One of the hottest topics in healthcare is a focus on productivity. As health care professionals we need to understand the financial and legal implications of measuring nothing but productivity when providing patient care. We need to have a clear definition of the differences between productivity, efficiency, and profit margins. By gaining a better understanding of these principles, we will be able to advocate for ethical service delivery which reflects our clinical judgment and the needs of the patients as we move forward under the Patient Driven Payment Model (PDPM).
The Patient Driven Payment Model (PDPM) will go into effect on October 1, 2019. While many therapists believe that this will be the end of a focus on productivity, industry leaders are already looking at ways to provide increased patient care with fewer staff. There are certainly some sound reasons for providing concurrent therapy and group therapy. However, these types of treatment models need to be at the discretion of the treating therapist and not delivered with a “one size fits all” approach.
So what is the difference between productivity and efficiency? And how do productivity and efficiency impact a company’s profit margin?
Productivity is nothing more than a measure of how much time a therapist spent with patients divided by the amount of time the therapist was clocked in. If a therapist is on the clock for eight hours (480 minutes) and spends six of those hours treating patients (360 minutes), they are 75% productive. If that same therapist treats patients for seven hours instead of six, they would be a little over 87% productive. Many companies now push for 90 to 95% productivity (or higher). A therapist that is 95% productive has spent all but 24 minutes of their day treating patients. While it is possible to do this occasionally while providing one-on-one treatment, it is unlikely that this occurs every day.
With 12 patients to treat and 2 minutes of time spent between patient rooms, that 24 minutes is gone!
If productivity is the amount of time spent treating patients divided by the amount of time a therapist has spent clocked in, what is efficiency? Some companies may push for a certain productivity standard, but a savvy manager will also look at how efficiently a therapist’s time is spent. For instance, if a therapy director does not manage the therapy schedule carefully a patient may receive a lot of extra therapy time that the facility will not be reimbursed for (i.e. the patient received 692 minutes – well over the minutes needed for reimbursement at the Very High level and not enough to capture the Ultra High level.)
The therapy team may have looked very productive on paper, but those extra 192 minutes of treatment (over 3 hours) were technically delivered for free because of the way that Medicare reimbursement works. Likewise, a therapist that travels between two or three facilities each day may be very productive while they are in a facility, but the delivery of services is not efficient because of the money and time being spent on travel.
Productivity and profits
Every company faces the question of how to improve proﬁt margins. This is true for every business – not just therapy. A profit margin is calculated by taking the revenue, subtracting the costs, and determining what percentage is profit. If a facility takes in $100,000 in one month and has $85,000 in costs (wages, benefits, travel, equipment, etc.) the profit margin would be 15%. There are basically two ways to improve proﬁt margin: increase revenue or cut expenses.
While this may be seem simple enough, it's easier said than done. Most companies take different approaches to improving revenue and reducing costs. The challenge for a therapy provider is finding the optimal solution for improving proﬁt margin that works best for their business. A small percentage of therapy providers take a little extra time and look beyond the therapists who are providing direct care to other factors that impact efficiency (travel time, contractor usage, management expenses, etc.) However, most therapy providers have taken a single approach to improving proﬁt margins - focusing on any way and every way that therapists can be driven to spend as much time as possible billing for treatment. This translates into a bottom line that measures nothing but productivity.
In this short-sighted approach, there is little to no education provided regarding the definition of each CPT code according to the AMA. There is no time allotted for therapist education regarding the screening process and how to identify both the immediate needs of patients, as well as the potential risk factors involved if treatment is not provided. There are minimal dollars invested in CEUs (continuing education) that would better enable therapists to provide quality care to their patients. There is no recognition given for exceptional treatment - only exceptional (and often unbelievable) productivity.
The Patient Driven Payment Model’s impact
In October, 2019, reimbursement for patient care will change. A new model – the Patient Driven Payment Model (PDPM) – will be used to compensate facilities for the care they deliver. The goal of PDPM is to deliver optimal services in an efficient manner to allow patients to move on to a lesser level of care. The model ties the patient's medical diagnosis to the amount and types of services that they will most likely need. Therapy will no longer be the driver in terms of reimbursement and this may result in organizations looking to cut corners with therapy by changing their delivery model to improve proﬁt margins.
While Medicare has promised to carefully police providers under the new model, the truth is that there are to be no sanctions related to group therapy - simply a warning if a patient receives more than 25% of their therapy in a group setting. Medicare has also said that it will carefully scrutinize providers who change their delivery pattern dramatically under the Patient Driven Payment Model. However, their ability to do so is driven by funding.
Government cutbacks are commonplace and government agencies are typically focused on Medicare fraud (billing for services that were not provided), rather than on Medicare abuse (billing for services that are not reasonable and necessary.) Therapists must be able to provide specific rationales for recommended service delivery models (individual, concurrent, and group treatments, along with frequency and duration of treatment) and must be able to understand how those models impact their organization financially.
What SLPs can do to make a change
We, as a profession, need to lead the charge to help therapy providers understand the importance of measuring proﬁt margin, not productivity. We need to help them see that non-billable activities on one day can lead to clinical services that turn into revenue the next day. We need to develop a culture that is mindful of what our employers are going through and strive to collaborate with management to deliver the best possible treatment for every patient. We need to take responsibility for providing excellent clinical care in the most cost-effective manner and identify those services which only we, as professionals, can deliver. We then need to spend our time providing those services for the betterment of our patients, our profession, and those who sign our paychecks.
Tomorrow, when we face our patients, we need to be able to answer these questions:
- Does the evaluation clearly define the underlying impairments that impact the patient’s functional abilities?
- Do the goals for treatment reflect the patient’s functional needs?
- Does the treatment plan reflect the latest in research?
- Has the patient been involved in the establishment of goals?
- Is the patient going to benefit more from individual or group treatment or would they be best served with a combination of both?
- If the resources are not available to provide the optimal treatment for the patient, where can additional resources be found?
- If the patient is making progress, how can the goals be upgraded to further advance the patient?
- If the patient is not making progress, how can the goals be adjusted to reflect the potential for further improvement?
- Are the patient’s caregivers adequately trained to assist and support the patient when skilled intervention is no longer beneficial?
We must be prepared to have the answers to these questions as we advocate for our services on behalf of our patients.
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