“I believe people are like boats.” With that I’ve started many a seminar and webcast. After a brief pause, I relieve the tension by saying, “They toot the loudest when they’re in a fog.” Ambiguity, tardy information, and just plain situational ignorance can keep many a decision-maker in a fog. However, because of the critical need to know how much and when cash will be flowing into and out of the bank, CFOs need crystal clear visibility. And business Intelligence dispels the haze and sharpens the perception of what is happening. From cash collections and revenue projections to labor and non-labor spend management, operations and finance executives alike can know almost up to the minute how much cash is flowing in and how much is flowing out.

Business Intelligence makes it happen

As we have discussed in previous blogs, Business Intelligence (BI) has become the go-to tool to help managers keep their fingers on their business’s multiple pulses all in one convenient easy-to-view location. For LTPAC providers, this amounts to such Key Performance Indicators (KPIs) as census, cash, accounts receivable, labor and non-labor spend, clinical, and other information. Roll up. Drill down. It doesn’t matter. CFOs can glimpse a consolidated view of KPIs important to them and then drill down as deep as they need to track, trend, and act. It’s real time and it’s highly effective. How? BI makes information visible at all levels within the organization simultaneously. And visibility drives accountability

But let’s limit this conversation to cash flow

Turning revenue into cash in the bank

Let’s explore a day-in-the-life-of one of a CFO who uses BI to monitor and hold accountable those responsible for keeping the cash flow steady and predictable. It’s mid-month and after logging into the BI tool (in our customers’ case, primeVIEW), the CFO, we’ll call him, “Craig”, reviews the tiles he’s configured for his home page displaying what to him are the critical KPIs. From there he clicks on the Cash/AR tab to view such information as:

• The current month collections-to-goals performance with 12-month trending
• What’s been collected and deposited each day by payer type for the current month, recent quarter, and year-to-date (Remember. He can view a corporate summary or drill down to a region or facility level.)
• How each facility or region ranks compared to their company peers by payer type
• The status of each facilities aging with payer type drilldown capabilities
• The Days Sales Outstanding (DSO) over a specified period of time
• How revenue is trending by payer typ

Craig notices that the South region is falling short of its MTD collections through the 15^th of the month. He calls Melissa, one of his veteran regional managers, and invites her to open up primeVIEW to discuss these outliers and what her staff can do today to right the regional ship and get it back on course by the next collection benchmark which is the 20^th. Melissa reports that she and her staff have been working with Facilities A and D since noticing the slowdown in collections on the 10^th. She assures Craig that her team is confident that these facilities will reach the month-end harbor very close to their goals

Financial performance

After concluding the call, Craig clicks on the financial tab to check on current revenues generated compared to budgeted projections by region as well as by facility by payer type. He further reviews revenue by occupancy by day, by payer, and by service. Convinced that the company is on track to meet goals and, in a couple of facilities, to exceed goals, Craig then turns his attention to the bad debt allowance status by facility as well as month-to-month trending. He makes a note to himself to address this issue in the next meeting with his corporate AR manager

Conclusion – Visibility is more than just clarity of sight

Because of BI, cash flow visibility is current, communication is specific, and required action is timely. Visibility encourages accountability and fosters real results.

To somewhat freshen up a term that can become stale due to overuse or, possibly, misuse, I would like to spin “business intelligence” (or business analytics) and convert it to “intelligent business.” Sometimes, playing with words (which is fun for me at times) can reshape our paradigms. “Business intelligence” implies the use of systems and processes which simplify the retrieval of data and its conversion into actionable information readily accessible to decision makers in real time[1]. But business intelligence goes beyond technology tools; BI is indeed "intelligent business" decision making. But first, let’s talk about BI’s/Intelligent Business benefits.

BI’s Key Performance Indicators reflect the organization’s mission and objectives.

I like the concept of each organization focusing its decision making on its mission and objectives. BI helps significantly to do just that, because executives and management can identify and align Key Performance Indicators (KPIs) to the broader organization’s mission, goals, strategies, and culture as well as to each of its business units’ objectives. The magic of BI is that the information displayed can be rolled up or drilled down to specific levels of interest and responsibility within the organization. Let’s say that the COO, who likely would never log into his or her organization’s clinical application, can view a consolidated corporate view or an expanded view of all regions’ or facilities’ clinical KPIs. Likewise, a department head can view his or her specific KPIs benchmarked against department-specific goals.

BI fosters quicker data-driven solutions.

Yes, successful decisions are often based on “hunches”, but in today’s LTPAC world executives and managers have to make and report on specific data-driven KPIs. Before technology truly enabled BI, decisions were often hunches based on information manually extracted from old data, assuming that the information was possibly a trend. It was like trying to drive a car exclusively looking in the rearview mirror. But for businesses to function intelligently with BI, the information needs to be organized and displayed in ways that fosters comprehension, timely quality decisions, and, may I add, accountability. BI also enables managers and executives to retrieve and view data in ways that are specific to their responsibilities and needs.

