Medicare Reprieve - What will you do?

Well the word out of Washington and the APTA today is that Medicare has again temporarily amended the pending Medicare Physician Fee Schedule for 2008 that governs physical therapy reimbursement. What was to be about a 10% reduction will instead be a .5% increase for the next 6 months.

While this is temporary good news for the industry it should not breed complacency, which it will of course do in too many Practices. For several years now this cyclical threat and retreat has been an annual end of the year circus in the physical therapy community.

Of course it is all about politics - this time we "won" next time we may not. Keep in mind that with 3.5% annual inflation the past several years even the small increase in the Fee Schedule is in fact a real loss.

Also keep in mind that Medicare is under severe financial pressure with rising healthcare costs, the expansion of coverage (drug benefits) and an exploding increase in the number of seniors thanks to the baby-boomer generation. 2008 is the inflection point where the US will begin to seriously feel the impact of that generation retiring.

The good news is that rehab utilization increases by about 50% for those over age 65. The bad news is that the likelihood of further erosion of benefits and reimbursement is all but guaranteed when the combined effects of Social Security and Medicare come to bare in the coming years. It is not a financially sustainable situation for the federal budget.

The bottom line is that Practice expenses are going up due to labor shortages and will continue to do so for the foreseeable future. Meanwhile reimbursement will continue to erode through a combination of actual cuts (by all payers) and the lack of cost of living increases. Those pressures will certainly be measured in profit erosion for all Practices.

So there are two options... some Practices will celebrate today's transient victory. Others, more astute, will recognize the inevitable trend and take this temporary reprieve as an opportunity to restructure their Practices for future sustainability and profitability. It is not time to budget but instead for plan for profits.

What is your profit plan for the next 5 years? How will you respond? Will you wait to act and sacrafice intrim profits, or will you take action to protect and enhance future profits beginning today? Profits that are not harvested are lost for ever.

What is your choice? Your Practice future is at stake.

Bob

Copyright 2007
Performance Builders