E827 | Why Insurance-Based PT Is Dying and How To Win The Next Era

Danny: [00:00:00] So reimbursements are down, burnout is going up. Turnover in your clinics is going up. More volume is happening in insurance-based clinics. And if you still think that insurance-based clinics are the way of the future. You're already behind.

I'm Dan Te. I'm the founder of PT Biz, and I have been a cash based clinic owner since 2014. I've been helping cash and hybrid based clinics now for the last eight years, and it's something that I think we've all seen coming for a while. The. Uh, slow death by a thousand paper Cuts of insurance-based practices have been happening now for decades, and now more than ever.

It seems to be that the way of the future is just not a traditional insurance-based clinic. I. Here are my thoughts on it, because I don't think that these are gonna necessarily completely go away. In fact, there's always going to be a place for these within hospital clinics and very [00:01:00] large clinics in general.

But what I'm seeing, and what many of you are probably seeing is the cracks in this business system are starting to become more and more problematic. Not necessarily just for these businesses, but for the people that are working in them as well. Let me ask you a question. If you're thinking about starting a clinic right now.

Are you thinking that you want to go a hundred percent insurance based, or are you thinking at a minimum you're gonna want to have at least some cash or we consider a hybrid clinic? Most people that we talk to, I. The hybrid clinic is really the only option that makes sense for them if they're gonna take insurance at all.

And in fact, I think hybrid clinics can make a lot of sense, especially if you want to work with certain populations like a Medicare age population or you live in a military area and you wanna take Tricare, um, or you live in an area that does still have pretty good insurance reimbursement. There's places like this that, uh, blue Cross or we know, whatever large organization, [00:02:00] they may still re reimburse quite well for physical therapy, but they're becoming few and far between and.

There's a few factors that are really leading to this. So number one, we'll talk about decreasing reimbursement, which is something that's been happening now for, um, decades, right? Much longer than I've even been a, a provider and. When you look at the numbers on it, right? If you look at the numbers on a United Health visit in Georgia, whenever I actually looked at, you know, is this an option?

Is this something we wanna do? If we wanna maybe move hybrid so we can take more postoperative volume and really grow our clinic base through that. You know, the reimbursement that we were gonna get was like $70 a visit. Um, so what do you do, right? If you wanna do that, then you have to make up for it in volume, and there's always a give and take because if you're going to make up for it in volume.

It's very hard on your staff to do that, number one, but it's very hard to maintain quality when you have multiple people in an office at the same time, versus if there's just one person that you're having to, um, you know, work on getting a [00:03:00] result that, that they want and that you want. So the lower volume side, um.

Obviously it, it's more appealing to providers. They don't wanna work with as many people, but when you're only getting $70 a visit, you don't have much of a choice as the business owner. And this is where small insurance-based clinics or smaller insurance-based practices, uh, they are, they're getting squeezed because they can't throw their weight around, they can't get higher reimbursements.

Um, and you don't, they maybe don't want people to see as much volume. But they don't have a choice, right? So reimbursement is one of the number one things that's really crushing everybody. The second thing is burnout and churn of the providers that we have. And this is a huge problem in healthcare. Not necessarily just physical therapy, but speaking of physical therapy and that in particular, you know, that niche.

Burnout of young providers is a problem that we see happen usually somewhere between two and three years into the profession. And, you know, when I was an intern, uh, so the way the the Army Baylor [00:04:00] program works is the last year that we're in school, we're actually not in class. We're in a clinic for that 12 month period.

Um, and we are working basically a full schedule. You know, I, I don't think we were supposed to have a full schedule and, uh. But you know, as interns, uh, in, in, in-network based civilian clinics, um, you know, I spent a year at a, at a higher volume clinic and. I can tell you that the people that I spoke to that were working there, there were a few, few years out, were definitely feeling that, you know, I was feeling it by the end of the, the first year that I was there, you know, and, and we weren't even seeing a full caseload.

We were probably seeing 80% of, of a caseload by the time that, you know, we were a few months into that, into that job. But it's tough. It's tough to manage that number of people. It's tough to manage the administrative burden of that. All the notes. Uh, the administrative side with getting approvals for more visits.

Like it's just a lot of time stacked on top of, [00:05:00] uh, the patient care that, which really is like the most important part, but there's all these other things you have to do. So it leads to an environment that creates burnout. It creates, uh, people turning over in the profession, maybe leaving the profession or definitely moving to another job.

