how to decrease reimbursement in physical therapy

5 Strategies to Combat Shrinking Reimbursement in Physical Therapy

In All, Business, Medicine by Ben

Today, I’m pleased to present a guest post by Ryan Klepps of Strive Labs, a leader in the space of customer relationship management software. In the face of shifting economics, customer loyalty is a huge deal. We know of this from the 80/20 rule as it relates in business, management, brand loyalty, profitability, and so much more.

And, in the current climate of healthcare economics, the question begs: What do we DO, when are just aren’t getting paid like we used to be?

Today, Ryan answers that very question and then some. So, without more yammering from yours truly… take it away, Ryan!


5 Strategies to Combat Shrinking Reimbursement in Physical Therapy


If there’s one thing we can all agree on, it may be this: the profit margin in outpatient physical therapy is slim.  And, with the average rate of reimbursement either staying stagnant or decreasing, this trend doesn’t look like it’s going to be reversed any time soon.

The frustration that I hear echoed most often by clinic owners is their lack of control over what they are reimbursed by insurance companies.  Out of this widespread frustration comes advocacy, spearheaded by the APTA (especially the Private Practice Section).

The issue is, advocacy is a slow moving beast (and insurance companies may be even slower moving); it may take years before we see an identifiable change in any given area of our profession.

So, we have a long-term plan as a profession, but what about your plan as a clinic owner?  What are your strategies to combat the current trends in the profession and continue to direct your business on the path to success?

Obviously, calling up insurance companies and fighting to get your rates increased is as effective as banging your head against a brick wall.  So, like any entrepreneur, you have to be resourceful and find creative solutions.

To help you get started, I’ve listed 5 strategies that focus on the aspects of your business that you can control.  In the end, zeroing in on concepts such as patient retention, word-of-mouth referrals, and patient engagement can improve your clinic’s efficiency and start increasing those profit margins!

1. Objectify the Patient Experience

Even if you’re using an outcome tool to track objective progress, and even if that outcome tool measures patient satisfaction, you’re likely missing the boat on objectifying and acting upon the customer experience.

Imagine having the ability to identify unhappy customers at their third visit in order to perform a customer service rescue to create a satisfied lifelong client. Or the ability to identify your biggest fans at discharge in order to ask them to tell their friends and family about your services. This isn’t a dream – a tool exists that can help you create and retain loyal customers. This tool is the Net Promoter Score (NPS).

The Net Promoter Score was developed by Bain and Company in 2003 to help businesses measure and monitor customer loyalty. This tool is so powerful, in fact, that the Harvard Business Review has dubbed it The One Number You Need to Grow.

The NPS is more than a survey, and it’s more than a metric; it’s a way of doing business. Monitoring, understanding and acting upon the NPS forces companies to focus on delighting their customers. And in that process, it can drive growth, as NPS companies see:

  • Increases in their number of word-of-mouth referrals
  • Increases in their customer retention rate (decreased early patient dropout)
  • Increases in customer reactivation rate (getting past patients to come back)
  • Implementation of data-driven process changes across their organizations to improve the customer experience and systematically build patient loyalty
  • Utilization of NPS data to increase Search Engine Optimization (SEO) so that it is easier for potential customers to find them online.

And the best thing about the NPS is that it’s simple to deploy, analyze and act upon.

The NPS itself is a quick, one question survey that asks your customers:

How likely is it that you would recommend [Blank Physical Therapy] to a friend or colleague?

 Best practice for NPS collection also calls for optional open-ended feedback asking What is the most important reason for your score?

Depending on their score on the NPS, customers can fall into 3 categories:

  • Promoters: Responders who score a 9 or 10. These are your loyal customers; the lifeblood of any business.
  • Passives: Responders who score a 7 or 8. These people are passively satisfied with your services. While you may think satisfied customers is a good thing, this group isn’t brand loyal: they’d be quick to try out a competitor’s services next time around.
  • Detractors: Responders who score a 6 or lower. For these customers, a fundamental failure in service delivery occured. These people, aside from being angry, are the most likely culprits for negative word-of-mouth comments that hurt your business.

To calculate your company’s NPS you need to keep track of the percentage of your patients that are promoters, passives and detractors.

The calculation itself is is simple:

NPS Score = (% Promoters) – (% Detractors)

As an example, if 70% of your customers are promoters, 10% are passive, and 20% are detractors, your NPS is 50.

