Benchmarking in Physical Therapy: The Good, the Bad, and the Illegal

Successful practice owners understand the importance of monitoring the competition, setting performance goals, and tracking progress. But choose your benchmarks with care to avoid unnecessary legal risk.

Physical therapist placing recovery tape on a patient.

According to the American Academy of Orthopedic Surgeons, the typical physical therapist (PT) spends about 45 to 60 minutes with each patient. Is this long enough?

If it were your decision, you wouldn’t keep track. Instead, you’d spend as much time with the patient as necessary. Your focus wouldn’t be on fulfilling your daily patient quota; it would be on helping that athlete get back to playing the sport she loves. But healthcare is a business, and your practice needs to make enough money to survive. With this in mind, your PT practice likely benchmarks performance.  

Benchmarking is the process of comparing your practice’s performance with competitors. To do this, you need to set goals, track progress, and compare data. Then, you can shift your practice’s standards and policies to ensure both that patients are properly cared for and your business stays above water. 

But here’s the tricky part: you must ensure your benchmarks don’t sacrifice patient care or inadvertently encourage fraud. This article will discuss some potential legal risks of benchmarking and ways to avoid them. 

When Benchmarking Undermines Quality of Care

Benchmarking is often a game of Whac-A-Mole. The moment you fix one problem, another pops up. 

Imagine your practice is losing money. Your research uncovers that the typical PT in your city sees eleven patients per day. The PTs in your practice, however,  see an average of nine patients per day. 

Wanting to keep up with the competition, you set a benchmark of eleven patients. Then, at the next staff meeting, you tell your PTs about the eleven-patient-per-day goal and even offer bonuses to those who fulfill this requirement. You are confident that compliance will increase revenue and get your practice out of the red.  

Unfortunately, incentivizing patient volume could backfire. Naturally, your PTs will be motivated to conduct patient visits more quickly to reach the new goal. Thus, they may not spend enough time with each patient. As a result, the quality of care may suffer, leading to poor patient outcomes. 

Poor patient outcomes not only invite lawsuits but also inspire negative online reviews and decrease patient-to-patient referrals. Benchmarking patient volume, then, may have the unintended result of actually decreasing revenue. 

When Benchmarks Undermine Perceived Quality of Care

According to research from Vanderbilt University School of Medicine, nice doctors get sued less. The study showed a strong link between legal action against doctors and complaints about lack of humanness and poor communication. The results were clear. Doctors with people skills— the ones who listen and spend time with each patient—stay out of the courtroom. They’re also less likely to have their patients complain to the PT board, a potential trigger for license investigations. Although the study’s subjects were doctors, PTs beware. The conclusions likely apply to you, too. 

What does this have to do with benchmarking? Well, let’s return to our scenario with the eleven-patients-per-day goal. When your PTs were seeing only nine patients per day, they had ample time for small talk. They asked each patient, how’s your day going? Did Mary have fun at camp? Did your boss finally give you that bonus you deserved? As a result, each patient felt connected to their PT. 

Now, the PTs skip the pleasantries to make time for those two additional patients. Feeling the pressure to reduce visit times, your clinicians stay laser-focused on the task at hand: examine and treat each patient and then quickly move on to the next one. 

Even if the quality of care doesn’t suffer, your PTs have an increased risk of being sued for negligence. Before, patients didn’t see the PTs as simply providers. They connected on a human level. Now, if a patient experiences any adverse treatment outcomes, his thoughts may travel straight to “lawsuit.”

Encouraging Fraudulent Behavior  

The False Claims Act (FCA) is a federal law that imposes liability on persons or companies who defraud the government. In other words, you’re not allowed to send any false claim for payment to the government. If you do, you could be on the hook for three times the amount of each false claim, plus an additional penalty of $5,000 to $11,000 per claim. Moreover, some states have created their own versions of the FCA. In many states, a person who violates these laws may face criminal charges. 

How does benchmarking relate? Let’s say you set a benchmark for the number of time-based CPT codes you bill per patient. As such, you instruct each PT in your practice to bill three units per encounter. However, getting to three units is not so easy, and many PTs don’t keep up. As they fall behind, some may feel pressure to upcode— that is, they code for a treatment service that exaggerates what they performed. 

The problem? Knowingly sending upcoded claims for payment to Medicare violates the FCA.  Even subtle upcoding that’s triggered by benchmarking can run afoul of the law. As a result, benchmarks that require PTs to bill a certain number of codes per visit carry high risk. 

