Less Volume, More QualitySep 05, 2022
When I transitioned from the Insurance based world into the cash pay setting, there was a significant unit economics difference.
It was common to see clients 2-3 times per week as we ate away at their insurance deductible, although sometimes necessary as they were coming in for care post-operatively. The perceived cost of care in this instance to the consumer was their $15-$50 copay. Now, let’s look at how volume would affect this: If a PT was able to see 3 clients per hour, you could effectively 3x their revenue potential and offset the management load with the use of a PT tech.
To be fair, I think this model of care has a massive place in the industry. Volume to some degree is needed as we do not have an adequate number of providers and, this is the bed the profession has made for the time being. When you look at the demographic of those choosing this model of care, I typically think of the general American consumer looking to get back to everyday life. Some people NEED 3 days a week of PT + their 10-minute warm-up on the bike, not just to allow for operational capacity of the clinic, but for their general health. In theory, this model of care, if educated well enough, could actually create sustainable and continued fitness habits for clients (maybe a topic for another day).
Within the consumer realm of PT, there became a clear disconnect between the type of care/rehab given and the activities that clients were looking to get back to. Enter: Performance Physical Therapy. Above and beyond navigating the activities of life, at times taking place directly in gyms or clinics that looked like gyms, and in many cases, cash-based (and typically with lower overhead than insurance-based clinics).
When I made the transition to cash pay PT as stated in the opening, it was apparent I wasn’t going to see my clients 2-3 times per week… Sometimes my recommendation was once every other week… This drastically decreases the unit economics of this setting.
So how do you offset it?
- Likely the most obvious…Charge for the quality you’re providing. The norm in cash pay realms now seems to be in the $200-400/visit range. If you dial in your pitch correctly, you should be able to explain how even at the higher price point, you will save your clients money AND time.
- Create an offer to offset the low volume of visits and deliver this digitally.
- See more clients…meh...You left the volume world for a reason
Outside of these three, there’s not much else you can do specific to the unit economics of the issue.
By understanding all three options, it was apparent to me that a combination of #1 and #2 would be my client management model. Here’s some cool math for you:
Let’s say you’re currently seeing 25 visits per week at $200/visit; this gets you $5,000/week or on average $21,500/month.
By adding 10 digitally managed clients at $300/month and structuring this so you could manage them all in 2 hours per week, you now turn your hourly wage into $349/hour. Let’s say you got really efficient and managed 12 clients in the same amount of time… now we are talking $419/hour.
In this example above, you could either: Have a 15% increase in total revenue OR decrease your service hours by 20% and see almost no drop in total revenue.
If you’re spinning your wheels figuring out how to make a low volume business model work, digitalization is your solution.
Interested in learning how to apply this to your clients?