2. Turn 2’s and 3’s into 7’s and 8’s

Your patient Bill attended his IE, and scheduled a few follow-up visits.  You see him twice the following week, and all seems fine.  But, it dawns on you a week or two later that you haven’t seen Bill since his third visit.  This is an all-too-common occurrence, and unfortunately, Bill’s probably gone for good.

By analyzing the NPS data we’ve collected at Strive Labs, we’ve found that people who score on the low end of the scale (detractors) are more likely to drop out of care than their promoter counterparts. This is also supported by data collected by Bain & Company, who state that detractors are more likely to defect than promoters.

We also know that a large cohort of patients (about 20%) drop out of PT within the first 3 visits. This high customer drop out, or patient churn, can cripple your bottom line. The good news is, it can be managed by finding your detractors early and intervening appropriately.

If 20% of customers are dropping out in the first few visits, it makes the most sense to send the NPS within the first week of a patient starting care with you. You can have the patient complete the NPS in clinic, or send it via email with tools like Survey Monkey or StriveHub.

From there, have a plan in place to intervene when a low score comes across your desk. If you can set the wheels in motion early, you have the opportunity to improve the customer experience and decrease that patient’s likelihood of dropping out of care, as well as the possibility of creating a loyal customer through service recovery efforts.

You can also follow-up by sending another NPS at the date of discharge, and compare your scores at these two touch points.

3. Keep Track of Your Promoters, and Make it Easy for Them to Promote!

On the flip side, your promoters are the key to driving growth at your organization. Here’s what we know about the power of promoters:

  • Promoters account for 80-90 percent of a company’s word-of-mouth referrals.
  • Promoters require less sales, marketing, and advertising costs than other customers.
  • Promoters are less price sensitive than other customers (in the age of deductibles, this is an important statistic to be aware of).
  • Promoters have a substantially greater Lifetime Value than other customers. Meaning, they buy more in each transaction, and they come back more often.
  • Promoters are more interested in new offerings and brand extensions than other customers.
  • On average, an industry’s NPS leader outgrew its competitors by a factor greater than two times.

So it would only make sense to keep a running list of who these people are, because it makes the next step a whole lot easier.

Your promoters are ready-and-willing to talk about you. If you know who they are, it becomes much easier to give them a nudge in the right direction. Here are a few examples of how promoters can drive growth:

  • Drive social reviews: Follow up a few days after a customer scores highly with links to your Google Local page. Google Reviews improve your search engine rankings, and help prospective customers find you more easily.
  • Engage them with Post-Discharge Information: These are the people most likely to convert to wellness and gym programs. Make sure every one of them receives that information right around their date of discharge.
  • Run Reactivation Campaigns: Stay in contact with your promoters after they are discharged, and give them the opportunity to come back in for a free wellness screen or a new course of care 3, 6, or 12 months after discharge.

4. Close the Loop

The open-ended feedback that you’re collecting from your customers is a proverbial goldmine.  This feedback should be shared with the employee(s) most responsible for creating that customer’s experience.

Over time, this will give your team the ability to truly understand the voice of the customer and identify common trends that lead to a positive and negative customer experience. The end result: addressing and fixing common customer concerns as well as innovating with the goal of creating more promoters.

5. Make Sure Everyone on Your Staff is on the Same Page

This is absolutely necessary in order for above strategies to be successful; if you are considering implementing any of these strategies at your clinic, I’d suggest making sure you start here.

Any initiative’s success is heavily contingent upon your ability to develop a plan, articulate it to your staff, and get them to buy in. Everyone from front desk staff, to clinicians, to rehab aides should understand the plan, and their responsibilities in making the plan successful.

One of the most effective ways of unifying your staff is to focus in on a single metric.  Let’s say, for example, that your goal is to improve your clinic’s average visits-per-patient by 15% in the next 3 months (a good example of a SMART goal).  In this case, you should let your staff know that everyone’s performance, including your own, is going to be measured by whether or not this goal is met.

You can certainly identify particular areas that each staff member can work on to achieve the goal (e.g. front desk staff confirming appointments ahead of time, clinicians spending a set amount of one-on-one time with each patient, etc) and ask each team member for other suggestions.  But, ensuring that the staff knows that they are all working toward a common goal will promote accountability, teamwork, and help improve the probability that you will be successful.


About Today’s Contributor:
ryan pic

Ryan Klepps is a physical therapist and COO of Strive Labs, a software company that helps physical therapists create and retain happy, loyal customers.  Ryan is also on the Board of Directors for the APTA of Massachusetts, serving as their Membership Chair.

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