Are you ready to cut through the complexities of back-office management? Join us for an insightful journey with Amy Knight, president of Knight Home Care Financial, as she demystifies back-office management in home health, hospice, and nursing facilities. With over 20 years of experience, Amy emphasizes the importance of understanding agency costs, metrics, and Medicare and Medicaid cost reporting for informed decision-making, limiting loss-leading payers, and using technology for efficient accounting. Tune in to revolutionize your back-office management with Amy's wealth of practical advice and industry insights!
If you liked this episode and want to learn more about all things home-based care, you can explore all our episodes at alayacare.com/homehealth360.
Are you ready to cut through the complexities of back-office management? Join us for an insightful journey with Amy Knight, president of Knight Home Care Financial, as she demystifies back-office management in home health, hospice, and nursing facilities. With over 20 years of experience, Amy emphasizes the importance of understanding agency costs, metrics, and Medicare and Medicaid cost reporting for informed decision-making, limiting loss-leading payers, and using technology for efficient accounting. Tune in to revolutionize your back-office management with Amy's wealth of practical advice and industry insights!
If you liked this episode and want to learn more about all things home-based care, you can explore all our episodes at alayacare.com/homehealth360.
Welcome to Home Health 360, a podcast presented by AlayaCare. I'm your host, Jeff Howell, and this is the show about learning from the best in home health care from around the globe.
Erin Vallier:Welcome to another episode of the Home Health 360 podcast, where we talk to home care professionals from around the globe. I'm your guest host, Erin Vallier, US Director of Sales for AlayaCare Software, and today I am joined by Amy Knight, president of Knight Home Care Financial. Amy started her firm in 2002 and has been providing complete back office solutions for home health, hospice and nursing facilities for decades. Amy, you don't look old enough to be in the business for decades. She is an absolute expert on how accounting systems should be designed so that everything flows efficiently from one system to the next. We're talking payroll design so that effortlessly flows into the year in cost reporting, which uniquely qualifies her to speak to us today about the complexities of managing the back office and why you might consider outsourcing some of these duties.
Erin Vallier:Welcome to the show, Amy. Thank you very much, Erin. I'm excited to talk to you, but I have a preliminary question before we dive in Now. You've been providing what you call back office solutions to home health, hospice and nursing facility for roughly 21 years. For those of us who are unfamiliar with what it really means to engage with a firm for these services, can you elaborate what back office solutions you provide? Because, when I think of it, it could potentially mean a whole host of different things like billing, payroll, hr and maybe some other admin stuff. But what does it mean to you?
Amy Knight:Well, that's a great question and a good place to start. I will say the firm is 21 years old now, but I actually started about five years before that because I landed in this home care space right out of college and started working in 97. So I went through some cost reimbursement, some IPS and PPS, all the good stuff. So when I think of back office, I boil it down in my mind of three buckets and I guess there could be a fourth one. But payroll, hr I think of as one, billing is one and then accounting is another. So those are my three main buckets and I guess you could throw a fourth one in there for, like, just general receptionist, admin, right, and so that's what we consider back office. That's how I think of it. I put payroll and HR together because many times you can bundle those services all in one and they're so closely related. It's hard to find the line Billing is its own animal and then accounting is its own animal that uses pieces from those other two buckets to pull it all together.
Erin Vallier:Gotcha. So payroll and HR, billing and accounting Okay, that makes sense. Now we know what it means. Can you share with us what are some of the most common challenges agencies face with their back office management?
Amy Knight:So, first of all, I like the fact that we define to what back office is, because I feel like in my professional career I feel like you hear these terms like leverage and leverage technology and you finally get a sense of what it is. But in the beginning you're like, what exactly does that mean? I feel like back office was one of those terms for a while into days market. I feel like it's staffing and I feel like that's been part of our solution. That we've tried to create is two things cost effective and to take that staffing burden off of the business owner, off of the provider. Because when you outsource I'll just use myself as an example as the outsource provider. So if you come to me, you've got Aaron's home care. You come to me, you hire me as a firm to handle the accounting work. Well, that means now the staffing burden is on me and not on you. You've put your trust in my hands. You've trusted me that no matter what's going on with my team, I'm always going to have your work covered. You might end up forming a relationship with somebody on my team that does your work and they may move on, but they move on and you know Amy's still got it covered. There's backup, there's other people on the team, everything's cross trained and all that good stuff. So we take that talent management burden off the provider. To me Again, in this market I think that's probably even more of a burden relief than the cost savings. So then the other thing that we look at is I can say we are almost always going to come in price wise far less than hiring a full time bookkeeper and then paying a firm to do your tax return and your cost report, because 99 out of 100 are going to outsource those items anyways. But they might do the bookkeeping internally. So we can take all of that at far less of a cost than even just a full time bookkeeper might be. So there is always cost savings and I say always because you got to be careful about saying never and always.
