Your Comfort, Your Care – Rick Lunsford of Blossom Ridge Home Health and Hospice

Rick Lunsford, Owner and CEO of Blossom Ridge Home Health & Hospice

Rick Lunsford, the Owner and CEO of Blossom Ridge Home Health & Hospice, grew his company’s revenue from $3.7 million in 2014 to $12.4 million in 2017, a 239% increase, and to around $16.5 million in 2018.  

Blossom Ridge Home Health & Hospice is a hospice and in-home skilled medical service provider to patients throughout the greater throughout the greater Sacramento and San Joaquin counties.  

In this interview with Eversprint‘s Malcolm Lui, Rick shares how he and his team accelerated their high value sales by:  

  • Focusing on both patient outcomes (so they do not have to be re-admitted to the hospital) and on patient satisfaction (they have a 4 star Medicare Home Health Care rating).  
  • Positioning the company to benefit from the aging of baby boomers — around 10,000 people turn 65 every day and get on Medicare.  

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Malcolm Lui:
Welcome to the High Value Sales Show of Eversprint.com. I'm Malcolm Lui, the Managing Member of Eversprint, and today we're speaking with Rick Lunsford, the Owner and CEO of Blossom Ridge Home Health & Hospice, a hospice and in-home skilled medical service provider to patients throughout the greater throughout the greater Sacramento and San Joaquin Counties. Welcome to the show Rick.

Rick Lunsford:
Thanks, Malcolm, for having me, appreciate it.

Malcolm Lui:
Rick, you grew your company's revenue from $3.7 million in 2014 to $12.4 million in 2017, a 239% increase, and in 2018 you hit around $16.5 million. Before we talk about how you grew your company so fast, can you briefly share what your company does beyond my quick intro, and how your company differs from the competition?

Rick Lunsford:
Absolutely. We are home health and hospice agency here in Sacramento. We have four offices now, one in our headquarters location here in Sacramento. We also have one in Yuba City, one in Stockton and another office that we recently purchased there in the San Francisco area. So we we provide skilled nursing and therapy, rehab services to the older population. Most of our patients are Medicare age or older, and half of our businesses in the hospice arena where we provide those type of services to two older folks that are in the last six months of their life. Yes, we've we've had a good run. Absolutely. We continue to grow year over year. That wasn't our intention to be on these lists of fastest growing companies. That just kind of happened that way. But we've been learning a lot. We started about seven years ago and we've been growing ever since pretty rapidly. And we really concentrate on the patient. And that's what it's all about here at Blossom Ridge, is we want to treat our patients like you want your mom and your grandma treated. And that's what we tell all of our clinicians. And they have the freedom to do so. We don't I don't look at the cost that it takes on any one patient. We want to always do what's right for the patient. And we're finding that as we do that over the years, we're gaining a good reputation from the patients. They're telling their doctors and the referral agencies. And we're continuing to get more and more referrals that way. And that's really what we concentrate on, is the outcomes of our patients and our patient satisfaction numbers. And we do everything in our power to keep our patients from going back to the hospital. And

Malcolm Lui:
Right.

Rick Lunsford:
That's our really are our duty.

Malcolm Lui:
Right. Yes. And I think what you shared. My dad answered my next question or part of my next question regards the three biggest drivers of your sales growth from 2014 to 2018. You mentioned your your focus on the outcome of the patients as well as the patient satisfaction. Would you say those are your number one number two drivers?

Rick Lunsford:
Well, they're absolutely the most important factors. I mean, we're if you look at the aging population of baby boomers, the macroeconomics of it is one of the big drivers is just a lot of patients that are needing these type of services. You've probably heard the number, some ten thousand patients a day turn 65 and get on Medicare. Those baby boomers are just starting to head and they're just starting to need services like what we provide. So from a macroeconomic standpoint, we're in a good, good place. But yes, in order, it's still very competitive. All the hospital systems, et cetera, have their own home health and hospice lines. So we need to become those those preferred providers that the hospitals are really looking for. And what we hear constantly is how are you at keeping more patients from readmitted? And we pride ourselves on on that on the outcomes of our patients, keeping them from going back to the hospital. In fact, our numbers are well below the national and regional averages for re hospitalization rates on our home health side. And that's what we tell our partners. We can keep them from going back to the hospital better than most. And we prove that over and over. So if we concentrate on the outcomes of our patients and then of course, the patient satisfaction numbers, which were four star rated agency, currently we find that we we continue to get the referrals even from the hospitals. And even in a very competitive marketplace.

Malcolm Lui:
Right now, when you mention you focus on the outcome, the patients, and in keeping them from going back to the hospitals, how do you go about doing that? One way, of course, to be very selective, right, in making sure that you only accept patients that you can help. Is that one avenue that you.

Rick Lunsford:
No, that's not really. No. Well, we can't pick and choose our patients. If a hospital is giving you a referral and you say no because it's too tough, you're not gonna get many referrals from that hospital. So in an ideal world, would you like to do that? Perhaps, but in the realistic world? No. We we just basically accept the patients that are given to us and we do the very best we can with each of those patients. So some of the patients are out of out of scope for what we do. But that's that's a different that's a very small number. But yeah, when does when those hospitals or skilled nursing facilities are referring to us, they really want us to take whatever they're giving us and we do for the most part. So we we put a lot of programs in place, just what we call our high risk re hospitalization program. And when when we do get one of those high risk patients, we put a lot of time, a lot of resources and a lot of money behind us. And behind that patient in order to keep them out of hospital. So basically what that comes down and looks like is we'll do extra visits. We'll add on a home health aide or sometimes other agencies will not. We'll do a lot of therapy visits. We'll do basically whatever it takes to keep that patient from readmitted. We we have started some new other new programs, like a telehealth program for some of the high risk patients, too. And we're we're just getting going on that. So we don't really have any outcomes to provide at this time. But it's looking very positive for keeping those patients out of the hospital.

Malcolm Lui:
All right. Investing in regard to your patient satisfaction numbers. What metrics are they exactly?

Rick Lunsford:
Well, Medicare sends out a survey to all Medicare patients after they've experienced any home health service. And we have no control over that sense. And some patients will answer the survey and some will not. On average, about 30 percent of patients do nationwide answer the Medicare surveys. And then based on the answers to the Medicare survey is what we get as a star rating. And the best star rating you can get is five stars. And we are currently at a four star rating for patient satisfaction. And there's, I think some 40 or 50 questions are asked by Medicare in that survey. And it's all it all ends up getting published on Medicare. Dot gov. Each quarter it's updated. So our goal has always been to be a four star or higher agency. And that's where we currently are. And we've been that for quite a while now.

Malcolm Lui:
So when I shoot for five star instead of a four.

Rick Lunsford:
Well, yes. Our goal is for we feel like we can be at five star. But because of the challenge of Medicare in the survey's system, I'm not going to I'm not going to sit there and tell my my guys, we've got to get five start when it's it's it's pretty hard just to get four. So I feel comfortable with setting the goal at four and shooting for five. I don't want to to have a goal of five and not attain it. And then my people won't feel quite as good about what they do.

Malcolm Lui:
Right.

Rick Lunsford:
So

Malcolm Lui:
Exactly.

Rick Lunsford:
That's why I want a four star.

Malcolm Lui:
Right. From the survey results that are given to you. What areas would your team need to improve upon to pump up the rating higher?

Rick Lunsford:
You know, I don't have it in front of me, so there's like I said, there's a number of questions on that and I'd have to give you a better answer. I'd have to look at it. I don't have it in front of me. Sorry.

Malcolm Lui:
Sure, no worries. No worries on that. And a third driver that you talked about and the macro factor really being in front of this wave of a huge number of people who are going to need any service.

Rick Lunsford:
Absolutely.

Malcolm Lui:
Is

Rick Lunsford:
Yes.

Malcolm Lui:
This something that you foresaw five, six years ago? And then you say, I'll start a business and get in front of this?

