Is it time to venture outside traditional reimbursement streams?

By Jonathan Bassett

Is Stephanie Weaver of Moorestown, N.J., the physical therapy client of tomorrow?

Many industry visionaries feel she could be, if adventuresome practice owners ever sever ties with insurance companies, venture outside traditional third-party reimbursement streams and begin courting cash-pay clients.

The community, according to these proponents, is ready and willing.

In early 2007, Weaver was studying abroad in Italy during her junior year as a psychology major at Georgetown University. While she waited for a cab on a busy street, a car ran over her foot, fracturing and displacing several bones.

After multiple operations in both Italy and at home, Weaver still has lingering pain and functional impairments. She can't stand or sit in one position for more than a few minutes. She walks with a barely perceptible limp, and wears orthotic devices to help her get around.

While Weaver graduated in May 2008, she doesn't want to start interviewing for jobs until she gets her physical health sorted out. "It's frustrating to have to put the next phase of your life on hold," says Weaver, who was physically active and played sports before getting hurt. "You get to the point that you'll try anything."

And as more rehab clinicians are finding out, "anything" includes visiting a physical therapy clinic for long-term, cash-pay therapy after covered visits have run out.

BRIDGING THE GAP

As a 22-year-old college student, Weaver was covered by her parents' insurance plan at the time of her injury, which capped therapy visits and carried hefty co-pays.

"We were always juggling things around, trying to conserve visits and work within the constraints of the policy," Weaver says. So after her course of formal physical therapy ended, she and her family decided to scrap the system altogether, and continue as a cash-pay patient at Strive Physical Therapy & Sports Rehabilitation in Moorestown.

Already familiar with her case, co-owner Erich Herkloz, MPT, Cert. MDT, CSCS, customized an exercise program to help strengthen her injured foot, increase mobility and prepare for the surgeries that lay ahead.

"This is the perfect arrangement for me," Weaver says. "It's very important that I have a therapist nearby in case there's a new pain that I haven't experienced before, or just to ask questions and give me peace of mind."

Weaver represents just the type of "bridge" client—one who has completed a course of formal physical therapy but who wishes to continue rehabbing an injury or pursuing general fitness goals—that can revolutionize the way physical therapists get paid, insiders claim. The rise of consumer power, health savings accounts (HSAs), consumer-driven health plans, and an aging population with discretionary income and an unwillingness to become sedentary, all point to the viability of cash-pay practices in the years ahead.

"Stephanie is the type of client I think we'll be seeing more of in the next few years," Herkloz says. "Without even doing any aggressive marketing, the cash-pay side of our business is growing." Herkloz predicts having to take on more space or redesign his facility to accommodate the rising demand.

PERFECT STORM BREWING?

For many private practices, this new model couldn't come at a better time. Rising business costs, coupled with withering reimbursement dollars and low per-visit rates, have made it harder for insurance-based practices to survive.

Between 2004 and 2006, the total number of people using outpatient therapy increased by 3.5 percent. Yet over the same period, overall expenditures decreased 4.7 percent, according to published data from the Centers for Medicare and Medicaid Services (CMS). And even though recent legislation was overturned that would have trimmed Medicare payments 10 percent and ended the therapy caps exception process, frustrated practice owners view it as only a temporary victory.

"Put simply, providers are earning less per visit," says Michael Weinper, MPH, PT, president and CEO of PTPN, a nationwide network of private therapy practices based in Calabasas, Calif. "Staff wages are escalating. Malpractice insurance, rent and other costs are going way up. Some owners are saying, Ôwhy should I stay in private practice?' There's a perfect storm hitting the industry and there's no end in sight."

To further fuel the storm, the Tax Relief Act of 2006 established the Recovery Audit Contractor (RAC) program, which allows CMS to authorize outside agencies to review Medicare claims made as long ago as 4 years to identify and recover overpayments.

Also, CMS is currently restructuring contractors and consolidating part A and B intermediaries, which could negatively affect local coverage policies, says Gayle Lee, JD, director of federal payment policy and advocacy for the American Physical Therapy Association. "You'll soon have a new local coverage determination that will affect your receivables," Lee says. "A lot of them can be pretty brutal."

Given these realities, the insurance-driven mindset must be modified to remain viable in a turbulent economic age, Weinper says. But while the market is ready to pay cash for physical therapy services, perhaps the biggest obstacle may come from inside the profession itself—overcoming the stigma of turning patients into long-term clients, and learning to "think retail."

ONE-STOP SHOP

Dentists offer teeth whitening on a cash-pay basis. Dermatologists promote the value of botulinum toxin and wrinkle-fillers. And while veterinarians are in the business of healing sick animals, up to 60 percent of their income is comprised of cash-pay nonreimbursables, such as grooming, kenneling, special foods and supplements, and implanting identification microchips.

