Health care as we know it is changing. But that’s nothing new, right? Health care has been in a state of flux for a while now—what with ever-changing payer regulations and the steady push toward more patient-centric, value-based collaborative care. And while putting patients first is surely good for everyone, increasing regulations—and decreasing reimbursements—can make it challenging for providers to keep up, let alone keep the lights on. That’s why we’ve spent much of this quarter discussing strategies for not only surviving in this uncertain healthcare environment, but also thriving. Here are some of the highlights (i.e., the must-dos for staying in business):
1. Money Management
Prioritize patient collections.
Account for patients with HDHPs.
High-deductible health plans (HDHPs) are on the rise, which means more and more patients are bearing the financial brunt of their healthcare costs. As a result, it’s incredibly important for providers to not only be transparent about the cost of their services, but also prioritize patient collections. After all, a larger percentage of your revenue is most likely coming directly from the individuals you treat—not your payers. As WebPT’s Heidi Jannenga and Nancy Ham advised during this webinar—and as we summarized in this post-webinar FAQ doc—providers should be collecting patient payments (including patient copays and outstanding balances) at the time of service at least 90% of the time. If 90% of the time feels like a lot to you, then consider this: “only 21% of patient balances that aren’t collected at the point-of-service are ever collected.” That means you may very well be writing off 79% of what you don’t collect while your patients are in your office.
Collect at the point-of-service.
To make point-of-service collections easier, consider implementing these strategies:
- Ensure you’ve established a solid check-in protocol. Here, Jannenga recommends your front-office staff “not only [collect] the correct demographic and insurance information, but also [use] that information to perform an insurance eligibility check within 72 hours of the patient’s first interaction with your clinic—or at the very least, before that patient’s first (or next) session.”
- Have your front-office staff members use the phrase, "How would you like to pay today? Credit card, cash, or check?," rather than "Would you like to pay your copay today?" As we explained here, the APTA found that clinics that used the first phrase achieved much higher collection rates.
- Develop a staff incentive program based on collection numbers. As Jannenga wrote here, “In addition to implementing a solid patient payment collection policy—and enforcing it—many practices have also found success in incentivizing front-office staff based on the percent of patient payments collected.” After all, the boon to collections should more than make up for the cost of the incentives.
- Make it a whole-team effort. In the same post, Jannenga also explained that “it’s not just the front office’s responsibility to keep an eye on patient collections; everyone in the clinic—including therapists and techs—must be diligent in ensuring a patient has payed before beginning treatment.”
To learn more about collecting patient copays—as well as how to demonstrate your value to ensure all your patients (including those with HDHPs) will happily pay you—check out Jannenga’s and Ham’s webinar here. It’s free to watch.
Consider accrual accounting.
As Jannenga explains in this post, accrual accounting is usually the preferred method of accounting for private practice PT, OT, and SLP clinics. That’s because “insurance payments don’t always come in during the same month as the date of service,” she wrote. “With cash accounting, this delay makes it really difficult to keep accurate books on a monthly basis.” Regardless of your accounting method, though, “organized, clean, accurate books and accounting practices are a must.” And that is doubly important “if you’re considering raising private equity money or selling your practice,” Jannenga said. Plus, “maintaining accurate financial records will also prove crucial come tax season.”
Prepare for a sale—even if you have no intention of selling.
Whether or not you plan to sell in the near future, if you’re a practice owner, Jannenga recommends taking some time to get clear on your practice goals. That way, should someone come to the table with an offer, you’ll be better equipped to make a decision that aligns with your vision for you and your practice. You may also want to give some thought to the following questions, which Jannenga posed here:
- What is your company’s valuation (i.e., how much is your company worth)?
- What do you need financially in order to reach your goal?
- What role do you personally want to play in your business going forward?
- What type of arrangement would fit your professional and personal plans?
- What values, ideas, and strategies would you want the person or company you’ll be working with to embody?
Build a budget.