Rick Lunsford:
Well, that's that's the basic reason we started the company, frankly. There was two other partners and I started we were actually one of us met in our MBA program and his wife was a nurse and had mentioned home health services. And then so we just started to research it. And soon as I started to research this industry, I just thought, my gosh, with the baby boomers coming, this is going to be around for many, many years. And so at that point, we actually I was actually let go. I was in a pharmaceutical job at the time, about 8, 9 years ago. And it was perfect timing. So soon as I got laid off, we put we put a little bit of money together to start this company. And we and we just ran with it from there. But but, yes, I mean, I thought these type of services are going to be needed for many, many years. The baby boomers are going to start hitting and they've only just started to really hit the system. And it's only going to continue to to increase from here.

Malcolm Lui:
Right now, when you start a business to a degree that your. You and your two partners have experience in providing in-home health care.

Rick Lunsford:
0 0 absolutely no experience at all. So we started from scratch knowing basically nothing about home health or hospice services, frankly.

Malcolm Lui:
Okay.

Rick Lunsford:
And so we had to learn. Yes, we had to learn from the ground up, from getting our our state license to our Medicare approval. It took almost two years for that to happen. And another maybe a year or two after that, before we even started to see any revenue. So we it was a big learning curve for us. The good part about that was we did have to start from scratch. We didn't buy a company and take over an existing operation. So we know how to build a company from the ground up in this space, which. You know, we didn't know how to do so, we had to learn every aspect. And now we've hired a number. Well, for years now, we've had a number of people who have been in this space for a long time and quite frankly, they do the operations on day to day basis now. But yeah, it was. I'm not sure I would recommend that route to most, but it's worked out for us and we're pretty, pretty proud of that.

Malcolm Lui:
Right. So how do you go about getting your first customer, your first patient?

Rick Lunsford:
Well, this was, what, seven years ago, I guess 2013 was when we got our first patients and I had mentioned to you that I was in pharmaceutical sales a long time ago. I was a sales rep and I was a sales manager for a large company here in the Sacramento area. As a result of that, I got to know quite a few physicians in the area. And so I went back to many of those physicians that I that I knew and just asked for referrals for home health. At the time. And they would give us one or two here or one or two there. Nothing, nothing major, but just enough to get us going and to learn how to do it and to meet the requirements that Medicare had. And so it started off with the local local physicians, the primary care physicians, mostly in the Sacramento area. And then it grew from there.

Malcolm Lui:
All right. Awesome. Now, in terms of getting new business today. What's your market and how do you go about doing that? No, referrals are a big part of it.

Rick Lunsford:
Well, this pretty much everything here is referral based. All home health, hospice is all referral base has to come from a hospital or a physician of some sort. So we've grown our sales force. We have a sales director. We have nine sales reps. And all of our reps just call on their accounts. The hospital accounts to skilled nursing accounts. The physician accounts. All all of those. And because we we have such a good star rating, we have such a good readmit rate. We have a lot that we can sell our service. We have a lot of proof. And as the years go, go on, our reputation is improves. And we were able to get in some bigger accounts, like the hospitals, the hospitals is where most of the volume comes from. And it also took us the longest to get into those hospital systems. But now we get over 60 percent of our referrals from our from our hospital partners. And so we have an aggressive sales force. But mostly it is it's based on our high service levels or high star ratings that we can really sell our service.

Malcolm Lui:
Right. How long does it take two to get a new hospital? I imagine when you say hospital, you're not referring to this one physical hospital. You're referring to a whole network of hospitals right on your platform.

Rick Lunsford:
Yes and no. It doesn't quite work that easily.

Malcolm Lui:
Okay.

Rick Lunsford:
You have to kind of get one at a time and prove yourself. And so, yeah, we have, you know, the hospitals here in the Sacramento area, the same walking area that referred to us now. But those it took us probably four or five years before we started getting any kind of referrals from them. And over the years, it slowly increased. I think as their confidence in us as a service provider increased as well. But yeah, it took a long time. We started off with physicians and then we went on to skilled nursing and assisted living facilities. And then finally we were able to penetrate some of the hospitals and hospital systems. But there's no contract. There's no promises. Each week goes by and they could send us zero or they can send us 20, 20 referrals. You just honestly, you don't know which is one of the challenges of operating a company like mine.

Malcolm Lui:
Right now, I assume they have a formal list of approved providers of in-home health care or

Rick Lunsford:
Well

Malcolm Lui:
Is not even that.

Rick Lunsford:
Well, you know, that's a that's a kind of a funny question mark, because they're supposed to offer their patients all the hospitals are supposed to offer their patients a choice of which providers, home health providers they want to use. And they always have their own rights. So they always prefer to use their own internal home health and hospice system. But mostly they're full, quite frankly. That's where we come in as a backup to their their own provider. And we just want to be a backup when when there they are full. So they do offer the patients choice and they'll give them a list. And I don't know who's on the list or not. Frankly, it's kind of a mystery list, I guess. But. But then we get referrals out of it. So I guess we're on the list.

Malcolm Lui:
Right now, are you working with, say, when the big, big providers out there like Kaiser or are they on your list right now or are you on

Rick Lunsford:
Yeah.

Malcolm Lui:
Their list?

Rick Lunsford:
We have a can we have a contract with Kaiser? Yeah. That's a separate. That was a separate kind of deal. We have to. They're the one provider out here. They have most of the market share, of course. But they they they require you to be contracted with them. But just because you're contracted doesn't mean they're going to give you anything. You just then you are on their list as a contract provider.

Malcolm Lui:
Right.

Rick Lunsford:
So, yes, we've over the years, we've got a contract with them for home health, for hospice services. Yeah. And others like Sutter Dignity System. We are not contracted with them, but we are a preferred provider of theirs.

Malcolm Lui:
Ok, so when someone, et cetera, dig into continues, you know, they're their own in-house services or are booked up. They need to before someone else.

Rick Lunsford:
Yes.

Malcolm Lui:
Do they go about choosing you as opposed to the other people that they know about? What do you do to stay top of mind with them?

Rick Lunsford:
Well, this is where we have our salespeople going in there, reminding them of our service or, you know, our star ratings are re hospitalization rate, etc.. So we are competitively selling against other providers like me for them to choose. So we stay aggressive with direct marketing staff. And that's basically how we do it.

Malcolm Lui:
Right. So they're constantly selling, essentially.

Rick Lunsford:
Oh, yeah, yeah. My people are out there right now.

Malcolm Lui:
Right.

Rick Lunsford:
I mean, just because there's a lot of patients doesn't mean they're going to come our way. Yes.

Malcolm Lui:
Right.

Rick Lunsford:
So we have to be competitive, but we have to have a good, good service.

Malcolm Lui:
Right.

Rick Lunsford:
And that's what we we concentrate on. There's a there's a fair amount of competition, but most are not for stars. Most do not have the readmission re hospitalization rate that we have. So we focus on what our partners are telling us they may need from a partner. And we put that into play every day.

Malcolm Lui:
Right now when you're marketing. Blossom Ridge to the hospitals in your sales team is doing is it all done in person over the telephone? Or do you have a advertising campaign running as well?

Rick Lunsford:
No. It's all in person. We don't really advertise the challenge with advertising in our spaces. Most people never heard of home health. They have heard of hospice. So some hospice companies do advertise that way. Our biggest challenge, honestly, is not getting referrals. Most of the time. It's getting qualified staff, nurses and therapists that want to do things the right way and the Blossom Ridge way. So we've, you know, we've done some advertising and like that. And because it's a referral based business, they have to go back to their physician and the physician actually has to send this referral. So it's a bit cumbersome to just advertise and say, hey, come to Blossom Ridge when it's not quite that simple.

Malcolm Lui:
Right.

Rick Lunsford:
So we've shied away from direct advertising in the marketplace because of that

Malcolm Lui:
Okay.

Rick Lunsford:
And concentrate on our on our partners mostly.

Malcolm Lui:
What about marketing to the to your contacts at the hospital's. Do you do any form of targeting target marketing to those folks?

Rick Lunsford:
No, we have not. No, we've looked at some more no more pinpoint type advertising, but we haven't followed through on any of that. It just hasn't it hasn't been a huge need thus far. And as a result, we just haven't done it.

Malcolm Lui:
Right. Meaning it does not bug me because you're you're getting plenty of referrals right now.

Rick Lunsford:
Right. We know there's weeks, we have too many referrals. Which is one of the things that I don't look forward to is when we can't accept the referral.

