Maximize Clinic Profit & Drop Low-Paying Insurances.

Maximize Clinic Profit & Drop Low-Paying Insurances.

Scaling Your Private Practice: The High Performance Fall Event 

Quick heads-up for all the private practice owners who are tuning in. If you've been tuning in for a while, you know that it took me at least ten years of grinding in my own clinics before I finally figured out how to scale and sell my four practices for seven figures and about three times the national average. The biggest shift was not some secret marketing hack. It was how I thought about profit, systems, and actually my role as the owner.

That's exactly what we're going to be working on together with you at the High-Performance Practice Conference this fall in San Antonio, Texas. From October 15th through 17th, Adam Robin and I are hosting a three-day hands-on event for PT, OT, speech, mental health, PEDs, pelvic floor, and medical practice owners who want to build clinics that are profitable, scalable, and, best of all, do not depend on them 24/7.

We'll dig into simple profit and KPI frameworks, real leadership and culture work, and practical systems you can take home and plug in with your team. If you're doing roughly 6 to 7 low figures a year and you want your clinic to feel more like a real business and less like a job/cage, I'd love to see you there. Frankly, I'd love to see you bring your leadership teams as well because we will have breakout sessions for them too. Let's get into this episode.

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We are talking about dropping low-paying insurance and maximizing revenue. Welcome, everybody. As I told Adam, my presentation at PPS was about this. I have given this presentation a few times. Not so much the dropping payers’ stuff, but the maximizing revenue part of the title of this episode is something that I like talking about. It's getting to the point where if you're not doing everything you can to squeeze every penny out of the service you provide, it's going to be hard to stay in business, frankly, and at least make a decent profit. That's the nature of the industry at this point.

I had a colleague say you used to be able to be average at private practice and still figure out a way to make 10% margins. Now, you have to be good to make 10% margins.

That's true. As we're talking about it, the topic being dropping low-paying insurances and maximizing revenue, maybe we focus on the second part first and then talk about dropping insurances. I don't know about you, but if I'm coaching somebody about a topic regarding this and they're not getting the reimbursements that they want, or they're not hitting the profit margins that they want. My first inclination isn't to figure out what insurance to drop right away. You begin the negotiation process.

Go cash-paying.

That’s not my initial thought. Maybe you feel the same way. My first thought is, “Have you optimized what you're currently doing?” You and I both know that if you're going to drop an insurance, or if you're going to negotiate with an insurance, you've done it a number of times over the past couple of years. How long is it taking for that process to come full circle and finally come to a resolution?

It’s taking a while. It's slow and tedious.

If you're going to drop insurance, that's at least 90 days on most contracts. If you're going to negotiate, I'm assuming it goes beyond 90 days, doesn't it?

They like to ghost you. They don't want to email you back. You have to chase them. It’s tough.

Optimize What You Have: Maximize Operations Before Dropping Payers 

If you're drowning, you can't waste that time hoping that a negotiation changes the trajectory of your clinic, or dropping an insurance makes a huge difference. Maximizing what you're currently doing is my recommendation for this first step. We can get into some of the details, but we've talked about it in some episodes.

There are four areas that I personally focus on. Number one is know your numbers and know where you're at. Number two, focus on the front desk because there's a lot of easy money that can be garnered there. Number three, focus on your billing collections team and ensure that they're collecting every penny that's given to you. Number four, ensure that the providers are charging and billing optimally with appropriate justification for the services that they provide.

I purposefully go in that order because, number one, you got to know your numbers. You got to know where you're starting. Even if you were going to negotiate or drop an insurance, you need to know, “What is my average reimbursement for that payer, and how does that compare to my cost per visit? Am I in the negative immediately?” Know your general profit margins, where you are now, and where you want to be. You have to have those baseline measures.

It goes from front desk to billing collections company to working with the providers and changing their charging habits, documentation, and whatnot. It's easiest to hardest. It's easier and faster to collect more money if you clean things up at the front desk. Collecting over-the-counter payments can change tomorrow. It can change your cashflow. Working with your billing collections team is going to take some time to make sure they're cleaning up the AR aging in your AR. You and I both know that trying to get providers to change their billing and charging habits is not an easy task and takes some training.

It's not easy at all.

We can get into some of those details. Were you ever at a point in the last few years where you had to go through this process of cleaning up your operations to maximize what you are collecting? What was the impetus behind it?

