Module 7:
Business and
Operating
Environment
Aging Services of Minnesota
Older Adult Services Orientation Manual
© Aging Services of Minnesota 2014
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Acknowledgements
This resource was made possible by funding from the
Ronald Patterson Governance Fund
of the Aging Services of Minnesota Foundation
Developed by Health Dimensions Group, Minneapolis, MN
TERMS OF USE
Aging Services of Minnesota (Aging Services) is the sole and exclusive owner of and retains all rights to this Orientation Manual (“Manual”) and
all associated registrations. Aging Services makes this Manual available free of charge only to its members on the Members Only section of
the Aging Services website, which is password protected.
Member representatives are authorized to use any or all of this Manual only in the performance of duties and responsibilities on behalf of the
member organization. The contents of the Manual may be customized to meet the needs of the member organization, and copies of any portion
of the Manual may be distributed within the member organization.
In every other respect, members and member representatives may not: (i) alter the Manual; (ii) add to the Manual; (iii) update the content of the
Manual; (iv) distribute reproductions of the Manual to any person or organization not a member of Aging Services; (v) borrow portions of the
Manual for use in other works; (vi) make derivative works; or (vii) be identified as an author of the Manual.
© Aging Services of Minnesota 2014
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The Operator’s Perspective
How an organization is managed will determine the
organization’s success today and into the future
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The Operator’s Perspective
Responsibilities
Operators are commonly
referred to as:
Responsibilities include :
• Administrator
• Campus Administrator
Quality of
Care
• Chief Executive Officer
• Chief Operating Officer
Mission
• Director
• Executive Director
Financial
• Housing Director
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Staff /
Workforce
The Operator’s Perspective
Funding
Older adult service providers that receive government
funding can have complex operating environments
Housing with Services/
Assisted Living industry
is heavily consumer
driven and constantly
evolving
© Aging Services of Minnesota 2014
Care center and home
health care are heavily
regulated
5
Business Operating Environment
Introduction
Business operations determine overall organizational
performance
Key operational indicators impacting performance
include:
Census Marketing
© Aging Services of Minnesota 2014
Staffing
Financials
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Quality
Census—Marketing
Aggressive marketing, referral management, and sales
activities = healthy census
Networking
• Developing new relationships
• Fostering existing relationships
Visibility and outreach to the community
• Attending/hosting community events
• Exhibiting and speaking at
conferences
Sales activities
• Lead management
• Tracking referral sources
• Building tours and meetings with prospective clients/family
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Staffing
Successful operations are dependent upon:
• Adequate staffing levels
• Experienced staff
• High employee
retention
Staffing
Levels
Experienced
Staff
High
Employee
Retention
Engaged
Employees
• Engaged employees
SUCCESS
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Financial
Financial performance depends upon:
•
•
•
•
Budgeting
Consistent revenue streams and cash flow
Expense management
Portfolio management
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Financial
Balance Sheet
Statement of Financial Position
Assets
Cash
Liabilities and Net Assets
$1,700
Current Portion of LT Debt
$1,270
Marketable Securities
9,000
AP & Accrued Expenses
5,818
Net Patient AR
3,000
Third-party Payor Settlements (aka due to third-party)
2,306
970
Other Current Liabilities
2,950
$14,670
Total Current Liabilities
$12,344
Inventory
Total Current Assets
Total Long-Term Debt
Plant, Property & Equipment
(PPE)
Investments
Total Assets
© Aging Services of Minnesota 2014
15,000
2,900
$32,570
---
Total Liabilities
12,344
Net Assets (total assets – total liabilities)
20,226
Total Liabilities and Net Assets
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$32,570
Financial
Income Statement
Statement of Operations
Operating Revenue
Net Patient Revenue
$35,156
Premium Revenue
11,000
Other Revenue
18,500
Total Operating Revenue
$64,656
Operating Expenses
Operating Expenses
© Aging Services of Minnesota 2014
$33,202
Depreciation & Amortization
2,300
Interest
1,285
Bad Debt Expense
1,000
Total Operating Expense
37,787
Net Operating Income
$26,869
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Financial
Statement of Cash Flows
Statement of Cash Flows
Statement of Cash Flows
Cash Flows from Operating Activities
Net Patient Revenue
$35,156
Premium Revenue
11,000
Other Revenue
18,500
Changes in Net Patient Accounts Receivable
(3,000)
Changes in AP & Accrued Expenses
(5,818)
Changes in Third-Party Settlements
(2,306)
Changes in Other Liabilities
(2,950)
Net Cash Flow from Operating Activities
50,582
Cash Flows from Investing Activities
Changes in Investments
2,900
Net Cash Flow from Investing Activities
2,900
Cash Flows from Financing Activities
Payments on Long-Term Debt
(1,270)
Net Cash Flow from Financing Activities
(1,270)
Net Cash Flow
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$52,212
Financial Indicators
Financial
indicators
measure
financial
performance
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• Current ratio
• Days in net patient receivable
• Days unrestricted operating cash
available
• Debt to equity ratio
• EBITDA
• EBITDAR
• Operating margin
• Personnel expense as percent of total
operating revenue
• Return on assets
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Housing with Services
Quality
Measures of Quality:
• Resident and family satisfaction surveys
• Home care survey findings
Quality Designation:
• The Aging Services of Minnesota Confident Choices for Senior
Living Designation
 A quality designation awarded to senior living providers that have
committed to high standards of quality and exceed regulatory
expectations
 Currently 70 senior living providers have been awarded this
designation
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Care Center
Census
Census drives revenue and helps determine the financial
success of an organization