Amy Knight:The times where it's not been cost effective is if it's a very large organization that has multiple providers, because they tend to think that there's an economy of scale. The reality is there's not an economy of scale. And not only that, because you have 10 providers it's more complicated because now there have become bad habits and move the money from one agency to another. It creates a lot more complexity on our plates. So that's when we get into a case where you know what? We are not cost effective because you could hire a bookkeeper internally, blah, blah blah, and it could be less. So that's why I hesitate on that.
Erin Vallier:Interesting. That's kind of the opposite of what I would think in terms of cost saving, like volume discount yeah tried it.
Amy Knight:It doesn't work and there's usually a different mindset. A lot of who we work with are what I still call mom and pops. They might be at large in my world they might be 10 or $15 million individual agency, which to me is a decent size agency, but they're run like a mom and pop. The owners are caregivers, they're not business people. And then a lot of times those that come in and they want to, you know, have 10 providers and they might be in multiple states. Those are more of your business people and they're just a different breed and they're better served by in-house staff. I have some little snarky thoughts that just popped into my mind.
Erin Vallier:Hey, you can say whatever you want on this podcast.
Amy Knight:I think of full-time staff. When you outsource you have to kind of follow the outsourcing firms rules and processes to be effective. But when it's internal you don't have to follow those rules. So if you have your own internal accounting team because it kind of takes a team when you get to that size you can tell them what to do and boss them around. So I'll put it that way.
Erin Vallier:Before I move on, I want to back up a little bit. You said something when you first started answering this question about staffing To me. When I hear you're going to take care of my staffing, I'm thinking, oh, you're going to be my recruiter. But what exactly do you mean by the staffing piece?
Amy Knight:I meant the accounting staff. So you don't have to hire a bookkeeper, train a bookkeeper, keep them engaged so that you retain the bookkeeper, so that whole attract there's a little phrase attract, recruit, retain, keep them engaged. You don't have to do the training, you don't have to worry about who's going to do the work when they're on vacation. So I meant specifically hiring and the talent management for your accounting piece of your team. Because what I do know maybe it's not the owners is, as a home care provider, you've got a lot of other hiring to deal with, which is, you know, field staff, and so why don't you focus on that? Because you know what qualities you need in field staff and caregivers and nurses and aides. I know what you need in a bookkeeper. So, yeah, I might have gone a little too far. We don't. God forbid. I can't even do my own recruiting. I have a team of professionals that I outs. So, for the record, I outsource as much as I possibly can. Thanks for clarifying that.
Erin Vallier:Now. You recently did a webinar on the uniqueness of home care hospice payroll. What makes it so complex and unique? It?
Amy Knight:is unique. The main reason it is is because labor is 80% of your cost, if you will, and so that plays a big role in your financial statements and a big role in your cost reporting, whether it's Medicare or Medicaid. But not only that even if you don't file cost reports having good numbers that you can create metrics from, a lot of it comes from payroll, and so we have to segregate all the payroll by department to make it simple, right, so that in and of itself is not super complex, but it is more complex than QuickBooks can properly handle, and I know there are a lot of you listening that probably still do payroll in QuickBooks. I get it, it's very cost-effective, but it does not provide, without a whole lot of extra effort, the proper reporting that we need. And even with the extra effort I mean you could do it by class in QuickBooks it's very easy for it to get off track and be wrong. Now there's also some uniqueness with like overtime rules.