Malcolm Lui:
Yeah. What happens then?

Rick Lunsford:
Well, we have to tell them no, we're full because we're all of our obligation through Medicare is we have to start a patient 48 hours from the day that we from the moment we get the referral. We have to be out there in 48 hours and we want to be out there in 48 hours. We try to be out there in 24 hours. The faster we can get out to see the patient and get care for them, the better outcomes are we're gonna have better patient satisfaction. That's patients going to have. So there's a lot of benefits to get out there fast and start care immediately. So we don't want to push out patients. There's some agencies that do. But not only is that, I think, unethical, it's actually against Medicare protocol. So once we get to that point, you know, we try to hire and we try to staff properly. I mean, it does not happen very often where we have to say no to a no do a referral. But it certainly does happen from time to time.

Malcolm Lui:
Right. And when you say no. Then they just refer to someone else. Or can you

Rick Lunsford:
Yes.

Malcolm Lui:
Take your overflow

Rick Lunsford:
Typically,

Malcolm Lui:
From

Rick Lunsford:
Yes.

Malcolm Lui:
One of your partners?

Rick Lunsford:
Now, now they'll just refer.

Malcolm Lui:
All right. Okay.

Rick Lunsford:
So, you know, they're going through a basic algorithm to. They start with their own agency. They say no, because they're full and they're almost always full, frankly. Then they go to outside agencies and then they go in in their preference. And then if if we say no, they'll go next one list. So that's another reason we don't want to say no, of course.

Malcolm Lui:
Right. Got it. And you mentioned before how hospitals. They they really prefer that patients don't come back. Right. And now on one hand, you know, of course, you don't want the patients to come see you. They don't have to. The damn thing, on the other hand, that's a revenue opportunity. Right. You look at it from a purely numbers perspective.

Rick Lunsford:
Right. Right.

Malcolm Lui:
So

Rick Lunsford:
Well, that's

Malcolm Lui:
What?

Rick Lunsford:
That's the dilemma of running a hospital there under very tight guidelines from Medicare as well. And if they're readmit rate is too high. They get penalized monetarily. So, you know, you'd have to talk to a CEO of a big hospital to know exactly what they're how they work that. All we know is they are under a lot of pressure not to readmit a patient within 30 days.

Malcolm Lui:
Right.

Rick Lunsford:
So whether that brings more money to their hospital or not after they get penalized. You know, I don't know all those details, but it is an interesting dilemma that

Malcolm Lui:
Right.

Rick Lunsford:
A hospital CEO would face.

Malcolm Lui:
And I said similar to you, right? When you talk about patient satisfaction,

Rick Lunsford:
All

Malcolm Lui:
I

Rick Lunsford:
Right.

Malcolm Lui:
Imagine if no patient want to go back to the hospital and if the hospital provides a home health care options, allow them to not go back. They're happier and that refer more people to the hospital as well as to your service.

Rick Lunsford:
No, absolutely, you're right. Nobody wants to go to the hospital, frankly.

Malcolm Lui:
Yeah.

Rick Lunsford:
I mean, it's just this is not a fun place to be. And that's why home care is so important. The cost of home care is pennies compared to the hospital stay. And we have very, very good outcomes. Our patients get better at home. They're happier at home. So if we can provide nursing and therapy and aides to them at their home, that's a win win for all. And that's why Medicare pushes home health and hospice services so much over over hospital based services. The costs are pennies compared to the hospital costs.

Malcolm Lui:
Right. So I actually did a little bit of research into the providers of those services, the hospice providers in the

Rick Lunsford:
Mm hmm.

Malcolm Lui:
Not necessarily in home, but where you take them to their facilities and the ratings during are very good. It seems like a you know, looking at the consumer base review sites where the yelps at the world. That's just the nature of the industry.

Rick Lunsford:
You're saying that they're happier at home.

Malcolm Lui:
Now that the service levels of the sort of health care providers outside the hospital. Make sure you don't read them very well and not withstanding what you're reading, it might be if I'm seeing just broadly. One quick, quick Google on hospice providers or skilled nursing providers.

Rick Lunsford:
I don't necessarily agree. I mean, you know, if you look at a skilled nursing facility, that's completely different. That's in a facility hospital, in a facility where the only home health and hospice are really the only ones that take care of people at their home. I don't know what exactly you're looking at, but I can just tell you the numbers that I see from patient satisfaction. We have some over 90 percent of our patients highly recommend us. Things like that. So I'm not sure what what you're looking at exactly, but

Malcolm Lui:
Yeah, it wasn't.

Rick Lunsford:
Most

Malcolm Lui:
It was.

Rick Lunsford:
Of.

Malcolm Lui:
Yeah, wasn't in-home services persay with more of the outside the hospital, but they were at a facility with skilled nursing. I was checking that out.

Rick Lunsford:
Well,

Malcolm Lui:
Yeah.

Rick Lunsford:
Nobody wants to go to school nursing facility if you've been in one. You don't want to be in those. So we have we get a lot of referrals from skilled nursing because so patients will go from hospital sometimes to a skilled nursing facility for rehab

Malcolm Lui:
Many.

Rick Lunsford:
And then they skilled nursing facilities also are mandated to get patients in and out as quickly as possible by Medicare and other payers. And so then you're going from hospital to skilled nursing, then finally to home health services at your home. That happens quite a bit. So I'm not sure that people. Yeah, skilled nursing or hospital based systems. I'm not sure what the satisfaction levels are there.

Malcolm Lui:
Right. Got it. So before we think about the macro way, right. You have this huge wave of people who are getting older.

Rick Lunsford:
Oh, all

Malcolm Lui:
That's

Rick Lunsford:
Right.

Malcolm Lui:
Gotten me a huge one massacre scenario that you're writing. Are there other trends you're seeing that that you can capitalize on and positivity or perhaps one that you need to position the company to avoid?

Rick Lunsford:
Well, there certainly some ones that we need to avoid. You know, we work for the government, basically Medicare and Medicare is always on the chopping block every year, budget wise, we're seeing reductions. We have some serious headwinds in that area. It's also a macroeconomic force that's that's coming in every year it's coming. But this year they're actually doing some significant changes. The most significant in home health and I think 15 years called the PDG. And they're changing the entire way that we are reimbursed for Medicare. There's no way to avoid this. There's only there's only ways to get ready for it, frankly. And it could be very, very serious. They anticipate, in fact, 30 percent of home health agencies may even go out of business because of this change.

Malcolm Lui:
Now.

Rick Lunsford:
So we're working diligently on on that now to get ready for this change come in in January of next year.

Malcolm Lui:
Now, why would 30 percent of the home health care companies out there go out of business from this change? What's happening

Rick Lunsford:
Well,

Malcolm Lui:
Exactly?

Rick Lunsford:
Most of not most. Many of the home health agencies are pretty small, relatively speaking. You know, there's a few monster players, billion dollar companies in this space, but really it's very fragmented and there's a lot of mom and pops like under 5 million in revenues like we used to be. Not too long ago. And cash flow is king in this business. Like all businesses and the changes that are going to take effect are really going to negatively impact our cash flows. The first quarter of 2020, and I just don't think that some of the small players are gonna have the cash infrastructure and ability to get the cash they're going to need to ride through the first quarter. And I think that's where they're coming, coming down with this 30 percent rate. Who knows exactly how it's going to pan out, but I don't doubt that. No, actually, because of the cash flow problems. And in general, they're expecting about 8 percent reduction in our rates. Most companies, smaller ones, especially home health on the home health side, would be lucky to have a percent margins. So there's gonna be some significant challenges to the to the small and even medium sized players.

Malcolm Lui:
Right. So you made you before the cash flows can be tough in the first quarter descent.

Rick Lunsford:
Yeah.

Malcolm Lui:
Deferring payments as well.

Rick Lunsford:
They are. Yes, the way Medicare works now is we get 60 percent of our payment per patient basically upfront within two weeks of a patient's starting. We usually receive 60 percent of that. They're reducing that down to I think 25 percent. And then 2021, they're supposed to be getting rid of that upfront payment where they would pay us all at the end instead of half of it. Basically at the beginning, which they have to be getting really helps us with operating the company. So if you don't have either enough cash saved or line of credit or some other way. I'm not sure how some of these small companies are going to be able to operate.

