Cash flow
Monday July 23, 2012
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Jason Waz, PT, knew when he started his own Tampa, Fla., practice in 2007 that "the reimbursement game wouldn’t let us survive." So he added a cash-pay niche — sports performance training — and focused his rehabilitation services on a private-pay client base.
Today, almost half of his practice is private pay, and Waz says he has the luxury of spending an hour with most patients each visit, more than double the time of a typical physical therapy session limited by insurance reimbursements.
"With a cash-pay business model, I can see 10 patients a day and bring in the same revenue as I would seeing 30 patients a day with insurance," Waz said.
Welcome to the new reality of private physical therapy clinics in the U.S.
Becoming business savvy
Physical therapists have sharpened their business skills in recent years to survive, said Tom DiAngelis, PT, DPT, president of the private practice section of the American Physical Therapy Association, and co-founder of Comprehensive Physical Therapy Center in Cincinnati.
"I believe we are better at business because we’ve had to be," DiAngelis said. "Years ago we could be successful in profitability despite ourselves. It’s been a challenging experience in the last decade. Private PTs have had to become business savvy."
Some areas of the country have become more difficult than others to base a practice solely on insurance reimbursement, said DiAngelis, who recently moved to the state of Washington to work. "It varies considerably geographically," he said. "There is significant variation in payment in Ohio vs. Washington, for example. Not in government reimbursement — that’s pretty universal throughout the country — but in private pay. It’s better in Washington than in Ohio."
DiAngelis said reimbursements from private insurers also tend to be lower in the Northeast and in Florida. "There are pockets of the country that are more challenging with payments from private insurers," he said.
Loading your practice up with contracts that don’t cover costs is one of the common problems of private physical therapy clinics, said Michael Weinper, PT, DPT, MPH, co-founder of PTPN Inc., a national network of independent rehabilitation providers.
"The fear people have is, 'I won’t get all the business I need,’" Weinper said. "The reality is that we take contracts we can’t afford to take. We have to have a more discerning palate on what contracts we take. Don’t continue to sign contracts that pay lower than your costs. If it costs you $78 per visit, don’t take $60 or $65 in a contract."
Learn to manage
Weinper said most PTs have a long way to go to learn how to manage successfully the business side of a practice. "Oftentimes we find therapists are not focused on the primary goal, which is to make money," he said. "They concentrate on providing good care or meeting their patients’ needs, but if you don’t do the business side, things start to slip."
Therapists should dedicate part of each work week to managing their practice, Weinper advised. In addition to overseeing staff, they need to track data about their practice, such as number of visits per month, visits from referrals, charges and costs per hour of treatment, and collections per treatment.
While most PTs use electronic billing, only about one-third have electronic medical record systems installed, Weinper said. "With an EMR system you can bill daily," he said. "Most clinics send out bills weekly or once a month, and if they do it on paper, it takes four to six weeks to process. You can bill every single day, and you should."
Weinper advised monitoring costs every week using Quicken or other business software — and not running your business from your checkbook.
Taking copayments upfront is another important step to help with cash flow, Weinper said. "Some therapists never ask for money. They say: 'We’ll bill insurance and see what it is paying,’" he said. "But when a patient is finished with care, they become less engaged and it’s harder for the therapist to collect."
Add-on cash services
Cash-based, extra services beyond physical therapy should be at least 20% of a clinic’s overall revenue in today’s business climate, Weinper said. Today, only about one in four clinics offer such services, however, he said.
"PTs need to be able to convert a client into a customer, like chiropractors and dentists do," Weinper said. "Our research shows that people trust their therapists more than their primary doctor or friends on where to go for a gym, how to stay fit."
Physical therapy clinics can offer a wealth of adjunct services to therapy, from deep tissue massages and senior fitness and wellness classes, to exercise supplies and classes, such as Zumba, Weinper said.
