Aligning Incentives with Declining Reimbursement

The landscape of private healthcare, especially in physical therapy, is seeing a shift with declining reimbursements juxtaposed against rising operational costs. In this week’s episode of the Grow Your Practice Podcast, we’ll explore effective strategies for aligning incentives within your practice to navigate these financial pressures effectively.

Understanding the Financial Challenges

Physical therapy practices are currently experiencing a pinch due to decreased reimbursements and increased costs:

  • Declining Reimbursements: There has been a significant reduction in reimbursement rates, especially from Medicare, which have not kept pace with inflation or cost increases in healthcare.
  • Rising Operational Costs: The costs to operate a practice have surged, making it more challenging to manage financial sustainability.

Key Strategies for Aligning Incentives

To maintain motivation and ensure your practice remains profitable and efficient, consider implementing the following strategies:

  1. Transparent Financials:
    • Share financial health with your team to foster a collective responsibility towards the practice’s profitability.
    • Use simplified financial statements to show income, expenses, and net profit to help staff understand how their roles impact the practice’s bottom line.
  2. Creating an Incentive Plan:
    • Develop incentive plans that align with your practice’s profitability goals. This might include bonuses or other rewards based on the practice’s performance rather than individual productivity alone.
    • Ensure that any incentive plan complies with legal and ethical standards.
  3. Involving the Team in Financial Goals:
    • Engage your team in regular discussions about the financial status and goals of the practice.
    • Encourage input from the team on ways to improve efficiency and reduce costs, making them part of the solution.
  4. Education and Training:
    • Provide basic financial literacy training to help team members understand the economic aspects of healthcare.
    • Discuss the implications of billing, cost management, and financial health regularly to keep everyone informed and engaged.
  5. Regular Financial Updates:
    • Hold regular meetings to update the team on financial progress, challenges, and strategies moving forward.
    • Use these sessions to brainstorm and implement new ideas that could help improve the financial trajectory of the practice.

Implementing for Success

Implementing these strategies requires a careful balance of transparency, training, and incentive alignment. By educating your team and involving them in financial discussions, you can foster a culture of accountability and shared responsibility. This approach not only helps in aligning incentives but also enhances team cohesion and morale, leading to a more motivated workforce dedicated to the success of the practice.

Join us at our upcoming webinar on “Aligning Incentives with Declining Reimbursement” to dive deeper into actionable strategies and real-world applications to boost your practice’s financial health and team engagement.

On July 18, Learn How to Increase Your Revenue Per Visit

Let’s go even deeper. On July 18th, we will discuss deeply into employee retention and incentivization. Click here to learn more and register for this free event.

Revenue Per Visit Virtual Summit aimed to help PT's improve on incentivizing staff, perform profits, and more.

Increase Your Profit By $10,000 or More

Remember, growing your practice is not just about adding more patients but optimizing every aspect of your operation, from insurance negotiations to patient accountability, marketing, and community involvement. If you’re ready to increase your profit margins by $10K guaranteed, apply for Profitability Under Pressure today. You’ll learn even more keys to increasing profit margins, connect with like-minded owners, and achieve financial stability and growth.

Recovering $80,000 by Optimizing Billing and Fees with Tina Marie Schultz

In the latest episode of the Grow Your Practice podcast, hosted by Chad Madden, we were fortunate to hear from Tina Marie Schultz, an exemplary business manager who has significantly impacted the success of Thomas Physical Therapy. Her extensive knowledge in revamping business operations provides crucial insights for physical therapists aiming to enhance their practices simply by changing their billing processes. Below are some essential takeaways from her enlightening discussion:

Revamping Financial Health Through Strategic Billing

Tina Marie’s impact on the financial health of Thomas Physical Therapy is remarkable. Initially, she swiftly pinpointed gaps in the billing processes, unlocking $80,000 in just six months. Furthermore, her effective billing strategies included:

  • Optimizing Billing Structures: Adjusting billing structures to fully capture potential revenue.
  • Strategic Billing Adjustments: Implementing strategic adjustments during periods similar to industry norms, minimizing impacts on existing patients.

Proactive Marketing for Practice Growth

Additionally, Tina Marie highlighted the necessity of dynamic marketing to increase patient intake and fill schedules. Her strategies are both innovative and community-focused:

  • Community Engagement: Boosting visibility and reputation through active participation in community events and causes.
  • Targeted Educational Workshops: Offering workshops in places like churches and gyms to educate and attract new patients.

Enhancing Front Desk Operations

Recognizing the crucial role of the front desk, Tina Marie transformed its operations to improve customer interactions and first impressions:

  • Empowering Front Desk Staff: Investing in robust training and fair compensation for front desk personnel, enabling them to effectively represent the practice.
  • Systematic Process Implementation: Developing systems that enhance the performance of front desk staff, making them integral to the practice’s success.

Leadership and Efficient Process Implementation

Moreover, Tina Marie’s leadership and strategic implementations have proven key in multiple sectors. Her approach includes:

  • Process-Focused Leadership: Applying Six Sigma principles to streamline processes across the practice.
  • Investing in People: Ensuring all team members are well-trained, properly compensated, and aligned with the practice’s objectives.

