How to Stay Ahead of Medicare Cuts in Your Physical Therapy Practice

Wednesday, May 2nd, 2012

The era of easy money is over. The Centers for Medicare and Medicaid (CMS) recently announced their 2011 physician fee schedule, and the average reduction for physical therapy will be around five-percent. More cuts will likely follow.

The good news? If you think about your practice in terms of standards and benchmarks across your entire system, there’s nothing to keep you from delivering high-quality patient care while cultivating a healthy bottom line.


What is your BOSE?

 BOSE, or Better Operational System Efficiency, is a productivity measurement of your entire PT system. The BOSE formula is based on a referral conversion rate of two visits per week over the course of five weeks. This means that one referral should yield 10 patient visits at the end of a five-week period.

To get your BOSE score, simply divide your input by your output. Take the number of referrals you have coming in, and divide by the number of total patient visits going out. The closer you are to 10, the closer you are to operating at peak levels. Here’s an example:

A BOSE score of 10 means a PT practice is operating at 100-percent efficiency. For every referral, the practice receives 10 visits over the course of five weeks totaling 100. If that practice only has 90 visits from those 10 referrals, its BOSE score is nine with an efficiency rate of 90-percent.

In this example, a one-point difference in a practice’s BOSE score amounts to $50,000, and that dollar amount has a linear increase with additional referrals. But how can you change your Better Operational System Efficiency?

Scores are affected by a variety of components including total referrals (new and rescripts), new evaluations, lost evaluations, re-evaluations, cancellations, no-shows, recurring visits, and discharges. Let’s take a closer look…


Four Reasons Why You Lose Patients

Patients can fall through the cracks. Typically, you lose them at four different exit points called the RETE’s:

Referrals not evaluated

Evaluations that don’t come in for treatment

Treatments that consistently cancel, no-show, or stop coming all-together

Early discharges not based on PT or physician judgment


As your practice’s RETE numbers shrink, you will notice your BOSE score and number of patient visits rise. They are inversely proportional. The key, then, is to make sure you eliminate as many RETE’s as you can.

A Checklist for Increasing Your BOSE and Decreasing RETE’s

Ask yourself the following series of questions spanning your entire practice:


Plan of Care

  • Are your PT’s trained to emphasize visit compliancy and to address patient pain concerns during the therapy process?
  • Is there open and continual communication between your doctors and PT’s so patients realize there is physician supervision?
  • Do your therapists call patients before an evaluation? Are they reaching out by email or telephone to the specific patients who need to hear from a therapist?


  • Are you leveraging the PT technicians to streamline workflow and maximize clinician-time with the patient?
  • Is your front desk able to schedule effectively? Do they know how to position open slots and consistently fill them? If clinicians have open slots, can schedules be reworked?
  • Do you have a coded system to track the reasons for no-shows, cancellations, lost evaluations, missed evaluations, etc.? If so, do you look for trends and creative solutions for addressing patient difficulties?
  • Are patients being called for follow-up visits? Do you need an electronic system that increases compliancy?


  • Do the PT’s and PTA’s (if you have them) team up and segregate responsibilities, or does one clinician do all of the therapy?
  • Would an EMR system cut down on paperwork and increase available patient time for your therapists?
  • Should you introduce a flextime schedule to allow for longer days and lunchtime coverage?


  • Do your medical scripts expire before the 12th visit?
  • How efficient is your front desk at collecting co-pays? Do you have a system that allows the front desk to access total patient balances and not just the co-pay?
  • What is your true billing collections rate: payments/allowed amount?
  • What is your average overall collection time? Does it vary per each insurance company?
  • Are your claims clean enough to result in a greater than 90% first pass pay rate?
  • Do you bill under the PT or the supervising physician?


  • Can you take outside referrals?
  • Do you have a system that tracks referrals from doctors and into the practice?
  • Do you have daily, weekly, and monthly dashboard reports that quantify all necessary metrics for the practice?
  • To what level are you able to drill down on your reports? For example, could you calculate the average Blue Cross payment over the past 90 days for all knee patients living within 10 miles of your practice?

Your practice can always be stronger.

Maybe you are part of an orthopedic group practice that decided to add physical therapy a few years ago. Perhaps you’ve learned about the staffing headaches that come with the territory. And while it’s true that your patient care is above standards and you’re making good money, you probably wonder if you could be doing more.


How do your referrals compare to your visits per week? What is the average net income per doctor?

It all comes back to increasing your BOSE by getting rid of the RETE’s that hinder your practice. When an orthopedic surgeon smiles about patient quotas and income from a PT practice, there’s no secret as to why. But what the surgeon may not know is that he/she could be doing substantially better with the exact same number of patients just by increasing the practice’s BOSE.

And when things like Medicare fee schedules are out of your control, it’s even more important to be on top of the things you can control.