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Benchmarking physical therapy programs

By Cary B. Edgar

Use benchmarking to gauge and improve provider productivity and program profitability

A successful physical therapy (PT) program requires effective management of multiple functions, including maintaining an appropriate level of provider productivity, minimizing patient cancellations and no shows, capturing all appropriate charges, effectively using support staff, and consistently collecting all payments due. Benchmarks can help you determine whether your PT program is operating at an optimal level and, if not, what functions need to be improved and how to approach improvement efforts.

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The following benchmarking data were collected over the past 5 years and are based on more than 2 million visits to PT clinics owned and operated by orthopaedic groups. The benchmarks provided are averages for the following PT-specific metrics:

  • Weighted procedures (WPs) per provider work hour
  • WPs per visit
  • Visits per 8-hour day
  • Visits per patient
  • Initial evaluation show rate
  • Follow-up visit show rate
  • Payments per WP
  • Payments per visit
  • Compensation cost per visit

WPs are procedures that are weighted in proportion to work relative value units (wRVUs) to account for variations in skill, effort, and payment rates. Each timed CPT code (eg, 97110) has a weight of 1; initial evaluations have a weight of 3; modalities have a weight of 0.5; and hot/cold packs have a weight of 0.25. This weighting system enables comparisons among different providers, including therapists and assistants, regardless of the types of PT procedures being billed.

Here’s what these benchmarks mean and how each can be used to assess and improve your PT program.

Weighted procedures per provider work hour
This benchmark is 4.6 WPs/provider work hour (or 2.1 RVUs per provider work hour). This basically means that for every hour a therapist is available for patient care, he or she is billing an average of 4.6 timed procedures or four timed procedures and one modality.

This is the most relevant benchmark because most PT is billed on a per procedure basis, and each visit regularly involves three or more procedures. Although many offices consider visits per day as the most important indicator of provider productivity, the visit count can be misleading, as explained below.

WPs per provider work hour provides a quick yet important indication of whether a PT provider is above or below an appropriate level of individual productivity, but the following benchmarks are necessary to determine the specific reason(s) a provider may not be at an appropriate productivity level.

WPs per visit
The average PT visit should take 45 to 60 minutes and result in about 3.4 WPs (or 1.5 wRVUs). This benchmark of 3.4 WPs per visit typically translates into three timed procedures and one modality. If a PT provider is regularly charging less than about 3.4 WPs per visit, one or more of the following factors may be the reason:

  • Visit times average less than 45 minutes because the provider lacks the clinical skills or attention to the significance of each visit to effectively treat the patient for that length of time.
  • Visit times average less than 45 minutes because the provider has too many patients on his or her schedule or may be spending too much time on documentation or other nonbillable activities.
  • The provider is not capturing all appropriate charges due to intentional or unintentional under coding (eg, the patient receives 40 minutes of treatment, but is only billed for two 15-minute units).
  • The provider is unnecessarily applying the relatively restrictive Medicare billing rules commonly known as the “one-on-one rule” and “8-minute roll-up rule” to non-Medicare patients.

Visits per 8-hour day
Visits per day should not be the sole or primary measure of provider productivity. A therapist who is seeing a relatively high number of visits per day is often not generating correspondingly high revenue because the WPs per visit are low.

For example, a therapist who is seeing 15 visits per day and averaging 2.5 WPs per visit is generating about the same amount of charges as one seeing an average of 10.7 visits per day and billing 3.5 WPs per visit. More importantly, a therapist who is able to spend more time with each patient will almost always have a higher level of patient satisfaction, better outcomes, less documentation time, and higher professional satisfaction.

The benchmark is 11 visits per 8-hour day (after cancellations and no-shows). A therapist who averages about 11 visits per day and charges 3.4 WPs per visit can provide exemplary care, maintain high levels of patient and physician satisfaction, and help generate a significant profit.

