7 - Step Profitability Checklist to Increase PT Profits | Breakthrough

A 7-Step Profitability Checklist To Increase Profits for Your PT Practice

7 Step Profitability Checklist

The healthcare industry is competitive, and the landscape is rife with financial obstacles. Declining insurance reimbursements force physical therapists to do more with less. Operation costs are rising, and recruiting and retaining top talent is costly. Faced with these challenges, how do physical therapy practice owners increase profits? (Read on to increase your profits using our comprehensive profitability checklist)

Sustained profitability certainly has its challenges. But it’s entirely attainable with the right strategies and a direct approach. It’s also important. Being profitable isn’t just a measure of financial success; it’s a crucial factor for the longevity and quality of services provided.

You may be on thin ice if your profitability margin is 10% or lower. Slight speed bumps could potentially shut the doors of your business. Aim for at least 20–25% profit margin to avoid that. Here, you’ll be significantly safer and remain competitive.

In this comprehensive guide, we address common misconceptions and share simple strategies that will help you increase profits and boost your bottom line. Let’s dive in.

The Profitability Checklist: Navigating Financial Success

Our profitability checklist will steer your practice toward a financially secure future. These critical items are meticulously designed to address the unique challenges faced by physical therapy practices:

  1. Filling Schedules and Utilizing Practice Space
  2. Maximizing Practice Space
  3. Building a Waiting List and Diversifying Revenue
  4. Adding Cash-Pay Services
  5. Attracting High-Paying Patients and Enhancing Efficiency
  6. Dropping the Lowest Payers
  7. Renegotiating Reimbursement Rates

1. Filling Schedules and Utilizing Practice Space

To increase profits, physical therapy practice owners need a strategic approach. For starters, try filling up your schedule and making the most of your practice space. Efficiency is paramount when it comes to scheduling patients. Every empty slot represents lost revenue.

For instance, if your schedule allows for 150 patients a week, but you’re only seeing 120, you’re running at 80% capacity. If each visit is worth $90, you’re missing out on 30 slots—$2,700. This money is additional profit, as the existing revenue already covers your regular costs, such as salaries and rent.

What’s more, when your schedule remains underfilled, it doesn’t just result in a missed opportunity for revenue—it also impacts the operational efficiency of your practice. Unfilled slots lead to underutilized clinician capacity, so you’re not maximizing your team’s expertise and physical space.

Increase Profits With Optimized Scheduling

There are several resources and marketing strategies that can help you fill up your schedule and increase profits, including:

  • Implement Online Bookings: This removes an additional step for your patients. With online booking, they’ll be able to see multiple slots available and can schedule appointments at their own convenience.
  • Send Patient Reminders: Send appointment reminders via email, text, or phone calls to reduce no-shows and last-minute cancellations.
  • Implement a Cancellation Policy: Consider charging for missed appointments. A fair cancellation policy will discourage last-minute cancellations and no-shows.
  • Diversify Services: Expand your services to include specialty programs or classes, such as nutrition and wellness programs. This will give your patients more reasons to visit your practice.
  • Educate Your Patients: Educate your patients so they don’t give up on their treatment mid-way. Explain the benefits of physical therapy and why they should have consistent attendance.

2. Maximizing Practice Space

Underutilized space means reduced profitability. If you have a 3,000-square-foot space, you should be able to schedule 300 visits a week. Similarly, you can book 500 visits a week for a 5,000-square-foot space. 

Imagine if you have three clinicians seeing 100 patients a week when the capacity for your practice might be 300 visits a week. This means your practice space isn’t optimized, which leads to missed opportunities. Unused treatment rooms or empty time slots translate to a drop in revenue. Every inch of your facility should contribute to your practice’s financial health.

To maximize your practice space, you can start by optimizing clinician capacity. When therapists are able to see more patients during their work hours, it gives you more opportunity to increase profits. For instance, say each clinician can accommodate five extra patients due to better scheduling and more efficient use of treatment rooms. Over the course of a week, you’ll see a significant increase in billable hours and revenue. 

In addition, an efficiently managed clinic means reduced downtime between patient appointments. Clinicians can seamlessly transition from one patient to the next, minimizing non-billable hours.

Another way to maximize space is through efficient space management. A well-organized clinic can improve patient experiences, enhance their satisfaction, and encourage referrals. You’ll also be able to accommodate more patients and reduce overhead costs, which contributes directly to a healthier bottom line.

3. Building a Waiting List and Diversifying Revenue

Building a waiting list for appointments can be a game-changer for your practice to increase profits. It’s not just about managing a busy schedule; it’s also about creating demand. 

When potential patients learn that your clinic is in high demand, it piques their interest. A weeks-long waiting list for an evaluation signals that your services are sought-after. Alternatively, getting an appointment within 24 hours could be considered a red flag. It might even raise an eyebrow over your competence. So, if you want to be considered the best in your area, having a waiting list can be a key differentiator.

In addition, a waiting list will reinforce the value of your practice. This perception can lead to an influx of new patients eager to secure an appointment, driving up your client base and revenue.

What’s more, a waiting list is also a gateway to diversifying your services and revenue streams. Consider this: while patients wait their turn, you could promote online resources or additional services. This can generate revenue before patients even step into your clinic. Specialized workshops, online training, or home exercise programs that cater to different needs can expand your reach and your income potential.

And let’s not forget that a waiting list can be a treasure trove of data and insights. Analyze it regularly to identify patterns and trends in appointment requests. This information can guide you in optimizing your schedule, staffing levels, and service offerings. As a result, your practice will be even more efficient.