Oversimplified Benchmarking Metrics

Anybody who’s tried to interpret data knows that human biases can steer us to inaccurate results. A famous study, for example, reached an astonishing conclusion: the higher ice cream sales were in a given city, the more crime there was reported in that city.  So can we blame ice cream for causing crime? Well, not so fast. In reality, ice cream sales and crime rates are both correlated with a third variable—they both increased as the weather became warmer. 

Like the ice cream study, benchmarks may lean too heavily on a single variable, missing the bigger picture. Let’s return to our patient quota example. Remember, after conducting some research on local competition, you created a policy requiring your PTs to see eleven patients per day. A few months after implementation, the results are in. One particular PT consistently underperforms and averages only seven patients a day. Can you conclude that this PT is less efficient than her peers?

It’s not that simple. You need to do more digging. In truth, you should adjust your expectations based on the type of patients this PT was seeing. Did she see more challenging patients than her colleagues? Did they have more complex issues? Were there unexpected complications?  If the answer to any of these questions is yes, you should expect her to miss her patient volume mark. Like in the ice cream study, a single metric doesn’t tell the whole story.

Overemphasizing one metric may create other unintended consequences. For example, if you evaluate PTs solely on their ability to efficiently and economically discharge patients, they may become hyper-selective in accepting new patients. Why would they take on the complex cases? Does it make sense to treat patients who face barriers to adherence, making it harder to discharge them on time? Why accept Medicare patients if their reimbursements are lower? Thus, even benchmarks with limited purposes can have cascading effects. 

Impact On Staff Well-Being

Benchmarks such as patient quotas can cause burnout. Burnout means your PTs are chronically stressed, resulting in reduced motivation, low mood, and exhaustion. Although burnout can happen in any profession, healthcare workers are especially at risk. 

As a PT, you spend your days with people who are struggling and need your help. Many of your patients have experienced devastating injuries or accidents, and they come to you in their time of greatest need. And sometimes, despite your best efforts, they still don’t do well. On top of that, you must keep copious notes and create detailed treatment plans. It’s a potent recipe for burnout.

Predictably, benchmarks that demand each PT see a certain number of patients per day don’t help. More patients mean more exposure to stress. Once again, a mole pops up. The effort to increase revenue could undermine your PTs’ mental health.

Remember, your staff’s well-being isn’t only a matter of compassion. It’s a business and legal matter, too. For example, Stanford researchers found that clinician burnout leads to increased medical errors. And guess where many healthcare fraud complaints against practices originate—whether those complaints are legitimate or fabricated? If you answered, “unhappy employees,” you would be correct.

Using Benchmarks That Reflect Value

Despite all these risks, benchmarking can, and should, be part of your practice. However, the focus should be on value, not just revenue. But what is value? Value-driven healthcare links quality to reimbursement. It tries to deliver the best possible outcomes at the lowest possible price. A PT who can reduce a patient’s shoulder pain cheaply is delivering high value. 

How can you create and incentivize a value-based benchmark? First, narrowly tailor your goal. Don’t just set a general benchmark to bill three CPT codes per patient visit. Instead, create coding benchmarks specific to each type of encounter. Be as specific as possible. For example, one benchmark may be the amount of time-based CBT codes billed for a geriatric patient who suffers from mid-stage Alzheimer’sand requires therapy to recover from a partial knee replacement. 

The more specific your benchmarks, the more you reduce your risk of creating unreliable data. You can even make benchmarks specific to each PT’s level of experience. For instance, a recent graduate may not be expected to discharge the above-mentioned patient as quickly as a PT with decades of experience. Targeting individual PTs will also create stronger links to incentives and can better influence changes in behavior.  

A Benchmarking Alternative

Last, remember that benchmarking is not the only way to improve your practice. You have other tools in your toolbox. For example, there’s the peer review process, where healthcare professionals evaluate their colleagues’ work to ensure quality. Under this model, you can create a peer review committee to evaluate performance. A smart strategy is to review poor-outcome cases to look for similarities and root causes. Then, you can create upstream solutions to prevent these issues from reoccurring. Finally, if needed, you can discipline incompetent or unethical PTs.  

We Can Help

You’re the type of person who appreciates the challenge of trying to improve every day. That’s why you started a physical therapy practice. Indeed, benchmarking can help your practice evolve. However, implementation of a rigorous benchmarking program requires care. A knowledgeable healthcare attorney can help you set and reach your goals while also avoiding unnecessary risk. If you’re located in any of the states where we practice, schedule a complimentary consultation to see how we can support you. 

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.

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