4 Strategies to Combat Shrinking Reimbursement in Physical Therapy

If there’s one thing we can all agree on, it may be this: the profit margin in outpatient physical therapy is slim. And, with the average rate of reimbursement either staying stagnant or decreasing, this trend doesn’t look like it’s going to be reversed any time soon.

The frustration that I hear echoed most often by clinic owners is their lack of control over what they are reimbursed by insurance companies. Out of this widespread frustration comes advocacy, spearheaded by the APTA (especially the Private Practice Section).

The issue is, advocacy is a slow moving beast (and insurance companies may be even slower moving); it may take years before we see an identifiable change in any given area of our profession.

So, we have a long term plan as a profession, but what about your plan as a clinic owner? What are your strategies to combat the current trends in the profession and continue to direct your business on the path to success?

Obviously, calling up insurance companies and fighting to get your rates increased is as effective as banging your head against a brick wall. So, like any entrepreneur, you have to be resourceful and find creative solutions.

To help you get started, we’ve listed 4 different strategies that you can use to improve your clinic’s efficiency and start increasing those profit margins!

Note: You’ll notice a trend throughout this post: I’ll offer strategies, explain their importance, and talk about how to measure each one. I’m purposefully staying at a high level, and shying away from giving step-by-step implementation plans because I believe the most important thing you can do is start measuring baseline data. The solutions to these problems are highly contingent upon your clinic’s unique characteristics. If we can help you gather the necessary data and analyze it, you can then use it to implement targeted strategies to improve!

1. Convert Your Initial Evaluations (IE)

This seems pretty simple, but it’s vitally important to the success of your business. Conversion is the process of taking one of your leads (i.e.: someone who is not yet a patient but is considering utilizing your services) and scheduling them to come into an initial evaluation, and getting them to show up for that initial evaluation.

There are obviously huge implications to a patient cancelling or no-showing their IE:

  • Your Therapist’s Daily Productivity: IEs are typically single-booked appointments, meaning that there is no one else on that therapist’s schedule at that time. That therapist could have seen 1 or 2 patients in that time slot!
  • Your Clinic Volume: This is not your standard appointment! Each patient represents 7-11 potential visits on average. If your patient doesn’t come in to their IE, you’re losing those potential visits as well as the scheduled IE.
  • Your Clinic’s Footprint: How often has a past patient referred their wife, coworker, or children to your clinic? Every patient that walks through the door is a potential advocate that can help increase your clinic’s community presence.

The most important thing you can do to start improving your conversion is to establish a baseline. Start keeping track of:

  • The number of leads that call your clinic for more information
  • The number of leads that schedule an IE
  • The number of leads that show up to their IE

This data represents your sales funnel: it will help you determine your conversion percentage, where in the process you’re losing the most leads, and allow you to actually quantify any changes you make in the future.

What it also starts to quantify is your perceived value to prospective patients. If your conversion is low, you’re likely not getting the value of your services across in a way that relates to your leads.

Want to learn more about Physical Therapy Conversion? Check out Jerry Durham’s RockitConversion blog!

2. Turn 2's and 3's into 5's and 6's

Your patient Bill attended his IE, and scheduled a few follow-up visits. You see him twice the following week, and all seems fine. But, it dawns on you a week or two later that you haven’t seen Bill since his third visit. This is an all-too-common occurrence, and unfortunately, Bill’s probably gone for good.

What we have here is a common case of attrition. To start to understand how attrition affects your clinic, ask yourself the following questions:

  • What is the average number of visits per course of care at my clinic?
  • What percentage of patients complete their entire course of care (i.e. attend all of their insurance-approved visits)?
  • What percentage of my patients only come to 1-3 visits? How about 3-5 visits? And the same for 6-8, 8-10, and 10+ visits?

