Where’s my money?

Physical Therapy Practice Owner Struggles with Cash flow

What should Shannon do to correct her cash flow problems?

“You ready for lunch?”

Shannon looked up from the pile of bills on her office desk to see her husband, Mike, standing in the doorway. “Only if you’re buying,” she said.

“That bad, huh?” Mike replied, closing the door behind him. “I’m a little surprised. On my way in, Theresa told me that you’re booked solid.”

“Patients aren’t the problem,” Shannon said. “Revenue is. Seems like no matter how many patient visits I schedule, I’m never sure if I’m going to meet expenses that month.”

“I thought you had someone who took care of billing,” Mike said, perching on the edge of the desk. “Isn’t that their job?”

Shannon laughed, weakly. “That’s how I looked at it. And if it were just a matter of a few patients with payment issues, I’m sure my staff could handle it.”

“Then what’s the problem?”

“It’s a combination of collecting from insurance companies and then figuring out what the patient owes. Seems like we have to chase after the insurance companies for every dollar we’re due.”

“I don’t get it,” Mike said. “Your staff files the claims. Doesn’t that mean you automatically get paid?”

“I thought so,” Shannon said. “But I guess that’s why I’m a physical therapist and not an accountant. Come on, I need to get out of here.”

Shannon wasn’t really in the mood for lunch, but she needed to clear her head. She and Mike walked to their usual lunch spot and found themselves a booth. As they slid in, Shannon’s phone chimed.

“What is it?” Mike asked.

“It’s a tweet from Ariana,” Shannon said, reading the display. “She says, ‘Pain is part of the healing process.’ Hashtag ‘physical therapy.’”

“You spoken to her recently? Her practice seems to be pretty successful. Maybe she can give you some advice.”

“That’s not a bad idea,” Shannon said, sliding back out of the booth. “I’m going to give her a call. If the waitress comes, order me the soup and salad.”

It took a couple of days before Shannon and Ariana could carve out some time. Finally, they got together at Ariana’s; they talked while putting together “goody bags” for her daughter’s birthday party.

“It drives me crazy,” Shannon said. “Cash flow is so inconsistent. Feast or famine, and I never know which. Sometimes the drought lasts for weeks, no matter how many patients I see.”

“You’ve got to get down to brass tacks,” Ariana said, using a scissor blade to curl the ribbons that Shannon had tied. “Figure out what your best sellers are.”

“My what?”

“Your moneymakers. Start by checking which CPT codes, POS items sold, referring physicians and employee productivity generates the highest revenue in the shortest time possible.”

“I’m guessing my billing department could help me with that,” Shannon said as she filched a gumdrop from the pile on the table.

“There are no guarantees,” Ariana said, “but that’s what works for me. For instance, you want to avoid using the worst CPT code for the best payer. And trust me; once you’ve gotten your system straightened out, you’ll be better equipped to make vital practice decisions.”

Should Shannon follow Ariana’s advice?
What should Shannon do to correct her cash flow problems?

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