Surviving in a Fee-for-Service World Mark Santangelo, President/CEO

Thriving in a Fee-for-Service World Mark Santangelo, President/CEO

Background Attorney for BlueCross BlueShield of Maryland (4 years) Executive with Green Spring Health Services and Magellan Behavioral Health (12 years) President/CEO Kolmac Outpatient Recovery Centers 13 years Company grew from 250 to 1,100 patients Revenues increased from $2.4 million to $12 million Profits increased by over 1,000% Only minor rate increases

What is Success? Continuously improving clinical outcomes (CQI) Program accessible for targeted client base Both financially and geographically Provide a positive livelihood for staff Salaries, benefits, etc. Program financially strong to survive the unexpected and invest in new developments Good Clinical Care = Good Financial Results

Today’s Topics Do we currently make money & where? Fixed vs. Variable Costs Collections – the importance of getting paid Leading indicators – The crystal ball of business Clinical Outcome Measures Great clinical care = great bottom line How do I attract more patients? How do I improve things for the patients I have?

Do We Make Money & Where? Separate fix costs from variable Fix costs = rent, equipment, executives and everything you can’t allocate Allocate variable costs by different services Allocate fix costs by service units Don’t forget bad debt/collections as a cost Determine profitability by service

Profitability by Service 2016 YTD 2017 New Patients 4.4% Total Revenues 6.4% Ambulatory Detox $43.11 Intensive Outpatient $49.66 Level I OP $12.17 Collections 94.82% Profits -8.2% New Patients 7.2% Total Revenues 7.9% Ambulatory Detox $68.71 Intensive Outpatient $61.27 Level I OP $12.68 Collections 94.95% Profits 13.7%

What to Do Next? Can I better utilize fixed costs? Can anything be outsourced? Do everything you can to minimize Increased volume lowers fixed cost per unit Can I better utilize variable costs? Variable staffing Marginal capacity All work hours are not created equal Collections

Variable Staffing 2 IOP Groups and 2 Level I OP Groups Classic Model Two Counselor Kolmac # of 8 hour Staff 4 8 2 # of 4 hour Staff # of 3 hour Staff Total Hours Worked 32 64 30 Total Hours Paid

Collections Doesn’t matter what you do if you don’t get paid What do we measure? Non-responses (over 30 days old) Rejections Underpaid Overpayments Total AR (excluding overpayments) vs. billings Measured as a percent Measured in days

Collections

Leading Indicators Where are we headed? Let me get ready Intake calls Admissions Billings Collections

Leading Indicators

Leading Indicators

Clinical Outcome Measures

Clinical Outcome Measures How are we doing? No show/Cancellation Rate Engagement Rate One Timer Rate IOP completion CC LOS Overall LOS Patient Satisfaction

CQI Continuous Quality Improvement Measurement/Intervention/Re-Measurement Importance of consistency Don’t get lost in the details Engagement example Increased from 68% to 84% 220 more patients $1,200,000 more revenue

Attracting More Patients How do patients come to me now? Previous Patient, 28 Day Residential, internet, recovery community, Legal, etc. What is my strength? What holds the greatest potential Previous patient example 2014 = 16.7% = 635 patients Developed 2 interventions 2015 = 22.5% = 874 patients

Enhancing Services Patients Clinical Quality Improvement New Services for Existing Patients Services for Mental Health Issues Med Management Individual Counseling Specialized Groups Pain, Co-Occuring, etc. Other Services Nutrition Yoga Meditation

Good Care = Good Finances A 1% drop in the no show rate means 40 more patients will get treatment = $200K in extra revenue A 1% improvement in the engagement rate means 30 more patients will get treatment = $150K in extra revenue A 1% improvement in the one timers rate means 24 more patients will get treatment = $120K in extra revenue A 1% improvement in our completion rate means 22 more patients complete treatment = $100K in extra revenue An average increase in CC attendance of 1 patient will increase profits by over $300K (we make about $400K total)

Low Hanging Fruit Review fixed expenses Variable Staffing Can any be stopped? Can anything be outsourced? Variable Staffing Marginal Capacity All hours are not the same Expand the number of patients served Expand the services by patient Collect what’s owed

Mark Santangelo, President &CEO 3919 National Drive, suite 300 My Contact: Mark Santangelo, President &CEO 3919 National Drive, suite 300 Burtonsville, MD 20866 301-589-0255 msantangelo@kolmac.com www.kolmac.com