• Average daily census (ADC) refers to the average number of
residents residing in the care center at a given time
Healthy census depends on active marketing and
management of admissions and discharges
Referral source relationship development is key
• Hospitals are the leading referral source of care center
admissions
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Care Center
Census (continued)
Occupancy is a measure of census
MN:
89.88%
% Occupancy
Total # of beds
# Occupied
resident beds
National: 81.23%
Minnesota’s
occupancy is
higher than the
national rate
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Care Center
Staffing to Census
Staff wages are the single largest operating
expense – operators must understand
staffing ratios and how to staff to census
Staff hours are determined and scheduled
based on:
Census + Case Mix = Direct
Care Hours (staff hours)
Cause of nursing homes
census fluctuations
• Census – the number of residents being
cared for on a given day
• New admissions (both
short-term and long-term
residents)
• Acuity levels or resident case mix
• Deaths
Staffing hours are calculated per patient day:
• Patient days are the average of the number
of patients or residents
• Nurse staffing hours per patient – average #
of nursing hours provided to the resident on
a given day
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• Discharges
• Transfers to another health
facility
Care Center
Payor Mix
Payor mix = % of revenue received from each payor source
(Medicare, Medicaid, Managed Care, Private)
+
Medicare Operations
Per Diem Revenue
-
Operating Expenses
Medicaid Operations
Per Diem Revenue
Operating Expenses
Operator must balance payor mix – net revenue from all payors
should meet or exceed operating expense
Note: Minnesota’s Rate Equalization Law prohibits care centers that participate in the
Medicaid program from charging private pay residents more than what Medicaid
reimburses
Medicaid is the primary funder of long-term-stay residents; Medicaid rates are
historically less than the actual cost of care
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Care Center
MN Payor Mix
2012
Minnesota
National
Medicare
10.21%
Medicare
14.21%
Medicaid
54.78%
Medicaid
63.65%
Other
35.01%
Other
22.14%
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Care Center
Quality
Care Center quality is driven by very specific standards
and regulations set forth by The Centers for Medicare and
Medicaid Services
Quality Measures Include:
• CMS Five-Star Quality Rating System
• Nursing Home Report Card
• Annual Health Inspection – State Survey process
• Certification and Survey Provider Enhanced Reporting
(CASPER) system
• Internal Quality Assurance and Performance Improvement
Initiatives
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Care Center
Quality: CMS Five-Star Quality Rating System (QA/PI)
CMS created the Five-Star Quality Rating System to
help consumers, their families, and caregivers compare
nursing homes more easily and to help identify areas
about which you may want to ask questions
Rating of 1 to 5 stars – with 5 being best
Quality
Rating is
comprised of
three measures
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Staffing
Health Inspections
Care Center
Quality: Nursing Home Report Card
The Nursing Home Report Card was introduced to provide
consumers with a user-friendly means of comparing the quality of
care provided in nursing homes across the state.
Nursing homes are compared using seven quality measures.
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Care Center
Quality: State Health Inspections
Health inspections (survey or state survey) determine if nursing
homes meet state and federal requirements as set forth by CMS
• A single poor survey can be devastating to a nursing home, in
both its reputation and financially, with the effects lingering for
years
Routine Standard Survey
All nursing home providers certified
by Medicare and/or Medicaid are
subject to unannounced standard
surveys every 9 to 15 months
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Other types of surveys include:
• Initial Certification Survey
• Abbreviated Standard Survey
• Extended Survey/Partial Extended
Survey
• Complaint Survey
• Post Survey Revisit (follow-up)
Care Center
Quality: Routine Standard Survey Process
The Standard Survey process
utilizes the Quality Indicator
Survey (QIS)
Overview of QIS Process:
• Off-site survey preparation
• On-site survey preparation
• Entrance conference
• Facility tour
• Stage 1 Preliminary
investigation – data collection
• Stage 2 Investigation and
follow-up
• Stage 2 Analysis and decision
making
• Conduct exit conference
QIS is a two-staged process
used by surveyors to
systematically review specific
nursing home requirements and
objectively investigate any
regulatory areas that are
triggered
Stage 1 = Data collection
Stage 2 = Investigation and
follow-up
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Care Center
Quality: Deficiencies and Plans of Correction
Deficiencies
• A finding of noncompliance results in a deficiency citation
• Deficiency citation is also called an “F-Tag” (federal tag)
• Survey team determines the actual or potential for harm based on
the Scope and Severity
Plan of Correction
• Facilities have 10 days to respond to deficiencies with a Plan of
Correction (POC)
• POC identifies how the facility will correct and assure future
compliance in the deficient area
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Care Center
Quality: Scope and Severity of Deficiency
Severity of the
Deficiency
Isolated
Pattern
Widespread
Immediate jeopardy to
resident health or safety
J
K
L
Actual harm that is not
immediate jeopardy
G
H
I
No actual harm with
potential for more than
minimal harm that is not
immediate jeopardy
D
E
F
No actual harm with
potential for minimal harm
A
B
C
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Care Center
Quality: Survey Deficiencies
A deficiency with a severity level
of Immediate Jeopardy
(J, K, or L) is interpreted as a
crisis situation in which the health
and safety of individual(s) are at
risk
The consequences of deficiency
are serious and may result in hefty
fines, denial of payments, closing
of admissions, and/or care center
takeover by the state
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Definition:
A situation in which
the provider’s
noncompliance with
one or more
requirements of
participation has
caused, or is likely to
cause, serious injury,
harm, impairment, or
death to a resident.