If you go several months in a row, and you're breaking even and not making any money. You know that third payroll cycle is coming up in a couple of months, so you've got to figure out a way to afford that, that'll spark you up to be like, “We have to make some changes.” That's a pretty clear sign that you got to know your numbers.

I’ll break it down a little bit to a more fundamental level. The first step in this is the idea of making this a priority. That's the first step. Figure out the front desk. When are you going to do it? How are you going to do it? I feel like the biggest risk is not necessarily not collecting over-the-counter or having a poor revenue cycle. The biggest risk is you being glued to the treatment floor, keeping your head in the sand, and never creating the schedule and the cadence to focus and study this and push these initiatives forward. That's where you start.

Make sure you have your time allocated. You have to put time and energy into it. You have to get in there and wrestle with, “What's going on with the money over-the-counter. What's going on with the revenue cycle? How does that work? What's our denial rate?” Start asking questions and learning. If you do that for a few weeks, you'll start to become more competent and have greater perspective on how you can start moving the needle at various touch points. That’s where I usually recommend starting.

What you're showing is some owners are wishing and hoping. They’re like, “My schedule's full. If I keep my schedule full, the numbers should look good.” It’s naivety. It’s ignorance. It’s running your business on a hope and a prayer.

Underestimating the amount of time and energy it's going to take to make a difference and treating it like a side project instead of the project is a bad strategy. Also, in underestimating the danger of allowing your company to be barely breaking even for months over months, there are so many reasons for you not to do that. One of the biggest reasons is running out of money.

Demanding Clinic Profitability: Shifting Out Of A "Break-Even" Culture 

Second, you're building a team and a culture that tolerates breaking even. The longer you wait, the deeper that pattern ingrains into the company, and the bigger the lift it is to turn the ship around. Attacking it with a sense of urgency is important. It has always been important, but considering the climate that we're in and how hard it is as a private practice owner, you have to get your finger on the pulse and keep it there. Otherwise, it's going to be tough.

It reminds me of a quote that Eric Miller said a number of years ago on the show. That is, “You have to demand profit from your business.” That's the mindset you have to have. You have to say, “I demand this business make profit not only for its survivability, but to give me money in exchange for the risk and effort that I put into starting this whole thing up.” Having a mindset of demanding that is what is necessary to be more passive and what gets you stuck in some of these situations that you're talking about. For any hiccup in reimbursements, like if Medicare delays payments for a few weeks, you are SOL.

It's important to have a mindset of, “I demand this business to generate a profit for me. This is the profit that I demand it to generate. This is what I need in exchange for me to do all the things I need for my business, but also to do all the things that I want to do with my household, to support my retirement, and to support my kids going to college. This is why I do this.” Do not be afraid to talk about that and demand it. I love that you brought that up.

You do have to go in with the right mindset. That mindset then requires you to spend the time. Take the admin time. Get to know your numbers. Get comfortable with KPIs. Get comfortable reading a profit and loss statement. Get comfortable reading the billing and collections reports and AR or Aging Reports. Know how to find out the denial rate. Know how to hold a billing collections team accountable, etc. Those are the steps you take then to demand profit.

You know, “If I'm not meeting that, I need to start looking in these areas to make sure operations are running appropriately.” If they are all running appropriately and hitting their metrics, we can talk about dropping insurance, renegotiating, and that kind of stuff. That's my mindset as I'm going into this. Make sure your operations are great, but you first have to take the time to get to know how to know if your operations are going well.

You've got to be unreasonable with your actions. If you're unreasonable enough, you might be profitable. It's tough.

I'm glad you brought that up. You do have to take the time. It takes effort and knowledge. No one teaches you this stuff unless you join some kind of program like ours.

There's not a single thing in the world that is going to grant you profitability. There's nothing convenient about it. It's not a downhill game.

You don't start a business, and then the money flows in.

Everything is working against you. All the people in your business, all the patients, and all the vendors are all trying to get a piece of it. Somebody's got to be the person to be like, “Keep making money.” It’s tough.

Not to belabor this point, and soon after this, we'll get into some details, but I think we're in an industry that puts profit in the back seat. If you’re like, “I'm here for the patients. I want to provide the best care. The patients are going to come, the money's going to flow, and all's going to be good in hunky-dory land.” That's not how it goes.

