This post was authored by WebPT Billing Specialist, Geoff Elledge. Thanks for sharing your wisdom Geoff!

 There are many different ways to look at your clinic’s finances.  You can look at average revenue per patient visit, insurance payer mix, average referrals from physicians and on and on.  

Let’s start with a few of the basic questions you should ask:

  • much does it cost you to treat an average patient?
  • How much does the insurance pay you per visit?
  • What is your average patient cost share per visit?
  • How long does it take on average to collect?

These are some of the basic questions you have to ask before you can start to maximize your revenues versus expenses.

First of all, take a good hard look at your fixed costs and figure out how much it costs you just to see a patient.  It’s boring, but if you want to run a successful business, there’s no better place to start.  I know we are in the business of caring for our patients first, but it is still a business, after all!

Start by calculating your average fixed costs such as rent, utilities, equipment costs/depreciation.  Then take a look at payroll, salaries, benefits, etc.  Add them up on a monthly basis then divide them by the total number of hours your office is open on a monthly basis, say 160 hours per month.  The resulting number is your average hourly costs of operation. If you spend 30 minutes per patient on average divide by two and you have your per patient cost per visit.  Confused yet? That is just the beginning.

Now, take a good, hard look at your various contracts and reimbursements by insurance.  Most therapists contract with some major national companies that may pay $60/visit or less on a bundled basis. On top of that, you have to jump through hoops for authorization that contributes to your overhead. These nasty behemoths shall remain nameless, but I’m sure you know them.

The bottom line is: Are you making money per patient? If not, it may be time to consider non-participating. It’s really just about what works for you and your clinic. If you count on volume and they are a major source of patients, try to see if the average patient care time allows you to maintain a profit. It could be that you only see a few of these patients and the referring physicians are consistent with sending you a variety of better paying referrals. Then maybe it’s worth it. There is no single right answer, but at least you can make an informed decision based on a cost/benefit analysis.

An often ignored area to analyze is the patient cost shares (co-payments, deductibles, co-insurance).  Do you know what the expected patient responsibility will be per visit?  If so, are you collecting your co-payments/coinsurance at the time of service? This small workflow change could have a big impact. The very best way to deal with it is be up front and consistent.  From a legal/audit perspective, it is also vitally in your best interest. Create a clearly defined rate and policy for any patient who requests it.  Make sure that the self-pay charge is the same or greater than the Medicare allowable fee schedule. This will keep you out of trouble with the Office of Inspector General.  There are always going to be those patients who truly suffer from financial hardship (and you can cut them a break), just make sure they are the exception not the rule.

Keeping forms in proper order is critical as well. Review your patient balances monthly and make a clear cut policy on when to turn them over to collections, adjust off, or pursue other collection methods. If you don’t make good faith efforts to collect patient balances, you will not only be out the money but breaking the law on anti-kickback statutes. It is hard to take the emotion out of it, but again, it’s your business and livelihood. Clear policies will make it an easier process for all involved.  In some cases the patient balances are often 20-30% of the total allowed reimbursement. That’s about 10 hours per week that’s being left on the table!

In summary, review your costs, compare them to revenues and keep up with those patient collections and you’ll be on your way to meeting your financial goals.


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