How to Determine Private Pay Therapy Cash Rates in Your Area
In today’s day and age, it seems like many clinicians’ who are opening their own therapy practices are deciding to open cash-based clinics. One of the biggest reasons for this is that oftentimes with third-party insurances there are limits on the number of sessions a patient can receive and most practices prefer to treat the patient as a whole. Treating the patient as a whole means seeing them through the recovery process rather than having limits on the patient’s ability to receive therapy sessions, based on what insurance companies deem as appropriate.
If you are considering opening a cash-based physical therapy practice, the first question that will likely come to your mind is how much should I charge? If you charge too little, you are at risk of undervaluing your services and potentially not having enough money to keep your clinic running, but if you overcharge, then there’s a good chance that you might not attract enough patients, resulting in not being able to cover your business expenses. So how do you find that sweet spot of what to charge to bring in the clientele you want while being able to cover necessary business expenses? If you are looking to open a cash-based physical therapy business in your area, you must consider the following:
Will you accept third-party payers or is your business going to be strictly cash-based?
Bottom line is you have to know where your payments are going to be coming from in order to accurately and appropriately price your services. If you decide to be an all cash-based clinic, then you will have a lot more wiggle room with how you price your services.
However, if you decide that you will be accepting third-party payers, such as different insurance companies, then you need to do a little bit more research on what the reimbursement rates are for each insurance company in your state. After figuring out reimbursement rates, then you will have a more accurate picture of how much you will need to charge cash-based payers to be able to meet your revenue goals.
The importance of knowing and surveying your market!
Research, research, research! When opening any business, you have to research the area that you want to have your practice in. Not only that, but you should also be researching what the general cost of therapy rehabilitation services are in your area.
The most important question to ask yourself is: would your target patient population, in that specific location, be willing to pay for cash-based physical therapy or not? If you answered no, then maybe a solely cash-based physical therapy business isn’t the right option. If you answered yes, then dig deeper into the demographics of your market, as that will often provide valuable insight as to what you should be charging for cash-based services.
If you are opening a clinic in an area where other therapy services are not yet available, meaning you are unable to determine what other practices are charging, one tip for determining your rate is to figure out what the individuals in that market are paying for personal trainers, massage therapists, etc. and use that information to help determine your fee schedule, based on your expertise and experience.
Figure out the numbers!
Another thing to consider is your estimated business expenses and your financial goals for the business. For this one, you’ll have to sit down and estimate your annual business expenses, such as overhead costs, marketing, insurance, etc., and set your annual financial goals for the clinic. After determining both of those, then you can use that information to set an appropriate fee schedule.
When determining the numbers, keep in mind that a lot of people may have a difficult time comprehending why they should choose cash-based physical therapy vs going through their insurance for therapy services. One of the ways to emphasize why they should choose cash-based therapy is through figuring out how much to charge so that you are not having to see 12-15 patients a day. By decreasing your caseload, while still meeting your financial goals, as a therapist you are able to avoid burnout and provide overall improved patient care plus your patients receive that 1:1 time that isn’t always guaranteed in larger clinics!
Determine and stick to a single fee schedule!
While it might be tempting to create a different fee schedule for third-party payers, the APTA highly recommends that you stick to a single fee schedule and instead offer discounts based on negotiated contracts with payers. Similarly, with a cash-based practice, you should stick to a single fee schedule which allows you to still offer discounts to patients.
There are many things to consider when starting a cash-based private physical therapy business. The bottom line is that you should set your fees so that you are charging enough for your services, but not double-booking or treating an unrealistic amount of patients each day. Through considering the above, researching, and developing a plan for your fee schedule that does not undervalue your expertise, while also keeping in mind market rates, your goal of achieving a successful cash-based clinic can come true!