncating, and stiff. The term budget doesn’t stir the imagination and garner much enthusiasm or cheers. A “Model”, or whatever term you want to substitute, is alive and flexible. A new name also accommodates the best ideas.

Budgets Offer Little Comparability or Perspective – Traditional budgets are difficult to compare to other similar organizations. Few aspects of budgets lend themselves to comparison to gain the much needed perspective that separates true hospice professionals from amateur hospice leaders.

When we contrast the Model with traditional budgets, the choice is obvious:

The Model is always based on Current Census – The Model automatically adjusts every category based on Net Patient Revenue (NPR) which is derived from census. You are always comparing “apples to apples” with the Model approach. In accounting, you have two types of variances, volume variances and efficiency variances. The Model eliminates the volume (census) variance and all that remains is the efficiency variance. With a traditional budget, these two variances are “combined” making decisions drastically more difficult.

The Model Established Standards - The Model forces a hospice to establish financial and operational standards. Areas include: caseloads, weekly visits, visit durations, costs parameters, et cetera. These standards apply regardless of fluctuations of patient volume!

Transparency – The Model based on NPR creates the immediate transparency that so many organizations seek. Percentages are widely understood by most people. Because the Model uses percentages as the common unit of financial measurement for all areas, anyone that is familiar with the Model amounts could easily evaluate the performance of any department or area. This would mean that if the Model were taught throughout a hospice, ANYONE, from staff member to Board of Director to volunteer, could judge financial performance.





All Staff Workbook Comparability – Because the Model is constructed on a Percentage of Net Patient

Revenue basis, a common unit of measurement, results are easily comparable to other hospices. In fact, each line item is comparable so, a hospice is not even limited to comparing grand totals or broad categories. Again, perspective and insight into the overall hospice world separates the hospice professional from the amateur hospice leader.

Once Established, the Model takes Little Time to Maintain – The Model is a perpetual system. It continues to be used indefinitely until the decision to change it is made. There is no need for months of effort to create something new. A Model can be changed in minutes, if needed.

The Model is Flexible – If the Model needs to be changed it can be altered in minutes to accommodate the new direction. It is not the alteration of the Model, mechanically, that is what is time consuming. It is the “what” and “how much” questions that require much mental work. However, this is exactly where we should be spending our time, thinking of improvements rather than thinking about the mechanics of measurement.

The Model is More Easily Understood – People “get’ the Model concept. It is that simple! They understand easily that the “pieces must work together” by the mere mention of the word Model.

The Model Still has Static Goals – A well-developed Model will have static or established goals. These are similar to the goals in the traditional budget in that normally annual goals are created. The Model establishes goals as well. However, the goals or targets pertain to things like ADC, Model %s, productivity measurement, et cetera. It does not pertain to static dollar amounts for each area of the hospice. Also, we recommend the use of the term “goal” rather than “target” or another term. “Goal” has a less negative connotation.

The Model can produce a Traditional Budget when one is Needed – Need a budget report for the United Way or the Board of Directors that does not understand a Model approach? The Model System can produce an annual budget in minutes as the current standards are projected into the next twelve months. These amounts can be uploaded via F9 into your accounting system to produce a traditional budget report.

The Model becomes a Forecasting Tool – Relating to the point noted above, the Model can be used as a forecasting tool. A hospice can change the standards in the Model and project operational performance into the future. The Model becomes a decision support tool.

We are completely biased regarding the use of the Model over traditional budgeting. It is a “no-brainer” in our opinion. It is the way of the modern hospice.





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MVI INSIGHT:

Transparency – The Model based on NPR creates the immediate transparency that so many organizations seek. Percentages are widely understood by most people. Because the Model uses percentages as the common unit of financial measurement for all areas, anyone that is familiar with the Model amounts could easily evaluate the performance of any department or area.

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Gaining Perspective and the Reality Check It is important that a hospice have perspective regarding the ever-changing hospice world. It is also important to realize that you have immediate access to it. The Model is derived from MVI’s proprietary benchmarking data. You have an idea about the Model at this point. You will understand it VERY well as you serve on this board. However, now would be a good time to take a hard look at your hospice operations compared to other hospices.

If you are implementing the Model, you will need perspective...especially financial perspective since so much of the Model is about increasing the business consciousness at the hospice. This perspective will come from MVI Benchmarking.





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How can you get your benchmarking results?