If you don’t know the answers to these questions, it’s time to start collecting some more data! Having a realistic view of how you’re doing in this department is incredibly important: most clinics believe they are either very good or excellent at establishing a relationship with their patients, progress them as needed, and get them to discharge day as a happy camper. But, reality is in stark contrast to these perceptions: On average, only 30% of patients attend all of their insurance-approved visits!

This data is relatively easy to keep track of, and needs nothing more than an Excel Spreadsheet and someone willing to update it once a week. All you need to do is keep track of the number of visits each patient attends, and the number of approved insurance visits they’re given.

The good news is, we’ve got you covered. We’ve created a free spreadsheet that’ll do all the heavy lifting for you! Click our button at the end of this post to download it!

What you’re measuring with this data is your clinic’s Patient Retention Rate. Just as importantly, you can dial down to see where the biggest opportunity lies.

For example, if you find that 33% of your patients attend between 1-4 visits, you know that there is significant room for growth. The patients that fall into this category are going to significantly less visits than your average patient. By making alterations in the way you interact with all patients within the first few visits, you may be able to reduce that percentage and drastically increase average visits-per-patient.

For clarity, when we’re talking about average visits-per-patient and Patient Retention Rate, we’re really talking about how valuable a patient finds your service. The biggest reason that someone stops participating in a given activity is that they don’t see value in it. By taking a critical look at your policies and procedures during the early stages of a patient’s care, you may be able to identify areas of improvement that can significantly alter the patient experience and incentivize them to continue coming to their appointments. With this concept in mind, you can start turning 2-3 visit patients into 5-6 visit patients in no time.

3. Monitor True Patient Satisfaction

If you’re only gauging patient satisfaction at discharge, you’re collecting heavily biased data: the only people you’re surveying have completed their entire course of care (and thus likely bought into your value proposition early on). This leads to extremely high satisfaction scores, many pats on the back, and absolutely zero actionable data.

The reason for monitoring patient satisfaction is to identify areas of improvement. In order to do this effectively, you need to survey every single patient that walks through your door. Simply, collecting feedback from people who were dissatisfied with your service is extremely valuable. As Bill Gates put it:

“Your most unhappy customers are your greatest source of learning.”

To get the highest return rate, we recommend sending surveys via direct mail AND email. To make this manageable, send surveys at the end of each week to a select group of (i.e those that had their initial evaluation one month prior)

The interesting thing that you can start to do is cross-reference patient satisfaction scores with their retention rate. From here, you can start to understand the mindset of a dropout patient, and can formulate strategies to better engage this type of patient.

4. Make Sure Everyone on Your Staff is on the Same Page

This is absolutely necessary in order for the first three strategies I mentioned to be successful; if you are considering implementing any of these strategies at your clinic, I’d suggest making sure you start here.

Converting your IE’s and increasing your patient retention is heavily contingent upon your ability to develop a plan, articulate it to your staff, and get them to buy in. Everyone from front desk staff, to clinicians, to rehab aides should understand the plan, and their responsibilities in making the plan successful.

One of the most effective ways of unifying your staff is to focus in on a single metric. Let’s say, for example, that your goal is to improve your clinic’s average visits-per-patient by 15% in the next 3 months (a good example of a SMART goal). In this case, you should let your staff know that everyone’s performance, including your own, is going to be measured by whether or not this goal is met.

You can certainly identify particular areas that each staff member can work on to achieve the goal (e.g. front desk staff confirming appointments ahead of time, clinicians spending a set amount of one-on-one time with each patient, etc) and ask each team member for other suggestions. But, ensuring that the staff knows that they are all working toward a common goal will promote accountability, teamwork, and help improve the probability that you will be successful.

Want to start figuring out where your baseline is? Download our free Patient Retention Rate Calculator to guide you in the right direction and help kick start your clinic’s success!

Download PRR Calculator Here!

Ryan Klepps



Physical Therapist, Membership Chair of APTA of MA, COO & Co-Founder of Strive Labs, Inc.

Somerville, MA http://strivehub.com