From So-So to So Good

The best performers are indeed different, often because they manage differently. In representing many of the best and the brightest, as well as in conducting interviews of industry leaders for best-practices seminars, we have discovered that the overachievers share many of the same management traits. Here, then, are seven habits of highly effective home care managers.

1. They are People-Centric The best route to performance excellence is effective management of people. Even the capital markets — known for an impersonal focus on revenues and profits — are increasingly scrutinizing “people issues” in evaluating companies. In fact, according to the Herman Trend Alert, “specialists who establish, review, and modify [credit ratings and interest rates for health care companies] now include issues like work force stability and vacancy rates in their evaluations” (“Workforce Issues Moving to the Bottom Line,” Herman Trend Alert, March 26, 2003). Intuitively, you know this one. But the best home care managers have put people issues at the very center of their strategic plans. They have developed an expanded view of remuneration that, in addition to salary, includes incentive pay, professional development and training, technological support, emotional support and unique perks. To attract the best employees — and retain the good ones they have — top companies are strategically branding their organization not only as a quality provider but also as the area’s employer of choice (a designation, by the way, that companies actually compete for in many cities). To improve the odds of choosing the best potential employees, some firms are using tests to identify candidates with psychological profiles similar to those of their best performers. Others have adopted staffing practices where they hire the “best of the best” when these candidates are available, not just when they have a position open. Such is a service industry where it is as critical to bank good people as it is to bank profits.
2. They Focus The best home care managers understand the extraordinary value that comes from focus. A recent article in the Harvard Business Review discussing the benefits of focusing on narrow customer segments states that “it is far from rare for the most profitable 20 percent of a company’s customers to contribute more than 100 percent of its profits, sometimes more than 200 percent (emphasis added), and for its least profitable 20 percent of customers to generate losses of an equal amount” (“M&A Needn’t Be a Loser’s Game,” Harvard Business Review, June 2003). Time and again, the best-performing managers and companies identify focus areas — and stick to them ruthlessly. Most commonly, akin to the customer segmentation described above, we see focus on narrow product lines and services, such as respiratory or rehab services for home medical equipment providers, specialty drugs for infusion therapy providers and orthopedic patients in the home health arena. But focus can come in other forms. Some providers focus on narrow geographic markets, others by payer and still others by combinations of each. These providers gain the marketing clout of a specialist: “We do it (whatever it is) better than anyone else, because it is the only thing we do.” Furthermore, when you only have to develop and implement clinical and operational formularies for a few products or services, deliver to a tight geographic market or bill one type of payer, you can reap extraordinary gains in productivity and efficiency. In highly focused organizations, employees always know what to do, as strategic decisions are always made within an identified, focused context.
3. They Monitor Once clear management objectives — which flow easily in focused organizations — are communicated, the best performers vigorously monitor performance. Recognizing that information overload can paralyze an organization, these managers are highly selective in what they monitor, often looking at as few as 10 key measures. These “flash reports” are generally only one page long, which increases the likelihood that they will actually be read, and are often prepared on a daily basis. Rather than tracking revenues that can obscure where revenue growth comes from — particularly important for focused product providers — firms may track only a few specific revenue lines. For HME providers that rely on rental revenues, this could include primarily monitoring new starts that are the best predictor of future growth. With respect to expense management, companies frequently monitor performance in relation to the most significant expense, which in most health care firms is personnel. Most commonly, we see revenues per employee, but we also see gross profit per employee. Such tracking enables companies to monitor trends in revenues, cost of goods sold and productivity in one combined measure. In addition to revenue and expense measures, the best performers aggressively monitor cash collection activities, traditionally in the form of days sales outstanding. The most enlightened firms also look carefully at measures such as days in pending, and cash as a percentage of revenues, where revenues are staggered 30-90 days to reflect normal cash conversion cycles. One other thing: The best companies do not rely solely on industry benchmarks to assess their level of accomplishment. Rather, they rely on internal benchmarking, where the objective is sustained performance improvement.
4. They Communicate No surprise here. Most companies believe they communicate well with their employees. But going far beyond weekly staff meetings, the best performers take communication to an entirely different level. Remember those “flash reports” described above? Many firms display these measures prominently, both to emphasize their importance and to facilitate greater buy-in from their employees. Similarly, rather than keeping financial statements locked in the board room, some industry leaders distribute sanitized versions of the statements (without confidential salary information) to all employees in order to breathe life into the link between their activities and profits. Many firms even conduct daily “call-outs,” where customer service reps literally call out performance numbers at the end of the day. Finally, top performers work hard to create corporate cultures that vividly reflect the manner in which they do business. This ultimately serves as a constant reminder about what is important to the organization.
5. They Reward When organizations communicate effectively and monitor focused objectives, the natural progression is to offer incentive programs reinforcing performance toward those ends. Although many firms offer incentive programs, the best execute them extremely well. First and foremost, the programs are highly focused. For instance, many respiratory providers only pay sales commissions for Medicare oxygen, CPAP/bi-level and nebulizer patients. Second, the incentives are carefully constructed to reward the right activity, often a more difficult task than it sounds. Since sales reps are responsible for generating new referrals, for example, the best incentive programs pay only on new start-ups versus residuals from re-rentals of focused products. Consider collection programs. Offering incentives to billing personnel to reduce DSO can lead to improved cash collections (intended) or a flurry of write-offs (the oft-unintended result). The best performers offer collection incentives based on reaching percentage of revenue collection milestones. Third, rather than paying incentives quarterly, or worse, annually, top managers pay them monthly to keep the link between performance and reward constantly in mind. Fourth, the best incentive programs are simple and easily calculated so that employees always know how well they are doing. And finally, the best managers offer targeted incentive programs to all levels of employees to build a corporate culture of performance excellence.
6. They Sell When we see companies that have achieved substantial and consistent growth, or that have strategically altered their product mix, in virtually every situation that firm has made a commitment to developing a professional sales force. And this means force, as in, it is not uncommon for the best performers to have one or more reps for each $1 million in revenues. Note the thread that runs through the Seven Habits: These reps are carefully selected, extremely well-trained, strategically monitored, and given solid incentives to achieve focused objectives, without caps on how much they can make. During our best-practice interviews, another pattern emerged. Most of the best performers seem to be concentrating their sales efforts on physicians, rather than on institutional discharge planners, in order to capture potential clients earlier in the referral process. These sales reps adopt a higher-end “consultative sell,” and further distinguish themselves as being more than mere “doughnut-pushers.”
7. They Network Last, we found that most of the best performers are heavily involved in state and national associations, and not necessarily for the reasons you might expect. While part of their interest lies in shaping the legislative and regulatory arenas in which they operate, the best managers use these forums to network aggressively with their colleagues, to learn what strategies work (and don’t work) for them and to stimulate new ways of thinking about their organizations.

We found many instances where managers with a strong network in non-competitive situations developed mentor-student relationships that often included on-site visits for the specific purpose of sharing best-practice information. As entrepreneurs in close-knit organizations often suffer from an unhealthy inbreeding of thoughts and ideas, networking can be a critical element in company success.

Certainly there are other management traits that are important, but virtually all of the best performers we have come to know possess and embrace each of those described. If you want to become a top home care manager, they’re not a bad place to start.

Dexter W. Braff is president of The Braff Group, a health care merger and acquisition firm with seven offices nationwide. He can be reached by phone at 888/922-5169; by e-mail at [email protected]; or on the Web at www.thebraffgroup.com.

7 Habits at a Glance

They are people-centric.

They focus.

They monitor.

They communicate.

They reward.

They sell.

They network.