You can ask for this report to be sent to you by MVIB staff (772-569-9811). You can ask the CEO, CFO or other person at your hospice, to run the reports for you. The system can be installed on your PC and you can run the reports yourself.

The CEO and other leaders should have direct access to this information. Having to ask the CFO or other financial person is simply unnecessary since the system is so easy to use.

What you should be paying particular attention to is the Percentile Rankings columns. They are included in every report. The 50th percentile would mean that your hospice is “in the middle” for a particular data point. Half of the hospices in the query you selected are above you and half are below you. If an area is in the 77th percentile, 23% of the hospices are better than you and 76% are worse than you.

The data in this example is for illustration purposes only. The numbers are from a test database.





We recommend that hospice CEO and other primary leaders have the MVI Benchmarking System installed

on their computers.

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This is where many hospice leaders falter. If the percentile rankings are not very good, the leader retracts. The human capacity for “self-justification” is almost unlimited. A courageous leader recognizes that it is only when we face the quantified facts that we can really improve. Realize that the Benchmarking System (BA) is changing daily as hospices are constantly updating their information since it is largely an automated process. The overall fact is that hospices are improving their performance year after year. As an industry, we are getting better.

To gain access to the Benchmarking System (BA), call the MVI Benchmarking office at 772-569-9811. They will help install the application in minutes and give you your pass codes. They will also provide a short training, if necessary. The system is quite intuitive and relatively easy to learn and interpret.

NOTE: The Benchmarking System (BA) should be on the CEO’s, CFO’s, or other key financial staff member’s, computer at minimum. Many hospices also have the application installed on Clinical Leaders’ computers.

Open Access Hospice





If your hospice percentile rankings are bad, resist the impulse to reject the data.

Look at it and understand it. This will fuel you to make the necessary

improvements.

A little discomfort is a good thing…

All Staff Workbook The term Open Access is a widely used in hospice and is associated with an “expanded paradigm” of the types or treatments of hospice patients. An Open Access hospice would normally consider patients seeking treatments that traditional hospices see as “curative” as appropriate such as chemotherapy, radiation, dialysis, blood transfusions, et cetera. Hospices can embrace Open Access to various degrees. The concept of Open Access was first conceived by Carolyn Cassin.

Open Access to many people translates into, “We pay for everything.” Thus, there can be a complete loss of “clinical discipline.” We know that even a single clinician with excessive clinical practices will drive up a hospice’s costs materially. Open Access should not be entered into without a plan or, at least, some thought.

Determine your goals for Open Access (longer Length of Stay, increased census) Determine clinical practices and training. This includes “how” we communicate the

idea of Open Access to the community so that it is CLEARLY understood. “Weaning Conversations” need to be instilled into staff. Examples of Weaning Conversation points:

o Do you find the 40 minute drive to and from the hospital exhausting?o Are you doing this because you want it?o Are you doing this because your family wants it?o Are you doing this because your doctor wants it?

A goal needs to be set for the AVERAGE period of time patients are on aggressive therapies and treatments. Best practices indicate that patients can be on aggressive therapies for 10 to 14 days. Clinicians need to have a firm grasp of this time-frame. Otherwise, it leaves it open-ended and soon a hospice will be justifying everything.

Once staff is trained, it is time to go out and explain Open Access and negotiate special pricing. HOW YOU COMMUNICATE and WHO YOU SEND WITH THE MESSAGE can make all the difference.

o Hospice is different now!o Patients need both of us at this time…o Let’s not make the patient choose between us or you…

Monitor costs. Watch your chemo and other therapy costs. Run costs by Clinician and Referral Source as well as aggregate.

“Clinicians need to have 10 to 14 days burned into their heads as the average time a patient continues with aggressive and expensive therapies and treatments. It should

be defined in the mind or you’re asking for trouble.” AR

In-Patient Unit Financial Problems________________________________________________________________

Multi-View Incorporated SystemsPO Box 2327

Hendersonville, NC 28793828-698-5885 or multiviewinc.com


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There are more hospice IP units being built or implemented than ever before…and many have learned how to create a positive operating residual. Even For-Profit hospices are building units and are not just leasing space. Why? They’ve figured out how to make IP units financially viable. However, there are a growing number of hospice IP units associated with very established hospices that are falling on tough financial times…through their own doing.