Conclusion: Building a More Profitable and Sustainable Practice

Consequently, Tina Marie Schultz’s insights offer a blueprint for physical therapists to improve their practice management. By focusing on strategic billing practices, proactive marketing, empowering team members, and robust process implementation, practices can achieve enhanced profitability and sustainability.

On July 18, Dive Deeper into Effective Billing Strategies

Lastly, join us on July 18th for a session on overcoming common billing challenges and enhancing your practice’s financial health. This free event will offer deeper insights into effective billing strategies and other methods to boost practice efficiency. Click here to learn more and register for this free event.

Revenue Per Visit Virtual Summit aimed to help PT's improve on incentivizing staff, perform profits, and more.

Increase Your Profit By $10,000 or More

Remember, growing your practice is not just about adding more patients but optimizing every aspect of your operation, from insurance negotiations to patient accountability, marketing, and community involvement. If you’re ready to increase your profit margins by $10K guaranteed, apply for Profitability Under Pressure today. You’ll learn even more keys to increasing profit margins, connect with like-minded owners, and achieve financial stability and growth.

Incentivizing Staff and Improving Retention

In our latest Grow Your Practice Live session, we delved into the vital topic of incentivizing staff within physical therapy practices. This webinar explored the nuances of staff incentives, offering valuable insights for private practice owners.

What is Incentivization?

Incentivization in private practice often involves a mix of fixed salaries and variable compensation, such as bonuses or commissions. This structure helps align staff efforts with practice goals, boosting productivity and motivation.

Importance and Benefits

  • Aligns Goals: Incentives ensure that everyone’s objectives align with the practice’s financial health.
  • Enhances Motivation: Staff members feel more invested and responsible for the practice’s outcomes.
  • Reduces Management Strain: Effective incentivization can significantly decrease the need for oversight and micromanagement.

Appropriate Settings for Incentivization

Incentive programs are particularly effective in practices where staff members operate with a degree of autonomy and are well-informed about practice finances. These settings encourage staff to think and act like stakeholders, fostering a proactive workplace culture.

Implementation Strategy

  1. Define Clear Metrics: Base incentives on measurable performance indicators like patient satisfaction, revenue per visit, or billable hours.
  2. Communicate Transparently: Ensure that all team members understand how the incentive program works and how they can influence their earnings.
  3. Regular Reviews: Hold periodic reviews to discuss progress towards incentives and adjust the program as needed to maintain alignment with practice goals.

Common Pitfalls and How to Avoid Them

  • Overspending: Ensure incentives are sustainable by tying them to profitability metrics.
  • Complexity: Keep the incentive program simple to understand and manage.
  • Lack of Transparency: Regularly communicate the financial health of the practice and how staff contributions impact it.

Conclusion: Building a Motivated Team

Incentivizing your team is more than just offering bonuses—it’s about creating an environment where everyone is invested in the practice’s success. By implementing thoughtful incentive programs, practice owners can cultivate a highly motivated and aligned team, poised for growth and success in the competitive field of physical therapy.

For more insights and to join our next live session, don’t forget to sign up for the upcoming webinars where we continue to tackle the most pressing challenges faced by physical therapy practice owners.

On July 18, Learn How to Increase Your Revenue Per Visit

Let’s go even deeper. On July 18th, we will discuss deeply into profit leaks, including lack of staff retention. Click here to learn more and register for this free event.

Revenue Per Visit Virtual Summit aimed to help PT's improve on incentivizing staff, perform profits, and more.

Increase Your Profit By $10,000 or More

Remember, growing your practice is not just about adding more patients but optimizing every aspect of your operation, from insurance negotiations to patient accountability, marketing, and community involvement. If you’re ready to increase your profit margins by $10K guaranteed, apply for Profitability Under Pressure today. You’ll learn even more keys to increasing profit margins, connect with like-minded owners, and achieve financial stability and growth.

ebitda physical therapy practice value

When attempting to determine a realistic valuation for their practice, owners often face several barriers, including unrealistic expectations and ignoring the buyer’s perspective. They underestimate the value of systems and processes when increasing EBITDA.

To accurately determine practice value, a common method is to calculate an industry-defined multiple of the practice’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This involves establishing the practice’s income after expense deductions and adding back interest, taxes, depreciation, and amortization.

Common Barriers to Achieving Realistic Valuation

Three barriers continue to surface when PT practice owners try to determine a realistic business sale value: 

Unrealistic Owner Expectations

Earlier, we mentioned the importance of maintaining growth goals. Your practice may have been busting at the seams pre-pandemic. But if you haven’t maintained that growth, your practice worth has diminished. 

Your business value is only as good as your current operation. To offer a future value proposition for buyers, you need to maintain consistent growth.

Ignoring the Buyer’s Perspective

A key factor to consider when planning to sell is whether the current state of your practice is an enticing proposition for an investor. Ask yourself these questions:

  • If you were the buyer, would you want to invest in this business?
  • What are buyers looking for?
  • Does your business meet these investment demands?