Uh, so these in-network clinics are dealing with way more turnover. Then, um, they're sort of hybrid and, uh, cash-based counterparts that are not, they're not required to see as much volume because they have higher reimbursement per session. So burnout is creating, uh, a huge problem for these folks. Then you have the rise of cash and hybrid based clinics like, like what we started, you know, in, uh, 2014 and all the clinics that we help.

That we work with now within PT Biz, you know, these are, um, small clinics for the most part in comparison. You know, you don't, you don't have these, um, 90 clinic chain, you know, PT clinics that are cash and hybrid based clinics just yet. I think you're gonna see that eventually, but right now they're smaller, but there's many of them and they're starting to take market share, [00:06:00] uh, from these, these clinics that, uh, that are functioning more in a traditional role.

So they're starting to actually lose some of these folks that maybe are more like. Cash, uh, patients of theirs where they're charging, charging potentially a cash rate, or they have a high deductible and, and they're, they're able to charge cash rate, well, now they're competing with somebody that's literally focused on that person.

They're marketing to that person. They're out in the community trying to actively, you know, get those people in the door. And if they're not doing that, uh, then they're gonna have a hard time competing against these more performance-based clinics that are popping up all over the place that specialize in a certain type of niche.

And that's a huge marketing advantage. It's a huge advantage whenever you're competing with somebody that's a generalist versus someone that's a specialist. Uh, if, if the playing field is more level, meaning they have a super high deductible, you know, the specialist is probably who's gonna win out. The other thing that you have to keep in mind is the consumer's mindset.

Uh, their mindset has shifted. This is something that I've seen over the last 10 years, just in particular, personally within our own [00:07:00] clinic and with the clinicians that we work with, and that is that as deductibles have gotten worse as, or I should say, as deductibles have gotten higher and people have more skin in the game, and copays are higher, and, you know, e everything costs more with health insurance from 10 years ago until now.

What we see is people become ins informed consumers. They're making a buying decision based on what is best for them, what's best for the type of injury they have, the, for the type of activity they wanna get back to, uh, proximity, potentially obviously with, with where they're located. But I mean, if they find the right person, people are not.

They're, they're, they're not, you know, only gonna stay within a couple mile radius. They may drive. We had people drive 45 minutes to come and work with us on a regular basis, uh, because we fit the, the buy box for them, for what they were looking for. And the consumer has more skin in the game. They're informed more.

They're expecting to have more, uh, [00:08:00] out-of-pocket costs. The question used to be, do you take my insurance? I saw a shift to you probably don't take my insurance, do you? And now. We don't get that question so much anymore because if you are focused on a specific niche, you're seeing people one-on-one, you have really high quality providers.

Uh, the assumption in many cases that you don't take insurance, and people are okay with that because they want, a specialist is gonna help solve their problems. So these shifts that we're seeing in the, in the profession, in my opinion, are leading to a, a slow death of. At a minimum, small insurance-based clinics that have to make a decision of what are they gonna do, are they gonna continue to go down this path of getting paid less and having people see more and more patients, which is really unsustainable at a certain level.

Like you just can't see that many people in a day. Or do you try to cut some of the, you know, the, the worst offenders, the lowest [00:09:00] payers? Uh, maintain some sort of payer mix of insurance, but really lean into the cash side and try to stabilize your clinic's finances, uh, by actually, you know, increasing your average visit rate with cash and insurance together at a minimum.

Maybe you cut all of insurance out together. Like, you know, we never took insurance a day that I had. Uh, I had a clinic, um. And there's a lot of advantage to that and there's some disadvantages right there. And this hybrid model, I think for many clinics are gonna have to make this decision. I see no other path for them, but to go this direction.

We see this through conversation we've had with, you know, large practice owners with, uh, with the A PTA, with professors, with, you know, clinic owners all across the country. I just don't see another way for this to go, unless they're gonna be massive. They're gonna partner with hospitals and they're gonna go that route.

That's, that's one option. But if you're gonna stay smaller and you want to have more of a quality work-life balance for your staff. This really is the direction that I see a lot of, um, of clinics going. So [00:10:00] if you wanna win in this environment, what do you need to do? Well, number one, you need to pick a niche and try to dominate it.

This is really important. If you want to be a general orthopedic outpatient clinic, you're gonna have a hard time competing against, uh, you know, ones that have. 50 locations and have partner, uh, relationships with hospitals and, you know, like you're, you're, you're playing a different game than if you say like, I'm the run, I'm the go-to runner PT in this area.

I kill it with runners. I focus on runners. That's my niche. That's what I want to work, work with. I create content for runners. I build programs for runners, all that stuff, right? That is a, a number one place you need to be. The second thing is you need to focus on your, uh, your customer's experience, your client experience, patient experience, whatever you wanna call it.