Amy Knight:First of all, let me clarify we do not do payroll. I guess I should probably say that to start with. Most people assume we do. We do not do payroll. We used to do payroll, so I know a whole lot about payroll. My personal specialties are cost reporting and payroll, but we ended up selling our payroll business and we work real closely with a preferred payroll vendor that we have two of them. And we work closely with them because we can control those departments and the setup of the payroll and not let the client take it off track and get it out of whack.
Amy Knight:I don't know the overtime rules, I don't know how to account for it in payroll, like how the payroll system works. I just know it is a very big complexity, especially if you're a home care agency paying on a point system or per visit system, you are still subject to the overtime laws and then there's also overnight shifts, so you know 24-hour shifts and how do those work and some payroll systems don't handle that properly. So, really, home care, hospice providers, nursing home, assisted living all really need to outsource their payroll and need to have it on a robust platform. That is my opinion. It needs to be on a robust payroll platform where you can segregate not only your salaries but your payroll taxes and your benefits, and everything by employee, by department, with department totals, so that we can then feed it into the accounting systems to make everything flow.
Erin Vallier:Gotcha. That does sound complex. So it sounds like it just really has to be set up correctly from the start and then you don't mess with it, because everything has to have its own category, which then flows into. You mentioned some cost reporting, Thanks. What advice do you have for home care providers whose goal is to structure their payroll setup so that the monthly and annual reporting requirements aren't such a pain in the rear end?
Amy Knight:So when you get to these robust platforms and when I say that I mean I'll go to the big elephant is ADP. But there are other providers that have good software like ADP style software that has just lots of bells and whistles that can be added on, lots of customization. That can be done. The partner we use, they use iSolved. That's the software that they use. That's not the name of the company and it is ADP style software. So what it does, you can set up segregations, if you will, by job, by department, by location, so you can get super granular. You can have one provider which is one payroll, but they have three locations, so you don't have to. But you can track payroll by location and then by department in each location and then by job code at each location within the department, so you can get super granular.
Amy Knight:My rule of thumb is that at minimum your payroll needs to be segregated by department and the department is what are called cost centers on your Medicare cost report. So it depends on if we're talking about Medicare or Medicaid. But let's just go Medicare, because that's more global. Medicaid is state by state. Medicare is federal, so we all file the same Medicare cost reports. If we're in that program, the Medicaid, the state by state. I know Texas, I don't know all the others, and so you want to look at your Medicare cost report and you want to look at it. Looks like hieroglyphics, I know, but your departments are this, they are admin marketing.
Amy Knight:If you're hospice, you've got volunteer coordination. You've got bereavement. That is not on the cost report but a lot of people are going that direction. Then, on the direct cost, you've got your physicians, nurse practitioners, RNs, LVNs, PTP, OTA, ST AIDS, and then, if you're hospice, you've got to add spiritual counseling. I skipped medical social work. That's on both sides spiritual counseling, medical social work. I think that covers all of them. Then if you're an agent, seeing you do some fancy stuff like art therapy or music therapy, then those are even other ones that you might want to set up as well.
Erin Vallier:Okay, so it needs to be set up by department, because that's actually what you have to report to the federal government is by department Okay.
Amy Knight:And it's not just wages. It's wages, it's taxes, it's mileage, contract labor.
Erin Vallier:Gotcha, and you said something about nursing admin. That's not on the cost report but some people are parsing that out. Why?
Amy Knight:would they do that? People get confused. So you've got an RN on staff and so you would think, well, I'm going to put them in an RN department. That sounds very logical, but that's not correct. It depends. The RN department is for direct care, so are they in this field doing RN visits, or are they in the office doing QA or scheduling or a DON or some other administrative role, even though they're a nurse, and so people are just wanting to track those nurses. It's really nurses that they're nurses but they're administrative admin.
Erin Vallier:We want to put them in the right bucket, not a patient facing role, a caregiving role, but in the administrative staff. Okay, that makes sense to me. Now, amy, every agency I speak to these days is looking for ways to cut costs and be more efficient, and you know as well as I do. Reimbursement rates keep going down and that's putting a lot of pressure on these agencies to get the job done with fewer and fewer resources. Now you just threw me for a loop. I thought, geez, this is expensive, unless I'm a large and enterprise agency or I'm very well funded. But you're telling me that actually outsourcing is a lot more cost effective for these smaller agencies or even large ones that are still ran like a single office, kind of mom and pops. Okay, so you've corrected me. I was completely wrong there. Can you expand a little bit more on what kind of agencies are seeking out these services that you provide, and what would particularly lead an agency to entertain outsourcing the back office?
