In a previous article, I wrote about the negative side-affects of hinging healthcare on time-based reimbursement and productivity metrics. I made the argument that a values-based or service-based reimbursement system may actually provide improved clinical outcomes, increased patient engagement, and potentially increased revenue for clinicians, with decreased overall cost to the healthcare system. Go read that article, if you missed it, so you’re caught up for this one.
Let’s say you’re on board with the idea that time-based productivity and reimbursement leads to clinician burn-out, decreased patient engagement, and reduces patients to numbers on a spreadsheet. You agree that something needs to change. What you measure, how you measure it, and where you focus needs to be entirely about the patient. How do you do that? What metrics or data do you focus on? What reimbursement or payment structures do the most to deliver value to patients rather than treatment units?
That’s what we’ll look at in this article.
What’s Wrong With Time-Based Reimbursement & Productivity?
Unless you already work in a private pay, out of network, or cash-based clinic or practice, the odds are that your clinic is paid based on the number of treatment units (or time) billed during each appointment. While on the surface this sounds logical and fair —you get paid for the time you spend with a patient— the reality is that this arrangement doesn’t truly capture the value of what your clinic and clinicians provide to your patients.
As previously discussed here, time-based reimbursement incentivizes the slowest & lowest quality work acceptable. It incentivizes clinicians and organizations to see a lower of number of patients for a longer period of time. This leaves some patients getting far more treatment time than what evidence or research would indicate. It also causes clinicians and organizations to see patients as numbers of potential “treatment units” rather than unique individuals on a road to recovery.
I won’t belabor this point since it was covered in the last article, but I think it’s important to understand it. The way healthcare reimbursement is setup today results in clinician burnout, reduced efficiency of care, and lower patient engagement and satisfaction. If we truly care about improving healthcare delivery & quality while reducing cost, we need to find a way to break the link between reimbursement and time.
How do We Forget Time-Based Productivity & Reimbursement?
This is where the rubber meets the road so-to-speak. It’s easy to talk about the negative affects of time-based productivity and reimbursement. It’s also easy to say that healthcare needs to focus on each individual patient. Lord knows I’ve sat through those “healthcare leadership” seminars or courses that focus on creating “unique patient experiences” or “individualizing healthcare treatment”. On the surface, these seminars sound interesting, but a few minutes in, you realize that you’re about to hear the same old, nonspecific ideas that you’ve heard at the past 10 seminars you’ve attended.
So how do we implement those changes? More importantly, why does it seem that while everyone knows that something needs to change, we rarely see followthrough or action?
I think the answers to those questions lie in the fact that, on the surface, the solution seems impossible. You can’t fully move away from time-based productivity without also moving away from time-based reimbursement models. And that itself sounds like you might as well try scaling Mount Everest in your swim trunks.
Now, while it may seem impossible, I’d like to propose a few simple ideas clinics & organizations can use to begin moving away from time-based productivity and reimbursement. I believe that just making small, incremental changes towards the world we want to see, is better than throwing our hands up in defeat. Some of these ideas come from my time in the VA Health system, my work in the private practice world, consulting projects I’ve been involved in, and some of these ideas have already been put into practice across the US. We’ll start with metrics and move on to payment models after that.
“If you can’t measure it, you can’t improve it” -Peter Drucker
Managers and administrators everywhere try and measure or gauge performance. Healthcare is no different. Performance of staff, performance of products or services, and even financial performance all receive the attention of those in executive offices. This is understandable, since monitoring performance in these areas helps management make improvements. However, many healthcare organizations and clinics go astray by focusing on time-based productivity measurements. While this gives a general understanding of how much a clinician or clinic produces in a given day —based on treatment units— this data doesn’t show the true value or efficiency of that clinician or clinic.
For example, productivity is measured by taking the actual number of treatment minutes in a given day and dividing it by the available number of treatment units (480 for an 8-hour day) to get a percentage. For example, a clinician achieved 90% productivity if he or she spent 432 minutes a day completing direct, billable patient care activities. While this is useful information, it leaves out many important factors that would help to improve care and efficiency.
By focusing on time-based productivity, organizations miss the opportunity to make improvements that affect patient engagement, outcomes, and satisfaction. If we want to improve the quality of healthcare delivery while also reducing cost and improving patient experience, we need to look at more than just treatment units. Some organizations have begun to incorporate other metrics when evaluating clinician or clinic performance. Below are a few of these areas.