Most of the problem is in staffing. There is a trend in hospice IP units to reduce staffing ratios for RNs and CNAs to 4:1 and sometimes even less. Think about this. Where else in healthcare do you find these ratios? Consider what staffing is like in ICUs and Critical Care Units. Hospice units are often staffed at similar levels. The question is, “Is this the way it needs to be?” Or perhaps the question is better asked, “Is this the way we want our hospice IP unit staffed?” The standard in hospice IP units is one RN and one CNA per 6 patients, translating to 3 patients per team member, excluding SW and Chaplains. Less than 5:1 for RNs and CNAs does not “pencil” very well. 5:1 works in rare situations. Some hospices add additional staff when the census is at capacity, as the revenues generated can easily cover the additional positions.

The other contributing factor is bed management. You must “design” your intake processes so that you keep the IP census at an acceptable level. This means weekend admissions, tracking nurses to identify ones who are not referring patients to the unit, evaluating your criteria, looking at how you have “trained” your referrals sources, et cetera. Do your clinicians really understand the value and benefits of the unit? Patients and family REALLY love them!!!!

BEST PRACTICE: Your hospice needs to find the average propensity of a clinician to refer to the IP unit and then design an “exception report” to identify clinicians who are not referring patients. ALL clinicians statistically should be referring a proportion of their patients to the unit based on need. If you discover that a clinician is not referring patients to the IP unit, you have a Lone Ranger! These clinicians basically are doing their own clinical practice. You don’t need Lone Rangers. Just the fact that you are monitoring it will cause IP census to increase.

Productivity has traditionally been lower than it should be in hospice since the first day I started…with the visit average usually one less than it should be. IP units are following the same path. We have to be strong leaders and managers. We have to listen to our staff, but we have to make it work economically…





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NEVER EVER SAY “WE CAN’T TAKE PATIENTS”The cardinal sin for any hospice staff member is to utter the words, “We cannot take new patients,” perhaps because the hospice is busy, short-staffed or somehow have comprised intake ability. Hospices NEVER recover from such words. A hospice can provide excellent service to a community for decades and for some reason that is beyond my understanding, they will never forgive a hospice that puts out this message.

This is the worst and most short-sighted message a hospice can put out. “We are too busy to take patients now.” What does this say about who we are? We are basically saying, “It’s OK for few people to suffer because we’re too busy.” This message states that the hospice is more about our staff needs and we are less interested in patients…even if they are in pain.” And the short-sighted clinician or leader nurse says, “But we won’t be able to serve these patients at our standards.” Well, suck it up! Let’s work a little harder, let’s get the patients in.

In our experience, referral sources will remember this message for YEARS! They will remember it for at least two years, maybe more. Even if your hospice only uttered this terrible message for three days, you will not recover from it for years. Note our advice here.

In fact, I would terminate anyone at a hospice that ever utters these words in public. If you want to see your hospice’s census plummet and not recover…even to the point that you will have to change your name because of the distaste in the public mind, then allow this message that “we can’t take new patients” to get out.





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Hospice Finance 1011. List the four primary reimbursement forms (levels of care) of the Hospice Medicare

Benefit.

1) Routine Home Care2) General In-patient Care3) Continuous Care4) Respite Care

2. Respite Care can be used a maximum of _______ days per episode. [5].

3. Continuous Care must be at least ____________ hours and ______% must be ______________________. [8, 50%, nursing]

4. A Continuous Care day begins at midnight and ends at ______________. [midnight].

5. The Hospice Medicare Benefit is part of Medicare Part ________. [A]

6. Attending Physicians continue to bill Medicare Part __________. [B]

7. The hospice Medical Director bills Medicare part ________. This is a per-visit fee and it is in addition to the normal level of care billing. [A]

8. Consulting Physician Services are billing to Medicare Part ______ and are billed by the hospice on behalf of the physician. A __________ needs to be in place for Consulting Physician Services. The reason this is billed through the hospice is that it is the hospice’s responsibility to _________________________________. [A, contract, professionally manage the care]

9. The Hospice Medicare Benefit is divided into periods. Patients are reviewed for appropriateness and either recertified or discharged during the Utilization Review process. The number of days in the first periods are:

Period 1) 90Period 2) 90Period 3) 60Period 4) 60





All Staff Workbook 10. When a patient is in a hospital for In-patient care, the hospice must have a

__________ with the hospital. The ____________ is paid for the day of discharge/death as contrasted with the way hospitals are normally paid on the day of discharge/death. [contract, hospice]

