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Closing Time

Vol. 19 •Issue 9 • Page 32
Closing Time

More clinics have been closing their doors. Is it a trend?

For years, physical therapists lobbied against the implementation of the Medicare cap and other measures that would limit outpatient expenditures on physical therapy. All the while, business boomed in what was a "golden age" for many PTs. Unfortunately, we're beginning to see why they fought so hard in the first place.

At the start of this year, physical therapists in two Florida counties—Sarasota and Manatee—reported the closing of up to 10 outpatient clinics in their domains. The reasons most commonly given for closings were stiffer competition and lower rates of reimbursement. Most troubling was the fact that the closures were not limited to that area.

Much of the increased competition comes in the form of physician-owned physical therapy services (POPTS), as more doctors are finding it cost-effective to operate in-house rehabilitation services. Likewise, Medicare and private insurers have implemented efforts to decrease and in some cases even cut their costs altogether.

"Are physical therapists feeling pressure? Absolutely," admitted Dave Mason, vice-president of government affairs and reimbursement advocacy for APTA.

Quite simply, the business models upon which most physical therapists founded their practices are losing effectiveness. Medicare recipients make up a large part of most outpatient clinics' clientele, and with their spending abilities compromised, it's the owners who pay the price in the end.

"I can't really speak specifically about the clinics in Florida," Mason responded when asked what caused such a chain of events. "As I recall, they were citing low Medicare payments as well as competition from physician-owned clinics."

Competitive Climate

Mason allowed that Florida was likely even more competitive than the average market simply due to the demographics in the state. He quickly added, however, that the problems experienced by the closing clinics were in no way unique to Florida or to any region of the country.

Asked whether the attrition had reached this level anywhere else—the closing of about 10 clinics in a two-county area—Mason said the Association hadn't researched such specifics. "We typically hear of [clinic closings] anecdotally," he explained. "We'll have a member, an individual practitioner call in and day, 'I'm going to have to go out of business' or even more commonly, 'I'm going to have to adjust my practice style' because they're overly dependent on Medicare payments, which are decreasing or because the competition for patients in the area has become too stiff."

So instead of collecting information in a geographical sense, the APTA relies on the experiences of its individual members to determine its course of action. "Basically, what we can tell from the anecdotes is that this is happening everywhere," said Mason.

But what recourse does the APTA have? When members call to commiserate about needing to close or severely alter their clinics, what advice can the organization offer?

"Often, these are longtime association members who are well aware of what we've been doing to protect Medicare payment rates, deal with things like the therapy cap, and address the issues of potentially unfair competition from physician-owned clinics or similar operations," said Mason.

Indeed, often the calls are made more out of frustration that the Association's efforts have yet to help the individual therapist—not out of anger that the Association hasn't done enough, he said. Mason indicated that these concerns are right at the top of the APTA's list of concerns.

"Obviously, we are directly confronting some of these problems with Medicare," explained Mason. "We're hoping to eventually see a long-term fix."

The Cap Conundrum

Of course, the Medicare therapy cap, which has been around for a full decade now, is another considerable obstacle. Mason said that recent information from CMS indicates that the exceptions process is having a beneficial impact—but this is countered by the uncertainty of whether the process will be in place from year to year.

Unfortunately, the nature of these problems makes it hard to come up with a cure-all, a solution that will appease the worries of every practice owner. You can advise an owner to diversify his clientele—that is, to decrease reliance on Medicare patients–but in some areas of the country, this is far easier said than done.

"The clinics I've heard from that seem to be more successful in this environment have definitely been able to diversify their patients and referral sources to some extent," said Mason. "This environment really puts a premium on the ability of these physical therapists to market their services directly to consumers."

Without a long-term solution from Congress, forecasters have projected that Medicare reimbursement could fall by up to 40 percent over the next five years. Dave Mason and APTA are optimistic, however, that Congress' track record will hold up and we'll see some relief before reaching that state of crisis.

"Congress is very sensitive to both these problems," he said. "They have a good track record of stepping in to prevent such cuts. On the other hand, the underlying law is still there, so this is something we have to continue to fight."

Practice Pointers

James E. Glinn, Sr., PT, of Bakersfield, CA, reported that business is still booming at FutureRehab, LLC, his private practice. For almost 20 years, Glinn has run his own practice while also consulting for other chains and private practices.

Glinn offered a few of his thoughts on why times are tough for private practice owners. While touching on the aforementioned reimbursement and competition aspects, he also offered a couple of unique perspectives.

The Economy—Unless you've been under a rock somewhere, you've heard about the possibly impending recession and other economical flaws, such as skyrocketing gas prices. What's more, people are again beginning to fear for their jobs in some sectors of employment. "It's hard to collect co-pays or even have patients attending PT sessions if they are about to lose their jobs or their homes," reasoned Glinn.

Lack of Preparation to Enter Private Practice–Glinn works with a lot of first-time practice owners, and said times are troubling for not only new owners, but those who are more established as well. "Young therapists, or those in once-forgiving markets, have often failed to invest in the business and market infrastructure necessary for success in this market," he lamented.

Shrinking Reimbursement/Increased Cost of Doing Business–Reimbursement concerns have been discussed ad nauseum, but salary structure plays a role here as well, in Glinn's opinion. "Private practice PTs have difficulty meeting today's salary requirements of those newly graduated—especially with the higher demands of DPTs."

Increased Managed Care, Especially in the Medicare Market–The larger the practice, the more equipped they should be to deal with changing times. This can spell doom, obviously, for the small or budding practice owner. "Larger multi-clinic practices who have the capacity to accept case rates and capitation generally capture these markets," said Glinn, "and often without the excessive oversight private Medicare requires."

Increased Competition–Aside from POPTS and competing private practices, Glinn cautioned owners about the re-emergence of hospital systems. The fact that so many private practices have cropped up in the past decade doesn't make it any simpler. "Just a few years ago, the Private Practice Section was the fastest-growing in the APTA," Glinn recalled.

Despite the cautionary tales, Glinn reported that some PTs have greater cause for optimism. "There are places where PT business is booming—luckily, my hometown is one of them," he said. "Also in regions on the Gulf Coast—anywhere that you have oil and agriculture, business can do well even during an economic downturn."

Rob Senior is senior associate editor at ADVANCE and can be reached at


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