What’s up everybody? It’s Steve “The Hurricane” here, and for today’s episode of “A Drink With The Hurricane”, we’re going to talk about increasing your profits without raising your rates. So raise your glass and let’s toast to your success. Cheers!
This is “A Drink With The Hurricane”, the talk show discussing all things growing your home care business. This video is sponsored by Home Care Evolution where we help home care agencies adapt to changing circumstances, transform their business, so that they can thrive for years to come.
This is one of those things that a lot of people have a hard time with. We know we need to increase our profits, and not because we’re trying to be greedy, but because the cost of doing business is at an all-time high. Everything! Caregivers are commanding more money, our staff are commanding more salaries, the paper that we use, the printing that we do, the ink, the office space, every aspect of running our business costs more now than it ever has in any other time in history. And we can’t always raise our rates. I recommend raising your rates twice a year just to keep it current with everything. That’s good when you raise your rates today but what about three months from now when the cost of doing business has gone up and you’ve already raised your rates?
Here are three tips on how you can increase your profit margin without raising your rates.
Tip #1: Reducing overtime. I have looked at so many businesses over the last 10+ years in business as the owner of Home Care Evolution. When I look at people’s profit loss statements, I am often at times shocked to see how people with say 2,000 billable hours every single week of care have 200, 300, 400 hours of that 2,000 hours, which is 10% to 20% of those hours at overtime that they’re not able to charge the client. And the reason for it is because of covering shifts and having caregiver shortages and other issues.
One of the issues that I’ll never forget was brought up at one of our Elite Academy meetings recently, where one of the owners was talking about how the schedulers have their go-to caregivers, and they don’t like to use the new caregivers because they don’t trust them yet, they don’t have them yet. And what we discovered is this was a common theme throughout many of the agencies at this board meeting, and I asked other clients of mine and they all said the same thing, “Yeah, my scheduler would have their go-to caregivers.” When you have your schedulers rely on the go-to caregivers, these are people picking up extra hours, which means you have to pay them time and a half.
Now, yes, it’s great. We want the caregivers to make money. Yes, when we absolutely have no other choice, we got to give the care to the patient. That’s when we send the overtime in there. But we have got to make sure we keep our fingers on the pulse of our business. If there are new caregivers coming in, we have to use those new caregivers. If you find that your people are using the same caregivers too consistently for overtime, and your overtime hours are way higher than they should be, you have to get your schedulers and the people who are in charge of managing those caregivers more involved in your orientation.
When they are more involved in your orientation, they will get to meet the caregivers, they will get to know the new caregivers, and they will feel more confident assigning them to cover shifts when there’s call outs and no-shows. That is so essential and that is the first way we can reduce our overtime, which is going to help us to increase our profits without raising our rates.
The second one is: Hiring, what I call, a Caregiver Team Lead. Now, what is a team lead? A team lead is a guaranteed work caregiver. Now how does this work? Well, you have the caregiver that you pay Monday through Friday from say, 9:00 in the morning to 5:00 in the afternoon, whether they work or not. Their job is to wake up every day and drive to the office and be there at 9:00 AM. If there’s no work for them, you can send them home. They’re still on call the rest of the day because if there happens to be a call out or there happens to be a new client that is emergency and they need to start right away, then you put that person on that case.
Now you may say, “Steve, well this is a little iffy. How am I going to be able to increase my profits if I have to hire somebody who I don’t have work for?” Well, this is where you have to take a look at your operation. And I will tell you, on average for every 20 patients you have on your census, you should have one team lead working for you. Because if you have 20 patients, I guarantee every day at least one caregiver is a call-out or a no-show and you can assign this guaranteed work caregiver to go work on that case.
If I have 100 patients on my census, I should have five guaranteed work caregiver team leads. A team lead is a caregiver that makes about $2 an hour more than your caregivers do otherwise. This way they’re paid for the flexibility, they’re paid for the constant change of clients because they’re going to be at new clients every single day, so they’re dealing with that, but they’re a reliable person who is worth this extra money.
Now again, “Steve, how is this helping me with my profits?” Well, if you go back to option #1, reducing our overtime, if I’m paying a caregiver $15 an hour, overtime means for every one of those hours, I’m paying $22.50. If I had a team lead that I’m paying $17 and they’re working all the shifts that the overtime caregiver will be working, I’m actually saving $5.50 an hour by having the team leads.
It’ll also opens the door for many other operational things like being able to start same day cases, having a same day startup fee when somebody wants you to start the same day, and other things that I teach my clients when they are part of the Hurricane University and the Home Care Elite Academy and other services that I offer through my website, homecareevolution.com. I know that you can do these things when you have the team leads, so make sure you’re taking advantage of it.
As a matter of fact, if you’re not getting the magazine, go to my website, homecareevolution.com/magazine and sign up and register to receive my magazine quarterly, absolutely free!
But this is the second thing you can do to increase your profits without increasing your rates.
The third and final one is my favorite one because this is one that allows you to have a much greater ease in growing your business because it truly is a “less is more”. Focus building your business around medically complex patients. That is the secret sauce! It is much easier to manage 10 patients than it is to manage 30 patients. Everyone will agree on that, right?
Now, if I have 10 patients who are all getting 56 hours a week of services or greater because they’re medically complex, that’s going to bring in far more revenue. It’s easier to manage and far more revenue will be generated from those 10 patients than 30 patients getting 10 hours a week of care, that’s only going to be 300 hours from 30 patients. 10 patients at 56 hours a week, that’s 560 hours. Literally double the amount of hours with a third of the amount of patients.
By having more medically complex patients, you now are sending one, maybe two caregivers into that house to provide the care. It’s easier to manage, it’s easier to maintain. The caregiver isn’t trying to go to two or three different houses. It’s a better work-life balance for the caregiver, so the caregiver stays on board with your company for a longer period of time. The medically complex patient stays on services for a longer period of time, usually the rest of their life, which could be three months, six months, a year, 18 months, sometimes several years.
It is much easier to build my business around these medically complex patients, and because of the volume of revenue and hours, that’s going to increase the profits with less effort. It’s the Jerry McGuire philosophy, right? “Show me the money!” Fewer patients, more intensive care, better quality of services. Love on your patients!
And you know what I love about doing this? Like my favorite part when I did this with my agency and the hundreds of agencies that I’ve worked with over the years? If you are not the one doing it, there are very few agencies who can. And for that patient, they would probably have no other choice but to pay privately and move into a nursing home to get the care that they need that you can provide, keeping them home.
Now, there’s a million things that I can teach you, and this is the reason why I have my business. If you need help getting more medically complex patients, if you want to increase your profits without raising your rates, do what the smartest people in our industry are doing, go to my website, homecareevolution.com, and schedule a consultation and let us help you “Blow Away The Competition!”.