Vol. 13 Issue 6
A Gold Standard
Productivity standards help practices maximize profits.
You may feel you have A firm grasp on your bottom line, but do you know how your staff is contributing to these numbers?
Measuring staff productivity can be an elusive endeavor for private practice owners. However, we have successfully implemented productivity standards for our clinical and administrative staff for the past four years. By implementing work performance expectations, managers can objectively measure the associate's performance in bi-annual and annual evaluations. These productivity measures also form the basis of monthly and quarterly incentive plans, which award monetary compensation when the person meets or exceeds these guideposts.
Planting the Seed
But how do you implement productivity standards? Each practice is different, but to gain a greater understanding, analyze our approach.
Our clinical associates consist of physical therapists, occupational therapists, athletic trainers, physical therapy assistants and physical therapy technicians. Our administrative staff includes front desk and billing office personnel. We communicate our standards with each of these people during our interviewing process so they know our expectations.
Our entire physical therapy staff works four 10-hour days. This averages to 17 working days per month. Our staff enjoys the extra day off, and this schedule allows us to maintain consistency with scheduling patients with their original primary therapist.
Our productivity standards are based on three key classificationsdepending on the clinic and the therapists' abilities.
•Single PT. The first classification of our productivity standards, the Single PT designates that one physical therapist perform evaluations, re-evaluations and daily treatments without assistance from other clinical staff members.
We ask the therapists with this designation to have 212 patient visits a month. This equates to 12.5 patient visits per day or 1.25 patient visits per hour. (Remember, they're working a 10-hour day.)
•Buffet PT. The next classification of our productivity standards, Buffet PT involves a PT who receives assistance from a variety of ancillary clinical staff members. These staff members could be physical therapy assistants, athletic trainers or any other staff members.
In this scenario, the PT evaluates, re-evaluates or treats 314 patient visits per month. This equates to 18.4 patient visits per day or 1.8 patient visits per hour in a 10-hour day.
•Gold standard PT. The final classification of our productivity standards is based on an ultimate team concept. Known as the Gold Standard PT, this approach occurs when the PT works exclusively with a physical therapist assistant. Thus, the treatment team consists of two people. As a team, they will be asked to evaluate, re-evaluate or treat 425 patient visits in a month. This equates to 25 patient visits per day or 2.5 patient visits per hour.
Why Productivity Matters
Having these productivity standards can help us determine when it's time to add new staff. Once therapists meet or exceed these visits for 30 days, we begin the interview process to add another physical therapist. Generally, we complete the interview process within 45 to 60 days following the month that the clinic has met or exceeded clinical performance standards. By implementing this process, we can meet the changing patient load from month to month and avoid excessive work load for the physical therapy staff.
Another benefit is we can determine their contribution to our operating income. This helps in doing reviews and awarding bonuses.
Take the contribution of a single PT as an example. If a single PT successfully achieves his productivity standards in a given fiscal or calendar year, he will have treated a minimum of 2,544 patient visits in the year.
If the net charge, defined as gross charge less insurance allowances, is $80 per visit, then the total net charges for the 2,544 visits is $203,520. Let's say the total cost per visit, defined as a combination of fixed and variable costs, is $65 per visit. We define variable costs as those that vary as volume increases or decreases. Examples of variable costs are salaries, payroll taxes, laundry and office supplies. Fixed costs don't change materially as volume increases or decreases. Examples are rent, utilities and operational insurance.
Given these numbers, the potential contribution by one physical therapist to your bottom line is $15 per visit or $38,160 per year from these 2,544 patient visits. If a physical therapist meets or exceeds this on a monthly or quarterly basis, he is compensated up to 10 percent of annual salary.
Front and Center
You can also apply productivity standards to the administrative staff. We define our administrative staff as front desk and billing office personnel.
We begin with our current outstanding account receivables. We then add the forecasted net charges or net sales we anticipate in the month. This equates to a forecasted account receivables or the potential amount that can be collected in a month.
We ask our staff to strive to collect 41 percent of this forecasted total of account receivables. We came up with this percentage by collaborating with other physical therapy clinics and using historical data. Obviously, you can adjust the goal to reflect geographical differences in payers, insurance plans and write-off percentages.
Another component of our administrative staff productivity standards is front desk collections. This is defined as money received by the patients before or after their treatments. This would include insurance deductibles, co-insurance and/or copayments. We use a target of 9 percent of the net charges.
Our approach is just one of many, but we've found success in using this method to achieve fair, reasonable and attainable productivity standards. By implementing these standards, we deliver quality care, while enabling our staff to contribute to our operating income.
Implementing these standards can help increase profits. In fact, since implementing this approach, we've realized a 20 percent to 25 percent increase in our operating income over the last four years.
Craig Klos, PT, ATC, is co-owner and CEO of Sports Rehabilitation and Physical Therapy in Kansas City, Mo. He can be reached at email@example.com. Larry Guihan is consulting CFO to Sports Rehabilitation and Physical Therapy and owns a consulting financial business.