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Accounting

Prescription for Continuous Planning: Easy, Flexible, Scalable


by Irene Da Silva

In a world where the future is harder and harder to predict, the best plans must involve everyone in the business.

© Kubra Cavus/iStock/Getty Images Plus

With 49,000 workers in 770 locations, our finance team at Gentiva Kindred at Home needed a cure for a static, manual planning and budgeting process that was costing us months of time and millions of dollars. So we turned to our branch managers, many former nurses or clinicians, for help.

No, really.

This is the story of how America’s largest home healthcare provider pushed planning, budgeting, and forecasting beyond the traditional realm of finance and to the front lines of our business. And in the process, we created hundreds of planning professionals who feel genuine ownership for the health not only of our clients, but for the business itself. 

And, yes, most happen to have an extensive background in healthcare, not finance. And while this has been a huge improvement in our efficiency, when the pandemic hit in March this year, we realized that we had our planners exactly where they needed to be—working in our branches.

A constant state of growth and adaptation

Before 2012, Kindred at Home (then called Gentiva) grappled with rapid growth and the typical difficulties that are often associated with traditional business planning. But we also faced other challenges that made the planning process even more complicated and arduous.

Each of our branch managers understands our business better than anyone. They don’t, however, have backgrounds in finance. Yet as managers, they still have to engage in day-to-day budgeting and financial planning.

It didn’t help that all this was done using static spreadsheets. Our spreadsheet-based system for budgeting and forecasting created widespread versioning headaches and endless hours of data entry work for branch managers. It also meant the annual planning process lasted upwards of five months, much of which was spent by our finance team painstakingly consolidating data from across the entire organization.

Amid this static planning process, our business was growing. An aging population with escalating healthcare needs—demographers call it the gray tsunami—made it crucial for us to accurately forecast our growth as the market for our services swelled. And with 80 percent of our revenues paid by Medicare and Medicaid, we had to pivot annually in response to frequent changes in compliance rules, coverage, and reimbursements.

Agility was important, but as most in the healthcare industry would see, we’d soon redefine what agility meant in the age of COVID-19.

Rx for FP&A: A modern planning platform

Once we identified that we needed to change both our process and the technology supporting our planning, we outlined what we needed:

  • Ease of use. Kindred at Home budget managers are often responsible for providing care for our 550,000 clients. So the platform had to be easy enough for anyone to use so those branch managers could collaborate and make meaningful contributions to the budgeting process. The end goal was more ownership—both for the numbers and the planning process itself.
  • Our planning solution had to be flexible enough to model any piece of the business or any what-if scenario. We’re also consistently acquiring new businesses and rolling them up into our larger company. This can exponentially increase the number of potential scenarios we would need to model, analyze, and act upon.
  • As I’ve noted, the market for home healthcare and hospice services is growing, with Baby Boomers largely driving the demand for home healthcare. Our ability to meet market demand requires a planning platform capable of scaling along with us.

An easy transition to cloud-based, modern planning

Adopting a new planning solution may seem like a daunting and painful task. If you find one that checks all the boxes, however, the transition can be relatively frictionless. We chose a cloud-based planning platform and were up and running in just two months. Part of what made implementation so easy is we chose a planning tool that eliminated barriers to adoption, particularly among our non-finance stakeholders. Branch managers came online easily, and we’ve since ramped up to more than 400 users of the planning system, and that has been key to our successful planning.

Planning through the pandemic: Ownership, foresight, and agility

We put this planning environment in place five years ago unaware that we were preparing for a future no one expected. Pre-COVID-19 we had already saved $2 million by deploying a much more cost-effective cloud-based enterprise platform and realized a 751% ROI  (as measured by Nucleus). 

In March 2020, as the initial impacts of the pandemic were starting to appear, we saw an immediate change in our business. We, like many companies, were challenged to move our teams to a remote work environment. Fortunately, because our planning is in the cloud, it is accessible by all 400+ planners that need it, so it was a very seamless transition.

We immediately recognized that we needed more personal protective equipment (PPE), yet supplies were short across the nation. We also had many clinician visits that were being done via video, and while we need to pay our clinicians the same rate, our reimbursement through Medicare, Medicaid, and insurance changed. Data from our branches was vital as we recognized that our costs per visit were going up, our volume was impacted, and we were incurring unexpected expenses.

With input directly from our branches, we were able to quickly model these expenses, creating different scenarios based on regional differences and anticipated recovery times, so that we could adjust and make informed, real-time decisions. Our team actually increased our scenario planning and forecasts by 10X during this time to keep pace with ever changing local community and governmental health mandates to ensure our business was running smoothly, while maintaining our patient care at the same exceptional level.

Cloud planning for the win

As I look back, there are key benefits to having moved our planning to the cloud.

First, there is an increase in ownership. Our employees feel confident about contributing their data and drawing larger, more useful insights that can help us make more informed, data-driven decisions. They have a more collaborative, hands-on role in shaping the future of the business, and they’re no longer wasting hours submitting and trading spreadsheets over email.

This also gives us a much more comprehensive view of the business. Kindred at Home builds our forecasts around volume—essentially, the number of visits we deliver for our clients over a given time period. It’s that volume that drives revenue.

So we’ve built a forecasting model that incorporates all the inputs that can affect both income and expenses—all with up-to-date actuals (supplied by those all-important nurses) that lead to a more accurate picture of where the business is today and where it’s headed in the quarters to come. This was critical before COVID-19, but the visibility we’ve had during the pandemic has been invaluable.

Again, volume drives revenue, which is determined by the number of visits and reimbursement rates set by Medicare, Medicaid, and private insurance. Both volumes and reimbursement rates tend to vary by location and, because we’d already created complex models to track this, when COVID-19 struck, we were able to quickly pivot and re-forecast based on new and even anticipated rates.

Also variable are expenses, including cost per visit, cost of supplies, transportation costs, and more. And as is true with any business, workforce planning and labor costs are a significant part of our operating costs and therefore our planning models, particularly since we employ clinicians on both a full-time and contingency basis. Many of these costs vary by location, as do other inputs, such as PTO, mileage, and general administrative costs. We were also able to create tags for COVID-19-related expenses, which has allowed us to easily monitor and adjust our budgets.

And while we still produce an annual plan—we’ve shrunk the development from five months to two months—it’s now easy to update it as conditions change. And in our business, change is a given, since regulatory requirements and reimbursement rates can change every year—and usually do. Previously, those changes sent us scrambling. Not anymore.

New levels of agility

Moving from a traditional planning solution to a modern, cloud-based platform has been transformational for our organization. With input directly from our branches we have greater visibility into our business, which in turn allows us to make better business decisions. We now have hundreds of planners who feel that the budget doesn’t just belong to finance alone.

But the biggest transformation has been the agility with which our team operates, especially as we continue to navigate through COVID-19. We couldn’t have imagined the speed at which we needed to—and continue to—forecast and plan, but with a collaborative, cloud-based approach, we’re successfully guiding the business at the speed our new world demands.

Irene Da Silva is Senior Director of Finance Operations at Kindred at Home.