Every Plan of Care establishes resource requirements. How those resources are planned, deployed, and managed can affect patient care, staff productivity, Cost Per Visit—and ultimately financial performance.

The Plan of Care is, first and foremost, a clinical document.

It identifies the services a patient needs, the disciplines involved, and the frequency and duration of those services. It should be based on the patient’s assessed condition, identified needs, goals, and appropriate clinical judgment.

But once those decisions are made, something else has happened.

The agency has also established a resource utilization plan for that patient encounter.

Those planned nursing, therapy, social work, and home health aide visits require people, time, mileage, supervision, scheduling capacity, and ultimately dollars.

That doesn’t mean financial considerations should determine clinically appropriate care.

Quite the opposite.

The objective isn’t fewer resources. It’s the right resources.

The right care. By the right disciplines. At the right time. Based on what the patient actually needs.

And then managing those resources appropriately throughout the patient encounter.

Most Patient Encounters Will Follow the Plan You Establish

A Plan of Care isn’t immutable. Patient conditions change. New needs emerge. Existing needs resolve sooner or later than anticipated. When circumstances warrant it, the POC should be revised accordingly.

But think about this as something of an 80/20 issue.

Most patient encounters will substantially follow the resource utilization plan established at the outset. A smaller percentage will require meaningful changes along the way.

That makes the decisions made when developing the initial POC particularly important.

If the resources established at the beginning are reasonably aligned with the patient’s needs, the agency starts from a sound foundation.

But what happens when they aren’t?

There are patient encounters where the resources planned—and subsequently provided—can exceed what the patient’s identified acuity, needs, and goals would reasonably appear to require.

And because those resources are embedded in the POC, they can continue to be provided throughout the encounter without anyone necessarily recognizing that an opportunity for more efficient resource utilization may exist.

And this can occur encounter after encounter after encounter.

The patient receives the visits.

The clinicians perform the work.

The agency incurs the costs.

And the financial results eventually show up.

But by then, the opportunity to manage those particular encounters has passed.

When One Additional Visit Means 20% More Utilization

Consider a deliberately simple example.

Suppose a certain type of patient encounter routinely receives six visits.

But based on the patient’s identified needs, acuity, goals, and appropriate clinical judgment, five visits would reasonably have been sufficient to accomplish the intended goals of care.

That one additional visit may not look particularly significant.

But six visits instead of five represents 20% more visit utilization.

And, all else being reasonably equal, approximately 20% more visit-related cost for that type of patient encounter.

This is intentionally a simple illustration. The real significance becomes more apparent when agencies analyze their own patient encounters and begin to see how frequently excess resource utilization may actually be occurring.

And the difference isn’t always six visits versus five.

There can be encounters where the resources provided exceed what one might reasonably expect based on the patient’s identified acuity and needs by multiple visits. When that occurs, the percentage of excess utilization—and its associated financial impact—can grow very quickly.

The presence of higher-than-expected utilization doesn’t automatically mean the utilization is inappropriate. It means the variance deserves to be identified, questioned, and understood.

There may be very good clinical reasons why a particular patient requires additional resources. If those reasons exist, those resources should be provided.

But when they don’t, an additional visit here or there can become something much larger when the pattern is repeated.

Across 10 similar patient encounters.

Across 100.

Across an entire year.

What initially appears to be “just one more visit” can become a significant amount of additional cost.

And importantly, when those additional resources aren’t clinically necessary, they ostensibly provide little, if any, corresponding patient benefit—and may not produce any additional reimbursement.

But they do represent additional—and unnecessary—costs.

This is one example of what I refer to as Hidden Utilization Costs.

Hidden Utilization Costs Aren’t Always About Too Many Patient Visits

Hidden Utilization Costs can occur even when the agency provides exactly the appropriate number of patient visits.

Consider another example.

Suppose an agency’s full-time clinical staff has sufficient capacity to complete the visits scheduled for a particular week.

Some of those clinicians are salaried.

Yet because of scheduling practices, geographic assignments, communication gaps, or simply the way the organization has historically operated, some visits are assigned to PRN staff while salaried full-time clinicians still have available capacity.