4. Adding Cash-Pay Services

Another way to increase profits is to market supplemental services, such as dry needling, personal training, small group fitness classes, massage therapy, and laser light therapy. All these services can be billed as cash services. Plus, the additional offerings cater to a broader spectrum of patient needs, increasing your appeal and revenue potential.

One of the standout benefits of cash-pay services is their independence from insurance reimbursements. While insurance-based treatments have their merits, they often come with administrative hassles, limitations, and unpredictable reimbursement rates. Also, insurance companies have been decreasing revenue—especially relative to inflation— while the cost of doing business is going up. So, it makes sense to add cash-first services.

Cash-pay services provide a direct and reliable income source. They’ll offer you greater control over pricing, allowing you to set fees that accurately reflect the value of your specialized services.

5. Attracting High-Paying Patients and Enhancing Efficiency

To increase profits for your practice, it’s essential to direct your focus toward attracting high-paying patients. For this approach, you’ll need to arrange your patient base by reimbursement rates. This is a fundamental way to optimize healthcare revenue—not all patients yield the same financial return.

Reimbursement rates vary widely depending on insurance providers, plans, or self-pay arrangements. Some payers offer higher rates, while others provide less favorable compensation. For instance, your bottom list will include the lowest payers that may be paying you $50–$70 capped per visit. At the top of the list will be your best payers, whose insurance companies pay you as much as $120 per visit.

Imagine how it would increase profits for your business if 90–100% of your patients were your best payers! You can achieve this by networking with employers in your area who offer such insurance to their employees. These best payers not only provide better revenue per patient, but they also reduce the administrative burdens associated with managing multiple low-paying contracts. Also, satisfied patients are more likely to refer others, further bolstering your practice.

Another small benefit is that these patients may be more financially stable and motivated to complete their therapy plans. This means higher compliance rates, shorter treatment durations, and better patient outcomes. 

6. Dropping the Lowest Payers

Many practices retain a diverse payer mix so they don’t risk losing referral sources. The fear is that dropping low-paying payers might alienate referring physicians or other sources of patient referrals. However, you should still consider it.

Here’s the truth: Not all payer sources are created equal. Some payers offer reimbursement rates that barely cover your overhead costs, let alone generate profit. By holding onto these low-paying payers, you might find yourself trapped in a cycle of barely breaking even.

While dropping low-paying payers might seem like a risky move, it’s a smart way to increase profits. It allows you to free up resources and time to be redirected toward serving higher-paying patients or diversifying your services. 

Also, when you drop low-paying payers, you’re essentially making a statement about your practice’s worth. You’re saying that your expertise and services command a certain level of compensation, and you’re not willing to compromise on that value. This can positively impact your practice’s reputation and bottom line.

What’s more, it’s essential to remember that the goal isn’t just to increase revenue—you also want to optimize profitability. Focusing on higher-paying payers and self-pay options can generate more substantial profits per patient session. This allows you to invest in your practice, provide better patient care, and even explore new revenue streams without being tethered to the constraints of low-paying contracts.

7. Renegotiating Reimbursement Rates

There’s a common misconception in the healthcare industry that smaller practices can’t effectively renegotiate reimbursement rates with insurance providers. However, this notion couldn’t be further from the truth. In fact, negotiating fair reimbursement rates isn’t only possible for smaller practices; it’s also essential for their financial sustainability.

You might assume that you lack the bargaining power of larger healthcare organizations and that insurance providers won’t entertain rate negotiations. While it’s true that negotiations can be challenging, success stories from small practices prove that it’s entirely achievable. In short, to receive something, you have to ask for it:

  • Compile compelling data showcasing high patient satisfaction rates, positive outcomes, and cost-effective treatments. 
  • Approach insurance providers with this evidence to renegotiate reimbursement rates. 
  • Be persistent in your follow-ups. 
  • Diligently negotiate for rates that align with industry standards. 
  • Leverage your reputation for delivering exceptional care.

Efficiency in Scheduling and Billing

A notable trend in the industry is the move toward shorter appointment times. Several physical therapy practice owners are slowly changing their scheduling, cutting sessions from 60–75 minutes to 40–45 minutes. Some are even capping their sessions at 38 minutes, in compliance with Medicare, so they don’t leave money on the table.

While this may seem counterintuitive to profitability, it’s about making the most of each session. Shorter, focused appointments can increase the number of patients seen per day, boosting your revenue potential. However, this approach must be balanced with maintaining high-quality care and patient satisfaction.

Diversifying billing based on clinical progression is another key strategy to increase profits. Mary Daulong from Business and Clinical Management Services (BCMS) explained that this can help you avoid underbilling and maximize PT billing units. Instead of billing the same rate for every session, consider varying rates based on the complexity and progress of treatment.

Increase Profits With Breakthrough’s Free Profitability Checklist

In today’s fast-paced and hyper-competitive world, private practice owners must look for new ways to increase profits. Everything from filling up your schedule to billing efficiently are steps toward that. These interconnected items collectively shape your practice’s profitability. They may be small steps, but when you adapt these strategies together to your unique circumstances, you’ll increase profits for your practice.

Breakthrough helps physical therapists increase their profitability by adding $10,000–$25,000 monthly in revenue. We’ve developed a proven step-by-step system that’s helped over 2,000 private practice owners in 12 countries grow their businesses.

Download our detailed checklist and increase your profits today.

 

Ready to Improve Your Profits by $10,000 Within 90 Days?

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

Get Started

Join hundreds of
practices accelerating
their growth with
Breakthrough.