The world is a different place today than just a few short years ago, and that certainly holds true for the long-term post-acute care LTPAC realm. The coronavirus (COVID-19) pandemic continues to prove how fleeting once-predictable revenues can be, while rising business costs, new regulations and shifting compliance requirements make it increasingly difficult to remain financial viable while providing quality care that residents deserve.
Essential skill #1: Holistic insight on, and understanding of, the entire LTPAC organization.
This means:
Essential skill #2: Thinking and acting strategically, not just tactically.
Yes, controllers must handle and/or oversee all the critical duties we outlined in Chapter 1. That said, automation and technology can facilitate many of these functions, which makes them more time-efficient and frees up controllers for more strategic and value-added work.
The next-level controller must be a strategic thinker and consider the organization holistically—not just through the lens of finance. This professional should have the ability and drive to review and analyze information and data that comes in from departments across the enterprise; process it through sound analytical means; and draw conclusions about performance that inform decision-making.
LTPAC executives may not have financial backgrounds. What they seek from controllers is informed guidance and advice that can help them meet today’s issues head-on and prepare for tomorrow’s changes.
There’s more. As a true strategic thinker and a valued member of the organizational leadership team, the controller should endeavor to understand the industry, learn about issues and trends and draw logical conclusions about where things are headed. Understanding how specific provider types will remain viable – and how their organization can transcend current and future changes – aren’t traditional controller duties. Yet, they are necessary for next-level controllers.
Essential skill #3: Understanding new payment methodologies and new regulations, and preparing for future changes.
As mentioned in Chapter 2, PDPM went into effect on October 1, 2019. This new payment model is a fundamental change in the way SNFs are reimbursed for Medicare A services. It also aligns reimbursement with the shift from volume to value. As the name suggests, PDPM is patient-driven—it is designed to improve incentives to treat the needs of the whole patient; decrease focus on the volume of services the patient receives; and reduce provider burden and paperwork over time. In fact, the Centers for Medicare and Medicaid Services (CMS) projects $2 billion in savings as a result of PDPM’s implementation over the next 10 years.
PDPM is the first payment change implemented by CMS in the last 23 years, and many – including us at Richter – believe it represents the next inevitable step toward the Unified Payment System.
PDPM is reality; embracing it can benefit your SNF in many ways. Conversely, not preparing, and not integrating it properly throughout your SNF, can negatively impact profitability and patient care—and given CMS’ promise of robust monitoring, it may very well lead to audits.
Then there’s PDGM, the home health industry’s newly adopted reimbursement model. The new PDGM billing model presents an extra layer of challenges to home health agencies on top of challenges posed by COVID-19. It’s imperative that today’s controllers are prepared to handle their agency’s billing under this new model efficiently, effectively and compliantly.
From a pure reimbursement perspective, controllers should perform ongoing analyses between pre- and post- PDPM/PDGM to determine what revenue looks like today, and what trends appear to be happening. This entails reviewing any relevant trends with ancillary expenses, as well as pre/post PDPM/PDGM. While the PDPM transition will eventually be fully realized, it’s taken some time for commercial payers to adopt this reimbursement model. Controllers should pay close attention to commercial payers in their sphere of operation to understand how they are thinking and acting.
Essential skill #4: Embracing data to inform decision-making.
Organizations in nearly every industry face an unprecedented upsurge in data. Consequently, making sense of data that surrounds business and financial leaders is becoming a truly daunting task. Still, throwing one’s hands up and ignoring the challenge isn’t an option in the LTPAC realm. Indeed, making smart use of data is a key to remaining viable.
Need proof? If you’re an executive or financial leader in your LTPAC organization, ask yourself:
Finding answers starts by asking four primary questions:
1) What happened? (in business consulting circles, we call this Descriptive Analytics)
2) Why did it happen? (aka, Diagnostic Analytics)
3) What will happen? (aka, Predictive Analytics)
4) How can we make it happen—or prevent it from happening? (aka, Prescriptive Analytics)
Chances are, data is available to help LTPAC controllers and their staffs shed light on these questions, spark discussion and ultimately, shed insight. Making strategic use of it as a basis for decision-making is a challenge that must be met—and the controller should be the one in a LTPAC organization who leads the charge.
Most post-acute care organizations don’t staff analysts, data engineers and the like, so controllers must be the organizational data driver. It’s a big ask, on top of all the traditional roles and responsibilities expected of controllers. Yet, intelligent use of data will unlock a wealth of opportunities that, in turn, can help optimize revenues and promote sustainable growth.
