Economics of an IOP

[jbomba]

Curious what the economics of running an IOP look like. Anyone know general ballpark reimbursement? When patients are seen by a psychiatrist who may be using standard output codes, does the IOP collect a facility fee? Other important considerations?

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[Merovinge]

There actually is some variability in how this is paid out by insurance but typically there is a lump sum provided for a PHP/IOP patient based on the number of hours of programming in the day. Psychiatrist visits are required at the PHP level but not at the IOP level and are billed for as a general outpatient visit. The real money is not at all in the MD visits (although they will pay for 99214's a few times per week at PHP and once per week at IOP without bating an eye) but in that lump fee paid for all the groups.

Keep in mind the expenses of running a PHP are relatively low, standard office space with group rooms that resemble a larger OP practice. No need for all the regulations around RTC and IP LoC, no beds, no 24 hour staff, you don't even need nursing. Therapists that run all the groups and see the patients are typically master level and get paid a crazy small amount. Emergencies are dealt with like in OP using 911 and local emergency departments. We've seen a meteoric rise in PHP/IOPs in the past 2 decades because the reimbursement is favorable for mental health compared to expense and because it really makes a huge difference in the lives of patients. As longer term IP care has fallen by the wayside, PHP/IOP care becomes the place where real treatment/change occur and I think patients are the beneficiaries of this changing model.

 

[forchinet121]

There actually is some variability in how this is paid out by insurance but typically there is a lump sum provided for a PHP/IOP patient based on the number of hours of programming in the day. Psychiatrist visits are required at the PHP level but not at the IOP level and are billed for as a general outpatient visit. The real money is not at all in the MD visits (although they will pay for 99214's a few times per week at PHP and once per week at IOP without bating an eye) but in that lump fee paid for all the groups.

Keep in mind the expenses of running a PHP are relatively low, standard office space with group rooms that resemble a larger OP practice. No need for all the regulations around RTC and IP LoC, no beds, no 24 hour staff, you don't even need nursing. Therapists that run all the groups and see the patients are typically master level and get paid a crazy small amount. Emergencies are dealt with like in OP using 911 and local emergency departments. We've seen a meteoric rise in PHP/IOPs in the past 2 decades because the reimbursement is favorable for mental health compared to expense and because it really makes a huge difference in the lives of patients. As longer term IP care has fallen by the wayside, PHP/IOP care becomes the place where real treatment/change occur and I think patients are the beneficiaries of this changing model.

How much would the lump sum be for 4 weeks of IOP?

 

[surfguy84]

I've heard insurance reimbursing at 5-800 a day

 

[Merovinge]

I've heard insurance reimbursing at 5-800 a day

For IOP I think $500 is a reasonable spot, maybe a bit high, PHP around $900ish with good insurance (it also depends on primary diagnosis, ED pays more than SUD pays more than mental health).

 

[Sushirolls]

They can be viable and yield money.
BUT
They require more staff - which means drama, which means turn over, which means scrambling to staff
They also have an inflection point. You need X amount of people in the IOP or PHP to break even. Do you have the referrals and volume of people to consistently have X+ people.
They also require more staff for the prior authorizations and the paperwork to fill out for FMLA to accommodate being in them.
Now when insurance or patient or both don't pay, its bigger dollar volumes. When insurance doesn't pay you have more angry patients stuck with big bills that are somehow your fault...

 

[Merovinge]

They can be viable and yield money.
BUT
They require more staff - which means drama, which means turn over, which means scrambling to staff
They also have an inflection point. You need X amount of people in the IOP or PHP to break even. Do you have the referrals and volume of people to consistently have X+ people.
They also require more staff for the prior authorizations and the paperwork to fill out for FMLA to accommodate being in them.
Now when insurance or patient or both don't pay, its bigger dollar volumes. When insurance doesn't pay you have more angry patients stuck with big bills that are somehow your fault...

