Tag Archive for: PT practice profitability

Calculate physical therapy practice profitability by discovering the real cost of documentation and EMR.

“The real problem is that even with a 20-minute SOAP note, I need a tremendous amount of time just for documentation. Peter wearily continued, “If I had 4,000 visits a year, I could make $312,000 a year. But even with the best documentation system I would need an hour to document 3 visits. That’s 1,333 hours a year just for documentation!”

“Wait a minute, Peter,” Alicia said, raising her voice. “those 1,333 hours ARE the evenings and weekends you miss with your family. When you see patients, your average revenue is $156 per hour. But when you document their visits you make zero, nada, zilch! Peter I think our mistake is that you only focus on increasing the number of patients you see. I understand you must invest time for documentation compliance. But we should find a way to reduce that unproductive time which pays you nothing.

“I do understand your rational Alicia, but the best documentation system only gets us down to 20 minutes per note. That’s still a problem. It places us in a dilemma to either spend 1,333 hours documenting or see fewer patients and lose revenue. What should we do?”

“Peter, let’s first figure out the REAL cost of your current documentation system. Alicia continued, “Let’s see if the computerized documentation system is better. Then we can think about our next step. Does it sound like a plan?” Peter relented and agreed with Alicia.

“So, if your average revenue for patient care only is $156 per hour, then that’s the best you can do. Every other activity dilutes the revenue. Now lets estimate the COST of other activities in terms of the best value you could be getting by seeing the patients. Does that make sense Peter?”

“First, let’s see how long it takes you to write an average note with your current system. An hour? So you see Peter, you are spending that time writing a note instead of seeing a patient for $158 per hour. How many notes do you write per year? 2,000? OK, then your current manual documentation system costs you $316,000 every year. Do you care to know how much that is in 10 years? Right! Three million, one hundred and sixty thousand dollars . . . That’s a very expensive compliance requirement, would you agree Peter?”

“Next, let’s estimate the documentation cost of your 20 minute notes. One 20 minute note will cost you a third of your best performance revenue, or $52. If you multiply $52 by your total annual visits, which is 2,000, that’s $104,000 in annual documentation costs. Care to extrapolate that into a decade? That would be over One Million and forty thousand dollars. That’s better than three million but still VERY expensive.”

“So, what can we do? Where can we find a documentation system that costs less?” Peter sounded discouraged as he felt his rosy plans being crushed by the cold hard facts of Alicia’s reasoning.

“Well Peter,” said Alicia, relieved that she was able to get Peter to finally think about the business side of his practice, “We must find a documentation system that does not take more than 3 to 5 minutes for a single note. Just imagine, if we had a system that took 5 minutes per note, you could do 12 notes an hour. In other words, your per note cots would be “only” $13 per note. Therefore, documentation of your entire year would cost you $26,000, or $260,000 over a decade.” chimed Alicia. “Now that’s a cost we can live with!” exclaimed Peter.

“And in terms of hours,” added Alicia, unable to hold her excitement, “you would only need 167 hours to spend on visit documentation for entire year. That’s just a tad over 3 hours extra a week! Imagine being able to work almost regular hours and still see 2,000 patients a week.”

“So, Peter,” concluded Alicia, “until we find such a system, you have to choose between your family and your practice.”

What do you think? Is Alicia right in her calculations?

Do you know of a PT-specific documentation system that could make Alicia’s and Peter’s dreams come true?