10 Reasons Why Lowering PCS Rates Might Benefit Your Agency

Say what? Dropping the private contract service (PCS) rates might improve my agency? That's a straight reduction in gross billings. You might think this is a typo or crazy talk. Before you skip this article, hear me out.

History has shown that firms that adapt to change survive then thrive. Recent examples are Wal-mart and Amazon. These firms faced decreased prices in a market filled with competitors. They took the bold steps to eliminating waste in their business practices, dropping product and delivery costs, lowering prices, and outperforming their competitors. Amazon took losses in shipping for years before turning a profit. The home care and home health service industry is at a crucial point in history: healthcare costs are outpacing inflation, private pay rates may eventually drop to Medicare / Mediaid rates as providers scrutinize claims, health regulators have abandoned the "pay for service" model to a "patient outcome" model. Change is here. Listed below are ten reasons why lowering PCA rates might be beneficial to your agency in the long run:

1. Poorly-run agencies go out of business. There's nothing worse than a bad agency providing a disservice to its patients.

2. Caregivers that cannot do the quality, required work in the necessary amount of time quit. Your agency can focus on training caregivers to do quality care and perform.

3. Agencies get creative by eliminating needless expenses. For example, are there better ways to spend your travel dollars (e.g., car pool, public transportation, more telehealth sessions)?

4. Administrators restructure their caregiver schedules to minimize unnecessary time and expenses.

5. Unfilled demand for services increases as poorly-run agencies exit the market. Your cost efficient agency will pick up clients that need you.

6. After the industry shakeout, the remaining agenices can augment their revenue stream by adding complementary services. You can begin partnering with auxiliary service providers (physical therapist, speech therapist, occupational therapists, mental health providers).

7. Reduced reimbursement rates might create a barrier to entry to poor quality performers which, in turn, improves the industry's image.

8. In the long-run, more affordable healthcare costs expands services for patients, thus contributing to stable, long-term growth of the home care and home health industry.

9. Economically efficient reimbursement rates in home care and home health can attract other patient groups such as those traditionally served by hospitals or not served at all.

10. Steady long-term growith in the industy will attract investors and potentially bid up the value of agencies.