Amy Knight:It's exciting to me because they're like oh my God, you're exactly what I need and I didn't know this even existed. I'm like, okay, well, that's great. So we get a lot of that where they're not, where they're not even necessarily looking for outsourcing back office. Occasionally we'll get an inquiry saying hey, we need somebody to do our cost report and so we don't do just stand alone cost reports or tax returns. We only do them as part of a monthly package. So we're able to take those calls and talk to them about a monthly package and they're like oh my God, I did not know this even existed.
Amy Knight:But it typically starts with a pain point of some sort. So either their existing accounting firm or in house is leaving changing, they're not happy with it. A lot of times they're outsourcing financial statement preparation to another, to a CPA firm or an accounting firm, but they're not getting the service that they expect. So a couple things they're either not timely, so they're getting their financials months late, or they're not getting any kind of communication with them throughout the year at all. Those are the common things we hear. And then also throughout COVID and because of COVID there's all this extra reporting and they're like Well, my firm didn't even know that we had to do that. They don't know about these grants.
Amy Knight:I had one guy totally missed out on the grants because he's in another state, in Texas offered some grants and he has an agency in Texas, but he wasn't in Texas. I don't know what happened, but he didn't get notified, he didn't get the memo, and so it's usually that they're looking for something that they're not getting the value of having somebody that specializes in the industry. So we get kind of a lot of that. We're also get quite a few startups of just hey, I don't know what, I don't know, we're ready to start up. How do we get this set up? What do we do? We get some of that, but usually there's a pain point and it's usually that their in-house staff is leaving or they're not happy with the firm.
Erin Vallier:So they're getting somebody's leaving on their own staff, they don't like the services they're getting, they're not particularly familiar with the programs and the benefits and the reporting required to take advantage of money, or, if you're like me, oh my God, I don't know what I'm doing. Teach me, I'm just getting started. Okay, that makes sense For these agencies who would be seeking out back office services. What are the benefits they can expect?
Amy Knight:I think it really simplifies your world. That is one of our big things is. I know we're not on video, but I actually have a little rock in front of me that I found and I wrote some words on it, and one of them is simplicity and just to simplify their life. Our real goal is to give the owner time back. Let me take all this detail, nitty gritty, dirty work off your plate so you can go do what you need to do. Maybe it's marketing or strategic development or strategy where do you want the agency to go? Or maybe it's your agency's running. You've got it where you want it and you're playing on the damn tractor out in the field. I got one guy that's got more cows and I can count and depreciate, and he also runs three nursing homes that are very successful and I don't know last day he stepped foot in one, but anyways, that's our goal.
Amy Knight:But what can they expect? So simplicity, cost savings. If they're big enough to actually have somebody in the office doing it for them, that's a position they can eliminate. That's the way I position that, because I'm not trying to take anybody's job. You can repurpose them. Hey, I got a great employee, but she's busy doing bookkeeping and paying bills, but I really need her doing something else. Okay, cool, we can fill that.
Amy Knight:But then just simplicity of a lot of times we're taking it off of the owner's hands. So kind of back to your last question. That's a pain point. A lot of times with a newer agency they'll say okay, I've been doing it as long as I can, I need to go scale and I can't be burdened with this accounting stuff, but I need it and so I'm at the point where I need you to take it off my plate. So that is simplifying their life a lot. Now, in that case the owner was doing it, so they're not going to find cost savings because they were doing it, so it didn't cost them anything.
Amy Knight:But versus hiring somebody, I can tell you in Texas you would be hard pressed to find a bookkeeper that has some experience. For 40 grand, that's 3,300 a month we start for a full monthly accounting. It doesn't include bill pay, but we don't do that for most people. I mean we started like 2,500. So for 3 grand I can easily do all of yours and that would have just hired you a bookkeeper.
