$59/Day: Good, Great and Shameful

I have been in the management of therapy delivery in SNFs for a very long time.  I have seen, and probably know, most every way a therapy company can improve its bottom line with any payor source. I do NOT approve of them all. Some ways to increase the bottom line are “shady” at best. 

For Example:

1. MPPR on Medicare Part B has been around forever and some still get charged the full Federal Rate.

2. Managing Medicare Part B efficiency (rule of 8) and CPT code utilization.

3. Managing Medicare Part A minutes before COTs and EOTs to ramp down or ramp up as you approached the scheduled assessments.

4. Managing Medicare Part A minutes after COTs and EOTs got here and understanding when to combine and not combine a scheduled and unscheduled assessments

5. Managing staffing ratios/average hourly cost to do business.

Prior to October 1, 2019 a therapy company could have charged you $102.86/pt/day for the Ultra High RUG.  Just so you know how that math works out, the therapy company would provide 720 minutes (or maybe a little more) every week. If you take 720 minutes and divide it by 7 days, you get 102.86 minutes/day.  So, at $1/minute you were charged $102.86/day for Ultra High. For Very High, the math would be 500 minutes divided by 7 days which is 71.43 minutes/day, or $71.43/pt/day.

When you blend all the Ultra High days, Very High days, High days, and Medium days, the average therapy bill for a Medicare Part A patient was around $85 to $90/day.  And remember the therapy company received $1/delivered minute of therapy.  The true cost to provide therapy services (IF managed well, and please note that is a big IF) is about $0.92/minute, so the therapy company made a profit of around $0.08/minute on Med A patients. Note that delivery minutes are not the same as labor minutes unless you are 100% productive…

Now, let us fast forward to PDPM and the apparent “Race to the Bottom” by some therapy companies.  I have heard of some therapy providers bidding $59/PDPM pt/day for Med A therapy services.  From the SNF’s position, they were paying $85 to $90/Med A pt/day, and now they are paying $59/Med A pt/day. This is a bottom line cost savings of $26 to $31/pt/day to the SNF! Cha-Ching!!!  This is a “Good” Thing for the SNF in the short term financially.

But, let us look at it from the therapy company’s position.  They now receive $59/Med A pt/day which is $413/week and they are providing only 30 minutes of therapy per Med A pt/day and only 5 days/week—There are fewer minutes/day and fewer days/week of therapy in this contract model. The Therapy company is now receiving $2.75/delivered minute of therapy ($413 divided by 150 minutes) while the cost of therapy delivery remains at $0.92/minute. Under this contract model, the therapy company makes a profit of $1.83/minute on Med A. Cha-Ching!!! This is THE MOST PROFITABLE WAY A THERAPY PROVIDER CAN DO BUSINESS!  This is a “Great” thing in the short term for a Therapy Company financially.

This may sound too good to be true (and it is) because the increased profit is made off the backs of untreated residents. Would you consider reducing resident medication 30-75% to increase your profit margin? No? Why not? The reduction of therapy minutes has nothing to do with patient needs, nothing to do with getting the outcomes the patient deserves and hospitals are going to require at some point, and nothing to do with patient and family satisfaction.  It has EVERYTHING to do with profit!  Please do not misunderstand, I am all for making a reasonable profit, but this is SHAMEFUL and a race to the bottom. 

We are in business, but it is a people business.  I can tell you the reduction of therapy minutes after October 1 was dramatic for a lot of providers (down 30% or more).  Remember if you were averaging 720 minutes of therapy/week and now average 150 minutes of therapy/week, you have decreased therapy minutes by nearly 80%! Have the residents or their needs changed? Of course, that is a rhetorical question to which we all know the answer.

We believe in making a profit, but doing so in a way that the resident receives the care they need. This means a smaller profit margin, but in the long run it is the best way to do business.

Has your therapy company decreased their therapy minutes to increase their profit?  I am VERY PROUD to say Broad River Rehab has not and will not do business this way.