Medicare Cuts Impacting PT Clinics
Are medicare cuts to PT posing a threat to your private practices? In this article we’ll walk you through some very practical advice from 3 industry experts:

For many, 2021 brings hope of putting challenges behind & looking ahead. Stabilization. “Normalcy.” But for PT Owners, the new year promises its own new challenge – one we’ve known was coming all year long. Medicare cuts will reduce physical therapy reimbursements by 9% as of January 1st.

We fought the bill when it was introduced and that was before 65% of private practice therapists saw their income decrease due to the pandemic. Now, the pending cuts feel like salt in a very open wound. 

So what can private practices do to avoid further financial pain?

First, let’s define the problem: 

On the surface, the issue is Medicare cuts. These are budgeting & payout decisions made by legislature that you & I have very little control over. It’s a big, external problem some are calling “potentially devastating.”

But if we dive deeper, the real issue keeping practice owners up at night is paying the bills.

Taking care of your family, your employees, and providing life-changing service to your patients – these are the real reasons you need to be reimbursed properly. These are internal problems you have control of.

So why should any outside company or entity determine the value of your services? They shouldn’t.

Perhaps you can’t do very much about the legislation at hand, but ask yourself “what can I do to gain more control of my own revenue and depend less on outside factors?”

Medicare cuts are no small challenge, but you can more than make up the 9% simply by focusing on areas you control.

Advice For Practices from Our Guest Experts:

To give you the best possible perspective on this, we interviewed 3 Current or Former Practice Owners who have proven themselves as practice growth experts. This “guest panel” has decades of experience helping their own clinic and others achieve maximum success. 

First, we asked how serious of a problem they saw medicare cuts as on a scale of 1-10:

For those that still owned their clinic, we asked what percentage of their patient volume is medicare patients?

Right away you can tell those with higher percentages of medicare obviously see this as more of a problem. That’s something we’ll dive into a little deeper in a minute.

We also asked what steps they were taking to prepare for reduced medicare payments.

The answers boiled down to 2 main ideas:

  • Don’t just focus on medicare income, focus on the profitability of your entire practice.
  • Consider expansion of services/adding non-insurance revenue streams to make up for these and future cuts.

4 Ways You Can Overcome the 9% Medicare Cuts:

Lastly, we asked what advice they would give other practice owners on addressing medicare cuts in their clinic. 

These 4 ideas came up in almost every conversation:

  1. Fight where you can, then move on
  2. Focus on net profitability
  3. Expand your services 
  4. Market only to your ideal demographic

1) Fight Medicare Cuts Where You Can, But Then Move On

I keep saying we can’t do much about the legislation, but if you haven’t already we should all do what we can. APTA is leading the charge to stop these cuts and has resources for you to make your voice heard here.

WebPT even created an advocacy letter template.

That said, once you’ve done your civic duty our best advice is move on – don’t get weighed down stressing about it. I love this quote from one of our guests:

“Don’t get caught up in confusing Facebook groups where other owners are sharing what they think, only go with an expert who can give you the best advice.”

-Dee Bills

What we can do, we should. But then turn your attention forward and don’t listen too much to people worrying. Worry breaks focus.

Another expert said it this way:

“Fight it! Then focus on capturing every dollar as [you] provide powerful care.”

– Will Humphreys

Which is an excellent segue into the next topic, profitability:

2) Focus On Net Profitability

As I said before, the internal problem with medicare cuts is your profit ratio. Especially if you’ve had a rough 2020, you need to stay profitable. 

There are a lot of factors that go into net profit, but the good news is you have control over most of them (unlike medicare). So while we can’t cover all your finances here, let’s look at 3 ways to maximize your net profit based on our experts’ advice:

  • Retention & schedule control 
  • Customer lifetime value (patient reactivation)
  • And operational efficiencies

Retention & Schedule Control: Retaining your patients through their entire plan of care requires a 2-pronged approach. First, marketing materials & systems that keep them excited about the end result, engaged with their therapist, and remind them why it is so important to complete their plan. 

This kind of marketing is done through a combination of printed materials for new patients, an engaging HEP program that allows for communication, and training your team with scripts that remind patients of their progress and goals.

Second, you need to control your schedule. With the right team training, there’s no reason your arrival rate can’t be 90% or higher.

“Make sure your whole team is trained up; not just on the Medicare changes but also on how to maximize your schedule so you aren’t bleeding visits somewhere else.”

-Dee Bills

We highly recommend Fix Your Front Desk Academy for clinics looking to train their front desk staff & eliminate cancellations.

Customer Lifetime Value: There are also 2 ways to improve the lifetime value of a patient. First, you can offer add-on services during their care plan. We’ll cover that in detail below. But, by far the most overlooked way by most clinics is getting past patients to return for more care: 

It is up to 10X cheaper to acquire a return patient than get a new one, so by working in more past patient marketing you can fill your schedule at a reduced cost-per-appointment.

So… what’s the best strategy for reactivating patients?

