This question came from a practice owner: What can PTs do about declining reimbursements?
Costs are going up for private practice owners. Meanwhile, reimbursement rates relative to inflation are going down. Compared to 20 years ago, we’re paying more for staff salaries, operating space, supplies, and all the other costs of doing business.
If you look at all 50 states, the average reimbursement has only gone up about 29% in the last two decades, yet operating costs have climbed much higher than this.
Combine that with the fact that there is an 8% cut for Medicare coming in 2021 and it’s clear that declining reimbursements are a big problem for PT.
A lot of private practice owners are facing this issue, but they’re reaching the wrong conclusion. Here’s what we should be doing instead.
No One Is Going to Save Us

Many PTs think that the government or healthcare associations are responsible for fixing this issue. They believe that the government will pass some form of legislation to protect us from declining reimbursements. As a result, they are waiting around for someone else to make change happen.
This is a big mistake, and it’s one that practice owners need to address head-on.
At Breakthrough, we look at Ray Dalio’s model of believability-weighted decisions: Has this happened before? Is there a track record that can lead you to believe that this will happen?
In this case, we would ask ourselves, “Does the government have a history of stepping in and paying physical therapists more?”
There’s not much believability in this statement, and PTs shouldn’t sit around waiting for it to happen when it’s not even likely in the first place.
A few years ago here in Central PA, I was in a meeting with a few other practice owners in the area, and the general consensus was that “they” needed to do something about the state of the physical therapy industry. It was never about what we could do, but rather what government and associations should do to step in and fix things.
But here’s the thing: We can’t rely on factors outside of our control. At that meeting, I voiced my intention to put all my chips into marketing instead of wishing and waiting for change, and that move changed my practice for the better.
The truth is, physical therapy is a low-cost healthcare option. This will always be a good thing because it means that PT will always have a place. We provide a better outcome for less money than any other form of healthcare. Conservative care is trending upward, and momentum is shifting in our favor.
And despite declining reimbursements, private practice owners can turn around the fate of their practice—if they make the right decisions and take responsibility.
What Can You Control?

There’s a lot working against PTs as far as declining reimbursements, and much of it is completely out of your control. The best response, then, is to focus on the things you can control to make the most of the situation.
Let’s look at seven things you can do before relying on someone else:
1. Influence Your Payer Mix
It may sound shocking, but if you have a bad payer in your payer mix (e.g., a private insurance company that only gives you $50 a visit no matter what services you perform), you don’t have to play the victim. Instead, you can drive in enough new patients, create a waiting list, and go out of network with that provider.
2. Go Direct to Consumer
If a physician refers patients to you, there’s no way you can control the type of patient or insurance. But when you go direct to consumer, this becomes something you can influence.
For example, you can go to a large employer in your area that offers the insurance you want to accept. Or you can go to more affluent populations with direct response marketing.
3. Control How Fast You Get Paid
Declining reimbursements are bad enough, but if it’s taking you longer to get paid, that’s a whole new (and expensive) problem. Tightening up your billing systems can help you get paid faster so that collecting money doesn’t become an expensive headache.
4. Create a Backend Cash Pay Service
Not all the services you offer have to be insurance billable. One California practice owner we work with decided to add a laser unit to augment their treatment. It’s a cash service, and it adds about $5 per visit.
This is a prime example of taking control rather than waiting for a government superhero to swoop in and save your practice.
5. Consider the Current Clinic Location and Future Locations
Is your clinic in a place where affluent people live? Is it in an area close to the people you want to attract? Where do they work?
You choose where your clinic is. If you’re not in a good location, you have the power to better position yourself in front of the audience you want to serve.
6. Get Paid for What You’re Providing
For most private practice owners, our well-being is directly tied to the checking account balance of our practice. If we have a big expense coming up and just paid taxes and payroll that cleared out the account, we start to get nervous.
But instead of looking at billing and accounting systems, we find a way to blame something else. This is not a healthy approach and will ultimately set you up to fail.
Instead, you can look directly at your billing system to ensure you’re getting paid for what you provide. You might be leaving money on the table if you’re not billing exactly what you’re delivering.
7. Examine Asset Utilization
Your two biggest assets in a practice are space and personnel. Let’s say you invested in 2,000 square feet of space, and you’re seeing about 60 visits a week—you’re not leveraging all the space you’re paying for. You could probably add about 140 visits per week in a space that size. Fill it up as quickly as possible to start getting your money’s worth.
The same holds true with personnel. Is everyone gainfully employed and contributing the maximum to the practice? Again, fill up your schedule as quickly as possible to ensure you have enough revenue to justify the personnel team.
Take Control of Declining Reimbursements
No one is going to bail out private practice PT owners. Your faith is best placed in your own abilities to own what you can and commit to minimizing costs and maximizing revenue.
Head over to LearnWithBreakthrough.com for more insights and free training on taking control of your practice.