We’ve covered the importance of building a marketing budget in depth, but it’s also crucial to establish a global practice one. According to Paul Angotti—the author of this this Physicians Practice article—“At its essence, a budget is a tool to measure and track revenue and expenses. While expenses are vital to the process, revenue's where it all begins. After all, the only reason to incur expenses is to support revenue-generating activities.” And every practice—regardless of its size—could benefit from this type of insight into its spending and earning habits. So, how do you build a budget? As I explained in this post, you must “identify what’s coming in,” “calculate what’s going out,” and “monitor [it all] regularly.” While that sounds pretty straightforward, building a solid budget may require you to “dig in even deeper,” because, as Angotti explained, your revenue and expenses are linked, which means that changes to one will affect changes in the other. For example, the number of sessions and services you need to perform in order to meet your financial goals will directly impact your staffing, supply, and space needs.
To learn more about building a budget—including common expense categories and the percent of revenue most practices spend on large line items—check out my full post here.
Clean up your claims.
While denials may feel like a fact of life for anyone billing third-party payers, there are several things you can do in order to eliminate—or at least significantly reduce—denied claims. And it’s incredibly important that you do so, because as I wrote here, “it costs providers an average of $25 to rework a single denied claim (according to a 2014 MGMA report).” As WebPT’s Charlotte Bohnett wrote here—and Jannenga and denial expert and business consultant Diane McCutcheon echoed during this webinar—one denied claim is often indicative of a larger issue. At $25 a pop, a stream of claim denials could very well bottom out your bottom line. So, first things first: Ensure your claims are clean. That means they have correct and complete:
- Demographic and insurance information
- Data (e.g., ICD-10 codes, G-codes, and modifiers)
- Referral/authorization information
- Credentialing and provider information
Then, be sure to file your claims—and respond to all requests for additional information—within each payer’s timely filing window. During the webinar, Jannenga and McCutcheon explained that if you miss an insurer’s filing deadline, “you’re most likely out of luck.”
Address each denial as it happens.
According to Jannenga, “the best way to start managing the denial process—in order to permanently repair the holes that are causing your practice to leak money—is to address every denial as soon as you get it.” To that end, for every denial you receive, Jannenga says you should denote—and log—its error code. McCutcheon agrees: You should have a log “because error codes indicate where the denial originated,” she said—and that can help you identify and fix the source of the problem. For example,
- “If a denial is due to lack of coverage or failure to obtain authorization, then you know you’ve got a front office issue.
- “If medical necessity isn’t demonstrated or carrier requirements aren’t met, then you know it’s an issue with the provider’s documentation.
- “If the wrong codes were billed or there are modifiers missing, then you know it’s a billing-related problem stemming from the provider and not picked up by the biller.”
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2. Hiring Strategies
Evaluate your current hires.
Watch out for bad apples.
While identifying a bad hire may not be as cut and dried as, say, spotting a patient with an ankle sprain, there are several signs indicative of an employee who’s not fitting in and/or not pulling his or her weight. Here are just a few (which I wrote about here and adapted from this article and this one):
- “Low performance or productivity
- “Frequent tardiness or absences
- “Drama, chaos, negativity, or conflict
- “Misalignment of goals and/or cultural fit”
Remedy the situation.
If you’ve spotted a bad hire in your workplace, then you have a couple of options: you could either coach the employee to improve his or her ways, or let him or her go (while scrupulously adhering to your company’s termination protocol, that is). If you decide to go the latter route, then WebPT’s Courtney Lefferts says, “the sooner you can cut the ties, the better.” After all, the cost of a bad hire can be financially and emotionally taxing—and that brings us to our next section.
Understand the effects of a bad hire.
Know the financial repercussions.