It boils down to consistent, monthly direct mail to your past patient list – especially those from the past 2-5 years. Combine that with regular emails and over the next 6-12 months you should see a noticeable increase in returning patients.

Many clinics are afraid direct mail is too expensive. But we send millions of newsletters every year and the secret is this: if you do it consistently and send to people who already know you (your patient list), direct mail is almost always profitable.

Operational Efficiencies: Lastly, put on your business owner hat for at least an hour or two and evaluate your operations. Is there any challenge that slows down your employees? Any budget you haven’t reviewed in a while to make sure you’re still using it wisely?

“Focus on making your business operate more efficiently, thus creating a better profit margin that will offset any reductions in revenue.”

-Jamey Schrier

I can’t tell you what areas your clinic needs to improve, that’s up to you. But don’t let this month pass without taking some time to evaluate. Maybe even do it outside your normal office or space to lessen distractions.

3) Expand Your Services

Adding services to increase your revenue per patient is an opportunity many clinics have not yet tapped into. 

Dee put it this way:

“Put your focus on expansion; never stop growing because there is a sweet spot where you can expand beyond the practice’s break-even point and insurance changes won’t feel like they’re going to kill your business.”

-Dee Bills

And Jamey had a similar comment:

“Consider adding a non-insurance revenue stream to protect against future reimbursement cuts”

-Jamey Schrier

Many add-on services are non-insurance meaning you control your own reimbursement. It will take a marketing plan to get patients on board and not everyone will, but if you can clearly show the value and what problem your service will solve, many patients will take part.

Here are some additional revenue ideas for PT Clinics:

  • Telehealth
  • Laser treatment
  • Diagnostic
  • Massage therapy
  • Acupuncture
  • Sports condition programs
  • After therapy maintenance programs
  • Cash pay PT 

Whatever you choose to do, just make sure you plan to market it heavily at the beginning and regularly after that. Patients are not likely to ever hear about it if you don’t spread the word!

4) Market Only To Your Ideal Demographic

In Marketing, one of the most important fundamentals is to know & write out who your ideal audience really is. Some call this a customer avatar or primary demographic.

For your clinic, one of the characteristics included in your ideal patient ‘avatar’ should be insurance. 

That’s not to say every patient MUST have only the couple insurance companies that are ideal. But if your marketing is aimed mostly at those patients you will be able to improve the percentage of patients on good plans, reduce collections headaches, and increase reimbursements.

“Consider your payer mix and ideal patient avatar. If you’re Medicare heavy, it might be time to shift your marketing to focus on a different patient mix that allows you to improve your average reimbursement per visit”

-Dee Bills

So then comes the question, how do I reach people based on insurance? Here are a couple ideas to get you started:

Your Website & Online Messaging: What you choose to highlight in your copy and even images can have a big impact on which website visitors convert. 

Somewhere on your website you should list all accepted insurances but they don’t all need to be on your homepage! 

Nothing attracts medicare patients like a big “we accept medicare” headline. Instead, consider using only the 2-3 logos of your most ideal insurance companies on your homepage and keeping the less preferred ones in a less prominent list.

Your Past Patient List: If you’re able to pull your past patient list in a spreadsheet that includes insurance (or reimbursement data so you can filter the most valuable ones), consider narrowing down your direct mail to mostly this list. 

For example:

MMA Sports Rehab Patient Newsletter

Let’s say you currently send monthly newsletters to 2,000 past patients and 50% are medicare:

For the same amount of postage, you could actually send 2 campaigns per month to the list of 1,000 non-medicare patients, boosting response rates and improving your payer mix! 

Focusing on your ideal audience even with past patients is a great way to improve revenue and reduce insurance headaches.

Local Networking: Networking with local doctors used to be the only way to succeed as a private clinic. That’s not the case anymore, but networking skills can still come in handy!

What local companies use your ideal insurance companies? 

What expertise & valuable marketing content do you have that an owner would find helpful enough to pass to their employees? For example, more people working from home creates an opportunity for brochures, videos… even live webinars that relate to physical health & wellbeing during these times. 

You already have the expertise to offer. Local networking based on insurance allows you to reach a more ideal audience with your marketing message.

Steps To Take First:

So that was a lot. But you might have one question left… “Where do I start?”

Hopefully, you got a handful of ideas above. I recommend this before going back to your inbox: 

  • Write down several ideas.
  • Circle 2-3 that have the most potential to help your clinic.
  • Start with the one that you can accomplish quickest then move to the others.

Medicare cuts suck, but we know legislation will ebb and flow as congress changes. Make your voice heard, but focus most of your efforts on what you have control of.

Don’t let anyone else determine your income – take control!

For details on how we help PT Owners control their new patients with an All-in-One solution, check out the Ultimate PT Marketing system here.

Huge thanks to our expert contributors for this article:

Will Humphreys
Practice Owner, PT, Business Coach

Dee Bills PT

Dee Bills
Practice Owner, PT, Founder of Front Office Guru

Jamey Schrier
Former Practice Owner, PT, Founder of Practice Freedom U

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