4 Keys to Managing a Healthy Therapy Business
There are a number of ways to measure the health of your therapy business such as conversion rate, cancellation rate, or average visits per discharged case but those measures can require intense data collection and analysis. As a growing therapy business owner you probably have very little time or experience to perform those tasks. However, I believe there are some simple tasks that if performed correctly will put you on a healthy growth track.
Don’t just check insurance eligibility but try to determine if there are any exclusions or pre-authorizations required for your therapy treatments. Even if the patient has insurance coverage, you should always require them to sign an agreement stating that they will pay you for any services not covered by their insurance company. You can check eligibility online for some insurers but the best method is to call the insurer and ask them these questions to determine if you will get paid for your service.
Is the service (OT/PT/ST) covered?
How many visits are allowed per year and how many have been used?
Do these specific treatments apply to the patient’s deductible? If yes, how much of that deductible has been met?
Is the patient required to pay a co-insurance percentage?
Is the patient required to pay a co-payment for this service?
Are there any diagnosis exclusions for these treatments (e.g. Speech Therapy for Autistic diagnosis is not covered)?
Do these treatments require prior authorization? If yes, what is that process?
Finally, always confirm the Payer ID number as they can be different even within the same insurance company.
If you’re contracted with any commercial insurers, you may have negotiated rates that fall below the allowable Medicaid rates. For example, the Medicaid rate for a Speech Treatment is $71.44 per hour but your commercial contract with Aetna may only pay $50 per treatment. In this case it would not be feasible for you to treat your Aetna patient for 1 hour because your cost would be significantly higher. Instead ensure that you’re seeing patients for the correct length of time, given your contract terms. In this case, it is feasible to treat your Medicaid patient for any length of time but your Aetna patient for a 30 minute session. Depending on how much you pay your therapists, you could be losing money in longer treatment sessions.
This seems like a simple concept but it is so important to the health of your business. Always collect co-pays at time of service. You may think you’re busy and you’ll remember to collect it later but it is so easy to forget about co-pays and you are required by law to collect them. Once the patient leaves your office, there is no guarantee that you’ll ever see them again which makes it that much more important to collect.
Track how much money you’re owed. How much did you bill last month? How much did you collect? What’s the difference? Of course it’s not that simple but this is the most important part of running a healthy business; knowing your profitability. If you’re not making a profit, there is no business. The average collection percentage is between 88%-92% for therapy businesses. If you’re using a good billing company with best practices, you can expect to see that percentage increase to 97%-99%. That’s a huge difference! For example, if you run a moderate sized practice of about 12-15 therapists and roughly $1 Million in revenue per year, you could be earning as much as $110,000 more with a better biller. If you were already covering your expenses then that money goes straight to your bottom line as an owner.
There’s always more you can do to improve the health and growth of your business but I would refer to these actions as the “fundamentals” of a solid business. If you do these things right, there is a good chance your business will be around for years to come. Please don’t hesitate to reach out and I’ll send you a free eligibility diagram that you can use when calling insurance companies. Don’t let them off the phone without answering all those questions!