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As we head into the fourth quarter of the year, is your practice hitting its financial targets, or falling short?
Now is the time to start thinking about your financial goals for the coming year. Here’s the truth about setting new financial goals: until you start to address the financial gaps that are holding you back today, your practice can’t grow. You’re going to be treading water just to survive, working harder than you need to for less money than you could be making. What about that makes sense?
Don’t coast your way to the end of the year, and take this year’s financial struggles with you into next year. Now’s the time to put your attention to a few key areas of practice operations, where small, focused changes can have an outsize impact on revenue. Fall is a perfect time to pivot into a 90-day sprint, fix the revenue drains that are inhibiting profits, and set your practice up with more cash heading into the new year.
These are specifically areas where you can make major gains in a short period of time. These aren’t the only revenue drains that keep PT practices from being more consistently profitable. They’re just three of the most common. Most practice owners who come to work with us at Practice Freedom U are coping with upwards of $100,000 in lost annual revenue, stemming from a lack of basic systems, as measured across about a dozen fundamental metrics.
Attention to these fundamentals will help you start to capture all that revenue you’re losing. It’s also going to improve your level of patient care, and the experience you’re creating for your patients, all of which leads to better patient outcomes, driving more patients and money to you, and increasing the value of your practice.
Tracking with data shows your progress, you can more quickly and easily identify the places where you’re losing money, fix those problems. That’s what will finally allow you to focus on the bigger, better, more ambitious dreams you have for your business.
3 major revenue hemorrhage points for PT practices
PT practices face a stark reality these days: only about one-third of PT patients complete their plans of care. That means nearly 70% drop out at some point, depriving themselves of the treatment they need, and depriving PT practices of much-needed revenue. Not every cancellation is a drop-out, and patients cancel visits for all kinds of reasons, including overbooking their own schedules and last-minute conflicts. It’s up to PT teams to communicate in ways that cut through the distractions and the clutter of modern life, and connect with patients so they stick to their appointment schedules and their plans of care. Based on a model of 100 visits per week and $100 per visit, improving your clinic’s cancellation rate by just 5% increases revenues by about $24,000 a year.
Systems to target: Cancellation rates at or above 10% are a sign that this area of your practice administration needs attention, starting with a scheduling system audit and overhaul. Admin and front desk teams bear a great deal of responsibility for scheduling, but its critical not to overlook the role that therapists play in influencing cancellations up or down. Communication systems that emphasize regular, empathic engagement with patients—communications that focus on the “why” of treatment, not only the what, how and when—make patients less likely to cancel and drop out of care.
Billed charges per visit
One of the most important financial metrics is billed charges, a measurement of how much you’re billing (typically in units), on average, for a single treatment session. To ensure you’re running an efficient, productive, profitable business, it’s essential to track billed charges, and to set performance goals for this metric.
Small changes in billed charges can mean significant revenue gains—or drains. For example, let’s say you’ve set a goal of 4 billed charges per visit. After tracking, you learn your practice is billing for an average of 3.5 billed charges per treatment session. Again, using a model of 100 visits per week and $100 per visit, that’s a loss of more than $60,000 per year.
Systems to target: Underperforming of billed charges is often a result of poor documentation practices, as well as communications and knowledge gaps between clinical and administrative teams, as therapeutic services are recorded and processed into claims.
We all know patients are taking on a larger share of the payment for their care, in the forms of higher deductibles and copays. That means even more than ever, the financial health of your practice depends on having reliable, effective systems in place for communicating with patients about payments, and for collecting those payments at or before the time of care.
It’s common sense: patients are most likely to pay for PT services at the time when they need those services, not down the road. Collecting at the point of service is also the least costly to PT practices. Research shows that successful collections from patients plummet the further away they happen from point of service, dropping to 30% or lower after discharge. That’s fewer than a third of patients paying their balances in-full, when those balances aren’t collected at the time of service. Given the increasing share that patient payments make of total revenues, for private, independent PT practices that can mean five or even six-figure revenue losses.
Systems to target: Communicating effectively with patients about payment—with clarity, detail, and transparency—is essential to successful collections. (It’s also essential to developing strong relationships with patients.) PT teams need training and ongoing guidance about how to engage with patients about payment, to feel confident and empowered in this critical area. Strong collections systems include clearly defined standard practices for communication and for payment options and plans, including bundled upfront payments, installment plans, and plans to collect all balances while patients are in active treatment. Tracking patient payment data, inclu
ding copays, deductibles, balances, and verifications of benefits, is also a must-do.
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In just two and a half days, the Practice Freedom Summit will immerse you in the strategies that will set you free and forever change the landscape of your practice. Personally connect with and learn from leaders in the industry who WANT for your success, and who will provide you with the motivation and clear, actionable steps to get you there.