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Today,
our guest believes physical therapy
doesn't have a value problem.
It has a positioning problem.
I like this.
He spends his time helping independent
practices stop waiting for reimbursement
to improve and start rethinking how they
get paid altogether.
While most clinic owners are stuck
negotiating contracts, chasing referrals,
or hoping legislation fixes their margins.
Spoiler alert, it's not going to do that.
He's asking different questions.
What if the problem isn't reimbursement?
What if the problem is the model?
What if the call is coming from inside
the house?
You get the idea.
He's gotten to work with practices that
want more control over their pricing,
their relationships,
their future by building direct
relationships with employers and
positioning physical therapy as the first
stop for musculoskeletal care.
He's here to challenge the default system
and give clinic owners in the audience a
chance to think differently about power in
healthcare.
Let's bring him in, Matthew Pratt.
Matthew, welcome to the show.
Thank you for having me on.
Pretty good intro, right?
I tried to go NPR style.
Yeah,
I feel like I'm going to have a
hard time living up to that,
but that was really good.
Thank you.
All right.
So I like bold statements and you say
most PT practices don't actually have a
reimbursement problem.
They've got a business model problem.
I like that because it changes the
ownership on not our fault to it might
not be our fault,
but it is our problem.
So break that down.
Break that idea down for me.
Yeah.
Well,
let me start by first saying reimbursement
is an issue for a lot of practices.
I'm not minimizing that in any way.
The reason I say that the way that
I do is because the current traditional
fee for service system does not position
physical therapy, for the most part,
in a position to win.
You're constantly,
where your people come from,
how much you get paid, your referrals,
all of that is dictated by someone else.
We're hoping legislation will change that.
We're hoping referral partnerships will
change that.
We're hoping that
the hospital system won't go out and
acquire our competitor across the street
and just refer everything in house.
And so when you look at the reality
of health,
the healthcare costs in America continue
to rise, right?
I saw a post this morning by Dr.
Eric Bricker and he, in his post,
he talked about how for a family of
five,
the cost of healthcare for in Dallas,
in the Dallas Fort Worth area was thirty
five thousand dollars.
which is, and that's my situation.
I have a family of five, I'm married,
I've got three little girls,
and that's a lot of money, right?
And so as these costs continue to rise,
the people who are paying for care,
patients and the people that employ them,
they're looking for alternative methods to
be able to bring those costs down, right?
And so for physical therapy,
I think that there's this unique
opportunity to position, not as a,
you know, a cheaper than option, right?
As in, you know, outcomes are worse,
but you save money.
But in the reality of this does save
you twenty seven hundred dollars on
average per musculoskeletal claim for
these employers and employers are willing
to pay a premium for that.
So to me, when I look at it,
the positioning problem is that the value
that P.T.,
provides isn't being realized or
recognized by the current system.
So we need to look at alternative methods
to go outside of, okay,
who does value physical therapy and who's
willing to pay what physical therapy is
worth?
Because I believe, you know,
a hundred and fifty dollar reimbursement
across the nation should be average.
But I know a lot of practices I've
talked to,
sometimes they're getting fifty dollars,
you know,
sometimes they're getting seventy five.
So that's why I say there's a positioning
problem.
It sort of changed.
This part of the conversation feels like
that Spider-Man meme, right?
Is everybody sort of pointing at each
other saying it's your fault.
It's your fault.
It sort of shifts.
It shifts that ownership.
I mean,
I heard Jerry Durham say this a long
time ago,
which the fact that we still call it
reimbursement and not getting paid like.
i don't reimburse my plumber i pay him
like i might get the invoice a day
later but i still pay him isn't that
funny how we even just the words like
reimbursement it's like well thank thank
you so much i appreciate you appreciate
you allowing me to take your money for
doing the thing i did right yeah yeah
so what specifically breaks in the
traditional fee-for-service model for
independent practices where does it where
does the where do things break down
I think that a lot of it goes
back to control and like control in the
sense of in the traditional fee for
service model,
the way that things are set up right
now, independent, you know,
outpatient practices,
they don't have the opportunity to dictate
who do they treat, when do they treat,
right?
Obviously with greater direct access laws,
some of that has opened up to a
point,
but I know certain States it's still,
you know,
there's caps on how many visits people can
get on direct access and
And so from a,
the problem I would say with the current
traditional fee for service model is it's
not built to value physical therapy and
for physical therapy practices to win,
right?
The people that are winning right now are
the health systems,
the people that are winning
are the people who have the scale to
go in and negotiate reimbursements.
And I've even had this conversation with
some people who agree and disagree with
what I'm saying.
And that's great.
I think that that's the discourse that we
need.
That's how the industry,
that's how health care gets pushed
forward.
We have these conversations.
But when your practice is located in a
large metropolitan area,
you have the demographics and the wealth
to say, oh, I offer cash pay.
I offer these other wellness services.
And I can scale to the point where
now I can negotiate my contracts and get
meaningful change in my reimbursement.