The jury is still out on the actual financial burden of a bad hire, but everyone agrees it’s not pretty:
- This resource claims that for a position with an annual salary of $100,000, the cost is $211,000;
- The US Department of Labor estimates the cost to be at least 30% of the employee’s first-year earnings; and
- Well-known recruiter Jörgen Sundberg believes that the onboarding cost of a new hire is $240,000, which, as I wrote here, “means if you don’t figure out that you’ve made a bad hire until well past onboarding, you’ll not only be out that money, but also have to pony it up again for the next hire.”
Think about the non-financial implications.
Then, there’s the non-financial costs. As Falon Fatemi—the author of the above-cited Forbes article wrote—“disengagement is contagious,” and “when a disengaged hire doesn’t pull his weight, good employees get burned out making up for it.” She goes on to tell the story of how one bad hire cost her “two—nearly three—key employees.” And she’s not alone in her bad-hire horror stories. I’d bet that just about everyone reading this has experienced a bad hire or two—whether you were the one responsible for the bad hiring decision or had to put up with a bad-hire colleague. It happens to the best of us, but there are things you can do to improve your chances of hiring well from the get-go.
Improve your process.
Put culture first.
Zappos CEO Tony Hsieh and Jannenga adhere to the “hire slow; fire fast” philosophy, which means that even when it feels like they need someone to do a particular job yesterday, they take their time in the hiring process to ensure it’s going to be a long-term fit—both from a cultural and skills perspective. As Jannenga cautioned in this Founder Letter, “Don't fall into the trap of hiring a warm body with zero regard for the long-term vision of your practice.” Instead, she recommends hiring for culture first. After all, she says, “You can teach skills, but I don’t believe you can teach someone how to be a good person.”
Take it slow—and be thoughtful.
How else does Jannenga ensure she’s making the right hiring decisions for her teams? Here are a few more tips from her personal hiring arsenal:
- Implement a multi-step hiring process in which each candidate meets with multiple members of your team in several different settings or configurations. This can help your team better assess cultural fit and give “introverted interviewees more of a chance to open up and come out of their shells.” Plus, when done well, this type of hiring process ensures that everyone on your team gets a voice in the decision-making process.
- Mix up your interview questions. Jannenga always throws out a “few off-the-wall questions during the interview in order to break down the barriers of a person who comes in all buttoned-up.” She frequently uses, “What’s your spirit animal,” whereas other WebPT staff members prefer “If you were a crayon, what color crayon would you be?”
- Ask yourself whether you’d enjoy spending five days a week with the person you’re interviewing—and whether you could effectively communicate with one another. If the answer to either question is “no,” you may want to reconsider making an offer.
- Take stock of your current hiring needs as well as your practice’s future ones. “If your practice is in the exciting, fast-moving startup phase, you probably want to fill your ranks with highly-motivated, entrepreneurial personalities,” Jannenga said. “Once you’ve established a firm foothold—and you’re possibly ready to expand—then you may want to think about introducing an additional specialty to widen the scope of your clinic’s services and increase your patient volume.”
- Appreciate diversity. “Challenge yourself to hire people whose stories are entirely different than your own—because that’s what cultivates cognitive diversity,” Jannenga wrote. “Look for candidates who went to different schools and have different backgrounds.” After all, “if everyone [you hire] has same history and the same education, then you don't have a collaborative atmosphere that’s conducive to exploring different ideas, because you all learned the same things in the same way.”
- Keep an eye open for top talent—even when you’re not actively hiring. According to Jannenga, practice owners and hiring managers should “take advantage of networking opportunities at trade shows, seminars, and industry conferences.”
To learn more about Jannenga’s take on hiring—and how to vet the skills of a potential therapist or front-office staff member—check out her full post here.
3. Ways to Adapt
Prepare for pay-for-performance.
Implement outcomes tracking.