How they feel when they work with your company, how they feel when they, they interact with your brand. Little things like being able to use their name, being able to do things like write handwritten cards, you know, being able to, uh, you know. I learn [00:11:00] more about them, go deeper with a relationship with them, be able to curate experiences for them, be able to connect them with other people in their community, right?

These are things that are very, very, very valuable that bigger organizations, more corporate, corporately led and run organizations have a hard time doing this because they can't be as nimble and they probably don't understand their avatar as well as you can your your ideal customer, right? Um, the third thing, you have to be able to educate people.

It's, it's not enough to just say like, we're a cash based clinic. You have to educate people on what they're paying when they go other places. And this is what a lot of people are coming to the conclusion of. And they're already sort of, they understand this when they come to your office because they've had typically a, uh, frustrating medical experience.

They go somewhere, they're seen for something. They, they have a, a copay potentially that they pay, but then they get a bill after the fact for more money than what they expected because they haven't met their deductible, they haven't, um, you know, got to the point where their insurance really kicks in.

And that is [00:12:00] a very frustrating thing if that is not communicated well by that clinic. I mean, this has happened to, to me personally, it's happened to my wife one time, uh, with a doctor's visit that she had, and it's. And I even, you know, I understand this stuff more than most people 'cause we deal with it, but it's still so irritating.

It's a terrible customer experience. And one of the best things about being transparent with how we're charging people, I. Is that never happens. We're never gonna send them a bill after the fact. It's just, this is what it costs to work with us. It's a pure one-to-one relationship. You value my time, I value your time.

Let's go ahead and solve this problem. And, and, and that's it. Right? Nothing after the fact. That's a really, really good place to be. You have to sell the, the actual, like transparency of that. The last thing, make sure that you are talking to people about the transformation that they're trying to achieve, the goals that they have, the things that they want to accomplish, not necessarily the, uh, the, the specifics of what you're doing.

Right. People don't really care that you're certified in dry needling. They don't really care that you're a PRI certified specialist. Maybe they're looking for those things. Maybe [00:13:00] that's part of the equation is what they're searching for. But what they really want is to be able to throw a baseball with their kid, uh, in the backyard and their shoulder not hurt, right?

They want to be able to go run with their friends and not have debilitating knee pain that stops 'em from being able to run, you know, a 5K, 10 k, whatever it might be. Like, you have to understand the root cause of what's going on, both on the, on the injury side, but also what drives that person for two factors.

This is really important. Number one is so that they will commit to your business as a, uh, a client to actually solve that problem. Right? They need, they need buy-in to think that, that this is the right place to, to actually make a sale in your business, right? And no money, no mission. That's just the reality.

Number two, compliance of the things we're gonna ask them to do, which are typically, uh, uncomfortable hands-on things that we're gonna have to do, followed by tedious, challenging, weird little exercises. And you need buy-in. You need people to actually like, want to, uh, [00:14:00] do those things to know why they're doing those things and tie that to the hard work they're gonna have to put in.

Because I can't do your pushups for you. I can't get your, I can't build strength on your behalf. I can't gain mobility on your behalf. You have to control these things through range. You have to build these, the capacity up, like people can't do that for you. And buy-in is what leads to them actually getting the outcome.

'cause you have to put the work in on their side. And if you can do these things, you set yourself up. To be successful in the future, and that's really what you have to think about. It's not where we're at now. You have to future proof your clinic and the way things are going. You have the application of technology, you have less and less people, uh, able to use their insurance, meaning you're gonna have more and more opportunities in a cash-based or a hybrid clinic.

But now you also have more competition over there. So how do you manage that? How do you, how do you actually have a, you know, a complete marketing plan, a sale, a, a sales cycle? Understand your customer experience, your finances. These are all the things you have to learn as a business owner. And if you wanna future proof your business, you have to become a business.[00:15:00]

Owner. You can't just be a clinician who owns a business. This is what we help people with every single day. If you're looking to future-proof your business, you're looking to put your business in the right place to make this transition that we're seeing now happen and really in a, a more rapid pace than ever.

Head to physical therapy biz.com. Take a look at what we're doing. See some of the people that we've worked with, we've worked with over a thousand clinicians, either helping them start. And grow cash-based clinics or helping 'em transition to hybrid clinics or start hybrid clinics and grow those all across the country.

We'd love to help you as well, really become a great business owner and not necessarily just a clinician who happens to own a business. So as always, thank you so much for listening and watching, and I'll catch you on the next one.