But what does the small rural pediatric
practice who services mainly Medicare
patients, what do they do?
that they're they're forced to say well i
have to take what i can get from
insurance and that that is what it is
right and so and i even in that
conversation i've had you know people have
told me well they decided to do that
that's their problem right and like i
understand but i think we all would agree
greater access to care is good like we
want people getting into the care that
they need so we've got to find a
way that it at least works for the
vast majority of people
and and i i don't i'm not in
any way advocating that we should just
trash the traditional fee for service
model i i don't that's not what i
think would be most beneficial especially
for most practices but i do think that
we're kind of getting to an inflection
point where the cost of providing care
Inflation, rising overhead, staffing,
how much it costs to pay your staff.
People are coming out of PT school with,
I think, you can correct me, Jimmy,
I'm not sure.
I think the average is like a hundred
and fifty thousand in student loans is
what people are coming out of PT school.
So people with that much debt,
they can't come in and start at sixty
K.
Right.
Like they've they've got to make more
money than that.
Right.
And we're getting to this point where it's
getting incredibly hard for we'll call
them the mom and pop private practices to
operate.
Right.
Margins are getting so thin they can't eat
the cost.
Larger practices can.
And for me,
like just my my background and I think,
you know, just uniquely to my experience,
what I've been able to see,
I've spent a lot of time
emailing cold calling practices all across
the country like some people who listen
this you may even have a voicemail in
your inbox from me at this very moment
uh but in the month of january alone
um i talked to two six location practices
i'm obviously not gonna name names or
locations uh talk to two owners who told
me in january two six location practices
that they were selling
and i've seen that as a growing trend
yeah over the last six months and i
think we're getting to that point where
the economics don't make sense that
doesn't matter
the math doesn't math and the concern that
I have, you know, my background, um,
I played football from fifth grade into
college.
I've, I've had,
I've been on a lot of treatment tables.
Um,
I've got a very good friend who's a
physical therapist here in where I live.
Um, I,
I deeply care about the industry and about
physical therapy.
And my concern is that in,
in five years, the,
the
The PT student coming out and saying,
I want to go start my own practice
because I just want to treat and serve
my community.
And maybe we scale it in the future.
They're not going to be able to do
that.
Their only option is going to be,
I've got to go,
I've got to go work for this very
large company.
And we're going to only going to have
four or five of those.
Maybe that's, that's my concern.
That's what I've been hearing,
and that's what some of the smart people
that I hang out with,
which is you can do this as an
individual provider.
This is where they say the rise of
the one point five FTE location, right?
It's like you running it,
you bring someone on part time.
But when you go to a step bigger
than that,
that that next step doesn't make any sense
the other end of the spectrum is a
giant multi-state um chain or a hospital
system or you know you sort of do
what danny mattei and his group talk about
which is like it's just cash but will
that work everywhere
Maybe not.
Right.
Like, so,
so the question I always ask people is
like, what game are you playing?
What game do you think you're playing?
I heard someone say it on a podcast
recently.
I, you know, just somebody was saying,
Oh my God,
I'm just done with this corporate America.
I'm just going to go open a, um,
a coffee shop.
And the guy was probing and he goes,
well,
do you like spreadsheets and ordering
coffee and cups and lids and napkins?
And they're like, no,
I want to hang out and talk and
hand coffee over.
He goes, you want to be a barista?
That's what a barista does.
So a coffee shop owner doesn't really does
that one percent of the time.
So I think when people are like,
I'm frustrated by doing whatever this is,
either a clinician or an owner,
understand what game you're actually
playing.
Because right now for owners,
it sounds like margin compression,
referral dependency, or I mean,
I've said this before,
you need to be a marketing engine first
that happens to sell physical therapy.
Red Bull is a marketing company that
happens to sell an energy drink,
not the other way around.
And then, I mean,
we've heard just in the last couple of
weeks,
Clinicians saying I signed on to that
contract knowing I'm losing money every
visit.
I'm like,
how do you do that with a straight
face?
Like,
how do you do that with a straight
face?
So overall,
we can say you've said PT needs better
positioning.
What does that look like to you in
a practice?
Yeah,
I think the two ways that come to
mind, you mentioned it a second ago,
right?
There's cash-based,
and I think that should be a mix
of every practice's payer mixes is just
cash-based patients.
I think the hard part with that is,
And I could be completely wrong on this,
but I haven't seen many practices that are
cash based be able to scale really well.
And I think part of the problem with
that is you're very demographic dependent,
right?
Just like the example I provided earlier.
I mean,
I grew up in a pretty rural area,
blue collar family.
We would have never had the money.
to pay to go to physical therapy
cash-based never would have had the money
and so i think that's where you know
the cash pay you know you get into
well what are direct access laws you know
does this work in every demographic it can
to some extent right but i i don't
think it's the solution in my opinion
where
I think the biggest opportunity for
physical therapy and for physical therapy
practices is in the direct direct
contracting model with employers.
And I'll tell you why I think that's
the case.
it alleviates some of the problems that we
just talked about, right?
Like, oh, this is a rural area.
These people don't have a lot of money.
They can't afford to pay me cash pay,
right?
But I also,
I'm not really happy with the contracted
insurance rate, right?
