Destroying the NFP Mentalities Regarding Profitability

I am on a mission to keep as many NFP hospices from tanking as possible. This directly relates to profitability. So at the risk of staying in trouble, let’s destroy many of the NFP ideas that plague our movement (Again, it is not an industry unless we’ve surrendered to the idea of being a homogenized form of healthcare). Frankly, I think that many FP players have it right from a business standpoint…and NFP’s need to take some lessons.

With this said, there are bottom feeders in both the NFP and FP domains that need to be wiped from the hospice slate. From an objective standpoint of seeing hundreds and hundreds of hospices, I can say unequivocally that the majority of truly creative “management” innovations in the hospice movement have come from FP hospices.

Now don’t get me wrong, many FPs have plenty to learn from NFPs as well. However, the management practices of many FPs should be emulated. It is interesting to note how many of the really, really successful hospice CEOs in the FP domain have come from NFPs. The fact that the ADC size of FP hospices is growing, sometimes at phenomenal rates, tells us that they know something about managing hospices.

Many times, FPs are even among the most spiritual hospices with healthy cultures that know how to balance purpose and profit. There is no monopoly on best practices by either FP or NFP hospice organizations.  

If I am helping to build a hospice business platform, I construct the operational methodologies with basically the same components, tweaked for overarching philosophies of who is paying for the assistance. Community Support does not even come into the picture for me. Deborah Dailey trained me well in this regard as she refused to operate a hospice on the kindness of others. My directive was that Community Support didn’t exist…and that I MUST learn to operate a hospice only on earned dollars from Medicare, Medicaid, Commercial Insurance and Private Pay.

Being an NFP organization is not an excuse for being wasteful.  In fact, it is the just the opposite. An NFP must be even more prudent regarding its allocation of resources.

Here are some common, confused and misplaced NPF Ideas:

• Hospices need Community Support in order to operate.
• NFPs shouldn’t make a lot of money.
• NFPs care more about patients and families.
• FPs have some mystic “advantage” over NFPs. 
• FP’s skimp on care.
• NFPs provide higher quality care.
• NFPs can’t pay their staff’s well.
• Volunteers prefer to give their time to NFPs.
• “If we are highly profitable, Medicare is going to cut our rates.”
• “If we are highly profitable, people won’t give.”
• NFP Boards of Directors are more committed than FP Boards.

All of these ideas are false. Yes, you can find specific instances for each of these statements that is contrary and “weenie-out” to escape the overall reality. However, if ONE organization deviates, it proves that the view does not necessarily apply to the whole. Again, we find ourselves in the world of the outlier…    

Some NFP CEOs may wonder why they don’t get the big offers to run FP hospices. Look at the quality and profits. Are they impressive enough to create interest?

Community Support & Fundraising

Many people wonder why there is such little reference to Community Support or Fundraising in MVI materials. The reason is that too many hospices are “dependent” upon community dollars. A hospice that is dependent upon community dollars is only 1 public relations disaster from being extinct. It is a very unhealthy state for a hospice. A hospice needs funds to weather PR (Public Relations) disasters. If your hospice is accused of killing a person, I guarantee that you will have a few “dry” years in the Community Support department. We have seen “large” hospices cease to exist in a matter of months after a major PR disaster.  

On the other hand, if a hospice is strong and can operate on earned revenue, then Community Support becomes a competitive edge. These funds can be funneled into value-adding products and services. They can be used to build large reserves in a short period of time. Community Support is a good thing and we encourage hospices to garner it and be excellent stewards. However, it should NEVER be relied upon. Knowing that community dollars are available can make a hospice undisciplined and wasteful. The point is “Operate your hospice as if you receive ZERO support from the community.”

Skin in the Game = Better Management

It is a BAD idea to roll the dice with other people’s money. This is a BAD business model. Skin in the game, YOUR SKIN and your leader’s skins, makes for more prudent and careful decisions. The higher the stakes, the more prudent and considerate you will be. This is the human condition. This is one place where FP hospices have a great advantage over NFP hospices. The owners and shareholders care a great deal because it’s their money at risk! Therefore, FP hospices are often more closely managed. However, an NFP can use many of the same methodologies and principles to motivate as well.   

Your objective friend,
~ Andrew