Underestimating the Value of Systems and Processes

The systems you have in place are key to maintaining operational efficiency and continued growth. For instance, inefficient and insufficient revenue cycle management systems mean the buyer will need to put these in place. Essentially, that requires more time and financial investment on their part. It also means slower initial growth. 

These factors are a noteworthy deterrent to investing in a business and a significant value downer.

How To Accurately Determine Practice Value

One basic way to determine your private PT practice’s value is by calculating an industry-defined multiple of your EBITDA value. EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. Basically, this is a projection of profitability. EBITDA is calculated on a trailing 12-month basis, excluding your salary as the owner.

Prior to selling a practice, it is important to look at all the ways one can potentially work on increasing their EBITDA.

Calculating EBITDA involves establishing your income (earnings) after all expense deductions and then adding back interest, taxes, depreciation, and amortization (debt repayment).

As a rule of thumb, PT practices can expect a business valuation of three times their EBITDA value for operations under $1 million. The multiple range increases with EBITDA value. Businesses over $1 million can work on a multiple of four to five times the amount.

Note that if you do adjust EBITDA by adding the owner’s compensation, the multiplier range will be smaller, generally between 2.5 and four. This is referred to as adjusted seller’s discretionary earnings (SDE).

A side note on increasing EBITDA:

 Some practice owners think they can easily increase their practice value (earnings) by joining with other businesses. But there’s a major limitation to this strategy. For this to work, all practices must operate according to the same revenue cycle management structure. There are strategies that owners should consider before this step when increasing EBITDA.

Owners should align all practice and financial management systems between stakeholders. This is a highly complex and costly endeavor. It’s also impractical as a quick fix for increasing practice value.

Growth Starts Here

Whether you’re hoping to sell your practice in two, five, or 10 years, the steps you take today can impact your business value. Schedule a strategy call with one of our experts and start your growth journey today. 

Practice Growth Strategy Call - Blog - CTA

Unlocking Billing Efficiencies

Struggling with maximizing physical therapy billing efficiencies and revenue cycles? Explore the potential of effective Revenue Cycle Management to transform your healthcare practice’s financial strategies. #revenuecyclemanagement #PTBilling

Many physical therapy practices make the mistake of tracking what they bill, rather than what they actually collect. It’s essential that you capture the actual amount of money that comes back to you. What’s more, you also need to consider the complex process of revenue cycle management and how much time it takes you to collect this dollar amount. 

Assessing billing efficiency and the overall growth of your business requires a lot more than simply adding up the number of consultations you get through every month. In fact, many private physical therapy practices are neglecting one of the most critical revenue loss areas. 

But you can significantly turn your practice’s revenue around by addressing physical therapy billing inefficiencies and rethinking your payer mix. This extensive guide will put you back on track to success.

A Quick Recap: Revenue Cycle Management

Revenue cycle management entails all administrative and clinical functions that contribute to managing claims processing and generating both payments and revenue. It includes insurance eligibility verification, follow up on payments, claims submissions, and all the tasks in between.

Traditionally, revenue cycle management involves both front- and back-end components. The front end includes patient-facing tasks such as appointment scheduling, eligibility and authorization, patient registration, and upfront payment collections. Back-end functions include claims management, medical billing, reimbursement, and final payment collections.

In addition, there are structural and operational elements to consider. Structural elements affecting your revenue cycle management processes include the practice model, payer mix, and the systems you use. Operational elements include accurate documentation, coding, and patient registration and authorization procedures.

The Significance of Revenue Cycle Complexity

The design and interplay between the revenue cycle structural and operational elements determines your revenue cycle complexity. As private physical therapy practices start to feel the pinch of reimbursement cuts, inflation, and increased operational costs, their first response is often to cut costs and work harder.

Physical therapy practices often cut marketing costs first. This is a poor strategy and counterintuitive to getting more (higher-paying) patients in the door. Another common (and equally counterintuitive) reaction is to fill up schedules with as many patient visits as possible, often to the level of employee burnout. If these patients are low payers, you’ll be working significantly harder with no results. In fact, these extra sessions may be draining rather than increasing revenue. 

Let’s dig into the underlying problem with this strategy. Numerous variables determine the complexity of turning potential revenue and claims into actual cash—i.e., how easy or difficult it is to get paid. These factors include: 

  • The efficiency of your practice operations
  • Billing efficiency
  • The various types of claims 
  • Payer regulations
  • Submission complexities 

The Relationship Between Revenue and Time

You may be calculating revenue per 60-minute patient visit at $80. The patient session may take one hour, but billing processes, back-and-forth communications with the payer, and claim resubmission might take another hour. So, you can essentially cut your predicted revenue per session in half. Earning $80 from one 60-minute session has now taken two hours of work.

We recently spoke with Bob Kowalick, a physical therapist and CEO of Revenue Cycle Solutions, LLC. Based on data collected from hundreds of clinics over eight years, Revenue Cycle Solutions found that revenue cycle complexity can inflate billing process time by 10 times or more. In a practical sense, this means that a 30-minute patient visit could essentially end up being 300 minutes’ worth of work. 