11. Medicare FIs (fiscal intermediaries) pay the _________ of the billed amount and the rate set by CMS. If you bill less than the rate set by CMS, you will receive what you billed and the FI is under ______ obligation to pay a hospice the difference. [lesser, no]

12. One of the biggest problems in hospice billing is late or incorrect _______ of __________ information. [level, care]

13. To alert a Medicare FI that a patient has elected hospice, a _______ is sent. [NOE or 81A]

14. To elect the Hospice Medicare Benefit, what needs to occur?

1) A physician needs to sign a certification of terminal illness (6 months or less)2) The patient needs to sign a consent statement or election statement

15. _______ is a prospective payment system option for hospices and allows a hospice to receive a set amount per month based on forecasted Medicare revenue. It is used by few hospices, but it can be useful for cash flow management. [PIP]

16. The acronym ADR means ______________________________. [Additional Data Request]

17. _________________ billing is where the hospice must get paid for the previous Medicare invoices before subsequent invoices can be paid. All invoices must be paid in order. [Sequential]

Physician Billing

18. A physician rounding in a hospice in-patient unit can bill for acute patients usually _________ a day depending upon the patient’s need and the hospice’s ideals of care. [once]





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CAP

19. The Hospice Medicare Benefit has two CAPs, ________________ and _______________. [Aggregate, In-patient]

20. The _________________ CAP limits the number of Medicare GIP days to __________%. [In-patient, 20%]

21. The _________________ CAP limits the total amount that a hospice can receive from the Medicare system within a year. It is computed by taking an amount set by CMS and multiplying it by the number of Medicare _____________________. This CAP period runs from _______________ to ________________ and is based on the cash payments made by the FI. The Medicare Admission period is not the same and runs from _________________ to _______________. [Aggregate, Admissions, November 1st , October 31st ,September 28th, September 27th]

Cost Report

22. The Hospice Medicare Cost Report is due ___________ months after your fiscal year-end. Hospices are required to be on the ____________ basis of accounting. [5, accrual]





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Index

AAccounts Receivable, 23, 34, 36

Days in Accounts Receivable, 34, 36Admission/Inquiry Percentage, 35, 36Admissions, 23, 29, 32, 34, 35, 40, 45, 47, 85ADR, 84Aggregate CAP, 21, 22, 23, 24Ambulance, 29, 45, 47Attending Physician, 19, 83Average Daily Census, 33Average Length of Stay, 33, 36

ALOS, 33, 36

BBad Debt, 53Benchmarking, 77, 79Benefits, 45, 47, 50Bereavement, 15, 20, 29, 32, 45, 61, 67, 71Best Practice, 34, 42Best Practices, 42Billing, 84Board, 1, 30, 32, 35, 36, 73, 74, 75, 77Board of Directors, 35, 36, 75Budget, 73, 75

Static Budget, 74Building Reserves, 25

CCAP, 21, 22, 23, 24, 33, 49, 85

Aggregate, 21, 22, 23, 24, 85Inpatient, 21, 24

Caseload, 40, 42Caseloads, 34, 40, 42, 55, 74Chaplain, 15, 71Chart of Accounts, 35Clinical Leader, 64, 79Clinical Manager, 29, 42CMS, 21, 25, 27, 84, 85CNA, 29, 32, 36, 43, 45, 47, 64, 71, 81Community Bereavement, 32Community Support, 28, 30Competition, 52Compliance, 32Computed Caseloads, 34, 42Computer Expense, 29, 32, 46Consulting Physician, 19, 22, 30, 35, 83Continuing Education, 29, 32, 46

Continuous Care, 18, 19, 22, 27, 83Contractual Allowance, 53Contractual Allowances, 53Contribution Margin, 36, 45, 47Cost Report, 25, 85Crisis Care, 71

DDays in Accounts Receivable, 34, 36Death Service Ratio, 35Definitions, 11, 33Depreciation, 29Development, 32, 36Development Return Ratio, 36Diagnosis Costs, 67Direct Labor, 29, 30, 32, 37, 45, 47Discipline, 34, 42, 80DME, 26, 29, 32, 45, 47

EEducation, 29, 32, 46, 67, 68Excel, 33Expectation

Management, 6, 59Setting, 6, 59

Expectations, 42, 60, 64

FF9, 75Facility Mix, 34, 36, 44Facility-Related, 29, 32, 45Finance, 29, 32, 46, 83FIs, 27, 84Fiscal Intermediaries, 25, 27, 84Forecasting, 75Fundraising, 30

