Opportunity

About a dozen years ago I had the privilege to introduce the American Physical Therapy Association (APTA) to performance benchmarking at one of its Leadership Conferences (LAMP). The presentation was about using objective comparative performance data as a tool in discovering best practices and providing evidence based practice. It was a presentation about enhancing the performance of the profession.

Over the past 15 years I had the privilege to benchmark hundreds of physical therapy operations - both hospital and private practice based. Benchmarking provides a disciplined statistical methodology t0 identify and assess variance in business performance - financial, operational, productivity, utilization, etc. The bottom line for a practice owner or manager is that benchmarking provides an efficient and economical system for optimizing clinical outcomes, competitive advantage, and profitability.

In working with the data on individual practices I found another story that was being told by the aggregate data. It was a financial story of physical therapy performance across the nation. It was a multi-billion dollar story told on the back of a napkin! Here's that story...

First lets make a few conservative assumptions that are readily supported by benchmarked industry data.

Assumptions:

• Each therapist provides 12 patient visits per day
• Each visit consists of 3.5 service units (CPTs)
• Each therapist works 230 days per year
• There are about 125,000 PTs in the US
• Expense per unit of service is improved by 10%

Doing the math:

• Each therapist provides 9660 service units per year for a total of 1.2 billion units per year.

The Impact:

• A 10% improvement in average practice expense across the US would generate an additional $2.9 billion in profit/margin. That equates to $23,200 per therapist ANNUALLY!

A 10% improvement across the industry would not be difficult considering the lack of attention that business performance gets in most practices and the high variance in financial performance that is shown by benchmarking.

What could such a an improvement in profitability (discretionary income) have on professional development, enhanced services, competitive advantage, compensation, political influence, and social responsibility?

Most physical therapy practices in the US are under performing. The performance of the top quartile of practices (25%) prove what can be achieved. They also demonstrate how it can be achieved (best practices).

Its right there in the numbers! That is what benchmarking and best practice is all about. Time consuming and costly scientific studies are not necessary. The answers are already in.

The opportunity does not offer just a one-time payoff, but one that is repeated annually! Think of what a decade of improvement would produce. Think how practice values would increase when sale prices are based on MULTIPLES of profitability. Think how performance, reward, and influence could be transformed.

The potential for the industry is nothing short of transformational!

In a period of skyrocketing health care costs and national policy debate on health care reform, isn't transformation what the PT industry needs?

Will ignoring the issues/threats with business as usual or complaining about health policy change your reality? The solution and the reward will go to those within the industry who take matters in their own hands and within their own practices to change their performance reality.

The risk is low and the return on investment great.

So, how are you doing? What are you waiting for?

Bob

(c) copyright 2009

Performance Builders