How do you calculate this average per session? Calculate your total revenue over a given period of time and divide by the total number of therapy sessions your therapists performed.
Why is this an important number to know?
Rather than looking at your rather ambiguous overall revenue, breaking it down per session gives you a truer understanding of whether your income is where you need and want it to be. This is a critical number to know in order to conceptualize your business expenses. For example, can you afford to pay your therapists higher end wages and keep up with your clinic’s overhead? If it’s hard to pay your bills on time or you’re running your clinic in the red, your average income per session is likely too low.
Even if you’re not sure how much you should be aiming for per session, this gives you a simple place to start your financial review.
Especially if you’d like to grow your clinic or open new locations in the future, this metric is one of the most valuable.
Following are our expert tips for upping the amount you bring in per therapy session:
- Diversify your payment sources. We suggest taking a hard look at the percentage of your revenue which comes from each source: Medicaid, Medicare, commercial insurances, grants, and so on. Determining the exact makeup of your payers can be quite enlightening. For example, it may help you see whether you need to shift who you are in network with, how many out-of-network patients you see, and how quickly you can bring on waiting list patients. The ideal breakdown of payers will be different for each clinic, but it is generally a healthy business practice to have well-distributed income sources.
Below is a visual example of how diversification of payers can transform the average you bring in per therapy session. You’ll see that clinics with a high percentage of Medicaid and ATA patients will have a much lower average per session. Both sample clinics indicate no Early Steps because counting the amount billed for travel in your total sessions can lower this calculation.
As you can see, Clinic A has a significantly higher average revenue per session due to their radically different makeup of payer sources. Of course, the optimal time to evaluate this breakdown is before you sign contracts with each company. We recommend negotiating your contract rates from the very beginning where possible.
- Extend your average session length, if possible. From a purely mathematical standpoint, this one is the go-to way to change your per-session calculation. Fewer sessions = more money per session. As a clinic owner, you’re likely aware of the hurdles you could face when trying to reduce the number of short (i.e. half-hour) sessions on the calendar.
Thus, it’s best to consider this the moment you take on each new patient. Who is their insurance carrier? Are you facing the limitations of things like capitations, which can force your therapists to stretch out treatments over a longer time period and decrease the duration of each session? Depending on the patient’s needs and authorization details, are you able to stretch sessions to 45 minutes or an hour?
Maintaining fewer, but longer, sessions significantly decreases your administrative load. Therapists spend less time writing treatment notes each day (time that can reduce clinic productivity!) and your admin team spends less time scheduling and billing. In theory, the more claims you submit to each insurance, the greater your chance of encountering an appeal process. Also, if you offer home-based services, the burden of travel time is most certainly in favor of keeping sessions as long as is allowable and comfortable for the patient.
Stretching out your average session length over time will allow you to increase the average amount you bring in per session.
- Pay attention to the type of evaluation being performed. In some disciplines, such as speech pathology, your therapists could be inadvertently shorting your business by not choosing the ideal evaluation type. It’s a good idea to take inventory of how many of each evaluation CPT code you’re billing for per provider and ensure that the evaluation type is appropriate for the patient. Are you aware that you can bill multiple speech evaluation codes in one evaluation? Oral motor and speech evaluations can be coded together. This can only be done with commercial carriers. Did you know that commercial carriers pay different on each different evaluation code?
If additional, more complex re-evaluation types would be appropriate, discuss including these with your therapists. Not only could your patients receive more thorough care, but you could correct an inaccuracy in treatment level that will ultimately have a positive effect on your business.
- Ask for an increase on your contracted rate from commercial insurances every year. Far too many therapy clinic owners are unaware that they can approach commercial insurance companies once a year to ask for a raise. If you have an unblemished record, we advise crafting a formal letter with your request. Include your clinic’s history and any growth trends you’d like to highlight. Don’t waste time…January is a great time to do this!
We recommend evaluating your average per-session amount on an annual basis. While checking on it monthly can be helpful, it won’t hold quite as much weight as your full year’s number will. Use your average per-session revenue as an indicator of how well your clinic is progressing towards your goals and compare your year-over-year data to get a real grasp on your unique financial trend.
Reach out to us to find out how using our EMR’s helpful administrative features can have a direct positive impact on your clinic’s average per-session revenue!
