Here are five things orthopedic practices should know about adding physical therapy services.
1. Think beyond the potential profits. Orthopedic surgeons considering the addition of therapy services to their practice shouldn't think of it as a separate entity, but part of the practice as a whole, says Andre Blom, a physical therapist at the Illinois Bone and Joint Institute. Adding physical therapy often increases the practice's profits and expands the continuum of care for patients. Physical therapists can also be used as physician extenders to help with office responsibilities. "If you are going to add ancillary services, you need to look beyond the fact that they are going to increase your revenues," said Mr. Blom. "You have to see it as something that is going to be part of your practice."
After making the decision to add physical therapy, be prepared for an influx in capital expenditures, says Mr. Blom. Even though it's relatively inexpensive to create the gym space, adding the equipment and additional staff can take a toll on the budget. There is also a cost associated with giving physical therapists utilization access to the electronic medical records. "Some of those costs can be mitigated, but you have to understand how much therapy staff is going to cost," says Mr. Blom. "Having a strong management structure in place can help tackle financial issues."
2. Hire physical therapists. To reap the most profit, a practice would employ its own physical therapists and assistants and bill for their services. Generally, 1-2 therapists per physician are required to meet referral demand (though referral volumes do vary by subspecialty), and practices can expect to generate $100,000-$200,000 in collections annually per provider, with a 25-30 percent profit margin, says John Davis, MBA, principal of Medical Practice Consulting, a medical practice consulting firm based in Bantam, Conn.
"My thinking has always been that orthopods use physical therapy as a treatment modality as much if not more often than pharmaceuticals. If they use it so much, why don't they just provide it?" says Mr. Davis.
While other arrangements exist where an outside physical therapy business might pay rent to a practice to offer in-house services, Mr. Davis recommends practices employ their own physical therapists and use the same tax ID number for the program as their practice in order to reduce legal risk associated with referral laws.
3. Know benchmarks for physical therapist compensation. Orthopedic practice administrators should know about benchmarks for physical therapists in their area. According to an article published in AAOS Now, the average benchmarks include:
• Average physical therapy visit takes 45-60 minutes
• Average therapist receives 11 visits per eight-hour work day
• Average orthopedic patient undergoes nine physical therapy visits for a specific problem
• Average of 88 percent of patients attend their follow-up visits
• Average payments per visit are $90
• Average total compensation and bonuses for therapists and support staff is $34.50 per visit
4. Decide whether your therapists should see Medicare patients. Another consideration for practices is whether or not its PT program will see Medicare patients. Resurgens decided not to see these patients because of the additional regulations on documentation requirements CMS places on therapy providers. "It can be a full-time job to manage the administration involved in treating and receiving reimbursement for these patients in a large practice," says Jeff Goldberg, director of operations for Resurgens Orthopaedics, a 90-plus physician orthopedic practice with 20 locations in and around Atlanta. "We weighed the risks and the benefits and in the end determined that referring our Medicare patients to the quality private therapy providers in our communities was the best model for our practice." This decision actually helps generate goodwill in the community because the practice continues to refer a number of its patients to these private PT providers, Mr. Goldberg notes.
5. Give patients a reason to choose your ancillary services. Orthopedic practices that include imaging and physical therapy services are required to give patients options about where they receive those services. Patients need a reason to choose your services. "We have our physical therapy department right next to our waiting room with large glass windows between the two," says Peter Althausen, MD, an orthopedic surgeon at Reno Orthopaedic Clinic and chairman of the board of directors of The Orthopaedic Implant Company. "Patients in the waiting room can see the new equipment we have as well as other patients going through the rehabilitation process."
Related Articles on Orthopedic Practices:
10 Benchmarks for General Orthopedic Surgeon Compensation
6 Best Practices for Profitable Orthopedic and Spine Surgery Centers
5 Ways to Bring Orthopedic Staff Together
After making the decision to add physical therapy, be prepared for an influx in capital expenditures, says Mr. Blom. Even though it's relatively inexpensive to create the gym space, adding the equipment and additional staff can take a toll on the budget. There is also a cost associated with giving physical therapists utilization access to the electronic medical records. "Some of those costs can be mitigated, but you have to understand how much therapy staff is going to cost," says Mr. Blom. "Having a strong management structure in place can help tackle financial issues."
2. Hire physical therapists. To reap the most profit, a practice would employ its own physical therapists and assistants and bill for their services. Generally, 1-2 therapists per physician are required to meet referral demand (though referral volumes do vary by subspecialty), and practices can expect to generate $100,000-$200,000 in collections annually per provider, with a 25-30 percent profit margin, says John Davis, MBA, principal of Medical Practice Consulting, a medical practice consulting firm based in Bantam, Conn.
"My thinking has always been that orthopods use physical therapy as a treatment modality as much if not more often than pharmaceuticals. If they use it so much, why don't they just provide it?" says Mr. Davis.
While other arrangements exist where an outside physical therapy business might pay rent to a practice to offer in-house services, Mr. Davis recommends practices employ their own physical therapists and use the same tax ID number for the program as their practice in order to reduce legal risk associated with referral laws.
3. Know benchmarks for physical therapist compensation. Orthopedic practice administrators should know about benchmarks for physical therapists in their area. According to an article published in AAOS Now, the average benchmarks include:
• Average physical therapy visit takes 45-60 minutes
• Average therapist receives 11 visits per eight-hour work day
• Average orthopedic patient undergoes nine physical therapy visits for a specific problem
• Average of 88 percent of patients attend their follow-up visits
• Average payments per visit are $90
• Average total compensation and bonuses for therapists and support staff is $34.50 per visit
4. Decide whether your therapists should see Medicare patients. Another consideration for practices is whether or not its PT program will see Medicare patients. Resurgens decided not to see these patients because of the additional regulations on documentation requirements CMS places on therapy providers. "It can be a full-time job to manage the administration involved in treating and receiving reimbursement for these patients in a large practice," says Jeff Goldberg, director of operations for Resurgens Orthopaedics, a 90-plus physician orthopedic practice with 20 locations in and around Atlanta. "We weighed the risks and the benefits and in the end determined that referring our Medicare patients to the quality private therapy providers in our communities was the best model for our practice." This decision actually helps generate goodwill in the community because the practice continues to refer a number of its patients to these private PT providers, Mr. Goldberg notes.
5. Give patients a reason to choose your ancillary services. Orthopedic practices that include imaging and physical therapy services are required to give patients options about where they receive those services. Patients need a reason to choose your services. "We have our physical therapy department right next to our waiting room with large glass windows between the two," says Peter Althausen, MD, an orthopedic surgeon at Reno Orthopaedic Clinic and chairman of the board of directors of The Orthopaedic Implant Company. "Patients in the waiting room can see the new equipment we have as well as other patients going through the rehabilitation process."
Related Articles on Orthopedic Practices:
10 Benchmarks for General Orthopedic Surgeon Compensation
6 Best Practices for Profitable Orthopedic and Spine Surgery Centers
5 Ways to Bring Orthopedic Staff Together