It’s hard to imagine a better approach to learning the data deeply than repeated rounds of analysis, proofreading, and discussion. After the fifth time looking at a data point, patterns start to emerge that aren’t always obvious at first glance.
As you probably know, we launched the 2020 Home Care Benchmarking Study this week.
The study is the most comprehensive study of home care agencies in the sense that it goes more deeply into agency operations than any other study, and this year’s study was the largest yet.
Conducting the study is always a learning experience for our team. It’s hard to imagine a better approach to learning the data deeply than repeated rounds of analysis, proofreading, and discussion. After the fifth time looking at a data point, patterns start to emerge that aren’t always obvious at first glance.
Some of the trends we’re highlighting here are obvious at first glance but merit a place here anyway; several of them require you to connect the dots between several data points before the pattern emerges.
The Home Care Benchmarking Study vs. Home Care Pulse’s Survey Program
Before we dive in, it’s probably important to make a clarification about what Home Care Pulse actually does. While many agencies know Home Care Pulse for the Benchmarking Study, the study is more of a labor of love for the industry than our bread and butter.
Our conducts phone surveys with your clients and caregivers, then sends you the data in online dashboard so that you can keep a strong pulse (get it?) on how your clients and caregivers are doing.
We mention this simply to avoid any confusion between the two types of surveys we do: monthly client/caregiver surveys and the Benchmarking Study survey.
Without further ado, here are five of our team’s takeaways from conducting this year’s Benchmarking Study:
#1: Home care agencies are getting better and better at retaining clients.
We’ve spent a lot of time recently discussing the three pillars of revenue growth for home care agencies: 1) Getting more clients, 2) increasing rates, or 3) retaining clients longer. The third option is typically the least talked about, yet it’s a key driver for the most profitable home care agencies.
From this year’s study, it’s encouraging to see a strong year-over-year trend in the overall average client length of service:
Home care agencies should be commended for this. Retaining clients longer isn’t just a driver of business growth—it’s evidence that agencies are providing an ever-improving quality of life to their clients.
#2: Home care needs to have some important conversations about readmission rates.
Let’s start with the numbers: according to the study, the percentage of home care agencies actively tracking hospital readmission rates is hovering at around 25%.
While it’s likely that the majority of providers have their pulse on readmissions in some fashion, it’s important to remember the old mantra: what gets measured, gets managed. It’s hard to make a concerted effort to improve a data point that you aren’t tracking.
Why is measuring and reducing readmissions so important? Many experts including CMS have highlighted home care as the ideal post-acute setting to keep seniors out of the hospital—increasing lifespans, improving quality of life, keeping healthcare costs down, and securing home care’s place in the care continuum.
The short version: if home care agencies want to take a major step toward improving seniors’ quality of life, playing an even more vital role in the healthcare system, and dramatically improve their referral partnerships, they need to start tracking and zeroing in on hospital readmission rates.
#3: The consequences of complacency are growing.
In previous articles, we’ve mentioned what’s been semi-jokingly referred to as the Great Home Care Divide: whether or not agencies are adapting to change by adopting new technologies to work more efficiently, pivoting their strategies to find ways to stand out to referral partners, and generally setting aside old ways of doing business in favor of what’s working today.
What’s clear is that the consequences are increasing for agencies that fail to adopt modern technologies and strategies. All of the following data points play into this concept:
The median client acquisition cost has increased almost $100 over the last five years, from $509 to $599
Agencies reacting to increased competition by upping their game with referral source and getting an edge on agencies that are still using yesterday’s tactics
Per-agency client growth rates are down by a third over the last five years.
The last data point is the most telling: because larger agencies naturally tend to have lower client growth rates, this data suggests one or both of two conclusions. One is that larger agencies have taken a much bigger slice of the market; the other is that agencies simply aren’t acquiring new clients as quickly. Either outcome would point toward a shifting competitive environment that favors adaptation and solid processes.
#4: Client experience has become vastly more important as a driver of growth.
Client experience has always been a critical factor to growth; it’s the reason Home Care Pulse was established back in 2008. However, this year’s Study demonstrates that the shift toward client-powered growth has accelerated—meaning that agencies who deliberately use a client referral growth strategy have pulled ahead.
Let’s talk about how we know this.
First, client referrals are again the top referral marketing source—but agencies who report clients as a top referral source now say that client referrals account for a whopping 73% of their revenue.
While we usually advise home care agencies not to put too many eggs in one basket in terms of referrals, a heavy percentage of referrals from clients is something to celebrate. Some of the reasons include:
As a source, client referrals are extremely stable because they’re coming from many different individuals. If your main source is a hospital and something shifts in your relationship with that hospital, you stand to lose all referrals from that hospital. If something shifts in your relationship with a referring client, you’ll still receive referrals from all of your other clients.
Clients who were referred to you by other clients typically stay longer, are more profitable, and more likely to refer other clients. In short, they’re generally best-fit clients because they generally already match the profile of your most loyal clients.
The other reason why it’s clear the client experience has become more important is demonstrated in the graph below, which shows the difference in revenue for agencies using our program to survey their clients and caregivers versus agencies that don’t, as this is a key way to pinpoint ways to increase client loyalty.
Is this a shameless plug for ourselves? Kind of, but the point we’re really trying to illustrate it is that that revenue growth happens when agencies a client base that is motivated to recommend the agency to others. And doing so usually requires the agency to prioritize having a clear process in place to get feedback from clients (and caregivers) so that they can pinpoint areas of improvement.
How should you use the Study?
In this article we’ve looked at the data from a macro level—what does the data say about general industry trends and the future of home care?
It’s equally powerful at a micro level—what are other agencies doing and how does this dictate ways that you could grow your own agency?
Home care agencies around North America are using the study to benchmark themselves and make more informed decisions to grow. If you aren’t using it yet, we challenge you to do so. You can learn more here.
Any questions about the Benchmarking Study? Let us know in the comments below.
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