Malcolm Lui:
Right. Tough stuff here. First quarter

Rick Lunsford:
Yeah.

Malcolm Lui:
Right before they get paid.

Rick Lunsford:
Yeah. Exactly. It'll catch up, but you still gonna have to operate with a lot less money. The first you know, the first two months,

Malcolm Lui:
Yep.

Rick Lunsford:
Three months and. You know, you're going to have to be really, really good and really smart. I think as a small business operator to be able to make it.

Malcolm Lui:
Yeah, definitely. Before you mention when they're bigger challenges, is finding qualified staff. So what are your plans for that?

Rick Lunsford:
Well, we get most of our stuff now from internal referrals, which is nice, and that's where we do a lot of marketing online. We do a lot of events. We're always frankly looking for good nurses and good therapists. So I don't know that it's going to get any easier over time. Fortunately, we we're also well known here in the Sacramento area. So are problems here in Sacramento are a little bit easier to overcome because of our reputation. Now, some of our outlying areas like Yuba City and Stockton are a little bit a little bit tougher just because of the size of the market. There is a little bit smaller, but we were voted one thing that helps us with recruiting as we were voted one of the best places to work in Sacramento. We got it this year and we had it two thousand seventeen, I think, or 16. So we have a good reputation. We take care of our people extremely well. Great benefits. Good pay. Very flexible, collaborative environment. So that's the one thing that we have that most other agencies don't have, is our cultures is really good. And we get a lot of referrals from our own people, which helps us tremendously.

Malcolm Lui:
Right. So what's the plan for the outlying areas where your reputation isn't as well known unit in Yuba City, for example?

Rick Lunsford:
Yeah. Yeah, it's tough. It's a slow and steady. You know, we we're just we're just fighting in those areas for four good clinicians. And that's that's all we can do. I mean, we do a lot of recruiting, a lot of word of mouth. Chamber of Commerce stuff, you know, small things like that. And we're doing good. But we could always, always be doing better in the recruiting side. So, yeah, it's an ongoing struggle. It's probably our top one or two challenge that we face ongoing.

Malcolm Lui:
Right, but the other challenge.

Rick Lunsford:
Well, what I talked about with our referrals, they're not guaranteed. So some weeks it's good some some weeks it's too much.

Malcolm Lui:
Ok.

Rick Lunsford:
And to be able to balance that properly and still make profit as a company is probably our biggest challenge. It's a operational the big operational challenge to balance it properly and yet give people a full time salary and work environment when the when the referrals are not always there. You know, sometimes they're there too much. Sometimes they're not there enough and there's no guarantees in that area. So we were constantly trying to balance that.

Malcolm Lui:
Yep, I guess how tough that is back in my in my business school days. We did it very simple, simple game where each of us were lined up as a part of the supply chain and we were getting steady orders all the way through and all the way through.

Rick Lunsford:
Right.

Malcolm Lui:
And all it takes is one person to just make one change and then it doesn't

Rick Lunsford:
Hit her.

Malcolm Lui:
Propose. A whole system becomes a complete nightmare at the end.

Rick Lunsford:
Yeah. Now, when we're full and we have, you know, we're we have plenty of referrals, things, things. I'm not saying they're easy, but they're more predictable and they're more predictable. It's easier to run a business when it's not predictable. That's when you get paid the big bucks for trying to figure out how to do it and still make a profit.

Malcolm Lui:
Yeah. Yeah. I mean, it's you don't want to overinvest in and

Rick Lunsford:
Right.

Malcolm Lui:
Have people sitting around and nor do you want to be under an ass and have to

Rick Lunsford:
Right.

Malcolm Lui:
Accept referrals. Right. That doesn't help in the long run. Yeah, right.

Rick Lunsford:
Exactly.

Malcolm Lui:
So a few final questions for you. Rick. I love it. What message would you show on a billboard along the freeway? It's only going to be seen for six seconds or less. And then you can talk about two different billboards, one for the hospital side. Get more referrals from them and then perhaps another one from a staffing side.

Rick Lunsford:
That's I mean, our our tagline here is Blossom, rage, your comfort, your care, your home, our passion. So that probably fit on nicely on a billboard of some sort.

Malcolm Lui:
Yet.

Rick Lunsford:
Yeah, I think I can go that.

Malcolm Lui:
Yeah, it actually works both both ways. Both

Rick Lunsford:
Yeah.

Malcolm Lui:
Of your

Rick Lunsford:
Yeah.

Malcolm Lui:
Hospital side, your care. Health care, professional side as well, wasn't on your recruiting side.

Rick Lunsford:
All right.

Malcolm Lui:
And who are your ideal patients and what's the best way for them to contact your company or get settings emotions to say get them to your facility. Or you go to yours or turn to you for service.

Rick Lunsford:
Well, thanks for asking. I mean, are our patients are typically Medicare age 65 and over. Although we do take younger patients that need rehab, but they're usually coming out of a hospital or a skilled nursing facility that need rehab services at home. Basically nursing therapy, aid, any of those type of patients that need help at home or of course, are looking at hospice and hospices aside. Business is very important and underserved, yet people don't like to talk about hospice that much because it kind of means people are passing away. But we we provide care for patients that are within six months of passing based on what the physician has said. And we provide spiritual help. Chaplain, nursing aides, all those to just help with quality of life at the end. So anyone that's unfortunately within six months of passing should should really get on hospice services. I mean, it's really for the family as well to help support their mom or their dad in their last months of life. So

Malcolm Lui:
In this hospice

Rick Lunsford:
That's a very

Malcolm Lui:
Services

Rick Lunsford:
Important site.

Malcolm Lui:
Are done at home as well. Or you have a facility

Rick Lunsford:
Yes.

Malcolm Lui:
For that.

Rick Lunsford:
No, no. That's all this is all at home. That's all we do

Malcolm Lui:
All

Rick Lunsford:
At home

Malcolm Lui:
Right.

Rick Lunsford:
Services, period. So, you know, half of half of our company does rehab with nursing and therapy and the other half does these hospice services, which is done usually by spiritual counseling and nursing and AIDS to help shower and things like that.

Malcolm Lui:
Even.

Rick Lunsford:
So really to improve quality of life the in the last months of people's lives.

Malcolm Lui:
Right. So for you, for that for these patients, they're a good fit for your service, your and your at home services. How should they go about inquiring about how

Rick Lunsford:
Well,

Malcolm Lui:
They eat your firm,

Rick Lunsford:
Yeah,

Malcolm Lui:
Diego?

Rick Lunsford:
There's there's a number of ways it's all referral base. It has to has to basically come from a physician so you can always ask your primary care physician for these type of services. But like I said, most come from the hospital or skilled nursing where you would talk to the discharged nurse at the time. And everyone, anyone who's been in a hospital knows a discharge nurse. They come in. Talk about next steps after you after you leave the hospital. They're the ones that are ordering the home health or hospice services, generally speaking. So you just the patient would just have to ask them for. They want to use Blossom Ridge and then they're obligated to send this a referral at that time.

Malcolm Lui:
Right. Even if they're not on the list on their own internal list.

Rick Lunsford:
No. Yep. Patient has 100 percent choice and we get a lot of patients these days that go and look at look at the outcomes and look at the star ratings and they'll call us up and say, we want to use your services, how do we go about it? And we always have to say, go back to your physician. Tell me what you want to use Blossom Ridge.

Malcolm Lui:
Right. And. And Medicaid doesn't have a list of providers, right? I mean, if you want your license, you can go. Anyone

Rick Lunsford:
No.

Malcolm Lui:
Can go.

Rick Lunsford:
Yeah.

Malcolm Lui:
Right.

Rick Lunsford:
Yeah. Medicaid is well, it's mostly managed Medicaid here and in. In California now. Blue Cross or Health Net, other other providers manage it for the medical population. And so you would just have to go through your provider, know if you're if you're a medical patient. And they would order it.

Malcolm Lui:
Ok, so you know, the hospital doesn't work for you. They can still have you on your. I'm very sure of. People can still say, I want to go.

Rick Lunsford:
Right. Absolutely.