Newport Academy sold about a year ago for over a billion dollars and that was for a controlling but not full stake of the company. Definitely benefitted from being in the right place at the right time (starting in the mid 2000's) like most entrepreneurial pursuits. There's fairly big money in this area as far as psychiatry goes. We're not derm/optho being bought out by PE at record paces, but PHP/IOP is definitely closer to that than OP practices. IP hospitals have room for innovation and improvement, but that is a huge time headache needing monstrous size teams to scale.

 

[TexasPhysician]

PHP/IOP is not easy money. It is expensive to keep one afloat, meet all insurance criteria, and do appeals on denials that were previously approved.

Most I know doing them are groups with 5+ psychiatrists in which some do at least PT inpatient. The outpatient team does them. The inpatient parts refer the patients.

 

[SmallBird]

Don't lump these together - IOP reimbursement varies from $175-$450 per day, whereas PHP range is more like $550-$1350. I have opened several of each program in different states. The economics of PHP are much more favorable. They are NOT ideal for professional billing and every PHP I've opened has budgeted to cover almost 50% of the MD salary from the daily rate and the rest from professional fees. This relates to the fact that you aren't supposed to see patients everyday and therapy add ons will almost always get denied. That said, the best run PHP I worked in had a census of 24 and made around $3million in profit.

 

[forchinet121]

Don't lump these together - IOP reimbursement varies from $175-$450 per day, whereas PHP range is more like $550-$1350. I have opened several of each program in different states. The economics of PHP are much more favorable. They are NOT ideal for professional billing and every PHP I've opened has budgeted to cover almost 50% of the MD salary from the daily rate and the rest from professional fees. This relates to the fact that you aren't supposed to see patients everyday and therapy add ons will almost always get denied. That said, the best run PHP I worked in had a census of 24 and made around $3million in profit.

Who owned that?

 

[Merovinge]

Don't lump these together - IOP reimbursement varies from $175-$450 per day, whereas PHP range is more like $550-$1350. I have opened several of each program in different states. The economics of PHP are much more favorable. They are NOT ideal for professional billing and every PHP I've opened has budgeted to cover almost 50% of the MD salary from the daily rate and the rest from professional fees. This relates to the fact that you aren't supposed to see patients everyday and therapy add ons will almost always get denied. That said, the best run PHP I worked in had a census of 24 and made around $3million in profit.

You kind of need to though. Going to a PHP that can't step you down to an IOP is just bad care. It's definitely the case that PHP is where the majority of the profit is derived but patients need a smooth continuum of care.

Completely agree about the professional fees, my pay is much higher than the reimbursement for my direct services. Obviously MD time in staffing and supervision is not paid for but needed to run a good program.

 

[SmallBird]

You kind of need to though. Going to a PHP that can't step you down to an IOP is just bad care. It's definitely the case that PHP is where the majority of the profit is derived but patients need a smooth continuum of care.

Completely agree about the professional fees, my pay is much higher than the reimbursement for my direct services. Obviously MD time in staffing and supervision is not paid for but needed to run a good program.

I don't agree with that at all. Yes it is nice to have, but it is hardly the case for that to be universally available. Many markets have neither, and many will have either an IOP or a PHP. Yes as a best practice having both is great but it isn't true at all that it is 'bad care' to only offer one. There are some excellent programs that only offer one of the two.

 

[Sushirolls]

Concur with Smallbird.

 

[smalltownpsych]

My intensive outpatient support program is from 2500 to 5500 per month. Of course, we don’t take insurance and psychiatry is extra. Two to three individual psychotherapy sessions per week, 2 hours of individual mentor support, and one group per week. I’m thinking maybe I should charge more. Of course, it’s different if I’m doing the therapy sessions which is what is happening right now. Economics would probably be better the more I can utilize the interns and as someone mentioned earlier sweet spot of getting enough patients to justify staff levels and also add some more group to increase peer support.

