Reimbursement Differences Between Private Practices and Hospitals
If you are on social media, whether Facebook, LinkedIn, X (formerly Twitter), I am sure you are seeing posts of therapists in private practices complaining about the difference in reimbursement hospital outpatient therapy departments receive compared to a private practice when providing the exact same intervention(s) and/or procedure(s). However, instead of complaining, I think private practices should use this discrepancy to their advantage.
In this article, I will answer the following questions and provide valuable insight how private practices can use this discrepancy to increase their business and revenue.
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As the current Director of a Hospital Based Rehabilitation department and a former private practice owner, the idea that therapists would be “troubled” by the higher rates negotiated by hospitals is problematic to me. “Leveling the playing field,” as many on social media have called for, is a short sighted approach to quality of care in the profession. Keep in mind that although many payors may reimburse hospitals at a higher rate, a growing number of them also have a higher copay/coinsurance requirement for the patients when they choose to utilize the services of a hospital based program. Even so, our patients often choose to use our services instead of those of the private practices in our area because they feel they are afforded a higher quality of care and a stronger sense of continuity of care. Fortunately for all of the therapy practitioners in our region, we work closely with our competitive partners in rehab to ensure all of these businesses stay busy and prosperous.
Taking over the rehabilitation services for a hospital based program is certainly an option, but may present a larger challenge than private practice clinicians may be aware of. I had a number of contractual agreements with hospitals in my own private practice. Comprehensive regulatory compliance needs, quality assurance and accreditation oversight play a large role in the hospital based rehabilitation platform that more than justifies the increased rate of reimbursement in many cases. While MIPS and MIPS Value Pathways have created a stronger incentive for private practice to report on quality, hospitals have had these requirements in place for years with significantly higher penalties for failure than private practices face.
In my opinion, the best approach for private practices who are not in a position to take over all of the requirements for providing care in the hospital setting, is to develop a relationship with the competitive hospitals in your region. Together, you can work to ensure all of the practices are able to staff and operate at the highest possible efficiency and provide your community with the highest quality available.