Malcolm Lui:
All right. Got it. It's been awesome having you on my show today. Really enjoyed hearing about how you grew your company so fast.

Rick Lunsford:
Well, thank you, Malcolm. I enjoyed the time.

Malcolm Lui:
We've been speaking with Rick Lunsford, the Owner and CEO of Blossom Ridge Home Health & Hospice, about his company's rapid growth. For interviews with other fast growing, high value sales companies, or to learn how we can accelerate your firm's high value sales through automation, visit Eversprint.com.

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Malcolm Lui:
Welcome to the High Value Sales Show of Eversprint.com. I'm Malcolm Lui, the Managing Member of Eversprint, and today we're speaking with Rick Lunsford, the Owner and CEO of Blossom Ridge Home Health & Hospice, a hospice and in-home skilled medical service provider to patients throughout the greater throughout the greater Sacramento and San Joaquin Counties. Welcome to the show Rick.

Rick Lunsford:
Thanks, Malcolm, for having me, appreciate it.

Malcolm Lui:
Rick, you grew your company's revenue from $3.7 million in 2014 to $12.4 million in 2017, a 239% increase, and in 2018 you hit around $16.5 million. Before we talk about how you grew your company so fast, can you briefly share what your company does beyond my quick intro, and how your company differs from the competition?

Rick Lunsford:
Absolutely. We are home health and hospice agency here in Sacramento. We have four offices now, one in our headquarters location here in Sacramento. We also have one in Yuba City, one in Stockton and another office that we recently purchased there in the San Francisco area. So we we provide skilled nursing and therapy, rehab services to the older population. Most of our patients are Medicare age or older, and half of our businesses in the hospice arena where we provide those type of services to two older folks that are in the last six months of their life. Yes, we've we've had a good run. Absolutely. We continue to grow year over year. That wasn't our intention to be on these lists of fastest growing companies. That just kind of happened that way. But we've been learning a lot. We started about seven years ago and we've been growing ever since pretty rapidly. And we really concentrate on the patient. And that's what it's all about here at Blossom Ridge, is we want to treat our patients like you want your mom and your grandma treated. And that's what we tell all of our clinicians. And they have the freedom to do so. We don't I don't look at the cost that it takes on any one patient. We want to always do what's right for the patient. And we're finding that as we do that over the years, we're gaining a good reputation from the patients. They're telling their doctors and the referral agencies. And we're continuing to get more and more referrals that way. And that's really what we concentrate on, is the outcomes of our patients and our patient satisfaction numbers. And we do everything in our power to keep our patients from going back to the hospital. And

Malcolm Lui:
Right.

Rick Lunsford:
That's our really are our duty.

Malcolm Lui:
Right. Yes. And I think what you shared. My dad answered my next question or part of my next question regards the three biggest drivers of your sales growth from 2014 to 2018. You mentioned your your focus on the outcome of the patients as well as the patient satisfaction. Would you say those are your number one number two drivers?

Rick Lunsford:
Well, they're absolutely the most important factors. I mean, we're if you look at the aging population of baby boomers, the macroeconomics of it is one of the big drivers is just a lot of patients that are needing these type of services. You've probably heard the number, some ten thousand patients a day turn 65 and get on Medicare. Those baby boomers are just starting to head and they're just starting to need services like what we provide. So from a macroeconomic standpoint, we're in a good, good place. But yes, in order, it's still very competitive. All the hospital systems, et cetera, have their own home health and hospice lines. So we need to become those those preferred providers that the hospitals are really looking for. And what we hear constantly is how are you at keeping more patients from readmitted? And we pride ourselves on on that on the outcomes of our patients, keeping them from going back to the hospital. In fact, our numbers are well below the national and regional averages for re hospitalization rates on our home health side. And that's what we tell our partners. We can keep them from going back to the hospital better than most. And we prove that over and over. So if we concentrate on the outcomes of our patients and then of course, the patient satisfaction numbers, which were four star rated agency, currently we find that we we continue to get the referrals even from the hospitals. And even in a very competitive marketplace.

Malcolm Lui:
Right now, when you mention you focus on the outcome, the patients, and in keeping them from going back to the hospitals, how do you go about doing that? One way, of course, to be very selective, right, in making sure that you only accept patients that you can help. Is that one avenue that you.

Rick Lunsford:
No, that's not really. No. Well, we can't pick and choose our patients. If a hospital is giving you a referral and you say no because it's too tough, you're not gonna get many referrals from that hospital. So in an ideal world, would you like to do that? Perhaps, but in the realistic world? No. We we just basically accept the patients that are given to us and we do the very best we can with each of those patients. So some of the patients are out of out of scope for what we do. But that's that's a different that's a very small number. But yeah, when does when those hospitals or skilled nursing facilities are referring to us, they really want us to take whatever they're giving us and we do for the most part. So we we put a lot of programs in place, just what we call our high risk re hospitalization program. And when when we do get one of those high risk patients, we put a lot of time, a lot of resources and a lot of money behind us. And behind that patient in order to keep them out of hospital. So basically what that comes down and looks like is we'll do extra visits. We'll add on a home health aide or sometimes other agencies will not. We'll do a lot of therapy visits. We'll do basically whatever it takes to keep that patient from readmitted. We we have started some new other new programs, like a telehealth program for some of the high risk patients, too. And we're we're just getting going on that. So we don't really have any outcomes to provide at this time. But it's looking very positive for keeping those patients out of the hospital.

Malcolm Lui:
All right. Investing in regard to your patient satisfaction numbers. What metrics are they exactly?

Rick Lunsford:
Well, Medicare sends out a survey to all Medicare patients after they've experienced any home health service. And we have no control over that sense. And some patients will answer the survey and some will not. On average, about 30 percent of patients do nationwide answer the Medicare surveys. And then based on the answers to the Medicare survey is what we get as a star rating. And the best star rating you can get is five stars. And we are currently at a four star rating for patient satisfaction. And there's, I think some 40 or 50 questions are asked by Medicare in that survey. And it's all it all ends up getting published on Medicare. Dot gov. Each quarter it's updated. So our goal has always been to be a four star or higher agency. And that's where we currently are. And we've been that for quite a while now.

Malcolm Lui:
So when I shoot for five star instead of a four.

Rick Lunsford:
Well, yes. Our goal is for we feel like we can be at five star. But because of the challenge of Medicare in the survey's system, I'm not going to I'm not going to sit there and tell my my guys, we've got to get five start when it's it's it's pretty hard just to get four. So I feel comfortable with setting the goal at four and shooting for five. I don't want to to have a goal of five and not attain it. And then my people won't feel quite as good about what they do.

Malcolm Lui:
Right.

Rick Lunsford:
So

Malcolm Lui:
Exactly.

Rick Lunsford:
That's why I want a four star.

Malcolm Lui:
Right. From the survey results that are given to you. What areas would your team need to improve upon to pump up the rating higher?

Rick Lunsford:
You know, I don't have it in front of me, so there's like I said, there's a number of questions on that and I'd have to give you a better answer. I'd have to look at it. I don't have it in front of me. Sorry.

Malcolm Lui:
Sure, no worries. No worries on that. And a third driver that you talked about and the macro factor really being in front of this wave of a huge number of people who are going to need any service.

Rick Lunsford:
Absolutely.

Malcolm Lui:
Is

Rick Lunsford:
Yes.

Malcolm Lui:
This something that you foresaw five, six years ago? And then you say, I'll start a business and get in front of this?

Rick Lunsford:
Well, that's that's the basic reason we started the company, frankly. There was two other partners and I started we were actually one of us met in our MBA program and his wife was a nurse and had mentioned home health services. And then so we just started to research it. And soon as I started to research this industry, I just thought, my gosh, with the baby boomers coming, this is going to be around for many, many years. And so at that point, we actually I was actually let go. I was in a pharmaceutical job at the time, about 8, 9 years ago. And it was perfect timing. So soon as I got laid off, we put we put a little bit of money together to start this company. And we and we just ran with it from there. But but, yes, I mean, I thought these type of services are going to be needed for many, many years. The baby boomers are going to start hitting and they've only just started to really hit the system. And it's only going to continue to to increase from here.