Waz has focused his add-on service on sports-specific training, fitness classes for people of all ages and children’s sports programs. He’s also a consultant for athletic teams, providing assessment screenings, injury prevention and physical therapy when needed.
"One of the biggest questions I got from athlete patients was, 'After rehab, where do I go to train?’" Waz said. He has hired two trainers and invests in the latest training equipment, including the suspension trainer Serius Strap, in order to meet the needs of his clients.
"We are always adding to our toolbox," Waz said. "Get certification and equipment and promote it. Find out from trainers and coaches about more therapies and equipment."
But at the same time, Waz advises to look for individual areas of opportunity in your market and try not to cover the full gamut of services a PT could provide. "I’m always looking at finding out what other PT offices don’t have — find ways of setting yourself apart," he said. "Find a niche. Clinics need to have an identity."
Focus on your patient group as if they were lifelong clients, Waz said. "Call a few days later and check up on them," he said. "Be available through email 24/7."
Weinper said hospital outpatient departments and retirement homes that don’t have PTs on staff often welcome a clinic’s services. Facilities for people with Alzheimer’s disease, and short-term rehab facilities, are other places to look for clients.
And instead of bringing doughnuts to a doctor’s office, try bringing in patient referrals, Weinper advised. "Get to know physicians in your community," he said. "Tell them about your programs for the elderly, or classes for pregnant women or those [who are] postpartum."
PTs also need to learn to focus on marketing their business to the public, Weinper said. "Get the local media to write stories about you. Put flyers on cars at sporting events. Think out of the box," he said. "More than treating the sick, help keep people well."
On-the-job training
Unfortunately, PT schools are not adept at teaching the business practices necessary to run a clinic, DiAngelis said. "They are including more business aspects in their administration courses and through internships," he said. "But you can’t come out of school knowing everything about how to run a clinic. They are having trouble squeezing everything in as it is. We don’t expect students to come out with all the knowledge."
APTA and other groups offer seminars, webinars and continuing education classes on business techniques that are growing in popularity, DiAngelis said. APTA’s mentoring program also is a way to transfer business knowledge, he said. •
Teresa McUsic is a freelance writer.
Today, almost half of his practice is private pay, and Waz says he has the luxury of spending an hour with most patients each visit, more than double the time of a typical physical therapy session limited by insurance reimbursements.
"With a cash-pay business model, I can see 10 patients a day and bring in the same revenue as I would seeing 30 patients a day with insurance," Waz said.
Welcome to the new reality of private physical therapy clinics in the U.S.
Becoming business savvy
Physical therapists have sharpened their business skills in recent years to survive, said Tom DiAngelis, PT, DPT, president of the private practice section of the American Physical Therapy Association, and co-founder of Comprehensive Physical Therapy Center in Cincinnati.
"I believe we are better at business because we’ve had to be," DiAngelis said. "Years ago we could be successful in profitability despite ourselves. It’s been a challenging experience in the last decade. Private PTs have had to become business savvy."
Some areas of the country have become more difficult than others to base a practice solely on insurance reimbursement, said DiAngelis, who recently moved to the state of Washington to work. "It varies considerably geographically," he said. "There is significant variation in payment in Ohio vs. Washington, for example. Not in government reimbursement — that’s pretty universal throughout the country — but in private pay. It’s better in Washington than in Ohio."
DiAngelis said reimbursements from private insurers also tend to be lower in the Northeast and in Florida. "There are pockets of the country that are more challenging with payments from private insurers," he said.
Loading your practice up with contracts that don’t cover costs is one of the common problems of private physical therapy clinics, said Michael Weinper, PT, DPT, MPH, co-founder of PTPN Inc., a national network of independent rehabilitation providers.
"The fear people have is, 'I won’t get all the business I need,’" Weinper said. "The reality is that we take contracts we can’t afford to take. We have to have a more discerning palate on what contracts we take. Don’t continue to sign contracts that pay lower than your costs. If it costs you $78 per visit, don’t take $60 or $65 in a contract."
