Most of us went into physical therapy so we could make a difference in our patients’ lives. PT can be extremely fulfilling and rewarding—and for many of us, owning a practice has been a lifelong dream. Once that dream becomes a reality, however, it can be a sobering experience. Bills need to be paid and bottom lines need to be met. It’s not always easy to bring in enough money to cover cancellations and billing snafus, not to mention fluctuating reimbursement rates, which can make it difficult to pay a fair wage to therapists and support staff. For those who went into PT to help improve others’ lives, this feeling can be devastating. 

Luckily, there are some factors that clearly affect your clinic’s cash flow, and by understanding what those factors are and how to change them, you can often take relatively small steps to improve your bottom line.With that in mind, here are the six biggest factors impacting your PT clinic’s cash flow:

1. Payer Mix

The types of insurance payers that you work with will make a huge difference in how much money you generate for your practice. If the majority of your insurance contracts stipulate that you receive $57 to $80 per patient visit, you’re either going to end up making very little profit—or you’ll find yourself in a situation where you need to cram tons of patients into your schedule. 

In this webinar, WebPT President Heidi Jannenga pointed out that some PTs try to offset low-ball third-party payer rates by either increasing patient volume or “reducing total patient treatment time or care episodes.” But, she added, “none of those decisions are based on what’s best for patients.” In fact, providers who do that “are making concessions to their treatment plans that essentially reduce the quality of the care they’re providing for all of their patients.”

Make your payer mix robust.

That is why many practices adopt a robust payer mix—including various private payers and some government payers—and incorporate cash-based treatments into their business models.

Incidentally, according to WebPT’s 2018 State of Rehab Therapy Report, there’s no “right”  payer mix in the US—although, the majority of survey respondents indicated that their clinics operated with a fairly even split between commercial insurance and government payers. That said, there are numerous factors that dictate a practice’s preferred payer mix, including their geographic region, referral sources, patient demographics, and clinic overhead costs.

Organizations By Payer Mix

2. Collections Policy

Do you have specific guidelines for how to collect cancellation fees? How about guidelines and processes for collecting payments and copayments? A formal collections policy and well-trained front office staff can improve your ability to collect the payments you’re owed—and help your practice run more efficiently.

Focus on payments and copayments.

The APTA notes that collecting patients’ copays at the time of service saves clinics a bundle. Each claim collected by mail can cost a clinic as much as $5 apiece, which adds up quickly.

It’s also good form to collect payment at the time of service. It makes life easier on patients when they know they’re caught up on what they owe your practice; nobody likes the unpleasant surprise of receiving a bill for hundreds of dollars, because you didn’t have a system in place to collect copayments at the time of service.

Enforce cancellation policies.

Many offices have cancellation policies but never enforce them. That can cost your clinic a fortune, depending on how frequently your patients miss appointments. So, training staff to collect cancellation fees at the next visit at the latest is key. The added bonus is that if you’re upfront and consistent with collecting cancellation fees, your patients will be more likely to respect your clinicians’ time and be less inclined to cancel appointments in the first place.

3. Aging Buckets

It’s a good idea to understand how long (a.k.a. old or aged) your claims are out before you get reimbursed by payers. You can organize the age of your outstanding claims into less-than-30, 30, 60, 90, and more-than-120-day aging buckets to track how long you wait for reimbursement.

You’ll clearly be looking for the shortest possible payment cycles, which means, ideally, most of your claims will be in the less-than-30 or 30-day categories. If that’s not the case, then you can look more closely at your billing processes to see what’s causing the issue. It could be a payer mix issue, where you’re only working with payers who take eons to reimburse your claims. Or, you could need to see if there’s something on your end that’s holding up processing.

4. Geographic Location

As noted above, geographic location has a big impact on your clinic’s bottom line. For one thing, different states have various median pay rates for therapists, which affects what you should offer therapists to retain your valuable talent. Secondly, geographic location will impact your payer mix and negotiated reimbursement rates. Even if you want to add certain payers to your mix, that might not be an option. As Dan Walker, PT, DPT, OCS, of San Diego-based Action Physical Therapy and Rehab, explained in a recent in-person interview, many payers have a hard cap on how many providers they’ll contract with. In Southern California, for example, Anthem Blue Cross hasn’t opened its network to new PT businesses since 2010, which deters some BCCA patients from going to his clinic. 

But, Walker added, going out of network might wind up being a good thing: “Rather than being limited to some of ridiculously low reimbursement rates—the ones that barely cover the cost of the patient visit—going out of network allows me to negotiate a fair rate with my patients.” He also noted that some payers require providers to pay a monthly fee to join their network, and if providers don’t see enough patients with that insurance to offset the cost of the membership fee, they can actually lose money from being in-network.

5. Claim Cleanliness

You’ve probably heard the expression, “The devil is in the details,” and that’s certainly the case with reimbursements. Thus, it’s imperative that your clinic has a practice for keeping track of the minutiae.

Clean up dirty claims.

The larger your team of therapists, the greater number inconsistencies you’re bound to have in your documentation. And even if you have the most attentive front office staff in the world, there will be some typos on your claims. That’s why it’s a good idea to have a QA/compliance task force, whose job is to look over claims before they’re submitted and ensure that they’re as compliant and as free from errors as possible. Each insurance payer tends to have its own sticking points, so the QA/compliance task force has its work cut out for it.

Use the right software.

The software that you use for your clinic can affect your cash flow. If you’re using a slow, clunky EMR, your therapists will be less efficient with documentation, which negatively affects their productivity and ability to provide timely care. Plus, if you’re still using paper patient charts or relying on harried front office staff to input important information used in the billing process, you’ll be much less likely to catch documentation errors and omissions that can cost you reimbursements. Instead, seamlessly connect your scheduling, documentation, and billing with a comprehensive software platform like WebPT to optimize your clean claims and maximize reimbursements.

6. Credentialing Mistakes

Credentialing is the process of signing up new providers to your insurance payers, and it’s frustratingly easy to slip up during that process. Plus, once you’re credentialed, there’s no guarantee that things will be smooth sailing. If your clinic moves, changes names, changes ownership, or adds new personnel, you’ll be at risk for having credentialing issues pop up during the process. And these issues can lead to late or denied payments.

The solution is to have processes in place for clinic or personnel information changes. Be sure you have a fully trained employee or team devoted to credentialing compliance to prevent avoidable claim denials.


These are the six biggest factors we’ve seen that impact your clinic’s cash flow, but there are many others. From patient cancellations to the addition (or removal) of income-generating courses, telehealth physical therapy services, and equipment sales, there are plenty of potential challenges that can impact your bottom line. What factors have impacted your cash flow the most—and what have you done to remedy them?

Meredith Castin, PT, DPT, is the founder of The Non-Clinical PT, a career development resource designed to help physical, occupational, and speech therapy professionals leverage their degrees in non-clinical ways. Meredith is also the co-founder of NewGradPhysicalTherapy and works as a freelance writer and editor for a variety of publications.