Amy Knight:Oh, here's another thing People management, people talk back, they have attitudes. I mean not that we are a piece of software, because I used to say that I'd rather pay for software than people, but I have people now and software, so simplicity costs savings, more time back in their calendar. Not only that, but when I say simplicity, that's wide reaching. We do everything we can to not have to bother you throughout the month. We try to do all the work on our own. A perfect situation for us is I deliver your financials, go over them with you, but that's when you talk to us once or twice a month and it's not a big burden to you. And so then you get this product, this complete a financial statement. But it's more than that. There's insights in there, there's KPIs in there, so you can see how everything's going without putting the details together.
Erin Vallier:I think the time saving is huge. That's our most valuable commodity, so that's awesome. But how is all this executed logistically? I guess my real question is they're going to have to provide some kind of information to you on a regular basis. What does that really look like?
Amy Knight:So we've really been leveraging technology for quite some time now. We this sounds harsh, but it is what it is. We forced everybody onto QuickBooks Online back in 2016. So seven years ago we were using it well before then. So there's still a lot of accounts out there that just think QBO is what we call it for short QuickBooks Online. Still, it's just a piece of crap. Well, it's come a long way and it's far superior.
Amy Knight:So we use QuickBooks Online. We work exclusively with QuickBooks Online, and so what we do is we get you into the file. Let's just go walk through a very typical example. Prospect comes in there on QuickBooks Desktop. We're going to take your QuickBooks Desktop file and upgrade it to Online. So it's going to pull in all of your historical information. We'll give you a login, so you've got access to all the data.
Amy Knight:And then we get a series of things. We require an online bank login, credit card login. We have to have that so we can connect the bank accounts in QuickBooks. So QuickBooks talks directly to the bank and pulls all the transactions in, and then we also need that so we can download any activity transactions. We go in once a week and we do a reconciliation every week to make sure your cash account is up to speed. But when we have a login we can do that ourselves. So that's a deal breaker for us. If somebody's not comfortable issuing a third party login for their bank account, that's kind of a deal breaker for us. We got to get past that. So online logins for bank credit card it's not a deal breaker, but we love to have an EMR login. So to your billing system so we can get in and pull the statistical reports, the revenue reports, AR reports that we need, so we can make those journal entries.
Amy Knight:And then payroll we need some sort of access to your payroll. So if you're on ADP, then you need to add us as a user. Whatever system you're on, we need to be added as a user. If you're still using QuickBooks payroll and you've decided to change that, we would get you with a good payroll partner. And if it's our payroll partner, we already have a login and have access to everything. And if it's our payroll partner, we try to help transition you as much as possible.
Amy Knight:So payroll login, emr login, bank logins we are completely cloud based. My tax software is still on a server, which is cloud based, but it's still server. But everything else is completely web based. That we do, and so then we have a big firm management software where we secure data, exchange, uploads. That's where we deliver all the deliverables. That's where we store all of your records and your financial statements, cost reports that's where you upload stuff to us. Oh, it's actually pretty easy.
Amy Knight:I think we've got a really good onboarding system going where it's a series of three or four meetings. We've got them scheduled out. We can tell you exactly the agenda for each. The third is lengthy. It's about an hour and a half. That's about three months in. At this point we've got you fully onboarded, we've got your financials caught up and we're going to have a state of the union meeting to go over everything with you. So it's lengthy and meaty, if you will. I don't see it as being a big heavy lift for the client. We do ask for corporate records, prior tax returns, prior cost reports. There's a little bit of data that we do have to get from you. It's kind of like applying for a mortgage. Actually, I think it's less than applying for a mortgage, because that could be a lot. So that's how it goes. We use a lot of technology to make it happen.
Erin Vallier:You answered my next question how does technology play into this? It seems like it's very heavily reliant on technology. Whomever they choose, they got to be prepared to work with the technology that that firm is working with. You guys have partnered with QuickBooks online and then be comfortable enough, given you access to all of the financial data so that you don't have to bug them on a regular basis. What happens if the agency is still on paper? You mentioned having an EMR login, because that piece wouldn't be there and potentially some of the other processes would still be on an Excel. What do you do in that situation?
Amy Knight:I have not encountered anybody that does not have an EMR. That's not on an EMR, okay.
Erin Vallier:Well, that's good, I know. Still, there's roughly about 30% of all agencies out there that are still on paper, which is shocking. If you were to encounter that, would you make them invest?
Amy Knight:No, I wouldn't, because if you've got a system that's working and you can provide me with, like an Excel schedule of what was billed or something, I can make that work.
