So What’s the FUTURE of Independent Therapy Practices?
5 Reasons Why Our Outlook is BRIGHT
Note: In our previous blogs on Consolidation and Risk Sharing we addressed these critical components of health care reform from a high level. In this blog we will bring you a little closer to the ground without going into the weeds. If you haven’t read our first two blogs on these topics, I suggest you go back to them to get a solid overview of how these two factors impact independent practices.
Unless you’ve been hiding under a rock, been in a coma, or had your head in the sand for the last 5 years, you no doubt are seeing many dramatic changes occurring in your local health care market.
Some bad . . . Some good . . .
Some worrisome . . . Some encouraging
So how will it affect YOU? Your practice? One thing has become quite evident –
Some will win . . . Some will lose
Those who can lead change and innovate around value will succeed. Those who refuse to change probably have a limited health care reform survival rate.
Consolidation and Value-Based Risk Sharing. Think of the key aspects of 2 of our previous blogs:
CONSOLIDATION. Quick review. 8 concepts to consider:
1) Connect with powerful decision makers
2) Size Matters – clinics, therapists, market share
3) Commit to Value for long-term strength
4) Decision makers will divide & conquer if they can
5) Create a tight knit organization
6) Trust must be at the core of your organization
7) Commit to building a tightly knit team
8) Leadership and leadership development are critical
1) Fee for Service creates incentives to provide more services
2) Fee for Service also creates high financial risk for payors
3) In risk sharing arrangements, providers take some risk from the payor
4) Sharing financial risk puts attention on quality outcomes
5) Providers share risk through Per Diem Rates, Case Rates, Bundles, and Capitation
6) Value based models have quality benchmarks, rewards
7) Connect with powerful decision makers through Triple Aim Mission; Value-Based Culture; and a Strategy around Innovation
8) Most payors and large providers already have risk sharing models in place
“OK . . . so I get that these 2 BIG CHANGES confronting physical therapists in independent practice are a reality, but how does a small private practice like mine get big and deliver value so I can ‘Get my foot in the door, AND keep my seat at the table’ with the powerful decision makers?”
Well . . . Related to SIZE – Here are 4 Basic Options for a practice owner in today’s market.
- “Stay the Course” is remaining independent and continuing business as usual. If you haven’t been able to negotiate with plans to this point, it won’t happen without change.
- “Grow my Own” is only an option for practice owners who have the financial wherewithal and business acumen to develop a large business entity.
- “Time to Sell” is the way most practice owners choose to gain strength of size. They know they can’t do ‘business as usual’, they don’t have the resources to grow their own empire, and, in many cases, they have tried the loose knit network approach, which has not worked. But you have to give up your business and likely go through major “culture shock”.
- “Get Big, Stay Small” this option allows you to maintain ownership of your practice and has 3 models – (1) a very loose knit network; (2) a loose knit independent practice association – IPA; and (3) a tightly knit management services organization (MSO). The latter brings the greatest value, but requires solid leadership and teamwork by the owners.
Except for “staying the course”, these options will likely give you a greater chance of get ting your foot in the door than you presently have.
So now – let’s look at ways to keep your seat at the table.
Value. Quality + Caring Service / Total Cost of Care.
Look at the Value Box of the “Connecting with the Powerful Decision Makers” matrix –
Outcomes Patient Centeredness Collaboration Care Management
Here are ways you can impress your risk sharing partners and create a long term relationship built around ‘win-win’ Value.
- Outcomes. Implement an outcomes tool that meets the needs and expectations of your market. Therapy Partners leadership and clinics are solidly committed to FOTO – fotoinc.com. FOTO has been our strongest ally in our value-based model and all of our relationship building around value. Risk Adjusted. Validated by over 80 studies. Used by over 3,000 clinics and 15,000 providers. Over 7,000,000 cases in its database. Accepted by CMS. Easy to use. But outcomes only work for you if they are impressive and if you bring them to the decision-makers. You better take the time to manage your outcomes process and hold therapists accountable achieving high level results.