There are plenty of forces working against you, and your company will spend as much money as you allow it to. As you continue to generate more revenue, your company will find more ways to create more expenses. You have to be the manager of this. It all starts with the owner. Someone has to say no. Someone has to push things down.

Taking Control Of Your Numbers: Financial Pro Formas And Budgets 

Let's start with a budget. How about that?

Talk to your bookkeeper and your CPA, like, “Let's put together a budget pro forma. How are things going? What do we need to do to generate this profit margin, etc.?” That's a great place to start. If you are financially illiterate, start talking to your CPA. Start talking to your bookkeeper on a monthly basis, like, “What do I need to do? What can I expect? What is my trend?” Ask them, “What is my breakeven?” if you can't figure it out. Ask, “How many visits do I need to see a week? How much money do I need to generate per month? How much more than that do I need to generate in order to hit the profit margins that I want?” Start there. It's simple.

From there, you can start gaining some particular metrics. What's your average reimbursement rate across all payers? What's your average reimbursement rate per payer? Connor went through my profits course. One of the worksheets was, “What is your average reimbursement per payer?” If you ask anybody, “What's your average reimbursement for a UnitedHealthcare?” For a flat rate payer like that, across the country, it's somewhere around $65, maybe some more if you negotiate a little bit.

He was assuming it was $65, but when he broke down the revenue over visits for only UnitedHealthcare patients, his average reimbursement rate was $59.14 or something like that. There are denials, co-pays that don't get paid, and that kind of stuff. He was assuming he was getting $65. $59.14 is a big difference compared to $65. That's a 10% haircut you're taking on every UnitedHealthcare patient. That's not meeting your cost per visit, I'm sure, in most places. Having that kind of knowledge puts a different perspective on all the work that you're doing right there.

I agree.

To add to that, you and I both have talked to owners. You'll ask the question, “What's your average reimbursement rate?” Would you say more often than not, they're pretty confident or pretty clear on what that is?

There are two buckets that 97% of people fall into. That's including myself at times.

It fluctuates.

It's either, A) They have no idea, like, “I don't know,” or, B) They're estimating it based on maybe a few EOBs that they're looking at. Blue Cross Blue Shield or whatever paid them, and they're estimating it. Typically, when we estimate things, we're a little bit more generous with our estimates, like Connor did. We're a little bit more generous, and we don't account for all of the inefficiencies inside the business that take place, like denials, miscollections, deductibles not being met, AR, and all that stuff. That was a long-winded way to say I don't think most people truly know what their average reimbursement per visit is. I don't think they're measuring it accurately or on a regular basis.

It could fluctuate, but you should have a general trend over the past 6 to 12 months of, “This is what it's been.” Compare what's happening now against your trend. You probably haven't asked this question, but if you have, let me know. I would assume most donors don't know their cost per visit.

I almost believe cost per visit is more important at times. For the reasons that you explained, especially in private practice, I've never had a lot of success in business trying to out-revenue the expenses. I’m like, “Let me figure out how to make more,” and I always end up spending more every time. I hire more people, and I get more bloated because I got extra cash in the bank. I’m like, “Let me spend it.” We are humans.

Efficient Expense Management: Learning How To Control Your Expense Line 

I can grow a business, but creating a profitable business, in my opinion, is optimizing your revenue, but sometimes even more so learning how to control your expenses. You’re learning to control your expense line and learning how to operate with less. You've got to figure out how to be more efficient. All of your KPIs are being measured. For instance, with over-the-counter collections, we have this idea of where we want to be, but anything below 99% or 97% is our budget. Learning how to minimize the inefficiencies across your business will probably make you a lot more money in the long run than focusing on, “How do I generate as much capital as possible?” Does that make sense?

You can never cut expenses to wealth. You can only cut so far, but you need to be aware of them. That's also one of the benefits of meeting with your CPA or bookkeeper monthly. What I learned as I was doing that monthly was not only learning how to read the P&L, but we would look at this month over last month, or maybe this month over the last 2 or 3 months comparatively, or this month over this time last year. You could say, “Let's look at our expenses by category. Is there a huge variation? If so, why?”

We had multiple clinics at that time. It's very possible that a clinic director or someone in the office got wild hair and wanted to buy a bunch of office supplies. They didn't know, and we had to maybe talk to them. It was important for me to know where we were. Once you get a handle on that, and you're relatively steady, and you're not having a lot of influx of providers, not a lot of transitions, and whatnot, the cost per visit should stay pretty consistent. With each provider, it should bump up a little bit more. If you get a few providers, then you have to add more admin staff. Those are all built in.