Malcolm Lui:
Right now, when you start a business to a degree that your. You and your two partners have experience in providing in-home health care.

Rick Lunsford:
0 0 absolutely no experience at all. So we started from scratch knowing basically nothing about home health or hospice services, frankly.

Malcolm Lui:
Okay.

Rick Lunsford:
And so we had to learn. Yes, we had to learn from the ground up, from getting our our state license to our Medicare approval. It took almost two years for that to happen. And another maybe a year or two after that, before we even started to see any revenue. So we it was a big learning curve for us. The good part about that was we did have to start from scratch. We didn't buy a company and take over an existing operation. So we know how to build a company from the ground up in this space, which. You know, we didn't know how to do so, we had to learn every aspect. And now we've hired a number. Well, for years now, we've had a number of people who have been in this space for a long time and quite frankly, they do the operations on day to day basis now. But yeah, it was. I'm not sure I would recommend that route to most, but it's worked out for us and we're pretty, pretty proud of that.

Malcolm Lui:
Right. So how do you go about getting your first customer, your first patient?

Rick Lunsford:
Well, this was, what, seven years ago, I guess 2013 was when we got our first patients and I had mentioned to you that I was in pharmaceutical sales a long time ago. I was a sales rep and I was a sales manager for a large company here in the Sacramento area. As a result of that, I got to know quite a few physicians in the area. And so I went back to many of those physicians that I that I knew and just asked for referrals for home health. At the time. And they would give us one or two here or one or two there. Nothing, nothing major, but just enough to get us going and to learn how to do it and to meet the requirements that Medicare had. And so it started off with the local local physicians, the primary care physicians, mostly in the Sacramento area. And then it grew from there.

Malcolm Lui:
All right. Awesome. Now, in terms of getting new business today. What's your market and how do you go about doing that? No, referrals are a big part of it.

Rick Lunsford:
Well, this pretty much everything here is referral based. All home health, hospice is all referral base has to come from a hospital or a physician of some sort. So we've grown our sales force. We have a sales director. We have nine sales reps. And all of our reps just call on their accounts. The hospital accounts to skilled nursing accounts. The physician accounts. All all of those. And because we we have such a good star rating, we have such a good readmit rate. We have a lot that we can sell our service. We have a lot of proof. And as the years go, go on, our reputation is improves. And we were able to get in some bigger accounts, like the hospitals, the hospitals is where most of the volume comes from. And it also took us the longest to get into those hospital systems. But now we get over 60 percent of our referrals from our from our hospital partners. And so we have an aggressive sales force. But mostly it is it's based on our high service levels or high star ratings that we can really sell our service.

Malcolm Lui:
Right. How long does it take two to get a new hospital? I imagine when you say hospital, you're not referring to this one physical hospital. You're referring to a whole network of hospitals right on your platform.

Rick Lunsford:
Yes and no. It doesn't quite work that easily.

Malcolm Lui:
Okay.

Rick Lunsford:
You have to kind of get one at a time and prove yourself. And so, yeah, we have, you know, the hospitals here in the Sacramento area, the same walking area that referred to us now. But those it took us probably four or five years before we started getting any kind of referrals from them. And over the years, it slowly increased. I think as their confidence in us as a service provider increased as well. But yeah, it took a long time. We started off with physicians and then we went on to skilled nursing and assisted living facilities. And then finally we were able to penetrate some of the hospitals and hospital systems. But there's no contract. There's no promises. Each week goes by and they could send us zero or they can send us 20, 20 referrals. You just honestly, you don't know which is one of the challenges of operating a company like mine.

Malcolm Lui:
Right now, I assume they have a formal list of approved providers of in-home health care or

Rick Lunsford:
Well

Malcolm Lui:
Is not even that.

Rick Lunsford:
Well, you know, that's a that's a kind of a funny question mark, because they're supposed to offer their patients all the hospitals are supposed to offer their patients a choice of which providers, home health providers they want to use. And they always have their own rights. So they always prefer to use their own internal home health and hospice system. But mostly they're full, quite frankly. That's where we come in as a backup to their their own provider. And we just want to be a backup when when there they are full. So they do offer the patients choice and they'll give them a list. And I don't know who's on the list or not. Frankly, it's kind of a mystery list, I guess. But. But then we get referrals out of it. So I guess we're on the list.

Malcolm Lui:
Right now, are you working with, say, when the big, big providers out there like Kaiser or are they on your list right now or are you on

Rick Lunsford:
Yeah.

Malcolm Lui:
Their list?

Rick Lunsford:
We have a can we have a contract with Kaiser? Yeah. That's a separate. That was a separate kind of deal. We have to. They're the one provider out here. They have most of the market share, of course. But they they they require you to be contracted with them. But just because you're contracted doesn't mean they're going to give you anything. You just then you are on their list as a contract provider.

Malcolm Lui:
Right.

Rick Lunsford:
So, yes, we've over the years, we've got a contract with them for home health, for hospice services. Yeah. And others like Sutter Dignity System. We are not contracted with them, but we are a preferred provider of theirs.

Malcolm Lui:
Ok, so when someone, et cetera, dig into continues, you know, they're their own in-house services or are booked up. They need to before someone else.

Rick Lunsford:
Yes.

Malcolm Lui:
Do they go about choosing you as opposed to the other people that they know about? What do you do to stay top of mind with them?

Rick Lunsford:
Well, this is where we have our salespeople going in there, reminding them of our service or, you know, our star ratings are re hospitalization rate, etc.. So we are competitively selling against other providers like me for them to choose. So we stay aggressive with direct marketing staff. And that's basically how we do it.

Malcolm Lui:
Right. So they're constantly selling, essentially.

Rick Lunsford:
Oh, yeah, yeah. My people are out there right now.

Malcolm Lui:
Right.

Rick Lunsford:
I mean, just because there's a lot of patients doesn't mean they're going to come our way. Yes.

Malcolm Lui:
Right.

Rick Lunsford:
So we have to be competitive, but we have to have a good, good service.

Malcolm Lui:
Right.

Rick Lunsford:
And that's what we we concentrate on. There's a there's a fair amount of competition, but most are not for stars. Most do not have the readmission re hospitalization rate that we have. So we focus on what our partners are telling us they may need from a partner. And we put that into play every day.

Malcolm Lui:
Right now when you're marketing. Blossom Ridge to the hospitals in your sales team is doing is it all done in person over the telephone? Or do you have a advertising campaign running as well?

Rick Lunsford:
No. It's all in person. We don't really advertise the challenge with advertising in our spaces. Most people never heard of home health. They have heard of hospice. So some hospice companies do advertise that way. Our biggest challenge, honestly, is not getting referrals. Most of the time. It's getting qualified staff, nurses and therapists that want to do things the right way and the Blossom Ridge way. So we've, you know, we've done some advertising and like that. And because it's a referral based business, they have to go back to their physician and the physician actually has to send this referral. So it's a bit cumbersome to just advertise and say, hey, come to Blossom Ridge when it's not quite that simple.

Malcolm Lui:
Right.

Rick Lunsford:
So we've shied away from direct advertising in the marketplace because of that

Malcolm Lui:
Okay.

Rick Lunsford:
And concentrate on our on our partners mostly.

Malcolm Lui:
What about marketing to the to your contacts at the hospital's. Do you do any form of targeting target marketing to those folks?

Rick Lunsford:
No, we have not. No, we've looked at some more no more pinpoint type advertising, but we haven't followed through on any of that. It just hasn't it hasn't been a huge need thus far. And as a result, we just haven't done it.

Malcolm Lui:
Right. Meaning it does not bug me because you're you're getting plenty of referrals right now.

Rick Lunsford:
Right. We know there's weeks, we have too many referrals. Which is one of the things that I don't look forward to is when we can't accept the referral.

Malcolm Lui:
Yeah. What happens then?

Rick Lunsford:
Well, we have to tell them no, we're full because we're all of our obligation through Medicare is we have to start a patient 48 hours from the day that we from the moment we get the referral. We have to be out there in 48 hours and we want to be out there in 48 hours. We try to be out there in 24 hours. The faster we can get out to see the patient and get care for them, the better outcomes are we're gonna have better patient satisfaction. That's patients going to have. So there's a lot of benefits to get out there fast and start care immediately. So we don't want to push out patients. There's some agencies that do. But not only is that, I think, unethical, it's actually against Medicare protocol. So once we get to that point, you know, we try to hire and we try to staff properly. I mean, it does not happen very often where we have to say no to a no do a referral. But it certainly does happen from time to time.