- Patient Centeredness. Make a commitment to doing what it takes to create an AWESOME patient experience. Quick access to care. Friendly, Caring Service. Empathy. Use your outcomes and care process to show each of your patients that “It’s ALL about YOU”. However you decide to display patient-centered behavior, set expectations and hold ALL team members accountable.
- Collaboration. Do you think patients care about our turf battles with other providers? Absolutely NOT. They want the best care, from the best provider, at the best price. Question for you. Are you more concerned about protecting physical therapy turf or doing what your patients want and expect for the best outcome at the optimal cost? A Collaborative Culture means you are willing to work with other providers – OTs, athletic trainers, personal trainers, dieticians, primary care doctors, and others who can collaboratively achieve amazing health outcomes with you. Be innovative.
- Care Management. Care management means making critical decisions that reduce total cost of care AND result in better functional health. What are the optimal services, information, and number of visits required to achieve the BEST functional outcomes? This doesn’t necessarily mean limiting therapy visits. It means doing what you have to do to eliminate high cost interventions that add no patient value and drive up total costs – unnecessary MRIs, surgeries, hospital stays, injections, medications, physician office visits. Best functional outcomes at the best price. Ask the right questions . . . Provide the right answers . . . Deliver the most effective care . . . From the Best Providers . . . At the best time and best price.
The Future is BRIGHT
So if I can pull all of this off . . .
What IS the FUTURE for Independent therapy practices in this wave of change around consolidation and value?
In spite of the challenges and obstacles, These changes create a brighter future for independent practices than the old way of doing business. Here are 5 Reasons why:
- Economies of Scale. Getting bigger brings greater opportunity to create economies of scale and gain access to services from skilled professionals that small practices can’t afford. In a reforming health care market, practice owners and manage rs must make a relentless effort to provide more effective services while at the same time, they must work to drive down and manage the cost of doing business.
- Long Awaited Negotiating Strength. With new size – independent practices finally have negotiating strength. How? If small practices walk away from a contract, the payor can easily find another local provider for that small number of patients. However, BIG practices see a large volume of patients. If the large independent practice ‘walks away’ from an unacceptable contract, the high volume of patients that they serve will either have reduced access to care or go to a hospital owned clinic that has a higher payment rate. The larger therapy business can negotiate a better arrangement because it can leverage its size, and if they are strategic, its value.
- Volume Based Payment Gives Big Advantage to Hospital Systems and POPTS. With Fee for Service, hospitals, big care systems, and POPTS have a strong financial incentive to open more therapy clinics because ‘the more they do, the more they can make’. In most cases, as long as there is a good supply of therapists, there is no reason for hospital systems to work with independent practices. Private practices have a hard time competing with in a volume-based world. So how do we escape? See # 4.
- Value Based Payment Creates Opportunity for Independent Therapy Practices. Whereas the traditional fee for service world offers advantages to hospital system-owned PT and POPTS and creates challenges for private therapy practices, risk-sharing care models bring opportunity to innovative independent therapy practices.
For example, ACOs have 2 BIG Responsibilities – Deliver Care that improves members’ functional health, AND Manage the Cost of that care. Furthermore, ACOs are paid, at least in part, on a capitated basis. Big risk. If independent practices measure their outcomes and manage total cost of care effectively, many ACOs will see greater value in contracting with independents rather than investing their limited dollars on therapy clinics. They can then allocate resources to higher profile services.
Additionally, health plans have long seen physical therapy as a commodity. The only factor is cost with no consideration of quality. Value-focused independent physical therapists can now be risk-sharing partners with health plans. Value creates greater connection with powerful decision makers.
- Market Around the Triple Aim. The Triple Aim is a powerful message about patient-centered value. If you deliver tangible Triple Aim value, your marketing and sales efforts with decision-makers within health plans, care systems, and your communities becomes much more salient.
Bright future?? Definitely. If you think Strategically. Size and Value Matter.
How can you get your foot in the door of the powerful decision makers . . . and stay there? Better figure it out, and when you do . . . get out and SELL IT!
Look for our upcoming Blogs on the topic of Value Delivery where we will talk about Connecting the Opportunity Dots and Leading Change. Those blogs will focus on specific ways to seize advantages and develop Leaders and Teams in our Value-Based World because –Leave a reply →