It does fluctuate month to month, but during steady times, it should be relatively constant. It is super important to learn because then you can break it down by unit. You’re like, “Now I have this cost per visit number, and I have my average reimbursement per payer number. It's easy to see who I am losing money on a regular basis and who I need to see more of on a regular basis.” It's easy to make objective decisions at that point and what would be in the best interest of your business.

I agree.

The reason I bring up the front desk is that it's easy to increase cashflow, if that's an area that's not optimized immediately. You tell me. The EMRs that you've worked with in the last few years, are they helpful in tracking over-the-counter collections, or is that something you still had to do manually?

I've seen them do a pretty good job of that, the good EMRs. Go to the Facebook group, and you see the ones that we mess with. They're all good. They should have some decent reporting. I agree about the front desk. It's such a revenue driver in so many ways. Over-the-counter collections is one way.

We recommend keeping credit cards on file forever. You made that trade transition a couple of years ago. I'm assuming you saw an increase in cashflow by doing that pretty quickly.

Patients don't owe us money.

You don't have any patient AR outstanding.

It doesn't exist. We have a positive AR. We're always reimbursing people every month.

I'd much rather do that than be chasing people for money.

Safeguarding Clinic Cash Flow: Mandating Credit Cards On File 

Put credit cards on file and make sure that you are collecting your copays. At the time of service, also collect the estimated deductibles and estimated coinsurances that might be associated with that payer. I know some people who have heard that from us before be like, “Yes.” There are going to be some people who've never thought about that. They're going to say something like, “How are we supposed to estimate that? What if they build a different CPT code?”

I'm going to say, “Figure it out. Go look at all your Blue Cross patients that you have billed over the last twelve months. Not a whole lot is going to change. You're going to bill them pretty consistently. You're going to have a normal bell curve. It's statistics. Most of your patients are going to cost this much. You're going to schedule them at the same one-hour time block. You're going to build this many units. If you look at it, you can get a close idea of what you're going to get reimbursed, assuming you stay normal and continue to do what you've been doing. You take a percentage of that.”

It’s easy. Even if you didn't want to break it down by pair, what's your average reimbursement? If it's $100 and they haven't met their deductible, you collect $100 that visit. If they have a 20% coinsurance, you're collecting $20 for that visit. You can make it very simple. The idea is don't let anybody walk out those doors owing you money. You lose money that way.

No way. It's not good. It's not a good idea.

Poor business sense. I shared a quote at PPS that I found. A lot of patients expect more digitized payment services like that. If I have to cut a check for somebody, I'm like, “This is 2026. Why am I mailing checks anywhere or even writing checks?” I can't remember the last time I wrote a check. I'm trying to get some work done at my house in Alaska, and the guy is like, “I can get started. Send me a check.” I’m like, “I'm in Arizona. Why don't you have a digital payment service?”

I think about that the same way with physical therapists or any private practice owners. You should have credit cards on file to make it easier for them. They don't have to bring a physical credit card to subsequent visits. We'll run it when they walk in the door. When there's a balance left over at the end of the month, we'll run it again and let them know that we're going to do it. They don't have to lift a finger. The patients expect that at this point.

We're going to be doing a little build-out downstairs with an outdoor kitchen area. I had to call the supply house and buy some lumber. I got the quote and whatnot, and they were like, “You're going to have to come in and pay in person. We don't collect cards over the phone.” I was like, “Sorry, I'll call someone else.” I’m not getting out of my house. I was like, “Tell me when you have a payment processor that you can collect over the phone.”

That's right.

I don't have time for that.

There are going to be owners who are reading who are like, “Some patients are going to get mad. Some people don't want to share their credit card.” What do you tell them? You've lived it.

I will tell them sometimes, in life and in business, when you learn enough of the things the hard way, you start to build these principles of success. One of the principles that I've learned is that a lot of your success will be found when you learn to stop being consumed by the opinions of other people. We love the patients. We love them as people, and we want them to get help. If they're upset with me, I don't have to let that consume me. If that means they have to choose to do business in other places, that's fine. That doesn't mean that they're bad people. It doesn't mean that I'm a bad person. It means that I don't have the luxury of absorbing that cost any longer.

That's the point right there.

