Home Care Agencies have a lot on their collective minds. The business of caring for America’s elderly and disabled, providing hospice care or rehabilitation services, is booming. Growth is good, but it’s not always easy. Home Care Agencies need to apply every technical advantage available to improve productivity and drive down costs. The nature of caring for people in their homes entails regular visits from mobile clinicians and this means geography plays an important role in home care.
Be an Optimizer
One way to lower costs is by improving controls over the mobile employee’s driving tendencies. A more efficient route, taken every day over a year will lower fuel costs by 15 to 30%. That rate of reduction comes from the transportation industry which has applied optimized routing tools for the last ten years.
Most of the time, a computer-calculated, optimized route with 5 to 10 stops is going to be more efficient than a human being’s best guess. The optimized route lowers the total miles driven and decreases the time required to complete the day’s stops. A truly optimized, computer-generated route considers road networks, speed limits, turn restrictions, and other routing factors.
With USA home care clinicians averaging 25,000 miles per year, fuel reimbursements constitute a major expense item on annual financials. Everyone understands that pain. Think about that reimbursement number on the year-end financials. Imagine being able to show a $250,000 savings a year from now. The fuel cost calculation for a 500 mobile clinician operation over a period of one year might look like this:
Total miles driven 3 Million x $0.55 compensation per mile = $1,650,000 Annual Expense
15% Reduction = $247,500 in Savings
Big Brother vs. Lower Costs
One argument against implementing routing and GPS tracking technology is that it introduces a “Big Brother is watching us” feeling with employees. My counter to that argument is that given the right information, employees will want to do the right thing. It just needs to be presented as an opportunity to help not as a directive to comply. Would a traveling employee working in the 1950’s have insisted on continuing to use back roads after the state and federal highway system had been upgraded, just so they could collect better reimbursements?
As a sales professional, each month I submit my sales travel miles for reimbursement. I do this to cover the costs of doing business. If I take a detour of 50 miles to attend to a personal issue, I don’t expect to be compensated for the detour miles. My travel report reflects my business miles. I want my business to thrive and am therefore interested in finding the most efficient way to drive to my business destinations.
Engage your people and they will contribute. Ask for ideas and feedback on transportation policies. Make sure the clearly understand cost reductions’ impact.
Significantly lower fuel costs will occur naturally by implementing and requiring the use of an optimized routing system. But just the idea that fuel costs are an issue and that management will be tracking them, will drive down those costs. That’s human nature at work in favor of your business. An additional way to drive those fuel costs down is to issue reimbursements based on routes generated by the system, not by routes actually taken, unless extenuating circumstances apply. Use the route analysis as an opportunity to discuss daily travel. Leverage geography – it almost always reveals interesting things about the nature of your business.
Perhaps the greatest benefit to an optimized routing system is that more time is available in each clinician’s day – less time driving and more time caring. So increase the number of patients visited or increase the amount of time available for each patient or just let the clinician go home early.
The pressure to improve productivity and lower costs is intense today. Energy prices will be a critical driver of costs for the foreseeable future. Help your employees understand the strategic need to reduce costs. Show them how fuel reimbursement reductions impact the bottom line, then set an objective for fuel savings and start an implementation plan. There are multiple vendors ready to help you.