Creating a matrix of success
Q. With yet another round of reimbursement cuts under our belt, the future of Medicaid programs in question and competitive bidding on the horizon, what can we do to prepare for the road ahead?
A. The most important tools for a homecare provider are systems that help ensure survival during times of declining reimbursement, increasing operating costs and other fiscal pressures. Your company's financial viability is scrutinized more often than you may realize by referral sources, lenders and leasing companies. A strong balance sheet and profit & loss statement can bring new growth opportunities and reduced interest rates. As competitive bidding debuts, competing companies will most likely be judged partly on their fiscal ability to acquire the equipment and deliver to an expanded patient population. There are several key indicators that can help you assess the fiscal health of your business. Creating a management matrix that tracks these indicators on a quarterly or annual basis enables you to present an accurate picture of the company's fiscal health . The areas that you should carefully monitor include: 1. P&L statement: sales growth, expense control, cash flow, bottom line orientation; 2. Balance Sheet: Assets, liabilities, fixed asset management; 3. AR Management: DSO (Days Sales Outstanding), bad debt management; 4. Market Position: patient census, product mix.
Begin to see your company as an investment vehicle and focus not only on the clinical aspects but take a close look at the business as seen in the eyes of an outside investor.
Jonathan Sadock is managing partner of Paragon Ventures Mergers and Acquisitions. 800-719-1555 or email: email@example.com