Private Practice Keeps on Truckin’

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June/July 2001

By Rich Smith

From top: Forrest Walker, PT, and Jane Milliff, PT; Stevyn Voyles; and David Wilhoite, PT, ATC

Private Practice Keeps on Truckin’

Despite setbacks, private practice owners continue to strive for excellence, from devising strategies for affordable continuing education to encouraging out-of-pocket payment.

Sleepless nights increasingly punctuate the lives of rehabilitation private practice owners and administrators. They have a lot on their minds these days. Such as? No less than the survival of the businesses they have struggled to build and of the very profession to which they belong.

Topping the list of threats to their practices is money, naturally. A lack of it, to be precise.

“We keep getting squeezed as far as what insurance companies are willing to reimburse for physical therapy,” says Forrest Walker, PT, co-owner of Alta Physical Therapy PC, in Boulder, Colo. “There’s no end to it.”

David Wilhoite, PT, ATC, agrees. He is the owner and CEO of Wilhoite and Associates PC, Anniston, Ala, a two-office practice that employs a staff of 19. “The game plan under managed care is to restrict the growth of the profession of physical therapy,” he says. “In particular, they want the small, independent, therapist-owned private practice out of the picture. The reason is that, if they’re left with only the giant, corporate-owned practices, it will be easier for them to control costs. The insurance companies see private-practice physical therapists as a greedy bunch who are encouraging overutilization to make more money.”

It is beyond question that insurance companies are complicating things for private practices. Just ask Stevyn Voyles, vice president of Progressive Physical Therapy Inc, a four-office enterprise near Los Angeles.

“About 50% of our billings are now handled online, but almost every one of the insurance companies taking electronic submissions are still finding ways to deny payment,” she says. “A typical technique the payors use is to come back later and inform us that they now also want to see a hard copy of the report or initial evaluation, and most want the copy of the signed prescription. This kind of tactic isn’t done to a scattering of claims—it happens a lot. And it’s being done simply as a way to delay making payment on a proper claim. The idea is to slow down and stretch out the payment cycle by requiring a lot of paper pushing.”

Responding to these requests requires more labor, which drives up Progressive’s costs per claim.

PLAGUED BY SHIFTING RULES

So does the process of producing documentation in the first place. “Payors are demanding that we document in ever finer detail covering a growing list of practice activities,” says Walker. “All of this adds to our overhead. The really frustrating part is the constant change in rules and regulations, both for Medicare and managed care.”

The sentiment is shared by his business partner, Jane Milliff, PT. “We’re expending a lot of time and energy to keep up with all the changes and make sure we are compliant,” she says. At Progressive Physical Therapy, the main documentation-related woe centers around Medicare’s medical-necessity rules.

“These rules carry the threat that outpatient therapy will be abruptly cut off for patients who Medicare feels aren’t making adequate gains,” Voyles tells. “The problem is that Medicare doesn’t give us any specifics as to what point the patient’s care will be denied. We know that patients must make marked improvement in their function on each visit and that our rehabilitation goals need to be met in a timely fashion. We must explain to patients that having a physician’s prescription stating that care is needed is not always enough to ensure that Medicare will cover our therapy services. This leaves patients on the hook financially. They become responsible for all those dollars in services we’ve billed that are not covered by Medicare.

“The concern we have in the practice is that patients may decide—because of this risk of being financially liable—not to continue coming in for therapy. To avoid that, we have to spend more time educating patients about their diagnosis and what to expect from Medicare. Giving patients more education is a good thing, of course. But the amount of time we have to invest in providing this higher level of education makes our per-visit costs rise.”

In some markets, the cost of living is an issue. It certainly is in affluent Boulder. “Physical therapists who are still relatively young in the field cannot afford to live in this city,” Milliff says.

Walker worries that, as reimbursement shrinks, there will be fewer dollars available within his and Milliff’s practice to pay for continuing education courses. He deems continuing education an essential tool for practice success, since the market demand is for providers with up-to-date clinical skills.

“It is getting harder and harder to come up with the money to send ourselves and the staff to continuing education courses,” says Walker.

RESOURCEFUL, RESILIENT LOT

Private practice owners have crafted a variety of clever strategies for addressing these problems. Consider first this matter of curtailed ability to afford continuing education courses.

“What we’ve done to keep continuing education available is host the courses ourselves,” says Milliff.

In regard to documentation burdens, Walker says, “We have looked for ways to become more efficient in how we do things like documenting. For example, we’re making use of standardized forms. We’ve also tried to delegate as much of the responsibility as possible for doing the documentation paperwork.”

Voyles, meanwhile, reports that she too has sought ways to streamline documentation tasks.