I care about my family a lot more, so I want to make sure that they're protected.

There's also a part of me that thinks if someone's not willing to share their credit card information, because that's our policy and we don't see patients who don't keep credit cards on file, you can pay in other ways when you come to each visit. We are going to protect ourselves by having a credit card on file. If they don't want to do that, then that makes me think, “That's a person that I might have to track down.” I'd rather not do that. I choose not to be in that position.

I would encourage people to do it anyway.

Managing RCM Metrics: Keeping Your Billing Team Accountable 

I know you've dealt a lot with this. Number one, your CPA, bookkeeper, and the same thing with the billing collections team, meet with them monthly. Review the collections for the month. We've talked about projecting out what they should have collected for this month in previous episodes. You should know what they should have collected this past month. You also should know what their denial rate is. You should have the report of their AR aging. With those three tools, you can pretty handily manage your billing collections team, don't you think?

I like those three stats. Even more than that, for me personally, my standards have grown as I've learned more. That's entry level. That's not like you hit the jackpot because somebody knows how to measure a statistic. I want to work with somebody who has business acumen. If I want a report that says, “Show me a report that shows me what hours of the day we make the most money,” I want a biller that can pull that. If I want a report that says, “I want to know which payers I should be considering going on a network,” I want a biller who can pull that data. They should be able to help me make business decisions without me having to micromanage all the data.

That's a good point you bring up. When we're talking initially about knowing some of these metrics, like your average reimbursement per visit and your average reimbursement per payer, those are numbers that you shouldn't have to get on your own. You could, and you should know how, but that's an email to my billing company. It’s like, “I want to know my average reimbursement over the past six months for clinic-wide and for these five payers. I want to know what's happening with them.” They should be able to get you that in 24 hours.

That is so important. I thought for a long time that we were supposed to be the people tracking every stat across all the businesses for everything. That was a bad idea. That's a pain in the butt. If it's coming up at my quarterly meeting, I would send an email and say, “These are the decisions we're trying to make as a company. This is the data that I want to look at. Our meeting is on Tuesday. Can you have it for me by Monday so I can review it before the meeting?” I can go in there knowing that I've got our revenue cycle team that's like, “We're on board with you. We know how to support you through this decision.” That's an important piece of it.

In the last few episodes, we talked about how to manage a billing collections team. I highly recommend you go back a few episodes and see what we say about that. It was probably one of the High-Performance Practice episodes that we did. We don't have to spend too much time on that. I'm sharing those 3 reports or those 3 statistics as entry-level. Once you get into it, you're going to want to know which payer has the greatest balance that's greater than 120 days.

I’m like, “Give me an update on all of my lean or motor vehicle accident patients or no-fault insurance patients. Give me an update on the communications with each lawyer that you've talked to and the status of their case.” It could get much deeper, but to start off, to measure their efficacy, those are some standard ones you should go by. They should be communicative.

Another good one is, “Show me the provider that has the highest revenue generation in the company. I want to model the way that they bill. Show me what that looks like. Show me the differences. Help me make more money.”

That's a good lead-in to the next section. How do we optimize billing? How do we optimize charges amongst our providers? The billing question is, what's their CPT code utilization rate? How often are they billing the 97530s? How often are they billing the neuro re-eds? Are they doing reevaluation billing? How are they justifying it in their documentation? That's not a biller's job right there, but that's what you're looking for.

Optimizing CPT Code Utilization: Training And Incentivizing Clinicians 

If they're generating a lot, is it purely because they're seeing a ton more visits, or are they generating more revenue per visit on average compared to the other providers in the clinic? That's one thing I'll ask frequently. I'm getting more appropriate answers, but are they billing with AMA when they're supposed to be billing with AMA? Are they billing with Medicare eight-minute rules when they're supposed to be billing with Medicare eight-minute rules? It's vastly different, and the reimbursement can be significantly different. You should be using either one appropriately. All those things go into it when you're looking at individual provider productivity.

I've got some general ideas on that, too. You want to try to agree on the terms. Our goal is to bill as much as legally and ethically possible for every visit. We're not going to do anything illegal or unethical, but we're not going to leave units on the table either. That's the sweet spot. A few ways to do that are to, number one, train your team. Have training.

It doesn't have to be complicated. Have some type of formal training to help them understand how to generate revenue for the business, which units pay the most, which ones pay the least, and how to justify that coding consistent with the way that you'd like to treat patients. That'll go a long way, but that's not going to get you all the way there.

