Several skills go into running a thriving home care agency. Simply being able to serve elderly clients doesn’t guarantee success. That’s right, being great with caregivers and people isn’t enough. You also need to develop other skills, like financial management.
As home care has evolved, so has the sophistication of today’s buyers and investors. They are closely looking at the impact of numerous home care trends, like pay-for-performance & value reimbursement. A new age of technological innovation, the rise of managed care organizations (MCOs), and increased emphasis on non-facility intervention, can make things pretty complicated for home care agency owners.
When it comes to finances, every agency element plays a crucial role. For example, how you work with clients, implement focused business practices, and train your staff is critical in determining how smoothly things flow. In addition, agency owners need to establish realistic goals about the company and how well they’re doing financially.
You can make your finances manageable. All it takes is a bit of planning, but believe when home care experts say they save you from last-minute stress.
While these practices and tips may prove the most useful for newer agencies, they still hold true for larger agencies. Some practices that ensure that a home care agency is financially healthy are:
- Be Honest with Your Clients:
Every home care agency must prioritize their client’s care before everything else. Focusing on boosting your agency’s financial income is crucial, and focusing on something other than patient care leads to faltered quality care.
This may mean referring patients to other care providers who are much more qualified and experienced to help them. Neglecting your patients’ well-being impacts your reputation in the long run.
- Create a Policy Around Client’s Financial Issues:
It’s always better to be specific about what you can allow and not make accommodations when addressing financial issues. For example, not having clearly defined policies for your home care agency means giving out charity you may not be able to afford. While you may want to do this, the reality is that you will not be able to provide healthcare, especially if you’re bankrupt.
- Understand the Financial Language:
Financial accounting is a specialized field with overwhelming jargon. Since it applies to home care business owners, things get much more specific.
Knowing the financial language upfront makes home care billers much more comfortable tackling the books moving forward. Some terms that agency personnel may encounter in their routine are direct care expenses, caregiver wages, indirect care expenses, gross profit margin, marketing expenses, caregiver recruitment & retention, office support wages, accounts receivable, general ledger, and more.
While these terms do not encompass the accounting jargon you may come across, these must be good basics to get started.
- Clearly Define Roles:
Each staff member should have clarity on their role, and roles should be assigned to
them depending on their abilities. For example, the person responsible for taking finances must be good with numbers and fully educated on practices and claim processing.
OASIS coding is specific and important. Thus, it’s where the reimbursement lies. Thus, the people dedicated to performing a particular task must be well-versed to ensure managed expenses.
- Never Neglect Training Throughout the Employment:
Your staff’s initial training must be adequate and thorough. With regular changes within the home care agency, caregiver training programs prove essential. It’s up to the managers in each department to ensure the staff is fully informed and up-to-date on changes affecting their job.
- Clearly Distinguish Between Personal and Business Finances:
Starting a Limited Liability Corporation needs a separate business account. After all, transferring money between self and the business becomes way too easy.
If your home care agency is short of funds and you think you could easily transfer some money to repay it later (considering it’s yours), you must go down the right path.
Having personal and business expenses mix in any way, you are at risk of having your license revoked. After all, you always wish to have clear lines between where your business expenses end and the personal expenses begin.
Owning, running, and managing a home care agency can be a 24/7 job that does not have a clearly defined work-life balance, but finances are something you never want to have interwoven.
Thus, home care experts suggest setting up separate bank accounts right from the first day- that will make things much smoother.
- Assess your Agency’s Current Financial Health:
As an agency owner, it is crucial to be fully aware of your agency’s current state of financial health. You will be able to achieve this by monitoring who’s handling all your finances, their experience, their success in their role, and evaluating what’s causing the existing issues.
To get a clear idea of your agency’s financial hiccups, review the account receivable reports to evaluate discrepancies and determine the scope for better performance.
- Look for the Right Accounting Software:
There are a lot of new bookkeeping software in the market today, with QuickBooks being the most popular. Some scheduling software can integrate with QuickBooks.
For instance, CareSmartz360, an all-in-one-home care management software, allows integration with QuickBooks Online and QuickBooks Desktop for billing and ADP Workforce Now for Payroll. The software also provides the ability to export CSV files to third-party software.
- Prepare Well for the Future:
Taxes are right around the corner, even if only at the beginning of the year. Planning for the future, after all, is always a good idea.
Some documents you will need about paying taxes include articles of incorporation, previous tax returns, accounting records, payroll reports, bank and credit statements, and more.
So, ensure you’re paying taxes quarterly instead of waiting until the end of the year. You may incur interest and penalties by paying taxes in April, June, September, and December.
You’ll have to pay taxes as you receive income, “To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year.”
Staying compliant and keeping thorough records with the state and federal regulations is your way to keep taxes fairly simple. Then, all you’ve to do is consult with your tax preparer or accountant. Also, make sure to keep your documents safe and secure. You surely want to keep everything you might need in the future.
- Get Help When Necessary:
It’s common for healthcare workers to outsource their billing to ensure that their finances are in their hands and are aware of when to depend on them. This holds, especially in the continuously changing home care industry.
Suppose you ever encounter a situation where your home care agency suffers due to finance gaps. In that case, it can always be your best bet to ask for help from home care payroll software solution experts like CareSmartz360, who help accommodate the personalized needs of billers.
While this may seem hard at first, you’re sure to pave a path to eliminate financial stress and save time caring for older people.
Keeping track of everything is the most important thing to remember when managing home care finances. It might be easy to overlook things at first, but these can cause long-term hassles, impacting other areas of your company.
Each home care agency manages finances in some capacity. Still, the real question is: How are you managing your finances effectively to elevate your home care business to the next level?
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