From Financial Instability to Sustainable Growth

A mid-sized Home Health Agency faced significant challenges in its financial operations, prompting a comprehensive assessment and strategic intervention. The organization lacked formal accounting infrastructure, struggled with cash flow management, and had an inefficient revenue cycle. These issues threatened its financial sustainability and operational efficiency.

CASE STUDY SNAPSHOT

Home Health Agency Financial Restructure

Implemented a general ledger, standardized accounting procedures, and KPIs—stabilizing finances and improving cash flow.

• Working cash balance established

• Accounting procedures formalized

• Expense reduction initiatives implemented

• KPIs developed for performance tracking

Assessment

Our team conducted a thorough evaluation of the Agency’s financial operations, focusing on:

  • Accounting Procedures

  • Revenue Cycle Management

  • Direct and Indirect Expenses

Key Findings

✘ Unreconciled Revenue: Revenue streams were not properly tracked or matched to services rendered.
✘ No Formal Accounting Procedures: The absence of standardized processes led to inconsistent financial reporting.
✘ No Working Cash Balance: The organization lacked visibility into its liquid assets.
✘ Poor Expense Tracking: Operational and administrative expenses were not categorized or monitored effectively.
✘ Inflated Accounts Receivable: Outstanding payments were significantly above industry norms.
✘ No Internal Accounting System (GL): The Registry operated without a general ledger, limiting financial oversight.

Planning

Our strategic planning phase focused on stabilizing and restructuring the financial foundation:

  • Establishing a Working Cash Balance: Ensuring liquidity for day-to-day operations.

  • Creating Accurate and Timely Financial Statements: Improving transparency and decision-making.

  • Developing Written Accounting Procedures: Standardizing operations to reduce errors and improve compliance.

  • Reducing Operational Expenses: Identifying inefficiencies and cost-saving opportunities.

  • Lowering Days in Accounts Receivable: Accelerating cash inflows to improve financial health.

  • Creating New Cost Centers: Enhancing budget control and performance tracking.

  • Implementing an Internal Accounting System: Introducing a general ledger for comprehensive financial management.

Implementation

  • Working Cash Balance Established: Reviewed bank statements and manual check registers, defined and monitored a sustainable cash threshold.

  • Accounting Procedures Formalized: Documented and deployed standardized workflows, trained staff on compliance and reporting protocols.

  • Expense Reduction Initiatives: Provided detailed operational data to guide cost-cutting, enabled informed decisions on staffing, procurement, and overhead.

  • Key Performance Indicators (KPIs) Developed: Built metrics to monitor revenue cycle, expense ratios, and receivables, creating a feedback loop for continuous improvement.

Outcome

The Home Health Agency now operates with:

✔ A stable working cash balance
✔ Clear and consistent financial reporting
✔ Reduced operational expenses
✔ Improved accounts receivable turnover
✔ A functioning internal accounting system
✔ A set of KPIs for ongoing performance monitoring

Our role transitioned from hands-on support to strategic oversight, with minimal involvement required moving forward.