When I worked in the VA Healthcare system, I had the opportunity to be part of a project with the executive team involving different ways to measure the performance of the Rehabilitation Service Line. Many ideas floated around the room during some of the initial meetings, but one thing became clear: we wanted to be able to measure more than just how many units individual clinicians or clinics produced in a day. We wanted to be able to know how many patients were being treated, how often they were treated, how long they were treated, and the availability of appointments in these clinics.
We settled on Clinic Utilization as our performance measures going forward. This involved several key changes over simple productivity. Instead of focusing only on number of treatment units or treatment minutes provided by clinicians in a given day, we focused instead on the combination of treatment units and unique social security numbers seen by each clinician or clinic (we also looked at availability, treatment duration, etc.).
Why was clinic utilization much more effective at measuring efficiency, quality, and value provided by our clinics? Because the focus of the data measurement involved more than just the time a clinic or clinician spent treating in a given day, week, or month. By focusing on how many unique patients came through a given clinic in a week, we were able to determine whether our clinics and clinicians were providing efficient, high-quality care, or if they were simply bringing in the same patients in for extended —often unnecessary— treatments to hit their productivity numbers.
Another key metric that should be monitored in any healthcare setting —and usually is— involves clinical outcomes. We see this a lot in marketing and advertising for different healthcare organizations and clinics. These metrics are used to convince patients to use that particular facility for whatever service. But can we use clinical outcomes as a component of productivity measurement? What can clinical outcomes tell us about a clinic’s or clinician’s efficiency or productive capacity?
Obviously, many factors influence the outcomes experienced by patients (read about the biopsychosocial model to learn about some). Even still, one major factor regularly impacts patient outcomes: the treatment plan & delivery. This may seem obvious, but how a certain treatment is delivered has a major impact on the results patients experience. By incorporating clinical outcomes into clinician or clinic performance measures, we gain some insight into this dynamic of healthcare delivery.
In a world where metrics, numbers, and percentages seem to drive healthcare decisions, patients often feel forgotten. They see themselves being run through the “steps” of treatment, without any real consideration for their own goals, desires, or values. To combat this, some healthcare clinics and organizations have begun using patient-centered or patient-driven outcome measures to assess the quality of their healthcare service delivery. For example, some research suggests that measures associated with overall health, sleep, fatigue, physical function, and mental health be used when treating patients with rheumatoid arthritis .
Obviously, including these measures improves a patient’s experience and engagement throughout the treatment plan. But do these measures benefit the clinic or organization? I would argue that including patient-driven measures is not only beneficial, but will be vital for healthcare organizations entering the new healthcare environment. Everyone from private sector organizations to CMS has been saying that value-based or merit-based payment and reimbursement systems are coming. Healthcare organizations that begin including patient-driven measures now will be better poised to thrive in this new environment.
It also provides that organization or clinic with valuable marketing material that can lead to business growth and expansion going forward. For example, let’s say that a patient is looking for a physical therapy clinic to treat his/her lower back pain. There are two PT clinics within a 10-minute drive from their workplace. Both clinics seem to be staffed with knowledgeable and trained clinicians. However, clinic A’s website and material focuses on their process, treatments offered, and the like. Clinic B’s website and material highlights how their treatment process involves and includes patient-driven outcomes. Clinic B’s website even has testimonials from patients talking about how clinic B took the time to listen, customize the treatment plan, and worked with their patients to help improve on those factors mentioned above (sleep, function, etc). Which clinic will the patient choose? I think it’s pretty obvious.
(If you’re interested, check out our Patient Satisfaction Survey to get an idea of where to start making changes)
Alternative Payment Models
As mentioned at the beginning of this article, many of the metrics that have sprung up around healthcare stem from the reimbursement and payment model that dominates the landscape (at least in the US). For the most part, health insurance companies and government payers alike reimburse clinicians and healthcare organizations based on the number of “treatment units” billed during each visit. Nearly all of these treatment units relate to time.
For example, 97140 (manual therapy) is a treatment code that is billed in 15 minute unites. If a physical therapist does 27 minutes of manual therapy, they bill 2 units of 97140 and the insurance company pays them for 2 units. As discussed here, this causes all kinds on problems from clinician burnout to lower patient outcomes. I’m assuming, if you’ve read this far, that you don’t need any further convincing of this point.