The agency hasn’t necessarily provided a single unnecessary patient visit.

The resource-utilization problem is different.

The agency hasn’t fully utilized the resources it was already paying for before purchasing additional resources.

That creates a financial effect in two directions.

First, underutilizing salaried full-time clinicians means their salary and related costs are spread over fewer visits, increasing the effective Cost Per Visit associated with those clinicians. This is one example of staff underproductivity.

Then the agency incurs additional incremental expense by paying PRN staff to complete visits that potentially could have been absorbed by existing full-time capacity.

The result?

Lower full-time staff productivity and higher overall clinical costs—at the same time.

This type of Hidden Utilization Cost can be particularly difficult to identify.

It doesn’t necessarily jump off the income statement—or become readily apparent in operational or utilization reports.

PRN expense looks like PRN expense.

Clinical salaries look like clinical salaries.

Your Cost Per Visit looks like your Cost Per Visit.

The reports may identify the cost. They don’t necessarily identify the inefficiency that created it.

You have to be looking for it.

And you need to know what you’re looking for.

Productivity Isn’t Simply About Asking Clinicians to Do More

Staff productivity is sometimes reduced to a fairly simple question:

How many visits did each clinician complete?

That’s important, but it isn’t enough.

Productivity is also about how effectively an organization uses the clinical capacity it is already paying for.

Before assigning a visit to PRN staff and incurring additional expense, does the agency know whether its full-time staff—particularly salaried full-time clinicians—have available capacity to perform it?

If not, how can management know whether that incremental PRN expense is actually necessary?

And this is where patient resource planning, staff scheduling, productivity, and financial performance begin to intersect.

They aren’t separate management issues.

They are different parts of the same resource-utilization equation.

Efficiency Is Not About Providing Less Care

This distinction is important.

Efficiency in home health should not mean reducing or limiting clinically appropriate care.

Clinical judgment must still rule the day.

If a patient needs additional visits, additional disciplines, or a revision to the Plan of Care, the appropriate resources should be provided.

The objective isn’t fewer resources.

It’s the right resources.

Efficiency means providing the care the patient appropriately needs while making the most effective use of the clinical resources available to provide it.

It also means being willing to periodically challenge established patterns of care and resource utilization.

“This is how we’ve always done it” should not be the standard.

The better question is:

Given what this patient needs, how can we accomplish what needs to be accomplished appropriately and efficiently?

That doesn’t mean beginning with a predetermined number of visits and trying to make the patient’s care fit within it.

It means beginning with the patient’s needs, applying appropriate clinical judgment, and then asking whether the resources being planned and provided are being used as effectively as reasonably possible.

The Problem With Finding Out Afterward

Home health agencies have enormous amounts of historical information.

Financial statements tell us what happened.

Payroll tells us what we spent.

Productivity reports tell us how many visits clinicians completed.

Cost Per Visit calculations tell us what those visits ultimately cost.

Claims data tells us what Medicare paid.

All of that information is valuable.

But it is largely reactive.

By the time management identifies a problem in last month’s financial statements, operational or utilization reports, or productivity results, the visits have already occurred. The payroll has been incurred. The patient encounter may already be complete.

There is nothing management can do to change that outcome.

There certainly is value in understanding what happened.

There is considerably more value in seeing what is happening while there is still time to appropriately influence the outcome.

That requires connecting information earlier in the process.

From the OASIS to the POC—and From the POC to Resource Utilization

The OASIS helps establish the patient’s clinical picture and contributes to determining the patient’s HIPPS Code and Case-Mix Weight under PDGM.

The POC translates the patient’s assessed needs into planned care.

That planned care establishes resource utilization.

Resource utilization affects staffing requirements and productivity.

Those resources generate costs.

And those costs, when considered alongside reimbursement, ultimately influence the financial performance of the patient encounter.

OASIS → POC → Resource Utilization → Productivity → Cost → Financial Performance

Those relationships exist whether an agency actively manages them or not.

The question is whether management can see them clearly enough—and early enough—to do something useful with the information.

