Hi folks, Steve “The Hurricane” here, and on today’s episode of “A Drink with The Hurricane”, we’re gonna talk about operational metrics to understand in 2022. All right, so I hope you had a chance to catch the last episode that I discussed the change for my company from home care marketing to Home Care Evolution, where we help folks adapt to changing circumstances, then transform their business so that they can thrive in the brave new world. With that said, our focus of these episodes are gonna be on sales and marketing, operations, recruitment and retention, finances, multiple revenue streams, and eventually exiting your home care business.
So for today’s episode, we’re gonna talk about operational metrics that we have to really understand. One of the biggest operational metrics that we must understand in 2022 is our readmission rates. Readmission rates is something that the latest Home Care Pulse report had showed that less than 75% of the home care industry is recording and accurately tracking their readmission rates. This completely blows my mind, and this is probably one of the biggest mistakes that people are making. When you remember what I talked about in the last episode, about finding those N.E.R.D customers, right? The target customer, great need, elderly, resources, disabled. Those folks exist in health care systems, right? They’re in hospitals, they’re in nursing homes, they’re in rehabs, they’re in assisted living communities, continuous care retirement communities, independent, adult daycare. They are within the health care spectrum. With that said, if I am not tracking my readmission rates, how can I expect a hospital to consider referring me? If I’m not tracking my readmission rates, how can I expect a home health company, or a hospice company, or a skilled nursing facility, or any of the other health care entities to even want to talk to me?
When you think about the health care system, it’s all about getting a patient, taking care of that patient, and then sending them through the entire discharge process, nursing home, and then back home with services to eventually get this person to be healthy again, to be able to meet their goal and plateau. When it comes to getting referrals, when it comes to being a health care provider, the agencies that are tracking their readmission rates are offering a superior product. How do I know they’re offering a superior product? Because they are looking at the outcomes of their patients. It is as simple as that. What is the outcome? When this patient signs up to be on my services, operationally, what am I doing for that person? I’m sending a caregiver into the home. That caregiver is helping with this person’s ADLs, those activities of daily living, bathing, dressing, toileting, transferring, keeping the house clean, making meals for them, running errands, all that other great stuff, right? If the caregiver is doing that, what is the purpose of the caregiver doing that? It’s to help this person thrive and live. Ultimately, in most cases, it’s to help the person so that they can get to a point where they don’t need the services anymore. That is a successful outcome.
When you discharge the person off of services, they should be better than when they started on services. Well, the readmission rate, the readmission window rather is 30 days from discharge back home. So if I wanna get referrals from a hospital, if I wanna get referrals from a skilled nursing facility, if I wanna work with assisted livings, if I wanna get referrals from a home health, and hospices, and all the other things, readmissions, a patient’s ability to go home and stay home 30 days after a hospitalization is of the utmost important to all of the other parts of the health care continuum. In this case here, if I’m a hospice company, I’m going to refer the agency that’s actually tracking their readmission rates over one that isn’t.
If I’m a patient, and I’m thinking about signing up for services, I’m gonna go with the company that can show successful positive outcomes on a high percentage, we’ll say 95% or greater of the patients that have entrusted them with their care. I mean, think about what you’re asking for operationally. You are asking a patient to pay you, what, $30 an hour for services? What, 56 hours a week? So we’re literally talking about 1500, $2,000 a week is what you’re charging.
You should be tracking your readmission rates, and you should know that data off the top of your hand. So when I see the Home Care Pulse report telling that more than 75% of the agencies out there are not tracking their readmission rates, yeah, that is the number one operational metric that you need to be calculating in 2022 and beyond, if you wanna be able to scale and grow your home care business. There’s a lot of other things that I found in the Home Care Pulse report that were really said, and our industry is not going in the right direction, which is why you’re watching this video.
Your weekly billable hours is another operational metric you wanna take a look at. The Home Care Pulse report showed that the average weekly billable hours decreased by 17% in 2020 from what it was in 2019. Decreased, that means we’re taking, we’re billing out less hours per week in 2020 than we did in 2019. That’s a problem. Your hours should be going up weekly, because if your hours are going down, that probably means you’re taking care of less clients. And there’s a lot of things that factor into it. But I can assure you, the agencies that are tracking their readmission rates are the ones that are working closely with their hospitals. Think about all the mess that’s happening with COVID, and COVID isn’t going anywhere anytime soon. And the population that is the most heavily affected by COVID-19 is the elderly, is the people that we’re looking, our target customer. They’re the ones that are most at vulnerable, most at risk of getting and dying from COVID. 1% of the senior population in the United States died in 2020 from COVID-19. 1%, hundred seniors, one in a hundred died from COVID-19. That’s a fact. That’s what happened in 2020 from COVID-19. So we have to be able to track our outcomes if we wanna be able to get more patients, right? It just makes sense.
If I wanna be able to grow my business, I have to track those outcomes. ‘Cause we wanna be able to grow those hours, which is the metric that I’m talking about here, I have to track the readmission rates, I have to track those hourly metrics. Another thing you wanna be able to track is your revenue. You have to track your revenue, but not just your revenue, folks, operationally. How much am I billing? What is the profit margin? We’re gonna talk a lot about that when I cover the financial topics over this next 12 months and beyond. But right now, from the Home Care Pulse report, operationally, when I looked at the P and L statements, the most recent data shows that the average home care agency was profiting about five to 7% revenue, five to 7% revenue. When you look at what is going on in the world, straight up business 101, a business, a for-profit business should be generating 18 to 20% profit after all is said and done to be considered healthy.
Something that I’m gonna be talking about with you, when it comes to exit strategies, when you’re selling your business, if your business is operating at five to 7% profit, which is the industry average right now, you’re not gonna get what you think your business is worth. I can promise you that. Because nobody wants to buy a business that is only generating five to 7% profit. A healthy business is generating 18 to 20% profit. So as you’re looking at the revenue, it’d be all exciting, I’m generating $10 million a year in revenue, but what good is that if you spend $950,000, I’m sorry, $9,500,000 to generate that? Yeah, that’s what a 5% profit margin looks like. That’s not healthy. People do not want to buy businesses like that. So you have to make sure that you’re watching your finances and watching your profit margin. These are all some of the most important KPIs that you have to understand in your organization and in your business going forward. So there’s the tips. Get those numbers to where they’re supposed to be. Do the things that I discussed here.
If you need help with it, call us at Home Care Evolution, we can help you adapt, transform your business, and thrive going forward so that you can blow away the competition. Guess what, everybody? I am excited to be announcing my Crush it in 2022 workshop day, where I’m gonna give you everything you need to blow away the competition. At this event, we’re gonna talk about how you can attract the best caregivers, how to maximize your profits, and how to free yourself from the every day to day operation of running your business. At this two-day virtual workshop, this is what we’re gonna cover. The $5 million business blueprint. The business goes where you go. We’re gonna talk about managing your office staff. And we’re also gonna talk about recruitment through better retention processes. Then we’re gonna bring it all home with tracking, reporting, and growing. This event is for business owners and executive directors. So claim your spot to save on our early bird discounting, which is ending on January 31st. Why pay full price when you can get it for less? So do the smart thing, click the button below and register so I can give you everything you need to blow away the competition.