So the question is this: How can organizations and clinicians step away from time-based reimbursement to improve outcomes for both patients and clinicians? I’ve found that an effective strategy is to begin to implement or offer alternative payment models, build that portion of the business (which reduces the revenue from traditional payment sources), and get tot he point where those alternative payment models make up the majority of revenue. It doesn’t have to be all or nothing. Consider it a sliding scale. Some clinics will be able to move to 100% non-insurance payment, while some find that 15-25% is their sweet spot.
Below is a quick break-down of a couple different alternative payment models.
Cash (or Private Pay)
When thinking about alternatives to traditional, insurance-based payment models, the first one that comes to mind tends to be cash or private pay. Using this type of payment model, a clinician or organization offers healthcare services and simply charges the patient instead of the insurance company. Often these organizations supply the patient with a “super bill” that the patient can submit to his/her insurance company for reimbursement. While this solves the clinic’s headache of dealing with insurance companies is a time of declining reimbursement and increasing denials of coverage, nothing much changes in the treatment that patients receive.
In fact, I’m going to go out on a limb and say that —if all the clinic is doing is shifting the payment source from the insurance company to the patient— this model may actually increase the cost of care for the patient without any notable improvement in quality or outcomes. Now I realize that many clinics that offer private pay or cash-based services offer some discount to patients who opt to pay in that way. In that case, it may be beneficial for patients to choose that option simply due to cost. However, isn’t the goal to improve the quality of healthcare while decreasing the cost? If that’s the case, then we need to look at changes to more than just who pays the bills.
Another term that gets thrown around in this arena is value-based payment. This often gets confused with cash-based or private pay because they appear similar, and the terms get used interchangeably. I argue that there is —or at least, should be— a notable difference between cash-based and value-based payment models. As noted earlier, cash-based or private pay simply shifts the up-front financial responsibility to the patient. In the end, it still involves a therapist or clinic billing for treatment codes and units (especially if they supply their patients with super bills to submit to their insurance companies). How does this change anything? It still bases payment for healthcare on time. And, as we’ve discussed, time-based payment is what we want to move away from.
Value-based pay, on the other hand, isn’t based on the time a clinician spends with a patient. Instead it bases the fee on a variety of factors such as time, outcomes, or complexity. In a word, the overall value of that treatment Ultimately, isn’t that the goal? Healthcare payers should focus value & efficiency. Clinicians should be payed independent of time spent with patients. This incentivizes those clinicians to be efficient in their treatment delivery while delivering the highest value possible.
These fees can be set on a case-by-case basis, a flat rate per treatment, or on a standardized tool based on factors such as diagnosis, treatment frequency/duration, and personnel involved. Some therapy clinics using this model simply charge $100-$150 per treatment session. These sessions typically last 60 minutes or so and involve a high level of one-on-one treatment time with the therapist. Many patients value this type of treatment and are willing to pay a higher rate to receive it.
Another way of structuring value-based healthcare fees takes into consideration the complexity of a diagnosis or situation, duration/frequency of treatment, patient desires, clinical staff involved, and a number of other factors. This method of fee structuring offers more flexibility for cost-sensitive patients while at the same time allowing clinics and/or clinicians to get paid for the value they create in their treatment.
I’ve used this example previously, but I think it provides a great illustration of how this type of fee structuring can benefit both patients and clinicians. Let’s take the example of a patient who presents to the clinic with “frozen wrist” following an injury or surgery (originally used here). As I pointed out in that article, there is some research that supports a treatment plan consisting of frequent treatments of less than 20 minutes each over the course of a week or two. If a clinician & patient felt that this was the most appropriate treatment given the circumstances, then the previously mentioned flat rate model would likely not work. A patient doesn’t want to pay the “rate” for a 60-minute treatment when he/she will only be receiving around 20 minutes of treatment. The clinicians could charge a fee based on the treatment involved (ultrasound, manual therapy, range of motion), the duration/frequency of treatment, and even the clinician involved (assistant vs staff therapist vs clinic owner etc). This fee may be higher or lower than simply using a multiple of a “flat rate” price depending on the factors mentioned above. It also gives the patient more control, choice, and influence over the treatment they receive and pay for.
Benefits of Moving Beyond Time-Based Productivity & Reimbursement
Before wrapping up, I’d like to take some time to go over the benefits of making some of these decisions. Deciding to begin implementing and including alternative payment methods —or even just changing metrics— involves hurdles for both individual clinicians and organizations as a whole. Below, I’ll outline a few benefits for both patients and clinicians that can be found in the switch away from time-based healthcare.