HHospice Hell, 22Hospice Menu, 43, 67, 68, 70HR, 29, 32, 46

IIdea, 74





All Staff Workbook Indirect Cost, 29, 30, 36, 37, 45, 46, 47, 55Indirect Costs, 29, 30, 36, 37, 45, 46, 47, 55Indirect Labor, 29, 32, 47Inpatient CAP, 21, 24Inpatient Unit, 19, 26, 33, 47, 81Inquiry/Admission Ratio, 35, 36Insurance, 18, 28, 30, 46, 53Investment, 36IP Unit, 23IT, 29, 44

LLab, 29, 45Leadership, 1Learning, 29Level of Care, 23LifeDisk, 67Linen, 47Lower Cost, 36LPN, 43, 64

MMarketing, 29, 34, 46Measurement, 36, 38, 39Medicaid, 15, 18, 28, 30, 32, 53, 72Medical Director, 19, 22, 29, 32, 46, 83Medical Records, 29, 46Medical Supplies, 20, 29, 45, 47Medicare, 15, 18, 19, 20, 21, 23, 24, 25, 27, 28, 30, 31, 32, 49,

52, 53, 54, 72, 83, 84, 85Medicare Cuts, 28Medicare Part A, 18, 19Medicare Part B, 19Medications, 20, 29, 32, 45, 47, 51Menu, 43, 67, 68, 70Mileage, 20, 29, 45MIS, 46Mission, 10, 11, 12Misys, 24Model, 1, 12, 30, 31, 38, 40, 44, 48, 49, 50, 52, 53, 54, 55, 56,

57, 59, 61, 62, 73, 74, 75, 77Models, 50, 55Money, 25, 26, 52MVI, 1, 11, 22, 25, 30, 38, 48, 55, 67, 77, 79

NNet Patient Revenue, 30, 31, 33, 34, 35, 36, 37, 45, 46, 47, 52,

53, 74, 75NFP, 51NOE, 84Nursing Home, 30, 32, 35

Facility Mix, 34, 36, 44

OOffice Supplies, 29, 32, 46On-Call, 7, 29, 45, 68Open Access, 36, 80Operational Costs, 45Opportunities, 52

PPalliative Care, 15, 21, 23Pass-Throughs, 26, 32, 35, 36, 45, 53Pastoral Counselor, 43, 45, 47, 55, 61, 64, 78Patient Mix, 34, 36, 44Patient Mix over 365 Days, 34, 36Patient-Days, 23, 33Patient-Related, 29, 30, 31, 32, 35, 37, 45, 47, 55Payroll, 35, 36PC, 43, 45, 47, 55, 61, 64, 78Percentage, 30, 33, 35, 36, 37, 75Percentage of Net Patient Revenue, 30, 33, 36, 37, 75Perspective, 74, 77Pharmacy, 45, 47Physician, 15, 19, 22, 30, 32, 35, 45, 47, 70, 83, 84Physicians, 83PIP, 84Postage, 29, 46Printing, 29, 46Product, 56, 67Productivity, 62, 63, 81Professional, 31Profit, 81Profitability, 37

QQI, 29, 32Quality, 49, 51

RRatio, 36Registered Nurse, 18, 19, 32, 34, 43, 55, 64, 81Reimbursement, 20, 52Rent, 20, 29, 32Reserves, 25Respite, 18, 22, 30, 35, 71, 83Revenue Per Payroll Dollar, 35, 36

SSatisfaction, 59Social Work, 34, 40, 43, 45, 47, 55, 61, 64, 81Standards, 74SW, 34, 40, 43, 45, 47, 55, 61, 64, 81





All Staff Workbook T

Teachers, 67Telephone, 29, 32, 46Therapies, 20, 29, 32, 36, 45, 47, 61Triage, 29, 45Turnover, 34

UUtilities, 29, 32

VValue, 12, 67, 68Values, 1, 9, 11, 12, 67Visit Design, 43, 56, 62, 63, 65Visit Durations, 43Visits, 19, 34, 43Volunteer, 20, 29, 45, 55, 61, 71

WWar, 37Weenie, 42World Class, 6, 11, 25, 34, 36, 38, 48, 49, 54, 62, 67





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