The Financial Ceiling In Rehab Professions

The Physical Therapy industry (and other rehab professions) has a big problem and so far, there’s not a good solution for it. As Outpatient Physical Therapists enter the traditional clinical model, they are faced with the fact that the financial ceiling hits pretty hard and pretty fast. I think the more you understand WHY this is happening, the easier it is to take risks and venture out on your own.

I remember being in school, taking on 6-figures of debt, and believing that my first offer would be around $100k per year as I entered the workforce. Then I was hit with the harsh reality that the number would actually be like $62,000/year… gross. But, I took a safe job in a familiar environment I was a tech at… one where I knew the volume, people, and pace would be a good starting point.

The reason I share these facts with you is because I know many of you are exactly in the same or similar situation right now. 

So let’s break down some of the economics of the PT business and how it affects you and your earning potential. 

Problem #1 - Salary to Volume Ratio

In the PT business, revenue is directly related to two factors: Payment amount and visit volume - it’s actually a fairly simple business model. This is why when you’re taking a job, it can be important to know how many visits you’ll be expected to see and, if you’re savvy with it, what’s the average reimbursement per visit (it’s a fairly common compensation model that PT’s are paid around 30% of what’s collected). 

So if you just look at the simple variable here, you can make more money in 2 ways:

• #1 - see more volume - now this IS something you can control, but you’d only want to go this route if you were paid per visit or if you had some sort of tiered volume-based bonus structure. Otherwise, you just become a more efficient / valuable employee for the clinic with no turnaround compensation for the increase in volume. 
• #2  - collect more per visit - in some cases, this might be out of your control if there is a “per visit rate” negotiated between the clinic and the insurance company, aka payer source, let's say Blue Cross reimbursement is $100/visit no matter how many unit codes. But, in some cases, you could control the amount billed by treating with more valuable units - let’s say neuro re-ed ($27/unit) is billed at a higher rate than ther-ex ($21/unit), you’d need to justify your treatment as such but that could skew the visit amount. 

Here’s what this means for you: lower volume jobs tend to equal lower volume pay. Want to make a lot of money in outpatient, you’re gonna get crushed with volume.

*Conversely, and maybe obviously, but higher reimbursement settings like Home Health tend to be higher paying jobs… Simply obvious but important to know as each setting is valued differently by insurance companies.

Problem #2 - A new crop of PT’s entering the workforce each year

Each year there are now 12,000 new PTs that enter the workforce. And guess what the most popular setting tends to be? Yep, outpatient ortho… That means when you get tired of the lower salary, there is someone ready to accept it in order to take that position. Brutal. This drastically skews the leverage to the employer since there’s minimal scarcity in the profession for this position. 

Problem #3 - More experience or credentials doesn’t equal more pay

For Medical Doctors, the formula is simple: continue to specialize, provide more value, make more money… For PT’s when this happens, nothing changes… Why? There’s minimal diversification in coding, and thus, experience doesn’t drive more pay… You just hit that volume to the financial ceiling in year 5 of your career, remember? 

Now, let’s say as a new grad, it used to take you 16 visits on average to get patients “better” and discharged... And let’s just say the clinic averages $130 per visit (around what Medicare pays). That means each new client that comes into the clinic is worth $2,080 (16 x $130).

But as a seasoned therapist, you only need 11 visits on average to achieve the same result… That ends up with each new client being worth only $1,430 (11 x $130) to the clinic…. Tough go, but we are paid on volume, not efficacy. 

It’s a tough world out there. But the more you know about how the industry works, the better you’ll be able to either negotiate a higher salary or a different pay structure. But what I really hope is you see how limiting the model is designed to be… and you take this understanding, use it to your advantage, and ultimately remove the financial cap that comes along with it.