🇺🇸United States

Delays in starting therapy and prolonged time-to-cash from slow payer approvals

2 verified sources

Definition

Therapy pre-authorization decisions frequently take several business days to weeks, and clinics often delay treatment or billing until authorization is confirmed, stretching the time between service and cash. Follow-up work on pending requests further drags the revenue cycle.

Key Findings

  • Financial Impact: For a clinic with $80,000–$120,000 in monthly insurance revenue, adding even 10–15 AR days due to pre-auth delays can lock $25,000–$50,000 in working capital at any time, raising borrowing needs and interest costs.
  • Frequency: Daily
  • Root Cause: Insurers’ variable and often slow review timelines, manual back-and-forth for missing information, and internal policies to wait for authorization before scheduling or billing when coverage is uncertain.[2][5]

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Physical, Occupational and Speech Therapists.

Affected Stakeholders

Revenue cycle and AR teams, Practice owners monitoring cash flow, Therapists whose schedules are impacted, Patients awaiting therapy start

Deep Analysis (Premium)

Financial Impact

$15,000-$32,000 monthly (10-20% therapist utilization loss from schedule gaps, $150-$300/open slot per day; 2-3 hours/day coordinator effort on rescheduling = 0.5-0.75 FTE @ $40K; patient no-shows increase 15-25% due to frustration; lost billable therapy minutes = $5,000-$10,000/month) • $25,000-$50,000 locked in working capital (10-15 AR days extension at $80K-$120K monthly revenue); increased Days Sales Outstanding (DSO); potential factoring costs or line-of-credit interest (2-4% annually on locked amount) • $25,000-$50,000 monthly locked working capital × 12 months = $300,000-$600,000 annualized impact; line-of-credit interest 6-10% on $50K = $3,000-$5,000/year; factoring fees 1-3% on delayed claims

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Current Workarounds

Call payer to inquire PA status (lengthy hold times); check patient's insurance card for contact info; manually write PA tracking notes on patient chart; delay treatment initiation until office staff confirm; in worst cases, start therapy 'provisionally' and hope authorization arrives • Email chains and Excel logs for PI attorney/payer follow-ups • Excel dashboards and manual payer portal checks

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Unpaid therapy visits when pre-authorization is missed or mishandled

Commonly 10–20 denied visits per month in a small practice; at ~$100–$150 per visit this is ~$1,000–$3,000/month ($12,000–$36,000/year) in preventable lost revenue.

Expired or exhausted authorizations leading to denied or underpaid claims

For a clinic with 200+ active patients on authorization, even 5–10 visits per month beyond limits at $100/visit means ~$500–$1,000/month ($6,000–$12,000/year) lost; multi-site groups see proportionally larger losses.

Labor-intensive manual pre-authorization and verification work

If each pre-auth averages 20–30 minutes of staff time at ~$20/hour fully loaded, and a mid-sized clinic processes 200+ authorizations per month, this is ~$1,300–$2,000/month in labor cost ($15,000–$24,000/year) just to move paper.

Claim denials and rework due to pre-authorization errors

If 5–10% of therapy claims are denied for authorization/medical-necessity issues and half require 15–30 minutes of staff rework, a clinic submitting $100,000/month could see several thousand dollars delayed and 20–40 staff hours/month in rework cost.

Empty appointment slots and lost billable hours from authorization-related scheduling gaps

If each therapist loses even 1–2 billable hours per week due to authorization-related cancellations at $100/hour, a 5-therapist clinic loses ~$2,000–$4,000/month ($24,000–$48,000/year).

Poor therapy scheduling and care-plan decisions due to incomplete benefit and authorization visibility

Misaligned care plans can cause hundreds of non-covered visits per year (lost revenue) or underutilization of authorized visits worth tens of thousands of dollars in missed billable services for a multi-provider clinic.

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