While some providers may cling to the remnants of the fee-for-service healthcare paradigm for as long as possible, the smart ones are already preparing for what’s next—namely, pay-for-performance. After all, the writing's on the wall. So, what steps can you take now to prepare for the future of payment reform? It all starts with implementing a solid outcomes collection process. How else will you be able to demonstrate your performance—and thus, get paid? Here are a few tips to get you started (adapted from this article and this one):
- Get your outcomes tracking ducks in a row now, before it becomes a requisite for payment. That way, you’ll have enough time to successfully incorporate it into your workflow—and make any necessary improvements based on the data you collect.
- Adopt integrated outcomes tracking software that comes with “industry-standard outcome measurement tools, satisfaction surveys, and a library of detailed, comparative reports.” That way, the data you collect will be applicable to other rehab therapists and non-rehab therapy providers.
- See how your numbers stack up against national benchmarks. Not only will you be able to use this information to better market your services, but you can also “negotiate better-than-standard terms with your payers,” which brings us to the next section.
Be proactive with your payers.
Providers aren’t the only ones who are feeling the financial pinch; as a result of the Affordable Care Act and rising healthcare costs, many payers are experiencing higher-than-normal financial risk—and they’re eager to share that burden with anyone who’s willing. That could work in your favor—if you’re prepared to put a risk-based proposal on the negotiation table (i.e., one “that allow(s) for larger or smaller payments based on outcomes.”) According to this resource, an insurance company may “agree to pay you a base amount for delivering care. If you achieve a higher outcome, [it] will pay you a bonus.” But, “if you achieve a lower outcome, you will only get your base payment. On top of that, if you can show you helped reduce [its] total cost of care relative to last year, [the payer] will share some of that savings with you.” To take advantage of that benefit, though, “you must provide measurable value to [the payer’s] enrollees and [the payer].” Piqued your interest? Then check out this full article to learn why a risk-based payment model could be your best bargaining chip.
Think outside the box.
Consider going out-of-network.
In Jannenga’s and Ham’s webinar, the duo discussed the potential benefits—and drawbacks—of going out-of-network. While you should never be hasty with your decision to drop a payer, there are circumstances when it really is best—for your practice and your patients—to go out-of-network. We summarized Jannenga’s words here: “Becoming an out-of-network provider is often a better solution in situations where you’re not receiving enough money from your payers to cover the costs associated with a patient visit. That way, you’ll have more freedom to negotiate with the patient—which you don’t have when you’re under a payer contract—to reach a fee that works for the patient and brings in a profit above the cost of a visit.” Furthermore, “when we look at the bigger picture, it’s better for our profession to not lower the price tag on the services we provide. In order to demonstrate our value to our patients and the rest of the healthcare community, we first must own it for ourselves.” To learn more about which payment model—in-network, out-of-network, or cash-based—is right for your clinic, check out this blog post on the topic.
Implement supplemental wellness services.
Whether or not you decide to take your practice out-of-network, you may still benefit from offering supplemental wellness services for your clients. Not only will you be able to charge cash for these non-covered services, but you’ll also be able to market to a wider pool of potential clients—both of which can help you boost your bottom line. Now, which services to offer? As WebPT’s Kylie McKee suggests in this post, you could start by taking a look at your current patient demographics and building your supplemental wellness services around them. For example, McKee wrote, “if you see a significant number of diabetic patients, consider implementing services that cater directly to this demographic (e.g., diabetic-specific exercise programs).” Additionally, “practices that see a high number of student athletes may find it beneficial to offer running evaluations, sports screenings, or performance improvement clinics, whereas clinics with a large Medicare population may want to implement wellness programs that focus on geriatric care and improving quality of life.” You could also include:
- “spa services such as massage and acupuncture,
- “weight loss programs,
- “fitness classes like yoga and pilates,
- “cardio training, and
- “nutrition consulting.”
Before you implement any wellness program, though, be sure to consult with a healthcare attorney in your area to ensure you remain compliant with the terms of your state practice act .
There you have it: a whole lot of must-dos for staying in business in this uncertain healthcare environment. Have your own strategies to add to this far-from-exhaustive list? By all means, share them with us—and your colleagues—in the comments section below.