We are struggling with plans for a downturn expected October 2010. I am looking for some insight. (I have listened to this cast Race don't Chase and have not found it there). I/we (boss, me, team) feel like we are in an impossible situation.
Our budget is fairly simple.
Revenues come from amount of time spent with clients.
Costs are Salary and Benefits. Other costs are trivial and make up less than 3% of my monthly budget.
Current situation- 50% of our work is with multiple clients simultaneously (3-5 at a time). The other 50% is one-on-one work with clients.
Next year, due to regulatory changes, 100% of work will be one on one.
Problem. If we continue the same intensity, total revenue will not change, but, we need 2.5x our current staff do accomplish this.
Solutions-
Other expenses -- cutting things like travel, education, bonuses, etc will not impact the bottom line to any appreciable degree -- not worth the time to find those pennies.
Benefits -- corporate controlled and out of my hands.
Salaries- Cutting everyone by 50% would make the numbers but I would soon be with zero staff.
Efficiency -- We could (and will) be able to get 5-10% more than current.
Other than wishing :) for an act of congress to change the regulations, is there something we are missing???
Thanks in advance,
Chris
Hard to say
Chris,
It's hard to say without more background. Suggestions would have to be very broad, but here are two:
Increase client fees... if this is a regulatory change, clients may face this issue regardless of who they turn to in the market.
Offshore... since your costs are 3%, excluding salaries, I'm guessing you don't have any real estate costs, and with no real estate costs your staff could work from anywhere.
--Michael
More Background
Michael,
First, thank you for the reply.
Background.
I manage a team of 13 staff (11 clinicians and two techs). We are Occupational, Physical, and Speech therapists. So, anything we do is while in the same room as our patient/client. We're like the plumber from The World is Flat -- will never be offshored.
Increase client fees. Will probably be the way it goes. The economics are screwy.
Our customer (the site) receives payment mainly from Medicare for our services based on how much we provide. We then charge our customer a percentage of what they receive from medicare. We can increase our charge, however, the customer will not receive any more as the rates are government controlled. But, as you said, this reality will exist no matter who the service provider is.
What I am trying to find is a novel solution. A sweeping change like this occurred industry wide a bit over 10 years ago. The coping strategy was twofold -- layoffs and salary cuts. The former cannot occur this time. More staff are needed. That leaves one other dismal choice.
I am certain there has to be a door number three here. Seeing we have a year to prepare. . .
Thanks again.
Chris
Starting to get the picture
Thank you Chris, I think I'm starting to see your challenge.
Along the offshore/outsource path, is there repetitive paperwork your staff has to fill out, and how much time is spent doing that? You may not be able to outsource any individual people, but you maybe able to increase their billable hours by shifting the administrative tasks to less costly personnel.
Would it be feasible to start a new line of business providing the group therapy directly to a different population? I suspect the recession has increased the population that's looking for good value but doesn't qualify for Medicare.
More thoughts.
Repetitive paperwork. No, my people mainly perform clinical documentation. Cannot be delegated. Other activities, yes, with the one to one model of service delivery, there is room for more efficiency (more point of service documentation -- you doctor writes his note before he leaves the exam room.) That’s a good point.
New line of business -- a possibility but not a reality. Logistically, we’re not set up for that; it is rather inefficient. Our business is to provide the service our customer asks for. Our customer serves the Medicare population. They are not able to turn away from that.
One final point. I am not trying to be difficult and do appreciate the time and thought everyone puts into this. I have worked in this business my entire professional career and have been managing for the last three. I have a whole lot invested. There has to be a better way.
Thanks again.
Not Difficult
I'm not seeing you as difficult! This is a tough issue and a forum posting isn't the most efficient or the most effective way of working through it. From an out-of-the-box perspective I applaud your approach.
As for the new business, I was thinking more along the lines of direct to the client, turning them into your customer. (I'm defining these roles in ITIL language merely for the sake of clarification. The Customer is the one paying for your services. The Client is the one benefiting from your services.) This may require a separate facility located in an area populated by people that typically don't qualify for Medicare. Alternatively you could seek value add by creating a referral agreement with a school system.
Just crazy ideas, but maybe one will strike a chord.
--Michael