The 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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