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Selecting A Therapy Contractor

January 27, 2014 0 Comments

Selecting a therapy contractor can be a time consuming and arduous process with many considerations, all of which will significantly impact your facility’s finances. Contract language and negotiation is an art in and of itself, and the nuances of what you agree to in a contract Selecting Contract Therapy Companycan have a significant impact in regard to your building’s margin.

Selecting A Therapy Contractor – Top Five Issues

  1. Price: While the bottom line is always a consideration, it should never be the only thing you consider. There are many value-added services that you may gain in one company’s quoted price, that another contractor may not offer or if they do provide the added service, it will be at an additional cost. In the end, old adages such as “you get what you pay for” and “if it is too good to be true, it usually is” can often ring true in the therapy world.
  2. Pricing structure: Many contractors are quoting pricing structures as a price per minute for the Part A services and a percentage of the Part B Physician Fee Schedule for Part B services. While this in and of itself is not a bad way to price the services, you will need to consider a few issues:
    • For Part A patients, how do you pay the contractor when a patient falls out of a rehab RUG category but is still receiving rehab services?
    • For Part A patients, what if the contractor provides 1,000 minutes and you are only being reimbursed for 720 minutes?
    • For Managed Care patients, how are you getting paid for your current Managed Care contracts and did the contractor quote you a separate price for this type of patient?
    • For Part B services,  Have you considered the decrease on the fee schedule in Part B for Multiple Procedure Payment Reduction Policy and are you sharing in that decrease with the contractor?
  3. Ancillary services: Many contractors will quote an “ancillary services” rate for services outside of the outlined services. Before signing on the line, be clear in your understanding what is and is not included in the services for which you are contracting. This will help avoid being “nickel and dimed” for services you thought were included.
  4. Staffing: Obviously, finding staff is paramount to having a successful therapy program. Therefore, I would recommend asking your contractor of choice for references who can attest to their ability in sourcing, training, and keeping quality staff members.
  5. Non-compete clause: Non-compete clauses are essential in the contract therapy world, as the contractor has spent thousands of dollars to attract, source, and train the staff for your building. That said, do not be held hostage by a non-compete clause. There are creative ways to modify the non-compete clause in contracts so that it can be a win-win for both the contractor and the client.

As you can see, negotiating the nuances of a therapy contract can be complicated. If you are in the process of sourcing a new therapy contractor, or if this is your first time as an administrator dealing with a therapy provider, seeking expert advice and guidance can save you thousands, if not hundreds of thousands of dollars in the end.  Selecting a therapy contractor may be the most important choice you make this year.

Thank you to Mark Mc David, from Seagrove Rehab Consulting + Education for this post.  Seagrove offers services to help clients in the review and critique of contracts to identify current pitfalls, as well as assisting with future contractor vetting and initial contract negotiation.

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Mark McDavid

Mark McDavid, OTR, RAC-CT, owner of Seagrove Rehab Consulting + Education is an experienced leader with a proven track-record of dynamically growing therapy and home health operations for both in-house and contract service companies.

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