Sunday, December 9, 2007

7 steps to Profits

Seven Steps to Assisted Living PROFITS with PALs

PALs will guide you to guaranteed PROFITS by giving you the tools to ensure that: "Revenue is greater than Costs".
The common denominator between service revenue and service costs is minutes. By converting both revenue and costs into minutes, PALs will guide you to profits. The examples will use "Per 15 minutes" but you could as well use per 10 or 5 or 1 minute.
PALs will calculate all the following:
1. Revenue = charges "Per 15 minutes" of service (see below) X total "15 minutes" for all Resident Services

2. Charges "Per 15 minutes" = Wages & benefits "Per 15 minutes" X Shift Productivity (defined below) X Overhead & ROI. This formula ensures that ALL of your staff time is "paid for" plus a profit margin. This mitigates "service creep" and converts staff from a cost center to a profit center since both Overhead & ROI are included.

3. Shift Productivity - is the ratio of all Resident Service Minutes divided by Shift minutes. Six hours of Resident Services during an 8 hour shift yields (6/8=0.75) = 75% Shift Productivity ratio.

4. Staff Cost "Per 15 minutes" = Staff wages & benefits "Per 15 minutes" X Shift Hours (converted to 15 minutes units)

5. PROFIT = Revenue – Staff Costs or Service Profit = (Pricing X service minutes) - Staff Costs

PALs will perform all the above calculations for you. Remember, the final number must be marketable (or offer a competitive advantage) in your service area.

Given the goal is to keep Revenue greater than Costs, PROFITS are GUARANTEED if you follow these 7 steps when using PALs.
1. Calculate your "Per 15 minutes" charges using PALs Template
Use the "Per 15 minute Charge" section to determine your charges for "Per 15 minutes" of service. See footnotes. By adding in the Overhead and ROI, each staff person becomes a revenue generator, as opposed to a cost center.
Determine what your agency's "Shift Productivity" will be by policy. Be sure to follow this policy when scheduling staff in step 7 below.
2. Price Services and charge by "Per 15 minutes" as calculated above. Enter services and charges based on the charge "per 15 minutes" as calculated above. When complete, click on "Print" button and review your Service Assessment template. You will use this to gather data to enter into the next two steps. Hint, enter services based on "encounter" rather than ADL. For example, AM_Care is the service (encounter) and it may include (multiple ADLs) dressing, grooming, toileting… depending on the resident.

3. Assess Resident's need for above services.
PALs will create a service template that will be applied to each resident in the form of an assessment. You only create this once. Then edit and use if for all residents. When administrating this assessment, remember you are only assessing for minutes of care. You do not have to enter the service need, only the minutes. You will enter the service description when developing the Resident Service Agreement in the next step.
It is recommended that this Assessment be done prior to admission, then 14 days after admission using the Service Documentation sheet from step 6 below as your data source. Your "Resident Service Agreement" should also state that service charges are reviewed regularly and will be adjusted as defined by your "Levels of Care".
4. Enter Resident Services using the Services from 2 and 3 Above
Enter resident services and assign each service to a specific shift, at a specific time and enter the number of minutes from the Resident Assessment (step 3). On the "Service Description" tab, describe how this service should be customized for this resident.

5. Shift Assignment Sheet/Checklist
Print the staff schedule daily to capture changes in services. Using this "checklist" will ensure that all services promised in the Resident's Service Agreement, are provided and billed as scheduled or any variation is documented.

6. Service Documentation - Staff Charting

Now have staff document services using the monthly "With Minutes/Variation" form. Use this documentation to trigger a re-assessment. Consistent variations may indicate a "Change in Condition" and warrant a different "Level of Care".
7. Staff Work Schedule – Schedule and check the "Shift Productivity" ratio
Enter the staff work schedule and click on the "Review Shift Productivity" button to ensure that service hours divided by Shift Hours is equals to or greater than the Shift Productivity ratio used when figuring costs "per 15 minutes" in step 1 above.
Bonus - No UN-controlled Service Creep. All staff hours are "paid for" since the charge "per 15 minutes" includes the Shift Productivity factor. Additional services or added time to current services present an opportunity not only for additional revenue, but more importantly, additional PROFITS!
Also, the incentives are aligned between management and staff. Staff is given an incentive to report additional services or work harder (more minutes) than another shift that reports all additional service time. And management is given an incentive to make sure sufficient staff are working since they are now revenue generators and revenue finders and contributing to both overhead and ROI.
Summary: With the above management tools, You can now manage for PROFITS!!
To download a trial copy of PALs go to