Erin Vallier:So willing to work with Excel.
Amy Knight:Well, let me just say some of the EMRs. I would prefer to work with Excel.
Erin Vallier:Oh yeah. Well, that's a side conversation that I'd love to dive into.
Amy Knight:Yeah, back-end reporting is not the strong suit for most EMRs.
Erin Vallier:We all do one thing or two things really good, and then there's usually a module or two that's lacking.
Amy Knight:I remember years ago years ago, when I first moved to Texas, there was an EMR and it was developed by accountants and it had great back-end reporting because it was developed by accounts but the front-end clinical side was horrible and so nobody would use it. And so we, the accountants, have accepted, and I'm fine with that. I talk to clients about it all the time. If it works for your nurses, that's what's most important. I can make the reporting work on my end, don't worry about it.
Erin Vallier:What if an agency isn't ready to outsource their back office or payroll functions? What insights can an owner and CEO take away from the cost reports that they have to do?
Amy Knight:So cost reports. The bad thing about that is they're done so far in arrears. Medicare cost reports not do until five months. After a month then it's not very timely, but there are some insights, right. If you don't have anything else, the cost per visit or cost per day. So it's cost per visit for home care, cost per day if it's a hospice. Those are your key metrics to pull out of a cost report. It's going to show you your fully loaded cost per day cost per visit. Fully loaded means everything included, like all of your overhead.
Amy Knight:What happens in a nutshell is you have an RN that does an RN visit for you and so you pay that RN $75 a visit and so in your mind your cost per visit is $75. And maybe you're working with I don't know UnitedHealthcare or some other commercial insurance payer and you strike an agreement with them a reimbursement of $95 a visit and you think you've hit the lottery, until you find out that your real fully loaded cost per visit is $130 a visit, which is actually a very low number. I had this happen in a conference session that I was doing. The light bulb went off and this agency owner she said but wait a minute, we're calculating cost per visit and she goes, but I only get reimbursed $125 a visit. You're saying my cost per visit is $150? I go. Yes, that's exactly what I'm saying and I mean she was freaked out and that is. That's a very real thing. And I will tell you many home care agencies. Your fully loaded cost per visit may very, very well be higher than your reimbursement Rate for some of your payers. How we deal with that is limit how many patients you take from those payers. Still take them because you don't want to piss off your referral sources. I know how all this works, but you want to really limit it because they're what we call loss leaders. You're going to take the loss to get the other business that they also sent you.
Amy Knight:But that cost per visit and that cost per day you need to know what that is. And fully loaded is when you've added all your administrative salaries and rent and utilities and everything that it cost to run the agency, including marketing and advertising. So one of the downsides of the Medicare cost report and Medicaid, but one of the downsides of relying on the cost report, is the cost report is going to strip out any non allowable cost before your cost per visit is calculated. What is a non allowable cost? Marketing, advertising contributions.
Amy Knight:But the big one is marketing, and so it doesn't mean just because it's non allowable doesn't mean you can't do it. You should be doing it, but Medicare is not going to pay for it, medicare is not going to include it with allowable cost to figure future payment rates. So Medicare is like hey, we want to cover the cost of providing the services, and that means paying rent for an office and paying administrative staff for accounting services. That's part of running a business. But marketing and going out and growing the business is not necessary to providing services. So you're going to strip out and marketing might be a big chunk of cost for you marketing and advertising and so you really need to know what your real cost per visit.
Erin Vallier:That's frightening for somebody who thinks that they're getting 125 and then the cost is 150 and you're saying that it could actually be higher than that because there's some unallowable costs. That's terrifying.
Amy Knight:Yeah, yeah, you really got to know before you strike agreements with commercial insurance?
Erin Vallier:Absolutely. And you really touched on the reason for strategy that the home health agency I worked for used when they were going out and getting their referrals. It was baked into how the marketers were even reimbursed. So for commercial insurance we would even we would cap it so we've got too many United Health Care patients. You can't get any United Health Care referrals today. Go get the Medicare. And if we had a Medicare referral it's like, oh, bonus, you get more money for that because there's a higher reimbursement rate in better margins there. So that's just something for the owners to think about. It just really hits home on how important knowing all these numbers are and how important like back office services are to getting to that final Like what does it really cost you to do business? Very cool. So, other than the cost of doing business, are there any other KPIs that we should be looking at to make sure the agency is healthy?
