What's your mode?
That is, what mode is your company in? In this rapidly changing healthcare landscape you should be considering one of 3 options....
And that's about it.
With reimbursement shrinking for Medicare providers, hospice providers getting squeezed by large national competitors, and the explosion of competition in the private duty world....standing pat means you are contracting. Many of my clients have seen this over the past 3 years.....what once was easy to achieve (revenue) is now difficult. Year over year revenue growth is more difficult than ever.
What to do? Buy, Sell, or Grow....simple.
If you are in Buy mode, you are aggressively reaching out to find providers that are in Sell mode (or those that are not, but could be with the right offer). Simply buying another agency isn't the answer however....it must be the right strategic, geographic, culture, and financial fit. There is little use duplicating your efforts in your existing service area by buying a competitor UNLESS they have a specific strategic advantage you cannot replicate. There is always attrition when it comes to new ownership transition so that must be figured into the equation. That said, buying is the quickest way to stake your claim in a new area with built in relationships, sales force, and caregivers. Buyers are aggressive, but not foolhardy when it comes to finding the right acquisition target.
If you are in Sell mode, don't be tempted to sit back, cut costs....all in the hopes of making the ledger look better. Agencies that are looking to Sell should be showing solid strategic and competitive advantages and revenue growth. Your buyer can take a look at administrative and direct costs and determine how their infrastructure can reduce costs.....but you're asking a lot if you expect a buyer to decide how they'll grow top line revenue if you haven't been able to. Show an acquisition partner you can bring in dollars, and they can determine how to make sure a few more pennies of each one are retained as earnings.
If you are in Grow mode....congratulations! This is my favorite mode of all. If you're not considering buying or selling, by default you are in Growth mode. Let's be honest....many current agencies are not going to make it in today's home care world. Sometimes it makes sense to buy some market share in your existing service area....but most times it makes sense to go out and take it. Research and understand why key referral sources work with a vulnerable competitor....and determine how you can leverage that market share away. Sometimes growth is a matter of attrition.....simply waiting for some smaller, or less well funded competitors to go away. The challenge with that is....you've just handed your other competitors the same opportunity that you now have. If you're positively in Grow mode.....don't wait for growth, go out and get it!
Home care is not going anywhere. It is a vitally important part of the continuum of care. YOU are in the right place, at the right time, as our healthcare system continues it's challenge of serving more people with less dollars and less resources. Our clients have already provided their own care setting (their home) so we don't need to absorb the cost of that. We can, should, and will be a greater part of the solution in the coming years....so it's simply up to you to decide where you stand on a very simple, yet vital list.
Buy, Sell, or Grow?
Whatever you decide....good luck!
If you need assistance or advice with any of this in your agency, email me and I'll be happy to talk you through it.
Power Shot Training, Inc.