Benefits to Patients
Healthcare is about one thing: people. Behind all the research, evidence, protocols, measurements, outcomes, and payments lie people. Healthcare is people helping people; helping them heal, recover, and return to their desired activities & goals. So what benefits can patients experience with a change from time-based productivity & reimbursement?
To start, patients that pay value-based costs for healthcare receive transparent pricing. How many times do patients get treatment, pay their copays and think they are done, only to receive a bill later? This leaves patients feeling frustrated and can even result in lower patient satisfaction survey results. As Paul Potter has pointed out, this setup also protects the integrity of the patient-clinician relationship . By removing the third-party payer middleman out of the equation, patients and therapists are able to collaborate on the best (or most preferred) plan of care without the risk of a denial from payers. This allows for truly patient-centered (or patient-driven) treatment plans.
Cost can also be reduced under a value-based or cash-based payment model. For example, a recently published study showed preliminary evidence suggesting that cash-based treatment can be more cost-effective than traditional insurance-based payment . These findings also suggested comparable clinical outcomes. Who wouldn’t want to pay less for the same outcomes? (It would be interesting to study the difference —if any— between cash-based and truly value-based payment models on clinical outcomes…)
Another great benefit to patients under a cash or value-based payment model is the fact that all patients are welcome. Because the clinic does not operate within the traditional payment models, which typically require approval from insurance, they are free to see whichever patient wishes to be seen. In short, all patients are approved; with insurance, without insurance, in-network, or out-of-network. Again this provides transparency, control, and ultimately choice to patients when selecting healthcare providers.
Benefits to Clinicians
Besides the benefits to patients listed above, cash-based or value-based payment models in healthcare also offer enticing benefits to clinicians. Here is a quick list that attract clinics and clinicians to these types of payment models:
- More Autonomy
- Less Conveyor-belt Treatment
- Less Bureaucracy & Red Tape
- Feeling More Valued & Valuable
- Better Treatment Options
Typically, clinicians working in insurance-based healthcare organizations —especially rehab clinicians— feel like cogs in a giant machine. They feels forced to see patients stacked one onto of the other, cranking them through cookie-cutter treatment protocols. They constantly need to send more paperwork, justify this, provide reasoning for that. They often feel that they know what the most effective treatment option may be, but are prevented from offering it because of insurance denials or approvals.
Much of this goes away with these alternative payment models. Clinicians are able to spend sufficient time with each patient, providing the most-effective treatment. Without the need to “squeeze more units” out of each patient —or stack them on top of each other— the risk of clinician burnout diminishes. Since there are no approval processes, these clinicians have more freedom to select treatment plans they feel would be best for each patient, without having to deal with any bureaucratic approval processes.
At the end of the day, any move towards more patient choice, clinician autonomy, and more effective treatment is good for everyone. While it may seem impossible to completely change the healthcare system, each clinician and organization can take small, incremental steps towards shifting the focus of healthcare productivity and payment away from time and towards value. Value-based measures and payment models benefit both clinicians and patients, and can potentially reduce cost. Ultimately healthcare is a human (person-to-person) service and experience that cannot be adequately measured by treatment units or time segments. We should all strive to implement processes and systems that move the focus of healthcare back to people.
Have you made changes to your clinic or organization to move towards a value-based payment model? What are some challenges you had to overcome changing from insurance-based payment? Share any additional resources that you found helpful in the comments below!
For more informational reads, check out our Blog to see all the articles we’ve published to date. Click here to head over to our resources section and check out our variety of clinical and professional resources aimed at increasing your knowledge and skills. If you’d like to make some changes in your clinic or health center, and would like some help, check out our consulting and advisement services or contact us to see how we can help you break out of the norm and provide a truly impactful patient experience.
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 Wells, G. A. (2009). Patient-Driven Outcomes in Rheumatoid Arthritis. The Journal of Rheumatology Supplement, 82(0), 33-38. doi:10.3899/jrheum.090129
 Potter, P. (2016, September 12). Are Cash Therapy Practices Good For Patients? [Web log post]. Retrieved March 20, 2019, from https://www.evidenceinmotion.com/blog/2016/09/12/are-cash-therapy-practices-good-for-patients/
 Pulford, K., Kilduff, B., Hanney, W. J., Kolber, M., Liu, X., & Miller, R. (2019). Service Utilization and Costs of Patients at a Cash-Based Physical Therapy Clinic. The Health Care Manager, 38(1), 37-43. doi:10.1097/hcm.0000000000000247.