Modernizing Clinic Management: Leveraging AI To Track Financial KPIs 

Another important hack or tip is to measure units per visit and have it reported to you every week. Create an accountability rhythm. They're reporting that metric to you every week. Have them put it on a piece of paper, see it, and measure it because that will help it improve. The other thing is it's helpful to have somebody else on the team who's responsible for pushing billing production with the providers and not the owner. Have somebody who's a little bit more detached from the financial gain of that initiative. You remove emotion. The conversations could be more direct and less weird. Don't make it weird. Find somebody who's good at having those conversations. You can bonus them a little bit. That's another one.

The last one is going to be aligned incentives. Finding ways to create compensation plans for your providers that allow them to earn more when they generate more can help create aligned incentives. All of a sudden, people know how to bill. Do a little bit of those. Take those strategies. Pick 2 or 3 that you like and go for it. You'll start to see revenue per visit climb that way.

There's a huge benefit to using a third party, whether it's someone on your team, or even a QGENDA, or something on MedBridge that teaches you how to bill appropriately and maximize billing for the services you provide. It is super helpful. Most importantly, the owner and the clinic directors are all on the same page on how we do things. You're also well-versed. You're not finding the course and then making the providers go listen to it. You're listening and watching it first and getting to know the ins and outs. You become an expert at it, as do your clinic directors. You create policy and procedure behind it based on your trainings. They can not only train, but also hold accountable as necessary.

I love all those things. We've gone through the entire baseline fundamentals on how to make money in a private practice. There's an important one that we didn't discuss, which is meeting with your accountant and bookkeeping team on a regular cadence. Maybe we loosely discussed it, but have a financial team and a financial plan.

Create a financial plan for the quarter. This is our burn rate every month over month. This is the breakeven metrics that we have to be at. Know that. Make sure your team is aligned behind it. Create budgets around how you spend and what the expectations need to be across all of those financial touch points. That's so important. If not, you're going to be like, “Let's get more patients in the door.” You're going to go and spend all your money. That happens a lot.

It became easier as we became more intentional about that. I started giving credit cards to my clinic directors and my marketing director. I said, “Listen. Anything under $100, don't bother talking to me. It doesn't need approval. I trust you. If it's under $100, go and buy it. Anything over $100, you need to submit for approval. Review it and tell me why you need it.” That's an email or a form to fill out.

Same thing with a marketer. I’m like, “If you're going to do lunch at a doctor's office, you have a budget of $250 to $300. Anything less than that, don't talk to me. Tell me when to show up and where.” That made things a lot easier. It's a simple process. I gave them budgets by doing things like that, and more so to say, “This is what you need to run the clinic. This is your budget for it. Go and do the work.” That made things a lot easier.

If you're still reading, guess what? You're going to get a hack. Don't tell anybody. Ever heard of this thing called AI? It's this new thing. You got to check it out.

Tell me about this.

It’s new. You have never heard of this. A few simple documents. Get you a KPI dashboard where you track your AR, your visits, and your email. Grab another tab and put your average reimbursement per visit per payer on there. Track all the information that we're talking about, like your over-the-counter collections.

You can use Claude or ChatGPT. You can integrate those into Claude, a co-work tool, and be like, “Tell me what I got to do to make money.” You have a financial advisor for your practice sitting in AI right there. How cool would that be to equip your directors with pieces of that as well? It’s like, “Can I hire this person?” Ask AI, “Let's see where we're at.” For somebody like me, I get a little overwhelmed. Trying to figure out money scares me. Having that control, which I know is right there at the tip of my fingers, gives me a lot of peace that I'm making good, sound financial decisions. That's an idea for you.

I love it. I'm glad you brought it up. Sometimes, we get into this, and we lean on our past experience and not how we can leverage modern tools to meet some of those same objectives. That’s great. Let's talk lastly about negotiating or dropping insurance. I have an insurance scorecard that I've had owners fill out in the past. Half of it is numbers.

The left-hand side of the spreadsheet is, “Who's the payer? What's your average reimbursement rate over the past twelve months? What's your cost per visit?” The other half is, “On a scale of 1 to 5, how easy is it to get paid from them? How quickly do they pay? How often do they deny? What is the authorization process like?” It's the administrative burden of dealing with that payer.