Not sure where to start? Look first at data coming out of the big healthcare data farms; this can help you to begin understanding today’s most prominent healthcare trends. You’ll learn what pressing needs are relative to hospitals. You’ll gain insight on trends in patients returning home and reentering the community versus needing institutional care or short-term rehabilitation. Data will inform the high-functioning controller as he/she makes referral and operations decisions. Yet, there’s no need to wait; today’s data can inform decision-making in the short term—and it can also help controllers and executives plan for years down the road.
You won’t have to look far for meaningful data. It’s widely known that today’s average life span is increasing— experts generally agree on an average of about 88 years. The longer we live, the more support we’ll need medically. Hospitals will provide an acute, episodic solution. But post-acute care providers truly see a patient all the way back through to independence. In this regard, an LTPAC organization’s controller should be looking at the front of the train to determine actual present-day and future post-acute care needs—i.e., what types of services are currently being provided? Which types will be in higher demand? Which could slip given present and future trends?
Take laparoscopic surgery, for example. Ten years ago, most surgeries left a patient incapacitated for six weeks. Now, with advances in surgical techniques and other medical services, those recovery periods are drastically reduced—in some cases, to a 20-day length of stay. This compels post-acute providers to identify and pursue alternative revenue sources. Doing so means that controllers must examine data—not just in their organization, but selected data throughout the healthcare industry, and absolutely within the acute care realm.
Identifying the right data, analyzing it with forethought and precision and using it to drive decision-making can optimize referral relationships, clinical programs, fiscal management and all other aspects of the operation.
Essential skill #5: Optimizing cash flow management.
Sound cash flow management skills never go out of style, and now more than ever they play an essential role in maintaining operations. Tasks such as working alongside AR on billing updates, projecting and planning for future payments and prioritizing vendors and payroll are some basic ways to help ensure that cash is available today and tomorrow, that debt obligations are being met and that employees are receiving paychecks.
There’s more to it, though. From our experience working with LTPAC organizations and finance professionals throughout the country, we find that far few controllers proactively perform cash management projections out to 90 days. A 30-day projection isn’t sufficient; 90 days must be the target. As part of this, controllers must review and analyze the latest data such as current census levels, because census levels today convert to cash in 45-60 days. Controllers must identify fixed costs and when those are incurred on a cash basis. Variable costs should likewise be on their radar—i.e., what variable costs do they have control of so that when census and revenue dip, they can spot whether they’re reacting too quickly on the variable costs and as a result, they can proactively manage that.
Keep in mind, the 90-day projection is always a moving target; it needs to be looked at almost daily—weekly at the very least, and especially during times like these where occupancy and case load rates are down and fluctuating as hospitals are reopening.
Today, controllers must, at a minimum, begin planning for a post-COVID-19 world. The virus eventually will subside; but in the meantime, many LTPACs have garnered substantial funding through the federal government’s Paycheck Protection Program and other stimulus measures—and this money won’t last forever, particularly if it’s being spent now. Continued occupancy and case load levels down the road could impact cash flow when stimulus funds are depleted, so it’s wise to make sure that future cash flow needs will continue to be met.
Essential skill #6: Integrating qualified professionals with appropriate skill sets within the finance function.
One of the most persistent challenges in post-acute care is the lack of professionals who truly speak the language in the finance arena. There continues to be a fundamental shortage of qualified people. This applies not only to LTPAC controllers, but employees who serve under them in the finance department. Today’s controllers are challenged to attract qualified professionals to handle financial duties that include revenue cycle, accounts payable, payroll and more. Consequently, far too many LTPAC finance departments are staffed by employees with inadequate training and experience in their given roles. On top of that, many financial employees in LTPAC organizations don’t possess the requisite knowledge and experience in the post-acute realm, which is technical, complex and specific. This matters because every provider type in healthcare has its own set of rules, codes and reimbursement methodologies. If you’re, say, a skilled nursing facility, you could hire a biller with experience billing physician or hospital services; yet, it’s unlikely they’ll adequately understand the billing nuances of skilled nursing.
So, in addition to all the duties listed in Chapter 1, controllers should be able to assess the skill sets and qualifications of candidates in positions under them. And if qualified candidates aren’t readily available, controllers should consider outsourcing options from highly experienced and reputable providers.
Contact Richter’s Skilled Nursing Facility Consultants
Do you have questions about expanding the role of your facility’s controller, outsourced contract controller services, or other financial or clinical challenges? Read our e-book, “The Changing Role of LTPAC Controllers: Essential Skills Needed for Success” or call Richter’s skilled nursing facility consultants at 866-806-0799 to schedule a free consultation.