Malcolm Lui:
Right. And when you say no. Then they just refer to someone else. Or can you

Rick Lunsford:
Yes.

Malcolm Lui:
Take your overflow

Rick Lunsford:
Typically,

Malcolm Lui:
From

Rick Lunsford:
Yes.

Malcolm Lui:
One of your partners?

Rick Lunsford:
Now, now they'll just refer.

Malcolm Lui:
All right. Okay.

Rick Lunsford:
So, you know, they're going through a basic algorithm to. They start with their own agency. They say no, because they're full and they're almost always full, frankly. Then they go to outside agencies and then they go in in their preference. And then if if we say no, they'll go next one list. So that's another reason we don't want to say no, of course.

Malcolm Lui:
Right. Got it. And you mentioned before how hospitals. They they really prefer that patients don't come back. Right. And now on one hand, you know, of course, you don't want the patients to come see you. They don't have to. The damn thing, on the other hand, that's a revenue opportunity. Right. You look at it from a purely numbers perspective.

Rick Lunsford:
Right. Right.

Malcolm Lui:
So

Rick Lunsford:
Well, that's

Malcolm Lui:
What?

Rick Lunsford:
That's the dilemma of running a hospital there under very tight guidelines from Medicare as well. And if they're readmit rate is too high. They get penalized monetarily. So, you know, you'd have to talk to a CEO of a big hospital to know exactly what they're how they work that. All we know is they are under a lot of pressure not to readmit a patient within 30 days.

Malcolm Lui:
Right.

Rick Lunsford:
So whether that brings more money to their hospital or not after they get penalized. You know, I don't know all those details, but it is an interesting dilemma that

Malcolm Lui:
Right.

Rick Lunsford:
A hospital CEO would face.

Malcolm Lui:
And I said similar to you, right? When you talk about patient satisfaction,

Rick Lunsford:
All

Malcolm Lui:
I

Rick Lunsford:
Right.

Malcolm Lui:
Imagine if no patient want to go back to the hospital and if the hospital provides a home health care options, allow them to not go back. They're happier and that refer more people to the hospital as well as to your service.

Rick Lunsford:
No, absolutely, you're right. Nobody wants to go to the hospital, frankly.

Malcolm Lui:
Yeah.

Rick Lunsford:
I mean, it's just this is not a fun place to be. And that's why home care is so important. The cost of home care is pennies compared to the hospital stay. And we have very, very good outcomes. Our patients get better at home. They're happier at home. So if we can provide nursing and therapy and aides to them at their home, that's a win win for all. And that's why Medicare pushes home health and hospice services so much over over hospital based services. The costs are pennies compared to the hospital costs.

Malcolm Lui:
Right. So I actually did a little bit of research into the providers of those services, the hospice providers in the

Rick Lunsford:
Mm hmm.

Malcolm Lui:
Not necessarily in home, but where you take them to their facilities and the ratings during are very good. It seems like a you know, looking at the consumer base review sites where the yelps at the world. That's just the nature of the industry.

Rick Lunsford:
You're saying that they're happier at home.

Malcolm Lui:
Now that the service levels of the sort of health care providers outside the hospital. Make sure you don't read them very well and not withstanding what you're reading, it might be if I'm seeing just broadly. One quick, quick Google on hospice providers or skilled nursing providers.

Rick Lunsford:
I don't necessarily agree. I mean, you know, if you look at a skilled nursing facility, that's completely different. That's in a facility hospital, in a facility where the only home health and hospice are really the only ones that take care of people at their home. I don't know what exactly you're looking at, but I can just tell you the numbers that I see from patient satisfaction. We have some over 90 percent of our patients highly recommend us. Things like that. So I'm not sure what what you're looking at exactly, but

Malcolm Lui:
Yeah, it wasn't.

Rick Lunsford:
Most

Malcolm Lui:
It was.

Rick Lunsford:
Of.

Malcolm Lui:
Yeah, wasn't in-home services persay with more of the outside the hospital, but they were at a facility with skilled nursing. I was checking that out.

Rick Lunsford:
Well,

Malcolm Lui:
Yeah.

Rick Lunsford:
Nobody wants to go to school nursing facility if you've been in one. You don't want to be in those. So we have we get a lot of referrals from skilled nursing because so patients will go from hospital sometimes to a skilled nursing facility for rehab

Malcolm Lui:
Many.

Rick Lunsford:
And then they skilled nursing facilities also are mandated to get patients in and out as quickly as possible by Medicare and other payers. And so then you're going from hospital to skilled nursing, then finally to home health services at your home. That happens quite a bit. So I'm not sure that people. Yeah, skilled nursing or hospital based systems. I'm not sure what the satisfaction levels are there.

Malcolm Lui:
Right. Got it. So before we think about the macro way, right. You have this huge wave of people who are getting older.

Rick Lunsford:
Oh, all

Malcolm Lui:
That's

Rick Lunsford:
Right.

Malcolm Lui:
Gotten me a huge one massacre scenario that you're writing. Are there other trends you're seeing that that you can capitalize on and positivity or perhaps one that you need to position the company to avoid?

Rick Lunsford:
Well, there certainly some ones that we need to avoid. You know, we work for the government, basically Medicare and Medicare is always on the chopping block every year, budget wise, we're seeing reductions. We have some serious headwinds in that area. It's also a macroeconomic force that's that's coming in every year it's coming. But this year they're actually doing some significant changes. The most significant in home health and I think 15 years called the PDG. And they're changing the entire way that we are reimbursed for Medicare. There's no way to avoid this. There's only there's only ways to get ready for it, frankly. And it could be very, very serious. They anticipate, in fact, 30 percent of home health agencies may even go out of business because of this change.

Malcolm Lui:
Now.

Rick Lunsford:
So we're working diligently on on that now to get ready for this change come in in January of next year.

Malcolm Lui:
Now, why would 30 percent of the home health care companies out there go out of business from this change? What's happening

Rick Lunsford:
Well,

Malcolm Lui:
Exactly?

Rick Lunsford:
Most of not most. Many of the home health agencies are pretty small, relatively speaking. You know, there's a few monster players, billion dollar companies in this space, but really it's very fragmented and there's a lot of mom and pops like under 5 million in revenues like we used to be. Not too long ago. And cash flow is king in this business. Like all businesses and the changes that are going to take effect are really going to negatively impact our cash flows. The first quarter of 2020, and I just don't think that some of the small players are gonna have the cash infrastructure and ability to get the cash they're going to need to ride through the first quarter. And I think that's where they're coming, coming down with this 30 percent rate. Who knows exactly how it's going to pan out, but I don't doubt that. No, actually, because of the cash flow problems. And in general, they're expecting about 8 percent reduction in our rates. Most companies, smaller ones, especially home health on the home health side, would be lucky to have a percent margins. So there's gonna be some significant challenges to the to the small and even medium sized players.

Malcolm Lui:
Right. So you made you before the cash flows can be tough in the first quarter descent.

Rick Lunsford:
Yeah.

Malcolm Lui:
Deferring payments as well.

Rick Lunsford:
They are. Yes, the way Medicare works now is we get 60 percent of our payment per patient basically upfront within two weeks of a patient's starting. We usually receive 60 percent of that. They're reducing that down to I think 25 percent. And then 2021, they're supposed to be getting rid of that upfront payment where they would pay us all at the end instead of half of it. Basically at the beginning, which they have to be getting really helps us with operating the company. So if you don't have either enough cash saved or line of credit or some other way. I'm not sure how some of these small companies are going to be able to operate.

Malcolm Lui:
Right. Tough stuff here. First quarter

Rick Lunsford:
Yeah.

Malcolm Lui:
Right before they get paid.

Rick Lunsford:
Yeah. Exactly. It'll catch up, but you still gonna have to operate with a lot less money. The first you know, the first two months,

Malcolm Lui:
Yep.