Weinper wonders why physical therapists aren't offering fitness programs under the same precept. "Historically, therapists have thought that wasn't something they should be doing," he says. Distancing themselves from sales-driven occupations has put physical therapists at a marked disadvantage in the business arena. Refusal to embrace the cash-pay model could spell the end for many clinics.

"I think our customers are more willing to pay cash for our services, than we as therapists are to ask about it," says Paul Gaspar, DPT, CCS, owner of Gaspar Doctors of Physical Therapy, with 5 locations in southern California. "We're in the wellness business. That's what we do. There's no reason why we should feel uncomfortable directing long-term fitness or wellness programs."

Depending on a customer's request, Dr. Gaspar offers personalized individual and group training sessions to his clients. Group training runs $25 per session, while semi-private "couples" strength training and Pilates sessions are $45. Private one-on-one workouts are $75.

The clinic offers discount pricing when booking multiple sessions, and with the purchase of 8 or more sessions clients receive complimentary tests for body-mass index, body fat, weight, girth, oxygen saturation, resting heart rate and blood pressure.

In addition, Dr. Gaspar recently began offering a total wellness package—a customized program designed by a team that covers nutrition consultations, resting metabolic rate and body fat testing, ECG exercise testing and cardiovascular risk screening, peak VO²testing, musculoskeletal and postural exam, strengthening, Pilates personal training and wellness imaging. The team meets once a month to go over a client's progress and make adjustments.

"The population is absolutely crying out for this," says Mary Lou Savino, PTA, NSCA-CPT, owner of Be Fit Physical Therapy & Pilates in Downers Grove, Ill. While the over-55 population is the fastest growing segment of health club memberships, says Savino, many of them are dealing with orthopedic and cardiovascular conditions that make unsupervised exercise unwise, even dangerous.

"A lot of these clients have recently undergone physical therapy for a specific condition, but they're afraid and unaware of how to exercise past that point," says Savino, who opened for business in June 2008 and is already seeing a surge of patients with cash in hand. "They don't know what to do or how to do it, and they're looking for that guidance. Why not keep these patients in-house?"

By offering a range of targeted programs based on a client's condition, Savino is able to provide baseline tests such as body fat composition, strength, balance, vital signs and flexibility, and structure a program based on needs. Her biggest cash-pay patient groups include those with osteoarthritis and rheumatoid arthritis, degenerative joint disease, diabetes, chronic pain and fibromyalgia, acute low-back pain and post-surgical issues, such as total joint replacements.

SLOW GROWTH

While many clinics nationwide are running strictly on cash-pay income, existing clinics can dip their toe in the water by starting a small cash-pay component, and building gradually.

First, give every patient that walks in your door the option of paying cash from the start, advises Lance Van Arsdell, MSPT, owner of At Home MED Rehab, a cash-pay home care practice in Mesa, Ariz., and author of a home study course that teaches therapists to go the cash-pay route.

"Offer an incentive if they pay up front," suggests Van Arsdell, such as a 10 percent to 30 percent discount, displayed prominently on your intake forms. "Money today is worth more than a partial payment in 90 days."

Before a patient is discharged, don't be shy about offering the option of having them continue as a long-term wellness client after visits expire. But don't wait until the day of discharge to bring up the subject.

Ask clients about their needs. Do they want to get back to an advanced skill, like golfing, or do they simply want to lose weight? Dr. Gaspar estimates that 90 percent of his current cash-pay clientele have received traditional physical therapy at his practice. Your current patients may be your most lucrative client base.

However, resist the temptation to recommend more visits than necessary. "Clients don't want to come in for therapy 3 times per week if they can be taught how to do many of the treatments at home," says Van Arsdell. "Worse, your integrity may suffer."

Prepare your clinic by purchasing simple, versatile exercise equipment. "Equipment does matter," says Van Arsdell, so be sure to stock modern devices in good working order, and promote them in marketing efforts.

While some cash-pay therapists find value in higher-end equipment, such as adjustable treatment tables and laser therapy units, most start small. A colorful therapy band collection looped through caribiner clips and anchored to an above-head column is a versatile, inexpensive way to begin. Ankle and cuff weights, fitness balls and lightweight dumbbells promote a range of strengthening maneuvers.

Treadmills, recumbent bikes and other cardiovascular units are essential in some settings, and Pilates equipment such as the Reformer and Trapeze table are becoming more popular.

"Before you buy a piece of equipment, ask yourself, ÔWould someone pay me to use this equipment?'" says Van Arsdell. "If you don't see the value as a clinician, chances are your customers won't either."