To maximize the value of your practice, you must control all the revenue cycle variables in a way that prevents billing time demand from outweighing billing time supply. If that condition is created, a turning point has occurred.

Revenue per Visit Ceiling and Maximizing Potential Revenue

Another variable and determining factor in your revenue potential is your payer mix. Your payer mix determines how much you get paid and how hard it is to get paid. 

If 70% of your income comes from a problematic or complex payer, it dramatically affects your time to complete billing and claims. The more time it takes you to process each claim, the less you’re earning per visit.

Your revenue per visit (RPV) ceiling is the maximum potential earning value per visit. This figure depends on structural variables such as your payer mix, what you code, and your time allocation. Your revenue cycle objective (RCO) should be to get 100% of this figure. In addition, you want to execute revenue cycle management to convert this revenue potential into cash as quickly as possible.

Your success lies in finding the sweet spot between the number of visits and the revenue per visit (including billing time). Controlling revenue cycle complexity is one of the most effective ways to keep your revenue as high as possible.

If you maximize high-payer visits and minimize your revenue cycle complexity with efficient and streamlined claims processing, you increase the gross value per patient. By getting paid more often and faster, you essentially earn higher revenue for working fewer hours.

Understanding ADO Score and Revenue Cycle Efficiency

The average days outstanding (ADO) score measures the average number of days it takes for a physical therapy practice to collect payments from insurance companies or patients. It’s a key indicator of the efficiency of revenue cycle management in a practice. 

  • A lower ADO score indicates a more efficient revenue cycle. 
  • A higher score indicates potential issues with billing and collections.

Your payer mix can impact your ADO. However, Revenue Cycle Solutions’ ongoing data evaluation of hundreds of practices indicates that 68% of problems come from inside the practice. This means that there’s significant scope to decrease ADO by improving revenue cycle efficiency within the practice. This will help increase your cash flow, reduce outstanding accounts receivable, and improve overall financial performance.

Time Inflators and Their Impact on Revenue

Operational time inflators (OTI) are omissions and errors across all your physical therapy practice functions that affect billing and ADO. Since they’re avoidable, managing and minimizing time inflators are your biggest opportunity to reduce revenue cycle complexity.

For your revenue cycle objectives to be met (maximizing RPV and minimizing ADO), the following conditions must exist:

  • Operational time inflators are quantified, managed, and reduced.
  • The time required for billing processes is less than the billing time supply.
  • Your revenue cycle practices are focused on effectiveness and efficiency.
  • Your revenue cycle team collaborates around shared objectives.

Once you’ve consistently eliminated operational time inflators, you’re well on your way to managing a physical therapy practice that’s highly effective and valuable.

Data clarity around operational time inflators greatly facilitates achieving your revenue cycle objectives. Data collected by Revenue Cycle Solutions indicates that, on average, 28% of all physical therapy practice visits have a claim affected by a time inflator issue. Some practices display OTI issues across 100% of their claims, while others have managed to keep this as low as 6%. 

Assessing your revenue cycle management efficiency can help you identify areas to keep OTIs in your practice as low as possible.

The Relationship Between Revenue and Margin

Physical therapy practices rely on a delicate balance between revenue and margin to ensure their financial stability. By understanding the relationship between these two factors, you can make informed decisions that lead to profitability and growth.

While 

revenue

 indicates the total income generated by your practice, 

margin

 represents the difference between your revenue and expenses. It’s the profit percentage that your practice retains after deducting all costs associated with providing services. A healthy margin allows you to invest in new equipment, staff development, and business expansion.

Time inflators extend across an entire physical therapy practice, from administrative functions and software systems to payers, scheduling, and clinical operations. Physical therapy practices with operational time inflator rates under 10% are generally stable and scalable, as long as their revenue per visit aligns with the cost per visit. But practices with operational time inflator rates at or above 50% will struggle to function as a viable business.

Note that your operational time inflator issues don’t only directly affect your cash flow. They also impact your biller’s time demand, resulting in another unnecessary revenue drain. To increase your margin—and, as a result, your profits—you need to minimize operational time inflators. This will reduce the time drain in your practice operations and cut billing expenses from external (third-party) billing services.

Opportunities To Improve Revenue Cycle Management: The Role of Data

There are numerous ways to improve revenue cycle management. These may include everything from scheduling more patients and communicating regularly to streamlining documentation and upgrading software. Although billing is only one aspect of revenue cycle management, improving this one feature holds significant potential for decreasing revenue cycle complexities.

Using data will help you uncover and understand revenue trends and patterns. You can then identify opportunities for improvement and optimize your billing processes to reduce revenue risks. 

Obtaining this data is quick and easy. Every time your billing team encounters a time inflator in the billing process, they record this incident in a predefined list of time inflators. This way, you can quickly identify which issues are coming up regularly and where you need to adjust and improve your process. In addition, data analysis can uncover potential areas of revenue leakage, such as undercoding or missed billable services.

Common Revenue Cycle Management Billing Issues

Before we get into resources for streamlining your data acquisition, let’s look at common billing issues that could lead to bottlenecks, inefficiencies, and increased ADO scores. It’s essential that your entire team is educated about the critical nature of these issues and the knock-on effect they cause in revenue loss.