 

[jbomba]

My intensive outpatient support program is from 2500 to 5500 per month. Of course, we don’t take insurance and psychiatry is extra. Two to three individual psychotherapy sessions per week, 2 hours of individual mentor support, and one group per week. I’m thinking maybe I should charge more. Of course, it’s different if I’m doing the therapy sessions which is what is happening right now. Economics would probably be better the more I can utilize the interns and as someone mentioned earlier sweet spot of getting enough patients to justify staff levels and also add some more group to increase peer support.

What's been your best method of actually attracting patients?

 

[smalltownpsych]

What's been your best method of actually attracting patients?

I have connections with a couple of private pay residential programs so I have been getting former residents. At this point it has been a gradual evolution from opening up a standard private practice in March. I will probably be more of an aftercare type of program and offer it to people coming out of residential programs nationwide that might need more support to help them reintegrate in the community and stabilize as there seems to be a high rate of regression after coming out of a program and tendency to underestimate need for support. I plan to attend a conference of education consultants in May and roll it out officially. At this point it is more unofficial and laying the groundwork, creating infrastructure.

 

[Merovinge]

I don't agree with that at all. Yes it is nice to have, but it is hardly the case for that to be universally available. Many markets have neither, and many will have either an IOP or a PHP. Yes as a best practice having both is great but it isn't true at all that it is 'bad care' to only offer one. There are some excellent programs that only offer one of the two.

I think this is one of the most dangerous lines of thinking in medicine. If A is not available then lets do B which is better than nothing.

If psychiatrists are not available, have them see NPs, it's better than what they have now has been the chorus of the past decade +. Interestingly this is a pretty uniquely US phenomenon as we have seen the midlevel positions expand at 1000% that of other first world health care systems.

I am also very interested in hearing which excellent programs you are aware of that only offer PHP but not IOP services. I know folks at well over a dozen PHP's as I work in the space full-time and 100% of them also have IOP. Now if someone is opening up their own program and need to start with one or the other for a few months to ramp into both that's one thing, but if the whole business model is designed to just do one of them, it is both bad practice and I would be shocked if it were even viable for any extended period of time. I cannot imagine explaining to someone getting 30 hours of treatment per week that once their insurance stops covering PHP they are going down to 1 hour a week of therapy and whatever OP psychiatry they can get.

 

[Sushirolls]

My former practice area had PHP stand alone. Great service, referred often. Viable for decades. Not bad care, and strongly disagree with that assertion.

Same area also had an ARNP run IOP. They've had it for years.

A patients continuum / trajectory of recovery can exceed PHP/IOP timelines, or even drag on longer than them...

Patients have different needs, and different logistics, a one size for every one doesn't feet the real world. Sure, if things were perfect we would have the PHP --> IOP --> Aftercare --> individual therapist. Heck, we'd even have residential for 30-180 days voluntary, for whomever needs it. But alas, things aren't perfect and stand alone IOP/PHP doesn't equate to bad care. Hogwash.

 

[Merovinge]

My former practice area had PHP stand alone. Great service, referred often. Viable for decades. Not bad care, and strongly disagree with that assertion.

Same area also had an ARNP run IOP. They've had it for years.

A patients continuum / trajectory of recovery can exceed PHP/IOP timelines, or even drag on longer than them...

Patients have different needs, and different logistics, a one size for every one doesn't feet the real world. Sure, if things were perfect we would have the PHP --> IOP --> Aftercare --> individual therapist. Heck, we'd even have residential for 30-180 days voluntary, for whomever needs it. But alas, things aren't perfect and stand alone IOP/PHP doesn't equate to bad care. Hogwash.

Do you have a link to this, particularly since you are no longer in the area to avoid doxxing yourself? I'm genuinely curious how they market such a program.

Clearly not everyone goes entirely from PHP to IOP to aftercare and OP. But to not even have this as a possibility strikes me as clearly suboptimal. A certainly a sizable portion of systems that have the full continuum of care do have patients move through them sequentially.