RE: Bidding on hospital PT contract for IP and OP

[Guest guest]

Your first step is finding out what are the expectations of the hospital. This

will include:

hours of service,

days of service (weekends and holidays?),

meetings expected to attend, committees expected to serve on,

staffing mix (therapists, assistants, aides, clerical),

marketing activities and events,

education and training to be provided to rehab and non-rehab staff,

assist with lifting or transfers

pay types and expectations for those payers

budget expectations

are there plans to change services (increase utilization, take on new payers,

serve new clinical population)?

For your own edification find out historically what has happened in the

department.

what is volume of treatment for inpatient and outpatient?

what was previous provider charging?

why did that relationship end?

are there any trends in treatment volume (either expanding or declining)?

Once you determine these they you have a basis to start estimating your costs.

Calculate what it will cost you to staff and manage this caseload. Tack onto

that amount what you want as a profit margin. This will become your starting

point for negotiation. Hospitals usually want to base these kind of contracts on

a " budgeted " amount they have allocated to this department. If this flat rate is

within the estimate you have made of your cost plus margin it may be OK to go

with. Some negatives of this arrangement are your financial motivation and that

of the hospital may be in conflict. If the hospital wants to grow utilization,

you have no incentive to do so because your costs go up while your revenue does

not. If your rate is based on average monthly utilization there will be some

months when you will lose and others where you will a handsom profit.

Another arrangement is to do a " Cost Plus " arrangement. This kind of arrangement

is more akin to an employee model. You charge what your actual costs are

(salaries, benefits and taxes) plus a " Management Fee " . This can be either a

flate rate or a percent above the cost (i.e. 15% of labor costs). The benefit to

both parties is that costs fluctuate with revenue/utilization provided you

staff accordingly.

Other arrangements include charging per unit of service or a hybrid of flate

rate for inpatient with a per unit charge for fee-for-service. In this latter

agreement your motivation is more in line with theirs in the area that may see

the most expansion based on your influence.

I hope this helps.

Ron Wall

Axiom Healthcare Group

Ontario, CA

To: PTManager

From: pristinehealth@...

Date: Mon, 27 Dec 2010 15:32:04 +0000

Subject: Bidding on hospital PT contract for IP and OP

We are bidding on a hospital contract and would like some feedback from those

who experience in this area to assist us. We would provide the inpatient and

outpatient therapy at the hospital. We may or may not need to buy the equipment.

Please provide tips, positives/negatives, and things to watch for in this

process.

thanks

Arkansas