IDEAS IN ACTION

After gaining a foothold in the cash-pay community, look for creative ways to thrive. By asking what your clients seek, you can offer a menu of services on a pay-as-you-go basis. Consider the following options.

• Therapeutic "tune-ups." At North Tahoe Physical Therapy in Incline Village, Nev., owner Jane O'Brien, MSPT, has always offered cash-pay services to a receptive clientele.

But last year she conceived the idea of a 15-minute therapeutic tune-up service. For $35, clients can walk in and receive minor treatments, such as a therapeutic massage or myofascial release treatment, exercise advice, modalities or taping. She offers complimentary consultations to walk-in clients that can include guidance for minor injuries, incontinence or pelvic pain, and to recognize conditions that may require ongoing therapy.

Despite minimal marketing efforts, O'Brien handles approximately 6 tune-ups a month and several consults. "It's a great way to stay connected with members of our community who may not have insurance or know where to turn for help," she says.

• Equipment sales. Fitness-minded clients are looking for clinician-approved equipment to continue their gains away from the clinic. Under a consumer-oriented banner, PTPN clinics offer selected equipment for sale to customers, including ergonomically designed tote bags and hand-held exercise kettle bells.

While traditionalists feel uncomfortable offering nutritional supplements, others rationalize that a percentage of patients still purchase these products regardless of the venue, and are beginning to stock them for sale.

• Targeted rehab programs for specific conditions. Does a large percentage of your patient population have cardiovascular disease or multiple sclerosis? Have they received total joint replacements, lumbar fusion or radiation therapy for cancer?

Attend support groups for these conditions and speak to attendees. Offer free consultations and a complimentary visit with a targeted plan for their symptoms. Visit long-term care facilities and speak to referral sources in your community.

The marketplace governing rehab practice is changing. Abandoning arbitrary insurance regulations and throwing reams of arduous paperwork into the trash is an attractive option that more practice owners are exploring.

But can an all-cash practice survive? Can you charge enough to cover your fixed and variable expenses and still produce profits?

For Van Arsdell, the answer to these questions is an emphatic yes—not just for his own practice, but for practice owners across the country he consulted before putting together and offering his course. And most of those fellow practitioners survive completely on cash.

"Why wait for the sky to fall?" asks Van Arsdell. "Take steps right now to position your practice for the future. Adversity brings opportunity to the prepared mind." n

Jonathan Bassett is senior associate editor of ADVANCE, and can be reached at jbassett@advanceweb.com

Technology and the cash-based practice

One reason that rehab practice models have stagnated in recent years is that many providers

are not keeping pace with technological advances. If you're considering a cash-based component, don't overlook the role of web-based practice tools to create a more valuable and purposeful patient experience.

By leveraging software and undergoing some simple process changes, you can offer cash-based services without the need for additional staffing or space. For example, chronic condition programs can benefit patients who have run out of annual benefits, but still desire maintenance and supervision.

Because the therapy team is already familiar with the patient's case, this software can allow the treating therapist to communicate, monitor compliance, issue progress reports, and make changes to the treatment plan from a distance.

Patients pay a low monthly fee, and a therapist can manage many patients at once for higher revenue per unit of time. When patients' annual benefits become available again, they can return for standard office visits.

Web applications can also enhance a patient's perception of value. When you ask patients to pay cash, they expect superior service. They desire better communication with their therapist, more control over their treatment, and better access to health and wellness information specific to their condition.

Even more important, cash-pay clients expect more engaging and memorable content regarding their treatment plan—routine verbal instructions and paper-based line drawings are no longer sufficient.

As we move into the next decade, rehabilitative care will be further practiced, delivered, and followed online. By harnessing the power of the technology your patients are already using, you can provide quick and convenient access to your expertise — something both your business and your patients will be grateful for.

—Mark Barnes, DPT, is a clinician in Boulder, Colo.

Cash-pay rehab: Not just for private practices

Hospitals are also starting to cash in on cash-pay therapy. According to the Medical Fitness Association, an affiliate of the American Hospital Association, 875 fitness centers operated in hospitals 3 years ago. That number has now grown to more than 1,000.

"It's a service that our clients are thrilled to be a part of," says Kami Brooks, manager of the Wellness Center at Baptist Hospital in Nashville, Tenn., a 17,000-square foot facility with a 4-lane pool, indoor track, and cardiovascular and strengthening equipment.

Housed on the hospital's campus, the facility is supported by cash-paying clientele. Hospital employees and families can also join, and there are no contracts or insurance forms to fill out.

"Many of our clients have been discharged from therapy, and they don't know where to turn next," says Brooks. "Older people with no exercise experience can be very intimidated by a community gym, and they simply won't go. This allows them to stay within the confines of the hospital environment for as long as they feel necessary."

—Jonathan Bassett