PT Clinic Control 3 | Costs-Benefit Analysis of Documentation

Best practices for physical therapy billing

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Chris Martin: So, are you saying that the cost of visit documentation is much higher than just the cost of the SOAP system [as part of the physical therapy billing process] because it takes YOUR time to document?

Dave Macolino: Precisely. The practice owner’s time is the most expensive component of their practice and they should be maximizing that value. Obviously, when they spend that time seeing patients, they maximize their value and time writing notes, reduces it.

Chris Martin: So, how do you compute the cost of writing a SOAP note? More importantly, how do you compute the cost of writing all your SOAP notes for the next ten years?

Dave Macolino: A successful enterprise must generate more revenue than costs and a practice owner must get used to thinking about his or her time in terms of revenue and cost.

So, the first question is: what is the cost of your time?

The answer depends on your productivity. Suppose your practice can handle 4 patient visits per hour and it requires you personally to supervise them for 15 minutes each. If an average visit pays $80, then your hour is worth $320. So, in this case, your optimal performance is $320 per hour.

That also means that if you spend your time on other activities that earms you less than $320 per hour, you’re losing money.

The amount of money you’re losing depends on the time you spend not generating $320 per hour. So, if you can only write 2 notes per hour then each note basically costs you $160. If you are writing 200 notes a month, then you lose the time equivalent of $32,000 a month! Extrapolate this forward to 10 years, and you get to $3,840,000 or very close to $4 million dollars in lost productivity and earnings!

Chris Martin: OK, I got it. It costs millions of dollars if I use a slow documentation system. So what should I do now? It all seems so confusing…

Dave Macolino: It’s not so much a slow documentation system as it is a system that has a flow of information and is set up with consistent phrases and measurements that are often used in the daily notes.

This computation is just an example of how you should think about your costs of any activity. Once you identify all your activities and attach cost to each one of them, you can focus on those activities that matter the most and eliminate or optimize those that don’t.

You can also set very clear requirements for the kinds of processes and systems you need to have in your office to help you spend as much time generating $320 per hour and very few hours that generate less or even worse, cost you as high as $320 per hour.

Think about it this way. If you personally spend 1 hour a week on practice administration and 3 hours a week on say billing, then over the next 10 years, you will spend the equivalent of $640,000.

So now you can add up all of your costs (add office rent, equipment, staff costs) and start thinking about what processes and systems do you need that reduce these costs?

Since documentation, administration, and billing are the largest components of your cost, then you need to design processes and install a system in your office that address these costs first.