A therapist might average less than 11 visits per 8-hour day because of one or more of the following reasons:

  • A relatively high cancellation/no show rate
  • Low productivity due to the inability to effectively “dovetail” patients
  • Excessive documentation time due to an inefficient paper or electronic medical record system
  • Scheduling inefficiencies, such as failing to adjust scheduling for patients who tend to cancel

Visits per patient
Our data indicate an average of 9 physical therapy visits per patient in a typical orthopaedic population. Although this average can vary significantly depending on patient diagnoses and socioeconomic factors, it can be very useful in comparing a group’s multiple PT locations and may be an indicator of low patient satisfaction or other problems. An average number of visits per patient that is significantly lower than 9 may be due to one or more of the following problems and should be addressed:

  • A relatively high proportion of patients that “self-discharge” before reaching appropriate goals because they think they are not progressing
  • Higher-than-average visit cancellation/no show rates
  • Lack of adequate capacity, causing patients to be discharged sooner than appropriate so that new patients can be scheduled

Initial evaluation show rate
The initial evaluation show rate is the percentage of patients referred for therapy that show for their initial evaluation. This rate is tracked and reported separately from the follow-up visit show rate and should be 95 percent or higher. An initial evaluation show rate that is less than 95 percent may result if new patients are scheduled for therapy more than 2 or 3 days after the physician’s order; the rate will be significantly lower if new patients cannot be scheduled for a week or more. For each initial evaluation no show, the practice loses all follow-up visits for that patient as well.

Follow-up visit show rate
This rate is the percentage of patients who show for their follow-up visits. The benchmark follow-up show rate is 88 percent. The follow-up show rate can differ significantly among PT providers, so it is important to track this rate by provider. A therapist’s follow-up show rate may be less than 88 percent for one or more of the following reasons:

  • The therapist has not successfully communicated the importance of therapy and each visit nor worked with the patient to establish and track progress toward functional goals.
  • Patients do not feel that they are receiving sufficient “value” because they are seen for a relatively short period of time or are simply directed toward gym equipment to perform largely unsupervised exercises.
  • An inflexible or otherwise deficient scheduling process does not adequately accommodate patients’ needs.

Payments per WP
PT payments per WP vary widely depending on region. In general, commercial rates on both the East and West Coasts are relatively low, and PT clinics are fortunate to average Medicare allowable rates of about $26 per WP. The rates in the Midwest tend to be higher, averaging closer to 115 percent of Medicare allowable rates, or about $30 per WP.

In addition to contract rates, payments per WP can differ based on the efficiency of administrative and billing processes, including obtaining and tracking insurance authorizations, co-pay collection, and denial follow-up.

Payments per visit
Payments should average at least $90 per visit. Many groups conclude that their contract rates are low based on their payments per visit. But low visit rates may be due to lower-than-average WPs per visit. For example, two groups average contract rates of $26 per WP. The first group averages $65 per visit because the therapists are averaging 2.5 WPs per visit. The second group averages $91 a visit because the therapists are averaging 3.5 WPs per visit. The 40 percent difference between these per visit rates is solely attributable to average procedures per visit, not contract rates.

Compensation cost per visit
Compensation cost is by far the largest PT expense. We benchmark total base and bonus compensation per visit, rather than total cost per visit, because groups use widely different administrative cost accounting practices and occupancy expenses can skew comparisons. Our data indicate a benchmark for total base and bonus compensation for PT providers and support staff, including aides and receptionists, of about $34.50 per visit. The most common reason for exceeding this benchmark is low provider productivity.

Cary B. Edgar is an attorney and a founder and principal of Ancillary Care Solutions, LLC, a company that helps healthcare organizations establish, manage, and revitalize the performance of their physical, occupational, and hand therapy programs. He can be reached at cedgar@ancillarycaresolutions.com

Additional Information:
WPs are procedures that are weighted in proportion to wRVUs to account for variations in skill and effort. Each timed code (eg, 97110, 97140) has a weight of 1, initial evaluations have a weight of 3, modalities have a weight of 0.5 and hot/cold packs have a weight of 0.25 (even though hot/cold packs do not have a wRVU value, they are weighted for these purposes because they do involve a small amount of time and effort). This weighting system enables comparisons between different providers, including therapist and assistants, regardless of the types of PT procedures they are billing.

Work hours include all hours that a provider is available for patient care, which is generally all paid hours, less paid time off, holidays, and CME hours.

Base and bonus compensation is actual compensation paid and does not include employer payroll taxes and benefits.

AAOS Now
July 2011 Issue
http://www.aaos.org/news/aaosnow/jul11/managing3.asp