When it comes to growth and expansion in behavioral health and addiction treatment, there are two key considerations that providers must keep in mind. The first is the rates they negotiate with payors, while the second is managing their operational efficiencies. Rates are relatively fixed variables while the operational efficiencies vary wildly.
In order to navigate negotiations with payors successfully, providers must leverage market analytics in conjunction with consideration to network adequacy. This means evaluating the current market trends and analyzing data to determine what rates they should be negotiating. There are some strategic approaches (send me a message for more) here that involve creating and leverage relationships depending on the type of patient/client profile you are pursuing. Combining these factors, providers can negotiate rates that are both competitive and reflective of their service offerings.
Once rates have been negotiated, providers must focus on managing their operational efficiencies. This means tracking and analyzing 11 key metrics that drive 6 main KPIs. These metrics include conversion rates, LOS (length of stay), turnover and more. The KPIs are pretty standard in healthcare between volumes, revenues and expenses which are refined through the metrics. By regularly evaluating metrics, providers can ensure that their operations are running as efficiently as possible.
It is important to note that while operational efficiencies are crucial, they fluctuate over time. You can buy or build talent or make strategic hires that increase your market position while weakening your competitors market position momentarily. You don't even need to be the best in a market to do well, you need to be good enough to do well enough to execute your strategic plan and your exit strategy, if you have one. However, to continue to excel over time, you have to have a deliberate strategy on attracting, creating and managing talent as they will always be the intangible variable.
Most providers end up in degrees of separation on both of these categories (rate and operational efficiencies) which is why there only a few exceptional performers in the space. We may see momentum when a head-wind changes or a first to market idea gets supported
in legislation but for the most part, teams often struggle to reimagine how to create competitive advantages. It is easy to mimic others and jockey for market share, it is much harder to blaze a new trail and challenge the status quo.
Overall, growth and expansion in behavioral health and addiction treatment requires careful consideration of both negotiated rates and operational efficiencies. Providers who successfully manage both aspects will be better positioned for success in an ever-changing industry.
Comments