[Tweet “You don’t know what you don’t measure.”]
Obvious enough, but how many doctors and physical therapists with private practices actually run their businesses by that credo?
The answer is a frightening one—not many.
Winning medical practices (like winning businesses) net 20-30% in profit, quarter-over-quarter, but many of the practices out there are lucky if they bank 10%.
Of course, they wouldn’t know that…because they’re not measuring it!
A clear understanding of the metrics and numbers behind a practice is absolutely integral. Without that clear understanding, objectively judging the health of the practice is impossible.
And it’s about more than overhead costs and profit margins—new patients, new visits, reimbursement percentages, cancellation rates, retention rates, referrals versus avails, a winning medical practice knows the numbers behind all of these KPIs.
Where to cut, where to reinvest, where to spend—those vital decisions are all tied to the numbers.
And that’s why you’re going to really benefit from today’s interview with guest, Andrew Vertson, physical therapist, metric master, and founder of Intecore Physical Therapy.
Andrew has been in the private physical therapy business for nearly two-decades and in that time he’s learned a lot, including the secret to getting over the hump—metrics.
Metrics are what enabled Andrew to step back and look at his practice objectively so he could start managing it in a manner that generated real revenue.
Listen to learn how Andrew learn how to close the gaps that were stalling growth in his business, and what advice he has for PTs who want to work smarter not harder.
Time Stamped Show Notes:
- 00:19 – Dr. Joe introduces Andrew Vertson
- 00:49 – Andrew is a physical therapist in California
- 00:57 – He has been in private practice ownership for 18 years
- 01:11 – He currently has 3 offices
- 01:30 – Over the years, Andrew found out that he can never get over the proverbial “hump”
- 01:42 – He realized that he was missing management skills of running the practice objectively in terms of looking at the “health” of it
- 01:55 – That was what drove him to looking deeper into his clinic metrics
- 02:19 – Andrew’s post on LinkedIn led Dr. Joe to finding him
- 03:38 – Andrew’s metrics for his practice
- 03:44 – Andrew had to track the number of new patients and the number of new visits
- 03:56 – Back then, reimbursements were great and employees’ salaries were low
- 04:13 – Andrew shares his conversation with a client
- 04:16 – Andrew’s first job, in 1996, paid $20/hour as a Staff PT
- 04:30 – He worked for a large corporation for a couple of years
- 04:40 – One day, one of his co-workers was sick and led him to treat 48 patients that single day
- 04:51 – He did the math of what he was getting paid and what the company was getting from the patients
- 05:09 – He didn’t care then
- 05:21 – 7 years ago, Anthem Blue Cross decided to cut 50% reimbursement
- 05:33 – 25% of his revenue is from Anthem and he was going to lose about $100K
- 05:42 – He reached out and consulted
- 05:54 – He thought of referrals
- 06:09 – Andrew realized there was so much that he wasn’t tracking
- 08:18 – A good business keeps 20-30% profit
- 08:29 – In Andrew’s situation, he’s lucky to squeeze out 10% profit from salaries and costs
- 10:00 – Overhead costs are high in some states
- 10:52 – Andrew had to learn to be resourceful
- 11:05 – He was fortunate to be able to present nationally about metrics over the last 5 years
- 11:09 – He is shocked at how successful therapist practices can be without background or knowledge in business
- 11:31 – That drove Andrew to starting PTClinicMetrics
- 12:54 – When going into a practice, Andrew first discusses the metrics
- 13:13 – He asks them to put physical metrics on a spreadsheet on a weekly basis
- 13:25 – “Weekly is the perfect amount of time”
- 13:53 – First thing he shows them are referrals vs avails
- 14:19 – Andrew tells us about his client in Virginia who’s losing 10% of his referrals
- 15:40 – Referrals are people who called, walked-in, or faxed-in a prescription to start care
- 16:17 – For every 10 referrals from doctors, only 4 get in touch with therapists
- 17:33 – The next large number to look at is cancellation rate
- 18:17 – On average, 92% of your patients should show up every week
- 18:30 – A missed visit is a visit you can never reclaim
- 19:04 – Your costs still run with or without patients
- 19:29 – Look at your cancellations in a given period of time
- 20:27 – The owner should be concerned about the cancellation rate
- 20:58 – The staff should be able to monitor this rate
- 21:57 – Everything comes back to the plan of care
- 22:10 – You want your clients to know the value PT provides in their lives
- 22:37 – The next metric to look at is your retention rate
- 23:28 – National average is 11.1 visits per evaluation
- 24:43 – A good practice is to use performance pay for your therapists
- 25:30 – Your therapists need to be 85% productive
- 25:53 – “If you’re not getting that 11.1 or 12 visits every evaluation, you’re going to see these little holes in the therapist’s schedule”
- 27:02 – When therapists are busy with new patients, you’re not only decreasing the number of visits but you also start to underbill
- 28:22 – Every clinic is different
- 29:58 – Therapists, today, don’t fully understand time-management
- 30:39 – Conditioning your “lazy” therapists
- 31:35 – “Did I create a culture of not working so hard?”
- 32:12 – An 8-hour person should be seeing 12 patients
- 32:26 – Andrew has some high-paying HMOs cut their reimbursements which affects ⅓ of his clients
- 33:10 – Andrew thought of squeezing more patients in, but dropped the idea
- 33:28 – They had to look at other measures to cut costs
- 33:47 – Dr. Joe’s advice
- 34:31 – Results depend on therapists
- 35:18 – Be on board with your metrics
- 35:46 – Metrics that Andrew teaches at PTClinicMetrics are the ones he uses every day and are solidified into his practice
- 36:47 – “We became physical therapists to help people”
- 37:38 – Andrew talks about discharges and dropouts
- 38:02 – Dropouts are significant issues
- 38:28 – Show your patient the value of what they are paying for
- 38:38 – People have no problem spending money if they see the value
- 39:00 – Dr. Joe shares his conversation with a receptionist
- 39:25 – If the value is not there, why would patients pay you the amount?
- 41:03 – Value and priority
- 41:12 – Andrew calls the staff members “the 6-year olds” and the parents are the practice owners; the staff want structure in their day
- 41:51 – Patients are 5-year olds who also want “structure”
- 42:07 – We therapists struggle with telling patients the truth, we leave that to the doctors
- 43:05 – A therapist is a salesperson
- 43:31 – Andrew requires his therapists to sell the value of the care they provide and the skill set they provide as a practice
- 43:48 – If you have a lot of dropouts, therapists might not be doing their job well
- 44:35 – Dr. Joe says that, in Manhattan, everybody shows up when there’s snow because people don’t have anything to do
- 45:07 – Andrew’s company goal is 94%
- 45:30 – Key Performance Indicators: Referrals, New Patients, Visits, Charges Per Visit, and Collections
- 46:15 – Every week, Andrew does a KPI sheet that he sends out to his managers
- 47:22 – With 1 therapist, ideally, you should have no dropouts
- 48:28 – In 2017, Andrew is seeing continued cuts in reimbursement
- 50:24 – 2017 will be the buffer year where the changes will come into place
- 51:14 – You have to know your numbers
- 52:00 – “You don’t know what you don’t measure”
- 53:00 – “Work smarter, not harder!”
- 53:18 – Check out PTClinicMetrics – a PT Practice Management and Practice Solution
- 56:04 – Get the FREE download of your Stat Sheet here
3 Key Points:
- Therapists and practice owners should know and use metrics as a basis for making decisions.
- Your metrics are a great assessment tool that can help you find the problem areas in your business.
- Know your numbers because you don’t know what you don’t measure!