Human Error

Data entry errors by front desk staff, such as a misspelled name, incorrect date of birth, or an “O” instead of an “0,” may seem small, but they’re enough to get a claim rejected. Staff need to double-check every entry and confirm the spelling of names with patients if they’re unsure.

Eligibility Checks and Prior Authorization

While front-office staff may verify eligibility on a first-time visit, it’s critical to confirm data and eligibility on subsequent visits as well. Payers are increasingly requesting confirmation of reimbursements prior to patient visits. So, front-office staff can avoid claim denials by completing prior authorization requirements on their end.

Therapists Aren’t Assigning ICD-10 Codes

Accurate claim processing is dependent on ICD-10 codes assigned to medical bills. These codes specify the diagnosis and conditions for healthcare services, allowing for correct reimbursement. The therapist is responsible for assessing the patient and assigning the right code. Failure to do so may result in the claim being denied.

Inefficient Documentation

Claims also get denied without thorough documentation. In the worst-case scenario, your practice may be subject to fines or required to pay money back. 

Getting your therapists to provide complete, detailed, and accurate documentation consistently can be challenging. However, it’s critical to reinforce the importance of this with training and implement therapy software to ensure compliance.

Physician Referrals

While physician referrals aren’t always necessary, checking the requirements and conditions with the insurance provider is essential. Sometimes, claims are rejected due to a lack of physician referrals. In the case of continued treatment, the physical therapist must have the suggested patient care plan approved and signed off on by a licensed physician.

Erroneous Coding and Omitted Modifiers

Coding errors are another easily avoidable cause of rejected claims. If these errors become repetitive, they can lead to a health insurance audit.

Another important consideration is knowing when to use the KX modifier. To be reimbursed for services provided to a Medicare patient after they’ve reached the annual therapy cap, therapists must add the modifier to their claims. It’s a simple but often forgotten step.

Upfront Collections

With increased high-deductible health plans, patients are liable for many healthcare costs. Settling copayments and deductibles at your front desk at the time of the appointment can significantly alleviate revenue cycle complexity.

You can improve point-of-service payments by allowing patients to pay with a credit card and providing financial estimates before appointments.

Outdated Codes and Regulations

Back-end office staff perform charge captures by converting physical therapy services and time into billable charges. This process is often complicated by changing payer regulations and coding guidelines. Codes are updated annually, if not more often. 

Because outdated codes can lead to claim rejection, your team needs to stay updated. To ensure the correct use of codes and modifiers—and remain on top of insurance regulations—your team should regularly review updates from the American Medical Association (AMA) and insurance providers.

Regular training for anyone involved in the coding and billing process is highly beneficial to minimize errors. It also ensures everyone is on the same page.

The Data Project and Business Intelligence

In an effort to simplify revenue cycle management and quantify time inflators for practices, Revenue Cycle Solutions built a platform where their third-party billing team records every time inflator that comes up during the processing of physical therapy claims. The team services hundreds of practices and has captured more than 1 million submissions and counting.

This business intelligence initiative for the physical therapy industry enables Revenue Cycle Solutions to analyze internal practice-generated problems on their clients’ behalf. This analysis serves as a pinpoint indicator of where the practice can improve its processes for an incremental revenue boost.

In addition, the data project offers insights into payer-generated problems and system inefficiencies within the industry.

Case Study

Let’s look at a case study to better understand the impact this can have on your revenue.

Revenue Cycle Solutions has been working with one of its clients for four years. Initially, the physical therapy practice operated at 2,200 patient visits monthly and at a rate of $85 per visit. When it came to billing, the practice saw an incidence or problem rate of 30%. One out of every three claims required additional time and resources due to avoidable inefficiencies.

Despite difficulties in the market, the practice saw significant growth over the next four years by applying data-driven strategies as advised by their billing partner. Today, the practice operates at 5,000 visits monthly, at a rate of $102 per visit. What’s more, their billing or claim incident rate has dropped to only 5%. This improvement in billing efficiency has lowered the practice’s cost of billing by an incredible 40%.

These changes alone have led to a revenue increase of almost $1 million over a 12-month period.

Because it doesn’t cost you more to make these adjustments, your added revenue is 100% profit. You’re essentially performing all the same tasks, just in a more efficient way. In fact, with improved efficiency and lower problem rates, performing the same business functions will cost you less.

Implementing Data-Driven Strategies

Revenue Cycle Solutions invites you to participate in this business intelligence project. By getting your billing team to capture time inflator data in a simple two-click process, you can gain insights into your own practice’s billing inefficiencies. Even better, you’ll contribute to the hub of data collection in this nationwide study. 

To learn more about accessing the data entry system or about billing services for practice improvement, you can contact Robert Kowalick at [email protected].

Unlocking Physical Therapy Billing Efficiencies: Key Takeaways

Revenue cycle management is a practice-wide foundational pillar that centers around creating and maintaining a balance between billing time demand and time supply. To do this, you need to understand and quantify revenue cycle complexities’ structural and operational elements.