Sometimes, we look at the number portion of it without thinking there could be a serious drain on our resources if these insurance companies aren't paying us in a quick and easy manner. If we have to fight tooth and nail to get a typical reimbursement for an average visit, and they're not authorizing stuff in a timely manner, then that expands the resources of your team to collect that same money.

Dollar for dollar, all the insurances aren't paying the same. One could be paying $85, and another one could be paying $85, but 1 has unlimited visits. They can come as often as they want. They don't require a lot of audits or anything like that and aren’t requesting notes. Whereas another $85 insurance company is giving you 6 authorized visits, and then they want a progress report. They give you two authorized visits and want a progress report. They give you one authorized visit and want a progress report. Their denial rates are high, and they're always asking for notes.

You can't compare them apples to apples and have to consider the administrative burden. That's one thing to consider. You're looking at either situation. If I'm talking to an insurance company to either negotiate with them or drop them, I want to know which ones to focus on, not just based on numbers, but also on the administrative headache that they're involved in. Considering those two factors, have you dropped any?

Yes, we did.

How many?

We've dropped some smaller ones that I don't know, and then we dropped Cigna.

Did they also have an administrative headache, or were they simply low payers?

The answer is yes. We were at a place where it was like, “We want to hire another therapist. If we hire another therapist, then we have to hire another front office person because they're already drowning in authorizations.” I was like, “That's $40,000 a year. Why don't we drop them and spend $40,000 a year on marketing? I'd rather do that.” We did that, but not the 40,000 a year.

I get it.

You could be like, “We’ll hire the therapist, drop them, and spend a couple of thousand bucks a month on marketing to fill your schedule back up.”

Dropping Low-Paying Insurances: Assessing Administrative Burden 

Was that a big hiccup for you, going through the process of dropping? Were you scared?

I was scared, but I like to operationalize my fears. For a lot of the fears that I have, I don't have the answers to these problems. I’m like, “Should I drop them? Should I not?” It's like, “What data do I need to make this decision?” Now that you have AI, you can plug your whole business inside the AI bot and say, “This is what I'm thinking about,” and they're like, “That's a great idea. Perfect business move. Here's the math and why you should do it.” You have that level of control of those numbers. You operate with a different pep in your step. Also, when you have a great team that you trust, then take a bet on it.

Asking for some real-world numbers, dropping some of that insurance, I'm assuming your average reimbursement went up a certain percentage. Are you willing to share?

I don't have the data in front of me, but it was not a big percentage. It might've been 1%.

It wasn't a large population.

It also saved me a payroll, saved me payroll.

You didn't have to buy another admin.

Correct. That's why I think managing those expenses is so important. In my opinion, I feel like the practices that are going to make it are the ones that are able to filter more money to the clinicians. In order to do that, you have to find ways to save money on the admin side. You've got to implement AI. You've got to work with VAs.

You have to learn how to bill. You have to learn how to do those things efficiently. You have to use AI because you have to pay those clinicians 60%-plus of your revenue. You don't want to keep adminning everything. You can't hire more front desk people, more billers, and more credentialers. You can't do that. You have to find a way to be more efficient.

If you want to know the tactical steps to dropping an insurance, feel free to reach out to me on Facebook. Send me a Messenger note. I've got an SOP all about dropping low-paying insurance and how you should do it optimally. I've done a number of episodes with people who have done it. I haven't met an owner yet that has dropped insurance and has regretted it. I’ve been around for a few years, and everyone to a T has dropped insurance and wishes they did it earlier. It never turned out poorly for them.

What you're talking about is the fear of the unknown. You haven't experienced this. You’re like, “Local physicians aren't going to appreciate that I'm dropping this insurance.” I haven't found those fears to be founded yet. It’s quite the opposite. They are typically unfounded. They figure out a way to do it the right way. They handle those patients the appropriate way, give them plenty of notice, and things work out. What tends to happen is they go through that experience, which becomes a relatively positive experience, and they're looking for the next insurance to drop. I see it all the time.

What I heard there was the fear of the unknown. You're going to confront new problems that you've never had to confront yet because your schedule was full. You might have a little bit more of a demand problem, which is scary because we feel like if we don't have full schedules, we're going to go broke. There's some truth to that, but you'd be surprised at what you're capable of.

