From declining margins to $250K EBITDA increase in 180 days
Anonymization note: Client requested anonymity during an active commercial payer contract renegotiation.
Growth on the top line. Quiet pain underneath.
On paper, the practice was growing. Revenue was up 18% year-over-year. The owner was adding providers and planning a fifth location.
Underneath the growth, margins were compressing. Every quarter brought a tax surprise. The owner had no idea which providers were profitable, which locations were carrying the group, or where the overhead was going. The ortho and PT arms shared a single P&L, which made the drag impossible to isolate.
The accountant delivered monthly financials. Totals only. No provider-level P&Ls, no payer mix analysis, no forecasting. The owner was making million-dollar expansion decisions on gut feeling.
Growth masking deep profitability problems
One provider generating $380K in revenue but only $12K in profit
Payer mix and coding issues made the busiest provider nearly unprofitable
$70K/year in unnecessary expenses
Duplicate software subscriptions (Raintree and WebPT modules billed twice), unused vendor contracts, overstaffed front desk at one location
No financial forecasting or cash flow modeling
Tax surprises every quarter; significant underpayment penalties
Expansion decision based on zero location-level data
Planned 5th location would have replicated the problems at the weakest existing site
Provider-level P&Ls and a real CFO financial package
We built provider-level P&Ls for all 12 providers across 4 locations, split between the orthopedic and physical therapy service lines. The owner saw, for the first time, exactly which providers made money and which cost money.
We conducted a full expense audit, renegotiated payer contracts where rates were below market, and implemented a monthly CFO financial package with forecasting, cash flow projections, and tax planning.
Created provider-level and location-level P&Ls (ortho and PT separated)
Conducted full expense audit across all locations
Renegotiated underpaying payer contracts
Built monthly CFO financial package with 12-month forecasts
Implemented quarterly tax planning to eliminate surprises
Paused 5th location expansion pending profitability improvements
$250K EBITDA increase in 180 days
EBITDA improvement
Declining
+$250K annualized
Annual expense reduction
$70K in waste identified
$58K eliminated in year one
YoY revenue growth
18% (margin-negative)
22% (margin-positive)
Tax surprises
Quarterly underpayment penalties
$0
“For the first time, we could see exactly which providers and locations were making money and which were costing us.”
Key Takeaway
Revenue growth without profitability tracking is just more work for less money. If you cannot see provider-level P&Ls, you are guessing which providers make you money — and which ones cost you.
Methodology
Methodology: Recovered revenue is defined as the difference between billed and collected charges attributable to fixes Sorso identified and clients implemented, measured over 90-day windows post-engagement. Figures are specific to the engagement and are not predictions.
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