Learn to manage
Weinper said most PTs have a long way to go to learn how to manage successfully the business side of a practice. "Oftentimes we find therapists are not focused on the primary goal, which is to make money," he said. "They concentrate on providing good care or meeting their patients’ needs, but if you don’t do the business side, things start to slip."
Therapists should dedicate part of each work week to managing their practice, Weinper advised. In addition to overseeing staff, they need to track data about their practice, such as number of visits per month, visits from referrals, charges and costs per hour of treatment, and collections per treatment.
While most PTs use electronic billing, only about one-third have electronic medical record systems installed, Weinper said. "With an EMR system you can bill daily," he said. "Most clinics send out bills weekly or once a month, and if they do it on paper, it takes four to six weeks to process. You can bill every single day, and you should."
Weinper advised monitoring costs every week using Quicken or other business software — and not running your business from your checkbook.
Taking copayments upfront is another important step to help with cash flow, Weinper said. "Some therapists never ask for money. They say: 'We’ll bill insurance and see what it is paying,’" he said. "But when a patient is finished with care, they become less engaged and it’s harder for the therapist to collect."
Add-on cash services
Cash-based, extra services beyond physical therapy should be at least 20% of a clinic’s overall revenue in today’s business climate, Weinper said. Today, only about one in four clinics offer such services, however, he said.
"PTs need to be able to convert a client into a customer, like chiropractors and dentists do," Weinper said. "Our research shows that people trust their therapists more than their primary doctor or friends on where to go for a gym, how to stay fit."
Physical therapy clinics can offer a wealth of adjunct services to therapy, from deep tissue massages and senior fitness and wellness classes, to exercise supplies and classes, such as Zumba, Weinper said.
Waz has focused his add-on service on sports-specific training, fitness classes for people of all ages and children’s sports programs. He’s also a consultant for athletic teams, providing assessment screenings, injury prevention and physical therapy when needed.
"One of the biggest questions I got from athlete patients was, 'After rehab, where do I go to train?’" Waz said. He has hired two trainers and invests in the latest training equipment, including the suspension trainer Serius Strap, in order to meet the needs of his clients.
"We are always adding to our toolbox," Waz said. "Get certification and equipment and promote it. Find out from trainers and coaches about more therapies and equipment."
But at the same time, Waz advises to look for individual areas of opportunity in your market and try not to cover the full gamut of services a PT could provide. "I’m always looking at finding out what other PT offices don’t have — find ways of setting yourself apart," he said. "Find a niche. Clinics need to have an identity."
Focus on your patient group as if they were lifelong clients, Waz said. "Call a few days later and check up on them," he said. "Be available through email 24/7."
Weinper said hospital outpatient departments and retirement homes that don’t have PTs on staff often welcome a clinic’s services. Facilities for people with Alzheimer’s disease, and short-term rehab facilities, are other places to look for clients.
And instead of bringing doughnuts to a doctor’s office, try bringing in patient referrals, Weinper advised. "Get to know physicians in your community," he said. "Tell them about your programs for the elderly, or classes for pregnant women or those [who are] postpartum."
PTs also need to learn to focus on marketing their business to the public, Weinper said. "Get the local media to write stories about you. Put flyers on cars at sporting events. Think out of the box," he said. "More than treating the sick, help keep people well."
On-the-job training
Unfortunately, PT schools are not adept at teaching the business practices necessary to run a clinic, DiAngelis said. "They are including more business aspects in their administration courses and through internships," he said. "But you can’t come out of school knowing everything about how to run a clinic. They are having trouble squeezing everything in as it is. We don’t expect students to come out with all the knowledge."
APTA and other groups offer seminars, webinars and continuing education classes on business techniques that are growing in popularity, DiAngelis said. APTA’s mentoring program also is a way to transfer business knowledge, he said. •
Teresa McUsic is a freelance writer.
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Monday July 23, 2012