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As home-based care leaders seek new business opportunities, rolling out new product or service lines can be an avenue for achieving growth. But those new service lines can also have considerable financial consequences if things go awry.
One company with extensive experience launching new service lines is Choice Health at Home.
Tyler, Texas-based Choice provides home health care, hospice, home care, palliative care and rehab services across Oklahoma, Kansas, Arizona, Colorado, Utah and Nevada.
Over the years, the company has entered into geriatric behavioral health. It has also doubled down on its efforts in the palliative care space.
When deciding to add a new services line, Choice begins by determining if it would align with the company’s mission.
“If it can further that mission, then it’s a worthy endeavor for evaluation, and that’s really the start,” Choice CEO David Jackson told Home Health Care News. “Our primary pillar is patient-centered care, and then our mission is the pursuit of excellent health care.”
As a company enters into a new service line, accurate financial planning is imperative, according to Jackson.
“I think about it as the two P’s,” he said. “Do you have accurate planning, and then do you have the people to execute on that?”
At VNS Health, there’s an entire process in place to decide if and when to launch a new product or service line.
VNS Health first gauges if there’s interest in the market. Once it has been determined that interest exists, the company works on developing the product externally.
“To do that, we actually do have a product development team that we’ve put together in the past couple years to take a very disciplined approach to working with our different business units,” Devin Woodley, vice president of managed care contracting and B2B sales at VNS Health, told HHCN.
New York-based VNS Health is a full-service home-based care organization. The company serves 53,000 people on any given day.
Most recently, VNS Health released an analytics tool with Netsmart. The collaboration is indicative of how teaming up with expert partners can add another layer of stability to a new launch.
“Working through a partnership where we can now allow other organizations to leverage some of the capabilities that we’ve developed and found a lot of success with is exciting for us,” Woodley said. “Netsmart has been around for 50 years. We’ve been around for 130. It’s been a very calculated decision. We’ve also tested the market significantly to make sure that there’s an appetite for a product like this. We have very high confidence that this is something people want.”
When rolling out a new services line, a company that doesn’t have its ducks in a row could land in financial hot water.
For Woodley, a financial disaster is anything that negatively impacts a company’s EBITDA. He pointed out that consequences for implementing the wrong service line can be a hit to the bottom line.
“A feeder program moves a bunch of money trying to generate money somewhere else, but overall, it’s hitting your bottom line,” Woodley said.
Jackson believes that the goal should be to build a sustainable health care program.
“A sustainable business means fiscal responsibility,” Jackson said. “If you pursue a new service line without a plan that works from a business position … it can actually negatively impact the long-term sustainability of your entire program. You see that throughout health care. If you take a misstep, because the margins are very thin, it can really impact your ability to deliver on your core business.”
In terms of best practices, Jackson urges providers to create a budget for the new endeavor. He also recommends examining what staff the company already has in place, and what areas require more recruitment to ensure things go smoothly.
“Do we have the resources to execute on this plan that works on paper?” Jackson said. “Then you should identify how the company is going to track itself and stay accountable. If you don’t have the resources to execute on the plan, it’s only as good as the paper that it’s on.”
Ultimately, Jackson believes that home-based care is well-positioned to be a fiscally responsible delivery model.
“Patients want to be seen in their home,” he said. “As a country we’re grappling with how to deliver on that for the greatest generation. It’s an opportunity for our industry to really evaluate and say, ‘Our mission is to provide this care for patients in the home across the country, and how do we do so in an efficient manner that is sustainable for the next 15, 20, 30 years?’”
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