“Five years ago, we converted to an electronic documentation system,” she reveals. “This isn’t a voice-recognition dictation and transcription system but a computer software package that comes with lots of templates. So, for most routine encounters with patients, the therapists can pick a few ‘quick picks’ and type a few sentences, and the system will fill in boiler-plated details that satisfy all of Medicare’s requirements. Notes were previously dictated by the therapist and then sent to a person to be transcribed. This new system saves some time and is less expensive than transcription.”

On the matter of getting paid appropriately and in a timely fashion, Alta Physical Therapy’s answer has been to encourage patients to forget about insurance if at all possible and instead pay out of pocket.

“People want physical therapy services because they know therapy helps them get better, faster,” Milliff says. “So, if their insurance will not pay for it, they shouldn’t let that stop them from obtaining the help that practices like ours offer. Frankly, I’d like to see more people adopt this attitude. I must confess to being heartened by the numbers who already have.”

Alta Physical Therapy, which was launched in 1990, operates satellite clinics in two Boulder-area health clubs. In one of those, among the city’s biggest, the practice also has set up a Pilates studio.

“One of the reasons we opened the Pilates studio is to give us an income stream not directly tied to insurance reimbursement,” says Walker. “We also see it as a vehicle, or a point of entry, to introduce members of the health club as well as the general public to our other services.”

Making introductions is the objective behind Wilhoite’s extensive use of marketing outreach in his own territory.

“Providing quality services and getting your name in front of the community are key to practice survival,” he says. “That’s why you’ll find us participating in health fairs, running ads on the radio and in local print media, and engaging in physician office calls.” The message Wilhoite disseminates includes explanations of what a physical therapist does. “Most consumers and potential consumers of health care services have little or no understanding of physical therapy and its importance to them. That lack of understanding contributes to the ability of insurance companies to restrict people’s access to physical therapy.”

OUTLOOK MAY BE IMPROVING

A tempting solution for some owners—but one freighted with risk—is to sell the practice to a management company. Milliff says the idea has crossed her mind more times than she cares to admit, but is dead-set against it now.

“What I’ve heard is that it is very painful to continue working in an office that you once owned but now go to as any other employee, being told what to do,” she says. “Forrest and I feel that if it ever came down to selling our business, we would not want to hang around afterward. We would want to get out and do something else.” Cashing in one’s chips would be ill-advised anyway, suggests Voyles, in light of indications that the outlook for private practices is improving.

“We are starting to come out of an ice age,” she says. “Capitation didn’t work, and HMOs got in trouble for preventing patients from receiving care. As a result, the patient-bill-of-rights movements at the state and federal levels of government have gained significant momentum. From that, I expect to see a variety of new laws that will ensure access to care. These will only serve to strengthen private practices.”

Another good portent for practices: the growth and acceptance of physical therapy networks. For example, in 1985, the owner of Progressive founded an organization known as the Physical Therapy Provider Network Inc (PTPN). The goal was to save small private practices from extinction in California’s managed care tar pits. The network—on the merits of its broad geographic coverage and array of specialty services—was able to negotiate large contracts with major insurance companies and self-insured employers. PTPN today is approximately 1,000 therapists strong in California alone and is franchised in 23 states.

“A solid 30% of our business comes from the network,” says Voyles, who adds that the value of PTPN is not purely economic. “The network provides a place to turn to when I need to do a little brainstorming. Within the network, there are administrators from other practices I can call on to pick their brains. It works two ways; they can call on me or on one another as often as they need. It’s a great way to get new insight for better ways to solve problems and, always, to find ways to improve efficiency.”

Back in Alabama, Wilhoite sees promise in contacting employers to negotiate contracts directly with them, thereby cutting insurance companies out of the loop. A few are willing at least to hear what Wilhoite is proposing.

“It is a good concept,” he assures. “But the problem in this market is that employers here have yet to be burned by managed care. Managed care is still relatively new to the Deep South, so employees haven’t had the chance to become as fed up with it as they have in states where managed care has been around a long time. Managed care is only about 15% of the market here. Since employees aren’t yet as mad at managed care as they could be, not many employers see a reason to modify their contracts with the payors. In time, though, after enough employees raise their voices in anger over managed care, more employers will be open to negotiating for services either directly with independent providers like myself or by modifying existing contracts to include suitable rehabilitation benefits.”

All in all, despite their current travails and concerns, some private practice professionals remain happy they chose a career in rehab.

“For me, the things that attracted me to this field are still operative today,” says Walker. “I got into physical therapy because I wanted to make a difference in people’s lives. I feel like I’ve been successful in that ambition, despite the turmoil that has been prevalent in rehab these past several years.”

Rich Smith is a contributing writer for Rehab Management.

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June/July 2001