By Frank Long, Editorial Director
Shrinking violets are rare among PT clinic owners, and Niki Varveris, PT, DPT, MSPT, MBA, is no exception. Varveris is among a growing group of physical therapy outpatient clinic owners who are shaping futures for their operations that rely more on technology and business acumen than the iffy generosity of insurance payors. This trend of adopting cash-pay initiatives also suggests that a practice’s particular focus or demographics need not be a barrier to adopting this payment model. In part one of this series we profile the evolution of cash-pay services at Varveris’ outpatient practice, PhysioNetics, located in Naples, Fla. This Southwest Florida community with a population of just below 21,000 includes a significant proportion of older adults and no shortage of competing clinics. Despite the challenges Varveris and her team face in their market, it is clear that cash-pay revenue is growing, and there is no turning back.
Q&A With NIKI VARVERIS, PHYSIONETICS
Frank Long: Describe your payor demographic and competitive market:
Niki Varveris: There are 16 private PT practices, two major hospital outpatient clinics, and four physician-owned PT clinics within a 5-mile radius of my clinic (PhysioNetics). I want to say competition is huge, but out of that group I just mentioned there is not a single operation that I know of that is truly moving toward a cash-pay model. There are a couple of clinics pushing a wellness program, so I’m guessing they’re paying cash-pay for those programs. But the other practices are pretty traditional.
Historically, our accounts receivable has been composed of 70% Medicare, 25% commercial insurance, and 5% self-pay (cash-based). The median age in our service area, Naples, Fla, is about 66 years, so we have been participating providers in Medicare ever since I opened the practice about 11 years ago.
Frank Long: What was behind your decision to pursue cash-pay clientele?
Niki Varveris: The second highest insurance carrier in Collier County after Medicare is Blue Cross Blue Shield. But I have not been able to get in network with them. I’ve tried applying almost every 6 months, but they say the network is closed. So we were really missing out on that population. People would call, and we’d have to tell them we were out of network. They’d say, “Thanks, but no,” and hang up and go on their way.
When we really started to look at cash-based programs, about 2 years ago, we looked at that 30% of non-Medicare revenue first, and then thought that down the road we’d decide what we’re going to do with the Medicare population. Our solution was that we needed to do a better job of capturing that missing, big Blue Cross, Blue Shield population. And terminate a couple of contractual agreements with insurance carriers that were really slack in their payments, and then beef up that other 5% of self-payers in general.
As of the first quarter of 2017 what we’ve seen is that the A/R mix now has shifted. We’re still at 67% Medicare, but 17% commercial insurance, and our self-pay has gone up to 15%. It may not seem like a huge change over 2 years, but it’s better than it was, so we are looking at it as a positive increase in the right direction. That also reflects a 19% increase in the number of visits compared to 2016, so there was a true change. We’re going in the right direction, and we’re just going to keep at it.
Frank Long: What major equipment purchases have you made within the last couple of years, and what drove those purchases?
Niki Varveris: Within the last 2 years, the most recent thing we’ve purchased is the X5 Soft Tissue Oscillator by Dynatron. But within the last 3 years we’ve gotten the Zimmer (Irvine, Calif) cold light laser, the Zimmer radial pulse, and the Valedo Shape, from Hocoma (Norwell, Mass). We’ve had the AlterG (Fremont, Calif) Antigravity treadmill now for 5 years.
Primarily, the driving force behind those technologies was and is to improve patient outcomes. The secondary reason for buying those technologies was to acquire the marketplace differentiation. Those are the two key reasons we go toward the technology.
The radial pulse, the laser, and the AlterG, we actually get people calling us just to come in for those things. They read about it, and then they call and ask, “Do you have cold light laser? My shoulder hurts, and I want to come in and get laser.”
People have read about the AlterG. They kind of know what it does, so they call and want to make an appointment to come use it.
