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Simply put it’s the Life Time Value of a Patient. Unlike many healthcare service providers, physical therapy requires patients to come in multiple times per week for a set number of weeks. It’s not simply a single episode of care. The matter is further complicated by managed care contracts, reimbursement rates, and denials. LTV plays a critical role in the vitality of a physical therapy practice as when calculated correctly private practice owners can use the information to drive their practice rather than hope their efforts (i.e. claims) get paid. Let’s face it, it doesn’t matter how many Instagram followers a practice has if the doors are closed.

In order to calculate LTV there are two pieces of information that are needed. The Net Collected per Visit and Average Number of Visits per Patient. The net collected per visit is the average amount collected given a practice’s payer mix, contracted rates, and adjustments. The average number of visits per patient is how many visits a patient completes in their plan of care. Armed with this information, a practice can gauge what a referral is worth from a revenue standpoint. In order to really take advantage of the information, it is strongly encouraged to plot the data.

A simple scatter plot with trend line and forecast is telling when it comes to LTV. The data above is actual data for Q3 of 2018 from six different practices. For Series A, the data is moving upwards indicating patients are staying in the program longer and/or better collection rates. The deviation of the data series from the trend line indicates a difference in Payer Mix. Possibly an increase in visits from payer with better reimbursement rates. Contrary, for Series F there is a downward trend equating to a decrease in how long a patient remains in therapy and/or decreasing collection rates. Also, notice in Series F, there is little or no deviation from the trend line meaning payer mix is consistent. The owner in Series F can now analyze if denials rates are up, if patients are non-compliant, visits denied due to authorization, or if providers are not properly documenting and coding for the time spend with patients.

LTV can offer private practice owners a considerable amount of insight by some simple calculations and plotting. Armed with these insights, owners will be more in tune and better equipped to make the appropriate adjustments their practice needs. Private practice owners should never accept that things are the way they are because the results will always stay the same. Use the data in a way to adjust culture, better deliver care, and increase revenue.