The revenue cycle objective is to achieve maximum revenue potential per visit. In addition, you want to convert this potential revenue into cash as quickly (and cost-effectively) as possible.

What’s more, every function in your practice can create risks that prevent you from achieving revenue cycle objectives. Focus first on improving operational time inflators since they’re low-hanging fruit for improving cash flow and lowering cost. Practices with more than 10% of visits affected by time inflators need more effective operational controls.

By leveraging data analytics, physical therapy clinics can identify trends, optimize reimbursement rates, and pinpoint areas for operational improvement.

More Innovative Strategies for Physical Therapy Growth

Effective physical therapy revenue cycle management requires innovative adjustments to continuously shifting regulations and an uncertain economic landscape.

Shifts in authorization, higher deductibles, and a lack of transparency across systems are all challenges that practices face in collecting payments. But by better structuring your revenue cycle processes and payment methodologies, your physical therapy practice can grow and thrive despite these difficulties. 

Not only can you improve ADO scores and reduce claim rejections, but you can also increase patient visits and enhance the visitor experience.

For more strategies to maximize payment speed and boost your bottom line, follow Breakthrough’s Grow Your Practice podcast. Or learn more about our Profitability Under Pressure Program.

Profitability Under Pressure

Strategies to Increase Cash-Based Revenue

In March 2024, EnovisTM hosted a comprehensive webinar focusing on a topic that’s increasingly relevant for physical therapy and rehabilitation practices: cash-based services. The event, which was co-facilitated by industry experts Mark Callinan, Director of Clinical Education at EnovisTM, shared valuable insights and strategies for incorporating and maximizing the benefits of cash-based services within a practice. Here’s an in-depth look at the key takeaways from this enlightening webinar.

The Rise of Cash-Based Services

With declining reimbursements from traditional insurance-based revenue streams, the future for many practices may seem daunting. However, introducing cash-based services offers a beacon of hope. These services not only bolster your clinic’s revenue but can significantly enhance patient satisfaction by providing quick, effective pain relief treatments. Moreover, they differentiate your practice in a competitive market, making it a go-to choice for prospective patients seeking specialized treatments such as laser therapy or shockwave treatment.

The Low-Hanging Fruit: Your Current Patient Base

Leveraging your existing patient base as the primary audience for your new cash-based services is crucial. This approach presents the lowest-hanging fruit, allowing you to generate additional revenue with minimal marketing efforts. Your current patients already trust your care and are more likely to adopt new services that can expedite their healing process.

Marketing Strategies That Work

Among the most successful tactics in today’s industry include hosting an open house event, which serves dual purposes: it educates your current and past patients about the new services and reactivates former patients who might benefit from these treatments. Another compelling strategy involves running targeted email and text campaigns to your patient list, a tactic that has yielded substantial reengagement and revenue generation for practices.

Operationalizing Cash-Based Services

Implementing cash-based services isn’t merely about purchasing equipment and waiting for patients to sign up; it requires a strategic approach to integrating these services into your patient flow. Educate your team about the benefits and application of these services, ensuring they are well-equipped to introduce and recommend them to patients. Importantly, practices need to focus on collecting payments for these services upfront, often through packages, to secure a commitment from patients and streamline revenue collection.

EnovisTM Exclusive Campaigns For LightForce® and Chattanooga® Devices

The Breakthrough-EnovisTM partnership program was designed to aid practices in incorporating and marketing cash-based services effectively. This comprehensive program offers done-for-you marketing campaigns, extensive training for staff, and sophisticated tracking tools to measure ROI, ensuring practices can confidently market and deliver their new services.

A Bright Future with Cash-Based Services

This webinar illuminates the path forward for practices looking to future-proof their operations and increase profitability amidst changing healthcare reimbursement landscapes. By adopting and effectively marketing cash-based services, practices can not only survive but thrive, providing enhanced value to their patients while bolstering their bottom line. As the healthcare industry continues to evolve, embracing innovative service models like those discussed in the webinar will be crucial for sustained success.

If you want to learn more about the EnovisTM exclusive marketing campaigns with Breakthrough, visit http://getbreakthrough.com/enovis/

 

The $20M PT Marketing System

It’s crucial to understand the significance of marketing in any business, including the healthcare sector. The right marketing strategies could be the game-changer in shaping up your practice, whether it’s a chiropractic clinic or a physical therapy private practice. In this article, we unwrap key aspects of our “$20M Marketing System,” a system meticulously constructed over the past two decades.

At Madden & Gilbert PT, Chad Madden’s practice in Harrisburg, PA, they started from a modest 50 visits per week in 2003. Now they see about 2,500 visits per week. They’ve consistently focused on achieving 20% growth year over year.

Recently the Madden & Gilbert PT valuation done in 2023 was for $20.8M, up from $4M just six years prior.

A $20M physical therapy private practice is realistic – read on to learn the marketing system that can help you achieve this growth year over year.

Scaling Your Practice with the $20M Marketing System

The $20M Marketing System is a strategy developed in a private practice valued at $20.8 million, and refined in hundreds of physical therapy private practices across the country. This system is designed to provide practice owners with a structured pathway to consistent and significant growth in both patient numbers and revenue.

