The Roller Coaster of Collections | Where is My Money III

physical therapy billing_roller-coaster-of-collectionsThe Roller Coaster of Collections | Where is My Money III

The Ups and Downs of Cash flow Give a PT Practice Owner Anxiety

Which areas of Shannon’s practice are most difficult to track?

Shannon was sick of the roller coaster. The ups and downs of her practice’s revenue – hurtling ahead from month to month, without knowing what was around the next corner – left her stomach in knots. She’d been planning a vacation to the Florida theme parks with her family, but kept putting it off because she couldn’t get off the wild ride of unpredictable cash flow. The irony was not lost on Shannon and her husband, Mike.

 The revenue issue was negatively affecting how Shannon felt about her physical therapy practice, and was starting to spill over into her home life.

 “I don’t get it,” she said one night as she pulled a container of leftover chicken from the fridge. “Back in January, we were averaging around 80 patient visits per month. Over the summer, we hit 200, and for the last few months, we’ve been averaging around 175. Yet over that same time period, our collections… This month’s number is almost identical to January, but there’s no predictability. Sometimes it’s thousands of dollars less; other times, I’d swear I’d won the lottery.”

 “It would be nice if you could simply take a steamroller and make it a smooth ride,” Mike said while cutting up vegetables for salad. “Instead, you’ve got potholes. It’s not really any different at the restaurant. We’ve got customers, and have to meet their needs in order to keep them coming in the door.”

 “Yeah,” Shannon said, “but your customers pay you right away. Could you imagine waiting two, three months to get paid for a bowl of pasta?”

 “Hmm,” Mike said, sliding the veggies into a bowl. ”My suppliers might extend me a little credit, but no way we’d survive if we were stretched that thin.”

 “Yet thanks to the insurance companies, that’s what I’m supposed to do, month after month.”

 After dinner, once the kids had cleared the table and settled into their evening routine of TV and computer games, Shannon and Mike picked up their discussion.

 “You ever think about your menu?” Mike asked, as he poured his wife a cup of coffee.

“My menu?” Shannon asked with a smirk. “Aren’t you the one in the food biz?”

Mike stuck his tongue out at her. “Your menu of services, Shannon.”

“What about it?”

“Let’s put it this way… how much do you make each time you see a patient?”

“You mean what makes it into my pocket? About 90 bucks per. Why?”

“When my partners and I developed our bill of fare, it wasn’t just about what we like to serve. We also had to take into account the cost of ingredients, the time it takes to make each dish, and the likelihood that people are going to order it on a regular basis.”

“So, you’re talking about sticking to the most profitable options.”

“More or less,” Mike said. “If you think about it, some of your services take longer and require special equipment, and for some things, there’s a lot less demand. If you go back and look at your practice, I’m sure there are services which really aren’t worth it for that 90 dollars — especially given how long some of them take to get reimbursed.”

“And you think I should cater my practice that way?”

“Now you’re talking,” Mike said with a wink. “And speaking of catering… you ready for dessert?”

Which areas of Shannon’s practice are most difficult to track?

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8 replies
  1. Robin Kortman
    Robin Kortman says:

    Acknowledge which therapies are not covered by payers then have a conversation with patients to discuss different payment options.

  2. Reuven Lirov
    Reuven Lirov says:

    Shannon needs to stop being a martyr and start being an expert. Being the best therapist out there does not guarantee success. Being a great therapist and an even better business owner does. Shannon needs to take a look at what she offers and seriously consider Mike’s advice. Find out what drives you as a therapist, what procedures and patients you want to treat and market to them. Make the majority of your practice the kind of patient that drives revenue and word of mouth. The latter portion should be your “pro bono” cases that not only reimburse very little, but also take the longest time to reimburse.

  3. Candace Coleman
    Candace Coleman says:

    Shannon’s cash flow is unpredictable making it impossible to plan for the future. She needs the ability to track billing in order to identify ups and downs and to smooth out her “potholes”.

  4. Lisette Acevedo
    Lisette Acevedo says:

    I do not believe tat having Shannon stop offering certain services will be helpful. Our providers’ main focus should be the patients, so would advising them stop offering services would be in everyone’s best interest?

  5. Heather Miller
    Heather Miller says:

    I believe that Shannon needs to review the services that she offers and see if there are certain payers that do not cover this service then she can work with her patients in advance about payment options. This way she can still receive compensation for her services. Working for free is not an option.

  6. Madhan
    Madhan says:

    It may be difficult to arrive at which service gives more profit and
    which gives least. A same service may give high profit with one
    insurance, least with other and medium with rest. Shannon should
    identify the treatment which is best for the patient and as well best
    payable by that patient’s insurance. If the billing software can
    provide easily accessible reports of most and least revenue generating
    procedures payer wise, it would helps Shannon to determine the best
    service for the patient and she can as well predict the collections

  7. Yuval Lirov
    Yuval Lirov says:

    Because of payment delay, it is hard to relate date of payments to date of service. This makes saying “my collections are too low this month” irrelevant, because this month’s collections are an aggregate of previous months’ charges

  8. Jason Barnes
    Jason Barnes says:

    Predicting cashflow can be tricky. If you are in network, you can track allowed amounts which let you know the amounts that you can expect moving forward. Then you can track your average payment delay based on your past performance. Once you have both of those, you can look at your current outstanding A/R and see both when and how much money will post.

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