In the August 17th issue of Modern Healthcare, I couldn’t help but take a particular interest in the article, “Health Systems Lose $2.5 Billion in Potential Physical Therapy Revenue from So-Called Referral ‘Leakage’”. The findings were based on a new study from Luna Physical Therapy. While I respect Luna’s desire to develop better technology solutions in physical therapy, I was taken aback by the underlying premise of the study. The concept that patients do not have self-efficacy and are captive to health systems is deeply problematic and ignores the central tenants of quality, access, and cost. From public and private data, we know that hospitals underperform outpatient physical therapy clinics in access, quality, experience, and cost. Patients shouldn’t be “owned” by health systems and should have the right to choose the provider that best suits their needs.
In many ways, physical therapy is emblematic of the issues that permeate healthcare writ large. Health systems aim to contain patients within their network driving pricing power and revenue growth, but that doesn’t necessarily take outcomes, cost or experience into account. This isn’t to say that an integrated delivery model is inherently bad for patients (there are lots of benefits and lots of great care provided), but that the FFS model can create misalignment of incentives (doing what is right for the health system may not always be what is right for the patient). Within physical therapy, this misalignment of incentives is particularly relevant. From an outcome perspective, time to care and plan of care adherence are major determinants of meeting functional outcome goals. Physical therapy providers not only need to be convenient (our data shows that the further people travel, the lower their plan of care adherence) but also need to be incredibly flexible in scheduling new patients and achieving optimal plan of care frequency. The longer that patients wait and the more infrequent the care – the worse the outcome.
The study really demonstrates that referring physicians (and patients) are willing to overcome the extensive pressure to stay in the system because outpatient physical therapy works for patients. The current interventional model for musculoskeletal health is remarkably broken and far too often leads to higher cost, inefficient care, and poor experience – focusing on reducing leakage doesn’t solve this problem. We firmly believe that healthcare shouldn’t be viewed as a closed network, but a collaborative partnership between high performing providers. A collaborative approach maximizes patient outcomes, improves patient choice, and minimizes cost (outpatient joint replacement bundles are an example of successful collaboration between multiple stakeholders that lead to savings and better experience).
As an aside, the cost of outpatient physical therapy in a clinic is typically 30%-50% lower than the amount large health systems charge, and utilization of opioids, imaging, and surgery is lower when patients start with outpatient physical therapy – all while achieving patient satisfaction scores at 99%+ (specific to our organization). We should be working together to achieve these types of results throughout healthcare – not just focusing on top line leakage.
Brady Hill
SVP, Strategy and Corporate Development, Cypress Health Partners