BI crosses data silos for multi-dimensional views.

Let’s take labor management, for example. For years LTPAC providers have analyzed labor hours and dollars based on hours and dollars per patient per day. Manually, that would mean reconciling time card totals with the census tabulated and reported by the nursing department. However with business-critical enterprise-class software, providers are now using time and attendance applications for labor hours, payroll applications for labor dollars, and clinical applications for the census in aggregate, by payer type, by clinical unit within the facility, and so forth. But each application may be from a different vendor. To get them to talk to each other and to consolidate and convert that data into actionable information instantly requires data mining and BI technology.

BI displays convenient and useful information

BI can also display the information in ways useful to the decision makers. I’ve hinted at this throughout this blog, but the magic to BI is its intelligent use. It starts with identifying and aligning KPIs to the organization’s mission, objectives, strategies, and, yes, culture (but that is a topic for another day). Once selected, KPIs determine how data is be collected, combined into useful information, and displayed in consumable formats. Because the KPI-driven information is available in real time and actionable, executives can make data-driven decisions right now. Now that’s intelligent business.

[1] Lest we get off on a tangent here, I am going to use Merriam-Webster as my source for defining “real time”: “the actual time during which something takes place <the computer may partly analyze the data in real time (as it comes in) — R. H. March>.” (Italics added) In this instance, BI generates information in real time as soon as the system has access to the data (as it comes in).  In the case of most of our BI customers, that means refreshing the data available in their respective data warehouses several times a day – as frequently as each customer wants to have its data updated.

Are the rates investors are quoting competitive?
Ever wonder if you’re getting the best rate you can on capital?  It’s a challenging question with a data-driven answer.  In a perfect world, skilled operators would be able to benchmark their performance against others, enabling those with the best performance to prove they are worthy of the best rates on capital.  In a perfect world, investors would have access to current performance data on every skilled nursing building in the country, and be able to set attractive rates for those with a positive and predictable track record of success.   That perfect world is in the process of being created.

NIC to flex muscle…again
NIC is ideally positioned to take on this challenge. Years ago visionaries at NIC set about to change the world of investing in senior housing by creating access for investors to a huge library of regional demographic data.  With confidence, today investors can easily size up markets in which to invest.  Over the years, this transparency has catalyzed development of many senior living products across the nation.

In a recent bold move, NIC announced a new initiative to create transparency with a new data set for investors and operators, dubbed the “NIC Skilled Nursing Data Initiative.”  This visionary program will help answer two strategic questions asked by:

• Operators:  are you getting the right rates?
• Investors:  are you setting the rates?

Today capital is flowing into senior housing, but the challenge is much of it goes to organizations focused on private-pay.  For those serving other segments, it’s an uphill battle to find capital at competitive rates. 

Timing could not be better
Nationwide, skilled nursing properties are aging.  The industry urgently needs capital to modernize physical plants, update mechanicals, and upgrade technologies that are the hallmarks of well-run operations in demand.  According to NIC, “The average age of skilled nursing properties in the top 99 markets is 36 years, making many buildings functionally obsolete.” 

Old data is useless
As new payment models across the skilled sector unfold, operators are flexing business models fast. What used to take years is getting done in weeks.  To lend capital, investors rely on historical government data that is 12-18 months old. As a result, the capital rate an operator is quoted may not reflect today’s operating reality. Current data is needed by investors to set the right rate. They need census, revenue by payer source, and much more.

NIC’s Grand Plan
NIC created a clearinghouse for current skilled data and is making it available to operators and investors.  For investors, this innovation will boost confidence in setting rates for capital that are more closely aligned with performance.  For operators, this innovation will boost confidence that the rates they get are competitive.

The data set
NIC is encouraging operators to submit monthly data in the following categories:

• Occupancy
• ADR by Payor Class
• Overall Revenue Trends
• Total Operating Expenses
• Skilled Mix
• Quality Mix
• Patient Day Mix
• Profit Margin/EBITDAR/EBITDARM (profit margin data is sensitive so it is not a requirement)

In return, subscribers get a monthly summary that de-identifies and aggregates data from all contributors.  Subscribers will be able to compare their performance with national benchmarks. As the database grows, subscribers will over time be able to see regional benchmarks.  Operators will not be able to see the specific data of peer operators for confidentiality. 

How Prime Care Technologies helps
NIC turned to Prime Care Technologies (PCT) to help operators submit data. NIC clients do not have to be current clients of Prime Care Technologies in order to participate.  For these operators, PCT will set up and automate data delivery directly to NIC.  For PCT clients using the primeVIEW business intelligence solution, the data feeds are already in place and the automation required for sending data to NIC is simple and straightforward. 

Ready to opt in?
Take the first step toward fair, competitive rates on capital for your skilled nursing portfolio of properties. Visit the NIC Skilled Nursing Data Initiative and complete the form at the bottom of the page.