When you place that healthy pressure on you and your team, you find ways to be resourceful. You find ways to attract the right people to your business, the ones that will actually pay you. What I've mostly heard you say is that most practice owners are capable. They're capable, good, hardworking business owners that are able to solve hard problems. That's what I heard. Bet on yourself a little bit, and you're probably going to rise. You and your team.

Negotiation Leverage: Coming To Payers With Strong Demographic Data 

To switch tables a little bit to the negotiating part, I haven't done negotiating, but I've coached enough people who have. I’ve done a few episodes about people who have negotiated contracts. It's not easy. They'll tend to ghost you. Sometimes, it's hard. I remember interviewing Trace. It took him 60 or 90 days to find the right person to talk to. They're not easy to come by. In finding the right person to negotiate with, is that a phone call or is that typically emails back and forth?

It's an email. I can share some stories on negotiation. Typically, most insurance will allow you to consider re-negotiating every two years. The first time you do it, you're probably going to be coming to the negotiation with a little less leverage because you're still only two years in the business. You don't know what the heck you're doing. By year four, you know a little bit more.

By year six, you know a little bit more. By year eight, you're like, “Let's negotiate. I've been around the block. I know how to hire people. This is what we need. We're going to have to either figure out how to get here, or we decide that it's no longer a good fit.” Something shifts whenever you approach it with a little bit more backbone. Have some courage, be professional, know your worth, and bring data to the negotiation. If you want to take a screenshot of how much their company profited last year and add that to the bottom of the email, you could do that, too. That might give you a few extra bucks.

Especially when you consider UnitedHealthcare makes tens of millions of profit.

Billions.

I’m sorry. Tens of billions. Not annually, but per quarter. That should make you think, “Maybe there is some money for this poor, struggling private practice.”

It's there. Don't believe what they tell you.

Good advice. You can do it. It's possible. There are some resources out there that will help you. I'm talking to Brace Health. You want to come up with numbers. They'll help you come up with numbers. If you're in the right places, they might even help you find the right people to talk to because they have experience in different states.

If you need some help, if you are one of those people who's struggling to see patients the entire time and don't know how to find these people, there are resources out there. You can leverage those to help you fill out those emails and get to the right people with the numbers that you're hoping for. Reach out to me independently at Nathan@PPOClub.com, or send me a Facebook Messenger request. I can connect you with people who can help you negotiate. They'll give you the email content you need to send to the right people. It has to come through the owner. Otherwise, there's going to have to be some kind of proof of that person negotiating on your behalf. You could do that, but you don't have to. How many times out of ten have they come back and given you an increase?

Eight or nine.

That's awesome. That's cool.

They need you more than you think. Some of them won't budge, but then you drop them.

That’s true. It's possible. That’s the only power you have, especially if you have a specialty.

Bring your data. Bring your costs per visit. Bring your average median household income in your area. Bring the debt-to-income ratio for physical therapists when they graduate from school. It's all free. Make this a data-driven position. Numbers don't lie.

I like that you shared some of those metrics. Those are important. I wouldn't have come up with those. The surrounding demographics for people and what you're having to pay people on your team nowadays compared to five years ago when you signed the contract and that kind of stuff. Tell a huge story and back you up as to why you're approaching them. We spent a lot of time on this.

We're passionate. We wanted you to make some money

Overcoming Fear: Rising To The Challenge Of Private Practice Leadership 

That's why we're here. We want to help people make some money. We know that's a path to freedom. What else do you want to add? Anything in particular on top of that? I've exhausted a lot of the stuff that we covered. I don't have much more to add.

Make sure you check out the conference in San Antonio. It’s on October 15th through 17th, 2026.

PPOClubEvents.com.

Check out the landing page. We tried our best to help you see what we're building for you. We want to try to give you a place where you can elevate yourself as an owner and a leader, and also elevate your team so that you can stay in the game with us. We need you. Consider coming to San Antonio.

I'll add to it. As I said, from Eric Miller, demand profit from your company. Put the energy and effort into it. It is the lifeblood. It’s the reason why you got into this. It’s the American dream. Demand that profit. These are some of the ways that you can do it. Good talk.

See you on the next one?

See everyone in San Antonio as well.

Important Links

• Drop Your Lowest Paying Insurances With Trace Kennemore, DPT
• Private Practice Owners Club on Facebook
• Nathan@PPOClub.com
• Nathan Shields on LinkedIn
• Adam Robin on LinkedIn
• High-Performance Practice Conference
• PPO Club Events