The Key Ingredient: Processes

A solid marketing system is essential for practice owners who aim to grow their businesses smoothly and sustainably. It involves a combination of proactive processes that help attract potential patients, maintain existing ones, and ensure a steady flow of revenue.

Establishing processes means creating consistent steps, scripts, or other routines that you and your staff can follow to reach your marketing goals.

The Five Pathways of New Patient Flow

There are five consistently valuable pathways for attracting new patients to a private practice. New patients are an essential aspect of any practice’s growth. Make sure you are tapping into these key channels:

1. Reactivations: Encourage past patients to come back for additional care.
2. Word-of-mouth referrals: Tap into your network of existing patients.
3. Physician referrals: Aquire patients referred by other clinicians.
4. Partner referrals: Develop partnerships with businesses that can promote your service.
5. Cold traffic marketing: Reaching out to potential patients who are not aware of your services and how you can help them.

Each pathway requires different strategies and processes—with the goal being to maintain a balance amongst all five, ensuring a steady patient flow.

It’s important to set up processes for all five of these resources to track and optimize marketing efforts for sustainable practice growth.

Common Pitfalls in Building Marketing Systems

While building a marketing system comes with numerous challenges, the key is to understand and avoid the common pitfalls. This could range from a lack of know-how, wherein owners may confuse a system with a process, box-checking strategies that could blur tracking end results, or underestimating the effort required in building a system. Choreographing multiple processes into a system requires immense planning and execution.

Creating the Perfect Marketing System

A marketing system consists of multiple processes designed to attract and retain patients. These processes can range from reactivations to cold traffic marketing strategies. The efficiency of these processes is critical for an effective system, and they should be designed with the specific characteristics of the practice in mind.

Reactivations

A reactivation process is particularly effective at bringing back past patients. This can be achieved using a range of techniques, including patient newsletters, email campaigns, text campaigns, and specialized conversion responses. This ensures a high retention rate and maintains a consistent patient base.

Cold Traffic Marketing

Cold traffic marketing, which refers to strategies that target people who are unaware of your practice, is integral in attracting new patients. Despite the challenges that can be involved in working with an unidentified audience, if approached correctly, it is possible to convert this into a resource for growth.

Building Your Marketing Team

Building a reliable marketing team is essential in leveraging these processes effectively. While an internal marketer might focus on reactivations and referrals, an external marketer can help in partner events and establishing professional referrals. In addition, ensuring trackability in your marketing processes is key to understanding what works best for your practice.

Harnessing the Power of Online Advertising

With today’s world becoming increasingly digital, online advertising is slowly overshadowing traditional methods. Platforms such as Facebook and Instagram offer opportunities to reach broad and diverse audiences. Designing effective online ad campaigns is crucial for any practice aiming to grow. They must also understand how to turn interactions into actual patients.

Conclusion

The $20M Marketing System offers an efficient and structured approach to growing your practice.

You can increase your patient base and revenue by combining reactivation, cold traffic, and effective online social media advertising.

I hope this serves as a testament to the power of sustainable growth strategies.

Want to learn more about scaling your practice? Sign up for a Practice Growth Strategy Call to see how the $20M Marketing System can work for your unique practice.

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Maximizing Revenue Per Visit

In the world of private practices, there’s a number that often keeps owners up at night: Revenue per visit (Rev/visit). This figure reflects the income generated for each treatment session, serving as a crucial metric for gauging practice profitability. However, many owners find themselves facing the challenge of maintaining or increasing Rev/visit over time, leading to stress and uncertainty.

Why Revenue Per Visit Matters

Rev/visit reflects the revenue earned per treatment session. It directly impacts practice profitability and overall financial health. When PT private practice owners experience a decline in profit margins, it can lead to management challenges and poor decisions due to panic of stress.

Understanding Revenue Per Visit

Rev/visit is more than just a number; it’s a reflection of a practice’s financial health. By understanding and effectively managing this metric, owners can make informed decisions to ensure the sustainability and growth of their businesses. But what exactly does Rev/visit entail?

At its core, Rev/visit represents the revenue earned per treatment session, factoring in both the amount billed and the amount collected. It serves as a proxy for total revenue and plays a significant role in determining practice profitability. However, maintaining a consistent or increasing Rev/visit can be easier said than done.

One of the challenges lies in defining what constitutes “high-quality care.” While practitioners may have different interpretations, the ultimate goal remains the same: providing effective treatments that yield positive outcomes for patients. However, the correlation between treatment quality and Rev/visit isn’t always straightforward, and assumptions about treatment duration can further complicate matters.

Challenges in Defining Quality Care

  • There’s no universal definition of “high-quality care.”
  • Different treatment approaches yield similar outcomes.
  • Length of stay per visit can affect revenue, especially with capped payers.

Dealing with Fluctuations in Revenue Per Visite

Practice owners often find themselves grappling with fluctuations in Rev/visit rates, which can vary widely depending on factors such as geographic location, payer mix, and practice specialization. Additionally, the traditional model of providing 60-minute treatment sessions may not be feasible for all practices, leading to disparities in Rev/visit across different settings.