Rick Lunsford:
Three months and. You know, you're going to have to be really, really good and really smart. I think as a small business operator to be able to make it.

Malcolm Lui:
Yeah, definitely. Before you mention when they're bigger challenges, is finding qualified staff. So what are your plans for that?

Rick Lunsford:
Well, we get most of our stuff now from internal referrals, which is nice, and that's where we do a lot of marketing online. We do a lot of events. We're always frankly looking for good nurses and good therapists. So I don't know that it's going to get any easier over time. Fortunately, we we're also well known here in the Sacramento area. So are problems here in Sacramento are a little bit easier to overcome because of our reputation. Now, some of our outlying areas like Yuba City and Stockton are a little bit a little bit tougher just because of the size of the market. There is a little bit smaller, but we were voted one thing that helps us with recruiting as we were voted one of the best places to work in Sacramento. We got it this year and we had it two thousand seventeen, I think, or 16. So we have a good reputation. We take care of our people extremely well. Great benefits. Good pay. Very flexible, collaborative environment. So that's the one thing that we have that most other agencies don't have, is our cultures is really good. And we get a lot of referrals from our own people, which helps us tremendously.

Malcolm Lui:
Right. So what's the plan for the outlying areas where your reputation isn't as well known unit in Yuba City, for example?

Rick Lunsford:
Yeah. Yeah, it's tough. It's a slow and steady. You know, we we're just we're just fighting in those areas for four good clinicians. And that's that's all we can do. I mean, we do a lot of recruiting, a lot of word of mouth. Chamber of Commerce stuff, you know, small things like that. And we're doing good. But we could always, always be doing better in the recruiting side. So, yeah, it's an ongoing struggle. It's probably our top one or two challenge that we face ongoing.

Malcolm Lui:
Right, but the other challenge.

Rick Lunsford:
Well, what I talked about with our referrals, they're not guaranteed. So some weeks it's good some some weeks it's too much.

Malcolm Lui:
Ok.

Rick Lunsford:
And to be able to balance that properly and still make profit as a company is probably our biggest challenge. It's a operational the big operational challenge to balance it properly and yet give people a full time salary and work environment when the when the referrals are not always there. You know, sometimes they're there too much. Sometimes they're not there enough and there's no guarantees in that area. So we were constantly trying to balance that.

Malcolm Lui:
Yep, I guess how tough that is back in my in my business school days. We did it very simple, simple game where each of us were lined up as a part of the supply chain and we were getting steady orders all the way through and all the way through.

Rick Lunsford:
Right.

Malcolm Lui:
And all it takes is one person to just make one change and then it doesn't

Rick Lunsford:
Hit her.

Malcolm Lui:
Propose. A whole system becomes a complete nightmare at the end.

Rick Lunsford:
Yeah. Now, when we're full and we have, you know, we're we have plenty of referrals, things, things. I'm not saying they're easy, but they're more predictable and they're more predictable. It's easier to run a business when it's not predictable. That's when you get paid the big bucks for trying to figure out how to do it and still make a profit.

Malcolm Lui:
Yeah. Yeah. I mean, it's you don't want to overinvest in and

Rick Lunsford:
Right.

Malcolm Lui:
Have people sitting around and nor do you want to be under an ass and have to

Rick Lunsford:
Right.

Malcolm Lui:
Accept referrals. Right. That doesn't help in the long run. Yeah, right.

Rick Lunsford:
Exactly.

Malcolm Lui:
So a few final questions for you. Rick. I love it. What message would you show on a billboard along the freeway? It's only going to be seen for six seconds or less. And then you can talk about two different billboards, one for the hospital side. Get more referrals from them and then perhaps another one from a staffing side.

Rick Lunsford:
That's I mean, our our tagline here is Blossom, rage, your comfort, your care, your home, our passion. So that probably fit on nicely on a billboard of some sort.

Malcolm Lui:
Yet.

Rick Lunsford:
Yeah, I think I can go that.

Malcolm Lui:
Yeah, it actually works both both ways. Both

Rick Lunsford:
Yeah.

Malcolm Lui:
Of your

Rick Lunsford:
Yeah.

Malcolm Lui:
Hospital side, your care. Health care, professional side as well, wasn't on your recruiting side.

Rick Lunsford:
All right.

Malcolm Lui:
And who are your ideal patients and what's the best way for them to contact your company or get settings emotions to say get them to your facility. Or you go to yours or turn to you for service.

Rick Lunsford:
Well, thanks for asking. I mean, are our patients are typically Medicare age 65 and over. Although we do take younger patients that need rehab, but they're usually coming out of a hospital or a skilled nursing facility that need rehab services at home. Basically nursing therapy, aid, any of those type of patients that need help at home or of course, are looking at hospice and hospices aside. Business is very important and underserved, yet people don't like to talk about hospice that much because it kind of means people are passing away. But we we provide care for patients that are within six months of passing based on what the physician has said. And we provide spiritual help. Chaplain, nursing aides, all those to just help with quality of life at the end. So anyone that's unfortunately within six months of passing should should really get on hospice services. I mean, it's really for the family as well to help support their mom or their dad in their last months of life. So

Malcolm Lui:
In this hospice

Rick Lunsford:
That's a very

Malcolm Lui:
Services

Rick Lunsford:
Important site.

Malcolm Lui:
Are done at home as well. Or you have a facility

Rick Lunsford:
Yes.

Malcolm Lui:
For that.

Rick Lunsford:
No, no. That's all this is all at home. That's all we do

Malcolm Lui:
All

Rick Lunsford:
At home

Malcolm Lui:
Right.

Rick Lunsford:
Services, period. So, you know, half of half of our company does rehab with nursing and therapy and the other half does these hospice services, which is done usually by spiritual counseling and nursing and AIDS to help shower and things like that.

Malcolm Lui:
Even.

Rick Lunsford:
So really to improve quality of life the in the last months of people's lives.

Malcolm Lui:
Right. So for you, for that for these patients, they're a good fit for your service, your and your at home services. How should they go about inquiring about how

Rick Lunsford:
Well,

Malcolm Lui:
They eat your firm,

Rick Lunsford:
Yeah,

Malcolm Lui:
Diego?

Rick Lunsford:
There's there's a number of ways it's all referral base. It has to has to basically come from a physician so you can always ask your primary care physician for these type of services. But like I said, most come from the hospital or skilled nursing where you would talk to the discharged nurse at the time. And everyone, anyone who's been in a hospital knows a discharge nurse. They come in. Talk about next steps after you after you leave the hospital. They're the ones that are ordering the home health or hospice services, generally speaking. So you just the patient would just have to ask them for. They want to use Blossom Ridge and then they're obligated to send this a referral at that time.

Malcolm Lui:
Right. Even if they're not on the list on their own internal list.

Rick Lunsford:
No. Yep. Patient has 100 percent choice and we get a lot of patients these days that go and look at look at the outcomes and look at the star ratings and they'll call us up and say, we want to use your services, how do we go about it? And we always have to say, go back to your physician. Tell me what you want to use Blossom Ridge.

Malcolm Lui:
Right. And. And Medicaid doesn't have a list of providers, right? I mean, if you want your license, you can go. Anyone

Rick Lunsford:
No.

Malcolm Lui:
Can go.

Rick Lunsford:
Yeah.

Malcolm Lui:
Right.

Rick Lunsford:
Yeah. Medicaid is well, it's mostly managed Medicaid here and in. In California now. Blue Cross or Health Net, other other providers manage it for the medical population. And so you would just have to go through your provider, know if you're if you're a medical patient. And they would order it.

Malcolm Lui:
Ok, so you know, the hospital doesn't work for you. They can still have you on your. I'm very sure of. People can still say, I want to go.

Rick Lunsford:
Right. Absolutely.

Malcolm Lui:
All right. Got it. It's been awesome having you on my show today. Really enjoyed hearing about how you grew your company so fast.

Rick Lunsford:
Well, thank you, Malcolm. I enjoyed the time.

Malcolm Lui:
We've been speaking with Rick Lunsford, the Owner and CEO of Blossom Ridge Home Health & Hospice, about his company's rapid growth. For interviews with other fast growing, high value sales companies, or to learn how we can accelerate your firm's high value sales through automation, visit Eversprint.com.

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