To Outsource or Not to Outsource Your Physical Therapy Service Line Management?

Revenue Cycle

Some therapy management companies will leave the billing and collections to the practice, while others have their own operations. As part of the RFP, ask the company which way it is done in its standard model. If the company manages the revenue cycle, ask which key revenue cycle performance indicators it monitors, how it calculates them, and with what frequency it tracks and reports them. Ask how the company has approached a revenue cycle performance improvement effort and what successes it has had. And definitely ask about the emphasis, training, and performance standards on point-of-service (POS) collections. In PT, successful, service-oriented POS collections are essential to cash flow and patient satisfaction. Typically, there is a copayment for each visit, and patients come 3 times or more per week. When patients pay the copayment before each visit, it feels manageable to them. If they get a bill for 6 copayments 2 weeks into PT, they often get angry and do not see the value of the therapy. 

Seek specifics on the elements of the company’s performance improvement. A number of companies will default to providing incentive bonuses for POS collections and other revenue cycle improvements. Incentive bonuses for collections can compromise the coding and billing integrity of the practice and are guaranteed to cause discontent among support staff. Everyone who works hard should be recognized, not just the staff in a position to collect money. On top of this, if the PT reception staff are getting paid POS collections bonuses and the practice reception staff are not, a managerial dichotomy ensues.

Accounting and Financial Reporting

In your RFP, ask about the accounting and financial model that each candidate company most often uses. Inquire as to which—the practice or the management company—is responsible for monthly, quarterly, and annual accounting and financial reporting and what typical monthly reconcilement process the company recommends. Include the following requests in your RFP:

1.  Please provide samples of the monthly financials produced or preferred.

2.  Describe your annual expense and revenue budgeting and approval processes.

3.  Please address how you recommend handling the purchase of new equipment and supplies as well as the handling of existing equipment and supplies. 

4.  Will you rent our current space? Will you look to move the PT department into an alternate space in the future? If so, where?

General

Make some general inquiries that will help you get to know each organization and determine which one may be the best fit for a long, committed relationship with your practice. Find out how often the organization will have corporate representatives in the practice and at physician board meetings. Inquire as to the types of referral reports they generate and share with the practice. Request the names and contact information of 3 to 5 orthopedic surgery practice managers or physician leaders whom you can contact as references for the company. 

If you have an existing PT service line, ask the company how it proposes to enhance the services, quality, and bottom line. What value will the company’s management services add to an existing program?

Get to know the organization by asking how many of its partnering practices have terminated their agreements with the management company and if it has any current or past litigation with partner practices. These are detailed, binding contracts with the potential for a lot of money. When the relationships or even the local markets change, suits are filed.

As part of the RFP, inquire as to the standard proposed model for income distribution between the practice and the management company.

Conclusion

If your RFP covers all of the inquiries discussed in this article, it will be necessarily comprehensive. Send it to several companies with a clear indication of the response deadline and the contact person for the response and for any questions they may have. The contact person is typically the practice manager or executive administrator. Individual physicians in your group may have relationships with local representatives of a PT management company, and it can put them in an awkward position during the proposal submission and evaluation process.

Some companies may not respond to an RFP this comprehensive, which provides an unequivocal answer that they are not qualified to be your practice’s partner. Compare the responses you receive and set up presentations or conference calls for those companies whose proposals warrant it.

Hire your own health care attorney to review any and all contracts before signing. The HR support, exclusivity, income distribution models, compliance, and duration of these contracts must be approved by an experienced attorney that advocates for the practice alone.