To address these challenges and improve Rev/visit, owners must adopt strategic approaches focused on maximizing revenue opportunities and optimizing practice operations. This includes implementing marketing strategies to attract new patients, enhancing the value of treatment plans, and managing relationships with insurance providers.

Furthermore, owners can conduct a thorough analysis of their revenue streams through techniques like the Profit Leak Audit and utilize tools like the Profit Planner to plan for future growth and profitability. By focusing on key areas known as the “4 Profit Levers” – marketing, patient value, insurance relationships, and billing efficiency – owners can make meaningful improvements to their Rev/visit and overall practice performance.

Here is a useful guide PT practice owners can use when looking for ways to improve their revenue per visit:

Pitfalls to Avoid

  • Don’t focus solely on Rev/visit – you may overlook other important factors.
  • Remember to consider revenue generated per hour, week, or month – these time frames provide a more comprehensive view.

Strategies to Improve Rev/visit:

Attract more new patients:

Implement marketing tactics to increase demand for services.

Increase plan of care value:

Enhance the value of treatment plans through additional services or referrals.

Increase frequency of treatment:

Encourage patients to schedule more frequent appointments for better outcomes.

Implementing Profitability Strategies

  • Conduct a Profit Leak Audit to identify revenue inefficiencies.
  • Use a Profit Planner to strategize future growth and profitability.
  • Focus on the “4 Profit Levers”:
    • Marketing for profitability
    • Improving lifetime patient value
    • Managing relationships with insurance providers
    • Optimizing Private Practice Math for billing efficiency.

Benefits of Increasing Rev/visit

Ultimately, increasing Rev/visit isn’t just about boosting revenue; it’s about ensuring the long-term sustainability and success of the practice. By implementing strategic initiatives and continuously monitoring performance, owners can navigate the complexities of Rev/visit and position their practices for growth and prosperity in the ever-evolving healthcare landscape.

Learn how Dr. Verelle Wyatt increased his revenue per visit by 18% in less than 3-months.

 

Ready to Improve Your Revenue Per Visit?

If you want to work with a program director and understand exactly how you can improve your revenue per visit, consider scheduling a 1-1 Profit Strategy Call. You’ll gain insights into which strategies are best for your clinic, or if you’re a good fit for our Profitability Under Pressure Program.

Profitability Under Pressure

Click here to get started.

Breakthrough - How to Double Your Practice Valuation

Introduction

Increasing your practice valuation presents its own set of unique challenges. Often, practice owners find themselves buried in a pile of work and are not sure where to begin. 

The market is unpredictable and the healthcare system is not set up in your favor. However, equipped with the right insights and systems, it’s possible to not only navigate the turbulent waves but achieve exponential growth. 

Today, I want to share how I doubled the value of my practice within just two years.

Understanding the Value of Your Practice

We recently hosted a webinar where we discussed how to increase practice value. On the webinar, we shared our free practice value calculator. This simple tool can guide you in conducting an assessment of your practice’s value. Understanding your practice’s valuation is crucial for long-term planning, attracting investors, and mapping out succession or exit strategies.

 

Numerous factors can affect a practice’s value, and practice owners need to familiarize themselves with the pitfalls to avoid when planning to sell or transition. These include unrealistic expectations about the value of the practice, ignoring the buyer’s perspective, and underestimating the value of systems.

Practice Valuation Calculator

Maximizing Your Practice Valuation

To maximize the value of your practice, focus on the three key areas:

1. Your EBITDA 

Practice valuation is performed based on the earnings before interest, taxes, depreciation, and amortization (EBITDA) times a multiple. It’s no longer based on the number of annual revenues.

2. Size of Your Practice

A practice’s size holds a reciprocal relationship with its value – the larger the size, the higher the valuation, and vice versa. This valuation gradient exists because acquirers seek stability and potential for future revenue and earnings.

3. Growth Opportunities and Rate

These two parameters have a high value to acquirers because growth potential is one of the key elements they consider when investing – this aspect is often overlooked.

To consider the calculations for the multiple valuations, we can use this example: if your EBITDA is 300K a year, you could expect a three to four multiple. However, it is crucial to remember that these are approximates, and actual numbers may vary. 

Calculate your practice value here. 

How to Increase the Value of Your Practice

Three ways to increase a practice’s value include increasing your number of patients, improving the average revenue per patient, and increasing reactivations or the number of times a client returns for services. 

Beyond these, focusing on the development and efficiency of three core systems —marketing, personnel, and finance — can provide a solid foundation for growth.

Acquiring an investor’s secret sauce is key to understanding how the market perceives value. Ultimately, the two primary aspects to focus on are improving your EBITDA and the multiple. Exhibiting a consistent growth rate, particularly one around 20% per year, can significantly enhance the attractiveness of your practice to potential investors or acquirers.

Conclusion

Whether you are planning to transition out soon or years down the line, understanding these factors can lead to a more profitable exit. Moreover, it can provide a roadmap to strategically increase the value steeply over a shorter period.

If you’d like one-to-one guidance on how you can better position your practice for growth, schedule a complimentary growth assessment here.