Cash-pay vs Insurance based Physical Therapy

Which one to choose? Is that the right question? Is a hybrid PT clinic the answer?

When I worked for a cash pay clinic, the patients paid a whopping $175 cash for every 1 hour visit. For a standard 12 visit plan, that is over $2000! Did I really feel like those patients were getting substantially better results from their therapy than they would from a good therapist at an insurance based clinic? I didn’t think so in this particular case, as I also worked at the time at an insurance based clinic and I know what I could’ve done for the patients there. But I would say it all depends on the actual therapists seen in each type of clinic. Cash pay therapists seem to focus on the time you get to spend with the therapist and make the accusation that it is using insurance that stops you from achieving quality care. But… I’d argue that isn’t really the full story. It’s more about not wanting to spend time fighting for maximum insurance reimbursements for you and not wanting to accept a lower price for their services. There’s some truth in their claims, but not the whole truth.

There was never a situation while working at the insurance based clinic where I felt that I couldn’t treat someone the way I chose because of insurance rules or reimbursements. The limiting factors were the clinic productivity and process protocols. There was constant pressure to bill more units or to utilize as many billing codes as possible. It does take more time and effort to make sure that maximum insurance reimbursement codes are used and justified.  Every physical therapist should be taking the time to research, learn & justify every bit of reimbursement eligible from your insurance. Unfortunately, with productivity and process protocol standards imposed by these PT clinics, many therapists simply don’t have the time to do that resulting in lower reimbursements, and an increase in the number of patients required to be seen each day. It’s a vicious cycle.

At the insurance based clinic, I was pressured to see 2 patients/hour while also needing to complete documentation during that time - meaning I was only spending 20-25 mins with the patient. On top of that, I only saw the patient for an initial evaluation, and then every 3rd visit. My average per patient insurance reimbursement rates were often around $135. That means the clinic was possibly bringing in at least $270 per hour when I was seeing 2 patients per hour. They were paying me $42/hour and the PTA $25/hour totaling $67/hour labor cost. This is exactly what traditional PT clinics shoot for: making 3-4 times the salary paid to each physical therapist ($67x4=approx $270/hr - of course this doesn’t take into effect average co-pay collections and % of schedule filled up). But still… is the problem that insurance only reimburses for approximately $270/hour? I don’t think so. If a PT clinic can’t make money and grow at $270/ PT hour billed, then there’s likely mismanagement issues. Do you think  the big corporate world is opening clinic after clinic after clinic because there’s limited profits? I don’t. I’m sure some fail, but it appears to me that this is a profitable endeavor if well managed. I absolutely think that insurance based clinics can do a reasonably decent job for patients if they choose to forgo some of their profits. Some clinics do and some do not. The good therapists don’t typically stick around for long if patients aren’t being served well at a particular clinic. So.. my advice if you want to use an all insurance based clinic is to do your due diligence. Research turnover rates. That’ll tell you a lot.

Is the hybrid physical therapy clinic the best option?

It is a fact that insurance companies do continue to drop reimbursement rates and put up roadblocks to reimbursements. Even so, I believe that a hybrid PT clinic can be profitable and patients can be served even in this unfortunate reality. Some insurances are no longer going to be accepted at many clinics because of their very low reimbursements. This includes medicaid and many of the HMO managed care types of insurances. As a consumer, each patient needs to inform themselves and understand what each insurance’s reimbursement rates are compared to other insurances. As patients, we will have a better experience within the medical system if we do our best to thoroughly evaluate our insurance choices. A hybrid PT clinic that maximizes insurance reimbursements and offers cash-pay add-on services that are not covered by those insurances may be the best option for patients moving forward. A small physical therapist owned hybrid clinic can be both profitable and patient centered, resulting in lower costs and better results for patients, as well as less burnout for therapists.