3 Insights From An Industry Analysis

So I was tasked to do an industry analysis on outpatient Physical Therapy a little while ago. I finally got to a point when all the data I mined started to make sense. I'm not privy to share everything, of course. However, I am allowed to share the following insights after hours of tedious data analysis.

3 Insights from An Industry Analysis: Outpatient Physical Therapy

Before I go into the insights to be shared, I want to first share with you a very special data presentation called the Profit Pool Analysis (PPA). This is a rather complicated graph to conjure, however, when done correctly and accurately, it speaks volumes.

What this graph speaks if not shouts, is of the profit found in outpatient PT through billing for Therapeutic Exercise. It receives the highest pay and lowest rate of denial compared to the runners up; the overwhelmingly common Therapeutic Activities and Manual Therapy. Also, to be noted, the last two or three years had an industry trend of commonly billing for Neuromuscular Re-education. Guess what? It wasn't the most profitable of all codes as much because of claims being rejected. There is actually far more discussion to be had on this PPA, but, I promised earlier on Twitter to keep this succinct.

So what were my three insights? Well based on this analysis and some other results...

1. We're branding wrong.

While the PPA tells us only the financial perspective of where our market dominance is, it should also tell us a little bit about not just the payer but the end using consumer, the patient desires. As much as we'd like to think people come to us for manual therapy, dry needling, functional movement training, or whatever... the fact is people actually come AND PAY for exercise.

Honestly, when I saw this, I nearly hit the floor. It was mind blowing. How could this be possible? With all the branding we're doing about movement, manual therapy, human touch, and improving the human experience... we missed the boat.

Exercise is a 100% reliable prescription that can be self-administered at supremely cost effective operational margins. And think about it, what do people do when they come up to an outpatient orthopedic PT on the casual conversation?

"Hey, I got this thing about my knee.... anything I can do about it? Any stretches? Exercises?"

RIGHT?! They don't go up to us and say, "Hey... could you mob my knee?" Consumers ALREADY value us for our expertise in prescribing exercise a medicine, so to speak. It's something to think about, and, it leads to insight #2.

2. Exercise is our unique value proposition.

I know, I know... there are half a dozen armies and brands of personal trainers who can delve out exercise content for a fraction of our cost.

The thing is, they don't prescribe exercise as a healthcare solution. Sure, it's fitness and what not. But, what outpatient PTs do that personal trainers cannot is they cannot prescribe exercise as a solution to musculoskeletal disease management.

As such, we need to be WAY better in our DPT didactics about exercise physiology, strength and conditioning, psychology of exercise, and keeping a keen market eye out for trends of exercises.

3. We're driving profit from the wrong place.

I alluded to this above, there has been so much billing as of late for 97112 because it is priced well. However, we're just not driving enough profits from it as an industry. Certainly, your clinic or your business may be gleaning quite a great amount of revenue from providing and billing for Neuromuscular Re-education. However, as an INDUSTRY AT LARGE... we're actually losing that battle. Plenty of payers have noticed that everyone seems to be doing it (billing for neuro-re-ed). Obviously, every patient can't be "appropriate" for 97112, at least in their eyes. That's why they are declining to reimburse a good portion of the industry's claims, leading to a lower operational margin for that service.

Instead, I would suggest that as an industry, we take a careful look at driving profit from Therapeutic Exercise. There may very well be something to it. Instead of lobbying to protect manipulation, or dry needling, or this or that or anything else. Why not lobby to protect the prescription of exercise for healthcare and disease management as something truly unique, only to be given by the physical therapist? It may not be the popular thing within our profession, but boy, it seems quite popular to our consumers and stakeholders across the value chain. Again, something to think about.

That's probably all I can share while holding to my commitments. I know for some of you, it may not seem like much of a share. For some of you, this may be as earth shattering as it was to me when I finally put the pieces together.

I'm not saying we abandon Neuromuscular Re-ed as a mainstay and specialty; I mean, all of our neuro patients need it! I'm also not saying let's abandon Manual Therapy. If anything, I think the combination of Manual Therapy with Therapeutic Exercise is what makes the Physical Therapy experience under the care of a physical therapist so unique in the spectrum of healthcare.

Instead, I'm humbling suggesting we take a look at the facts of this analysis. The market values our ability to prescribe, provide, and progress exercise as "medicine" -- as a solution to rehabilitation, recovery, and the management of musculoskeletal disease in the outpatient environment. As such, we can also use it to optimize health, and perhaps, improve markers in population health through proactive measures and prevention initiatives.

The market demands us for exercise; we'd be wise to consider not only giving it to them, but finding new ways of positioning and promoting our expertise on the strategic level, the political forefront, and, through legislative avenues.



PS. Keep your eye out for two up-and-coming posts:
"5 Wasteful Management Tasks" and "5 Thoughts, 5 Years Later"