The Shockwave also draws a lot of demand. I just had a younger girl call and say that she had tried “everything,” for plantar fasciitis. She said, “I’m calling you because I see you have the Shockwave. I want to come and try it.” After one treatment she came back and said she couldn’t believe she had been suffering more than 6 months with it, spent so much money on everything else, and one treatment helped her.
Frank Long: And these clients are willing to self-pay for these services?
Niki Varveris: Yes, absolutely. Those are the three technologies people will call about. The AlterG, for example, let’s say someone is a runner and they want to break up their running patterns, and they just call and they want to come use the AlterG. Or the laser, technically, is not covered by Medicare. People will call and they’re willing to come in and pay just to get lasered. Same thing with the radial pulse. We get a lot of athletes who read about it, how it helps maintain the fascia, and the tissue, or patients that we discharge and they just want to keep up a wellness package; they’re willing to pay for it out of pocket.
Frank Long: What technologies give you the best ROI compared to the others?
Niki Varveris: If I were allowed to buy only one piece of equipment, it would be the Shockwave, for certain. Considering the price, it’s the technology that gives you the biggest bang for your buck. A lot of people don’t have it, and the results are so good that once you use it on a patient they are completely sold on it. When I recently just sort of looked at the financials it looked like 150 cash-pay visits would cover for it, and everything after that is profit.
It also helps save therapists’ hands. That poor machine works all day long, and we’re fighting over it all the time. What we do now is typically use the Shockwave first and it gets such an immediate, nice release of the soft tissue that you don’t have to dig with your thumbs, you don’t have to dig with your elbows. And typically I still use the Graston afterward, but a lot of times I bypass the Graston technique, too, just using the Shockwave. Then we can do our mobilization much easier, or get the person out there moving. You feel it right away. So that saves the therapists’ time, and our own joints.
Frank Long: It seems like cash services would have no-fuss billing. Is that the case?
Niki Varveris: It definitely makes billing much easier. We still document things the way we do for all our payors. But we’re spending a lot less time with our office manager or our billing personnel entering everything, submitting it, then waiting a couple of weeks to get it back. We get paid the day we provide the service, so it improves our cash flow. We get paid at a higher rate, really, compared to our commercial insurance, and compared to our Medicare patients as well. So, right there is increased revenue. And, saving on expenses related to billing. Even though we do in-house billing we still go through a clearinghouse and they get a percentage of however many claims we submit, and the cash payers don’t have to be submitted, so we save expenses there.
Frank Long: What equipment would be helpful to you in the future for you to continue to innovate your cash-pay programs?
Niki Varveris: You have to take your geographic area into account. Our median age in Naples is 66 years. And, I can guarantee you that an 80-year-old person here looks a lot different than an 80-year-old person from the Midwest. These people are out golfing, they’re playing tennis, they bike 100 miles per week or more, they are swimmers. They want to be out there and be active. They’re not what you’d think of as the average 80-year-old. To answer your question, though, means an owner has to think about what would be beneficial to add to the clinic. For PhysioNetics, I am looking at maybe investing in musculoskeletal ultrasound diagnostics. The xDVR goggles from Micromedical Technologies (Chatham, Ill.), because we have a really high need here for vestibular rehab. That would add an entirely new level of services to what we offer.
Frank Long: How has having an MBA helped you succeed in business?
Niki Varveris: I still say I’m a better clinician than a business woman, but I do think my MBA has helped me manage my business needs far better. I began my business on the belief that I would make it because I was a good clinician, and had no doubt that I could offer good service. And I did do a good job of marketing. I think those were my strengths back then.
But even though my management and marketing skills were enough to keep the business going, I think my greatest weakness was in finance and accounting. Pre-MBA I was happy with the fact that money was coming in and my bills were being paid. Now I look at things much more proactively—and under a microscope. I look for trends, I forecast, and analyze the financial aspect of the business with much more detail. Now I can truly say that I am running my business, whereas before I think the business was running itself and I was just getting lucky that it was going. PTP
Read part 2 here: https://ptproductsonline.com/2017/08/cash-king-2/