Prosthetics, unlike most areas of healthcare, is not reimbursed on a fee-for-service basis. Rather, prosthetics is reimbursed per product. Whether a practitioner sees a patient two times or twelve times, the reimbursement amount is the same. A conundrum for prosthetists is how to deliver quality care and prostheses and provide prostheses in a time frame that will keep the practice’s cash flow healthy. Delays in delivery times and/or unproductive patient appointments cost the practice money.
Initial evaluations, adjustments, and follow-up appointments are all bundled into the cost of the prosthesis. Therefore, in theory, a prosthetist can see an entire day’s worth of patients and have no income to show for it. Meanwhile, the costs of doing business for the practice (rent, salaries, phones, supplies) still need to be paid. Thus, delays in delivery have a direct impact on the financial health of the practice.
Effects of Delays in Care on Patient Satisfaction
Delays in prosthetic deliveries result in backups in care provision, decreased patient satisfaction, and poor outcomes. The psychological impact of delayed care cannot be understated. By human nature, the sooner we receive our items, the more satisfied we are. The same goes for healthcare. If patients are made to wait weeks between appointments for their prostheses, their satisfaction will go down because of the frustration of having to wait. In addition, residual limbs change with time, so the more time that passes between casting and delivery of a socket, the more likely that the fit of the socket will be compromised. Therefore, the sooner we can provide the prosthesis, the greater the chance for successful patient outcomes. Finally, according to Miller et al., a delay in receiving a first prosthesis for patients who are unable to be physically mobile leads to further health-related issues and a decrease in satisfaction and quality of life. The same could be said for ambulation on a poor-fitting prosthesis.1
Costs of Componentry
The cost of components for prostheses is not insignificant. A foot for a prosthesis can be upwards of $6,000, and the suppliers of these components will not wait for the insurance reimbursement before they expect payment. Suppliers generally bill on net-30 terms, which is a much shorter time frame than most insurance companies. Therefore, the practice will need to pay for all of the componentry before collecting any money from the insurance company. A clinic may end up financing prostheses for weeks and months before it is able to recoup its costs.
The Time Value of Money
The time value of money is the concept that a sum of money is worth more now than the same sum of money at a future date.2 This is true because money that you have right now can be invested and earn a return, thus creating a larger amount of money in the future. The time value of money is sometimes referred to as the net present value (NPV) of money.3 For investing, that means that an investor loses earning potential for every day that they hold an IOU instead of actual cash—because an investor can’t invest an IOU.
The same concept applies to prosthetic practices. The faster a practice is paid, the faster a practice can pay its bills and invest its money. When the practice has high accounts receivable and little cash, it must borrow money and incur interest expense to continue seeing patients. Thus, the practice is almost always behind. The more a practice can reduce the amount of time between casting and payment, the more money it will have in hand and the less interest expense it will incur. Better cash flow allows a practice to invest more money in equipment, employees, software, etc.
The One Patient Example
Let’s break this into its simplest terms. What if we only had one patient? We have paid our fixed costs and now we have an opportunity to bring in some money. Let’s assume we can calculate our daily fixed costs with the following formula: R+S+I+S+P (rent, salaries, insurance, software, phone/internet, etc.) = FC (fixed costs of practice). This is the amount of money it takes to keep the practice doors open.
Now let’s assume that we outsource our fabrication, so it is not part of our fixed cost but part of our device costs.
The cost of the fabrication will change based on the socket design (for example, laminated versus polymer, suction versus pin, flexible inner liner versus hard socket), as well as in-house fabrication versus central fabrication. But for the purposes of this discussion let’s look at just the decision to do a test socket at a central fab facility. We all agree that a test socket improves fit, but what does the provision of test sockets do for the bottom line?
Back to our example, the new patient is measured for a transtibial prosthesis (costs in addition to fixed costs: plaster wrap, stockinette/nylons, indelible, etc.) The socket is poured and modified (costs in addition to fixed costs: plaster of paris, files, tools, pipes), and the shipping costs to the central fabrication facility are added. In addition, there is the cost of the lock the practice needs to purchase. Then the check socket needs to be shipped back to the practice.
Based on the average cost from five different US central fabrication facilities, the cost of a check socket is approximately $200 including attachment plate integration and shipping.
Let’s say that shipping takes two days in each direction and fabrication of the test socket takes two days. So far, the process has taken seven days, including the patient visit. When we finally can see the patient for a socket fitting, it is still not a billable event for the practice.
Every practice can calculate its own yearly fixed costs, and once that number is derived, divide it by 2,080 (40 work hours in 52 weeks) to determine what it costs every day to keep a practice open. So, if it takes seven days to deliver a check socket, that is seven days of fixed costs that are incurred before the fitting of a test socket, which currently has a reimbursement rate of $340.89 (Region D, CMS average fee). While in-house fabrication may decrease turnaround times, the fixed costs also increase.
Given the costs and the reimbursement, would it be better to bypass the check socket stage? If we have a tool that allows us to replace the check socket stage and deliver a definitive prosthesis in less time than a check socket, wouldn’t that improve the efficiency of the practice? Maybe it is time we took a closer look at whether shifting away from or decreasing the number of check sockets is a viable option. One advantage of this method, if appropriate, is that it will cut the amount of time between initial evaluation and receipt of payment, therefore eliminating (or at least reducing) the amount of time that the practice may find itself financing the prosthesis for the patient. In addition, the faster provision of the prosthesis is beneficial to the patient’s well-being emotionally and physically. Receiving a prosthesis in less time allows the patient to start his or her rehabilitation sooner and regain valuable mobility and independence. This of course, should not come at the cost of comfort or improved outcomes.
Armed with the knowledge that time equals money, it is important for the clinician to consider time to delivery in addition to all the other factors that go into traditional outcome scores. The longer it takes a practice to deliver a prosthesis, the harder it is on the practice’s finances, patient satisfaction, outcomes, and the long-term patient-clinician relationship.
Ultimately, the decision to alter one’s tried and true practices should be based on the clinician’s best judgement and keeping the patient’s best interests in mind. However, it is reasonable to incorporate the practice of reducing “time to bill” into your practice’s paradigm to improve cashflow and efficiency. Whether the use of one less check socket, shorter time out on a test socket, or having tools to eliminate test sockets altogether, decreasing the time to delivery can only help the health of the practice. The decision a practitioner makes should be based solely on what is best for the patient, not just the profitability of the practice, but perhaps rethinking the way we have been providing prostheses by incorporating the goal of reducing time between measurement and delivery will also aid in the creation of new prosthetic paradigms.
Gary M. Berke, MS, CP, FAAOP, is an adjunct clinical associate professor in the Department of Orthopaedic Surgery at Stanford University, owner and lead prosthetist at Berke Prosthetics and Orthotics, San Mateo, California, and chief clinical officer at Medical Creations, Denver, CO. Brenda L. Berke, MBA, is the business manager at Berke Prosthetics and Orthotics.
- Miller T. A., S. Wurdeman, R. Paul, M. Forthofer. 2021. Value of Health Economics and Outcomes Research in Prosthetics and Orthotics, Canadian Prosthetics & Orthotics Journal 4(2)8.
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