This Is Why I Developed the Case-Mix Planner™

The IFS4hh Case-Mix Planner™ (CMP) was designed to help agencies become more efficient in the provision of care by providing greater visibility into these relationships at the individual patient-encounter level.

It was not designed to reduce or limit clinically appropriate care.

And it isn’t intended to tell clinicians how much care a patient should receive.

Clinical judgment must still rule the day.

The CMP provides information that can help clinicians and management better understand the financial and operational implications associated with the projected resource utilization through the Plan of Care—and continue evaluating those resources as the patient encounter progresses.

The presence of higher-than-expected utilization doesn’t automatically mean the utilization is inappropriate. It means the variance deserves to be identified, questioned, and understood.

The CMP can help provide the visibility needed to ask those questions.

It can incorporate the patient’s HIPPS Code and Case-Mix Weight, LUPA threshold, planned and actual visits by discipline, agency-specific Costs Per Visit, expected reimbursement, and estimated profitability.

Because the CMP can incorporate an agency’s own discipline-specific Costs Per Visit and applicable agency-specific revenue adjustments, the analysis can reflect the economics of that agency, rather than relying solely on generalized industry assumptions.

And the CMP isn’t limited to Medicare Fee-for-Service encounters. It can also be used with Per Visit payors and Medicare Advantage Plans that follow PPS but reimburse at discounted rates.

But the value isn’t simply in performing another calculation.

The value is in having information available when it can still be used.

Proactive When You Can Still Affect the Outcome. Reactive When You Want to Learn From It.

One of the distinctions I consider particularly important about the CMP is that it can be used both proactively and reactively.

Proactively, an agency can evaluate an individual patient encounter while the POC is being developed and while care is being provided.

Management and clinicians can see the resources being planned, understand their financial implications, monitor the encounter as it progresses, and determine whether actual utilization continues to align with the patient’s needs and the POC.

That visibility can be especially important for more resource-intensive patient encounters, where even relatively modest utilization variances can have a more significant financial impact.

If the patient’s condition changes, clinical judgment should drive whatever changes are appropriate.

But the agency is evaluating the encounter while there is still an opportunity to appropriately influence the outcome. Proactive.

Reactively, completed encounters can be evaluated to compare what was planned with what actually occurred, to identify and measure efficiency and effectiveness.

Both perspectives have value.

But they serve different purposes.

Reactive analysis helps you understand what happened. Proactive analysis gives you an opportunity to manage what is happening.

Additionally, saved encounters can become a source of agency-specific information for identifying patterns, evaluating resource utilization, and helping the agency develop its own internal best practices based on its own patients and experience (your own agency-specific database of saved encounters)..

Those encounters can also become valuable training examples, helping clinicians better understand the relationship between patient needs, clinical decision-making, resource utilization, and the resulting financial implications. Perfect for use in a classroom setting.

What You Don’t See Can Still Cost You

Hidden Utilization Costs rarely announce themselves.

More often, they accumulate quietly.

One additional visit here.

Several additional visits somewhere else.

Underutilized salaried capacity there.

Unnecessary PRN utilization somewhere else.

A resource pattern repeated because “that’s how we’ve always done it.”

Individually, none may appear particularly consequential.

Across hundreds or thousands of patient encounters, the cumulative financial impact can be very different. And in my experience having worked with 100s of agencies over the years, these hidden utilization costs (in whatever form) tend to be one of the bigger drivers of profit erosion that agencies can spend a significant amount of time and resources on and never properly identify.

And once an agency begins specifically looking for these patterns, it may discover that what appeared to be an isolated resource-utilization issue is considerably more common than previously realized.

That’s why I believe the POC deserves to be viewed not only as the clinical roadmap it unquestionably is, but also for what it becomes once those clinical decisions are made:

A resource utilization plan.

The objective isn’t fewer resources.

It’s the right resources.

And the earlier an agency can see how those resources affect its patients, workforce, operations, and financial performance, the greater its opportunity to manage them appropriately.

Learn More About the IFS4hh Case-Mix Planner™: https://ifsforhomehealth.com/case-mix-planner/