(42 CFR Part 489.3)
Care Center
Quality: CASPER
Certification And Survey Provider Enhanced Reporting
(CASPER) system
• The CASPER system is a reporting mechanism
• The application compiles quality measures captured through
the minimum data set assessment (MDS) submission for each
resident
• The application serves as a means of capturing comparative
data and evaluating quality
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Care Center
Quality Assurance and Performance Improvement (QA/PI)
CMS requires Care Centers to develop a QA/PI process
that utilizes these five elements for developing,
implementing, and sustaining ongoing quality
Systematic Analysis and Systemic
improvement
Action
Feedback, Data Systems
and Monitoring
Performance
Improvement Projects
Governance and Leadership
Design and Scope
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Medicare-Certified Home Health Agency
Census
Census drives revenue and helps determine the financial
success of an organization
• Average daily census (ADC) refers to the average number of
individuals on active caseload at a given time (whether or not
they will receive services on a given day)
Referral source relationship development is key
• Hospitals are the leading referral source of home health care
admissions
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Medicare-Certified Home Health Agency
Staffing
Staff wages are the single largest operating expense
Staff hours are determined and scheduled based on
scheduled visits:
• For a specific discipline scheduled (nurse, therapist, aide)
• The anticipated length and complexity of scheduled visit
• Consideration of travel time and geographic efficiencies
• Home care agencies often have production levels establishing
the number of visits a staff member is expected to perform in a
given period of time
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Medicare-Certified Home Health Agency
Quality
Home Health Care quality is driven by standards and
regulations set forth by CMS
Quality Measures Include:
• Home Health Compare
• OASIS OBQI/Outcome-Based Quality Improvement Reports
• Annual Health Inspection – state survey process
• Certification and Survey Provider Enhanced Reporting
(CASPER) system
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Medicare-Certified Home Health Agency
Quality: Compare
Home Health Compare has two kinds of quality measures:
• Process of Care Measures (also known as Process Measures)
indicate how often an agency gave the recommended care
• Outcome of Care Measures (also known as Outcome Measures)
indicate the results of the care an agency provided
The quality measures are divided into the following sections:
•
•
•
•
•
Managing Daily Activities
Managing Pain and Treating Symptoms
Treating Wounds and Preventing Pressure Sores (Bed Sores)
Preventing Harm
Preventing Unplanned Hospital Care
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Medicare-Certified Home Health Agency
Quality: OBQI
OASIS OBQI/Outcome-Based Quality Improvement
Reports
• Derived from Outcome and Assessment Information Set
(OASIS) data submitted for each individual
• Include 37 risk-adjusted outcome measures
• Measure changes in an individual 's health status between two
or more time points (an example of an OASIS-based outcome
measure is whether an individual improves in the ability to
move independently)
• OBQI Outcome reports provided to agencies include a series of
outcomes for their patients in the current year, compared to
prior year and to national reference values (i.e., benchmarking)
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Medicare-Certified Home Health Agency
Quality: State Health Inspections
Health inspections (survey or state survey) determine if home
health agencies meet state and federal Condition of
Participation (CoP) requirements as set forth by CMS
All home health providers certified by Medicare are subject to
unannounced standard surveys
Other types of surveys include:
• Initial Certification Survey
• Extended Survey
• Routine Survey
• Complaint Survey
• Post Survey Revisit (follow-up)
Routine Standard Survey
• Statement of Deficiencies
• Plan of Correction
© Aging Services of Minnesota 2014
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Medicare-Certified Home Health Agency
Quality: CASPER
Certification And Survey Provider Enhanced Reporting
(CASPER) system
• The CASPER system is a reporting mechanism
• The application compiles quality measures captured through
the minimum data set assessment (MDS) submission for each
resident
• The application serves as a means of capturing comparative
data and evaluating quality
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Notes
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