Amy Knight:Cash flow obviously is a big one because that has nothing to do with cost per visit or cost per day. But you're not going to get any of that data from the cost report. That's why the cost report is actually very limiting. The other things that I check regularly what we look at, gross profit margin, that is going to be revenue minus joint profit, revenue minus direct cost, so all of your direct patient care expenses. You know that really should be 40 to 50%, would be good. If it's higher than that, that's even better.
Amy Knight:And then, of course, net income right, because not everybody's for profit, but the for profits need net income to be for profit, because I encounter a lot of caregivers that don't want to hear about cost savings and profit margins. And the way I explain it is I understand you're a caregiver in a caregiving business. The more profits you make, the more patients you can serve, because it takes profits to be reinvested back into the business, to grow the business and get it bigger and bigger and serve more and more and more patients. That's why profits are important. And so if you're not a nonprofit, you're still making profits to be able to service more and more people. It's just constantly being reinvested. Same theory.
Amy Knight:So gross margin, net income. You know we look at those as well. I mean, we look at census visits, like number of visits for home care, and we also look at all of these metrics as a slice in time. That's fine and helpful, but it's even more helpful as a trend over six months, 12 months, because you can say, oh, our cost per visits 145. And you're like, well, it's too high, yeah, but it's down from 175 six months ago. We've been chipping away at it. So is it going up or down? It's up good or it's down good. So there's lots of those factors too.
Erin Vallier:Awesome. So it's all about profit and then some metrics in terms of visit volume. Are you getting that information from an EMR or is that coming from one of the other platforms?
Amy Knight:So your visits and senses is all from the EMR. Then we use that data with the financial statements to get the other pieces, so it's a combo. That's kind of the big. I think weakness in our industry is there's a lot of benchmarks out that you can buy, meaning what is the average number of visits per episode. Like, there's these benchmarks but they don't include financials. It's all statistical from EMR, so there's not that much financial statistics that show what percentage should my marketing cost be of total revenue? Okay, 5%, like I know just based on my experience. But there's not a good place to just like find those statistics.
Erin Vallier:It also sounds like if an agency isn't going to engage with somebody to do the services for them, they really need to have a solid technology stack that is able to pull this information from them and they know and they know where to go get the benchmarking data that helps them reconcile what they're actually spending versus what they should be spending. Did I summarize that?
Amy Knight:Yep.
Erin Vallier:Yep.
Amy Knight:Very well.
Erin Vallier:We kind of butt up against our time. I could just keep talking to you about this because I'm fascinated. It's been super informative. You are a wealth of knowledge and we just really want to thank you for sharing it with our listeners. Now, if people want to learn more about outsourcing back office, is there a way for them to do some research? Do you have a website Of?
Amy Knight:course, we're technology leveragers, so we do have a website, but yeah, that's where I would point them. I would point them to our website. We are Night Home Care Financial. The website, though, is NightHC Financial, because that was way too many letters the other way Night with a K, nighthc Financial, and I think we got pretty good content on our website, and also our YouTube channel is good. I have not been very active lately in our webinars that we had been doing. I will probably get back on them in a couple of months. We'll see how that goes, but there's still a lot of good content. Our website has a lot about back office, about our services, our processes and our cost. Also, we try to be transparent as possible.
Erin Vallier:Wonderful. So you got a website and a YouTube channel and we'll make sure that information is in the show notes for people who want to engage. Sounds good. Thanks again, amy, it was such a pleasure. Thank you.
Jeff Howell:Home Health 360 is presented by AlayaCare. First off, we want to thank our amazing guests and listeners. To get more episodes, you can go to alayacare. com/homehealth360. That's spelled Home Health 360. Or search Home Health 360 on any of your favorite podcasting platforms. The easiest way to stay up to date on our new shows is to subscribe on Apple Podcasts, Spotify or wherever you get your podcasts. We also have a newsletter you can sign up for on alayacare. com/homehealth360. To get alerts for new shows and more valuable content from AlayaCare right into your inbox. Thanks for listening and we'll see you next time.