That I'm usually getting in the same area.
When you contract directly with a
self-insured employer, and Jim,
are you familiar, Jimmy,
with like what a self-insured employer is?
Yeah, but just explain again,
because I don't know if everybody does.
Yeah.
So basically,
when an employer is self-insured,
they have their own group health plan.
And instead of paying premiums to Blue
Cross Blue Shield, UHC,
they basically they have a third party
administrator that can be someone like
Blue Cross or UHC.
But instead of paying for premiums,
they're just paying all of the claims out
of pocket.
So for their covered lives.
Right.
So.
Anyone who's an employee and then an
attendant on their plan,
they pay all of the healthcare costs for
those people, right?
And what that means is when my wife
pulls her back at the gym,
And then she has to go to the
PCP.
And then the PCP says, yeah,
I don't really get musculoskeletal.
Let me refer you to a specialist.
And then you go to the specialist and
you might get a great specialist who's
like, oh yeah,
this sounds more like a PT problem.
Let's get you into PT, right?
My experience having gone through this
before, they're gonna wanna do imaging.
And then once you get imaging,
they're either gonna say,
let's do surgery or pain management.
or maybe PT, right?
But I think it's pretty rare that people
go, they get pushed directly into PT,
right?
All of those stops along the way,
it just inflates the costs.
And these self-insured employers who are
paying every cost along the way,
every PCP visit, every specialist visit,
they're looking at this rising cost of
healthcare and going,
How do I,
how do I make this work?
Right?
Like I only have so much budget that
I can put towards this and then how
do I make it work?
So they are willing to be self-insured
employers.
And the majority of employers in America
are actually self-insured.
And what we've been seeing in our
conversations at like Second Door Health
is basically more and more employers,
even smaller and smaller employers,
because the premiums are getting so
expensive,
they're looking to go self-insured.
It just costs too much.
It's a gamble,
but now there's skin in the game.
So now you're advocating for better
decisions and you're like, well,
if this on average,
because everything's an average, right?
This on average tends to lead to lower
costs and better outcomes,
getting that person back to work,
covering them, right?
Giving them care, back to work,
solving the problem.
And it's less money.
Well, I'm going to want to do that.
I'm incentivized to do that.
Whereas the insurance company,
you have paid them.
Now they are now practicing medicine
without a license,
essentially where they will deny or use
strategies to pay as little as possible.
It's just, it's moving where the money is.
It's moving where the decisions are made.
Yeah.
And,
and the reason why I think this is
such a,
I think it needs to be a very
important model for the future of physical
therapy and especially private outpatient
physical therapy is that
these employers,
they're not looking to pay you less than
your current contracted rate with Blue
Cross Blue Shield.
Most of the time when we've had these
conversations with employers,
they're willing to pay above and beyond a
per visit rate of what you're getting
right now.
The reason being you're saving them on
average,
twenty seven hundred dollars per claim for
musculoskeletal care.
Right.
So they're looking at that and they go,
well,
if I had two hundred claims last year,
that's five hundred and forty thousand
dollars potentially in savings.
That's that's yeah.
They like that math, too.
And the reason in all that being said,
like,
This model, it's not easy.
It takes time.
It takes time developing the
relationships, the conversations,
and it's new, right?
Anytime you're trying to introduce a new
business model, a new product,
it takes time.
But the reason I think that it needs
to be a part of the future of
physical therapy is one,
margins are an issue.
This is a great way to solve margin
problems, right?
And, you know,
When you have those direct contracts,
you can set that up as onsite services,
or you can just have people fed right
into your clinic, right?
If you wanna go onsite and you've got
the infrastructure for that,
you can do that.
If not,
you can just have people funneled straight
into your clinic,
most likely for a higher reimbursement
than what anyone else is paying you at
the moment.
And it solves the problem we talked about
earlier with the cash pay or the
cash-based model.
Because even in rural communities,
your municipalities,
your school districts,
your fire departments,
your police departments,
those are all generally self-insured.
So no matter where you're located,
you have people that you can go out
and contract with and be able to fulfill
this type of model.
We'll get to misconceptions in a minute.
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Misconceptions.
So with direct to employer,
there's some misconceptions I bet that PTs
have about it.
You just touched on it a second ago.
I'm too small.
I don't know how to sell.
That's only for big groups.
I mean,
I guess two of those have to do
with size, but are all those wrong?
Are those wrong?
Should people change their viewpoint on
that if you're a PT listening?
They – the size, yes and no.
And this is – how I would answer
that is when you're pursuing these
contracts with employers, right,
you have to have the clinic density and
geographic coverage to be able to service
the people that are employed by them.
Got it.
So where you are and where you're –
where the organization is located is not
actually where the people live because
they might also get it so i'm
understanding that god yes yeah so that
that can be a problem and like we
you know at second door like i've talked
to single location practice practices that
were like hey i want to do this
direct to employer thing like let's get it
going and i'm like i want you to
do it too
But you have one practice and there's two
hundred employees at this one employer.
They probably have five hundred covered
lives.
You on your own can't service that.
Right.
And I think that's where I think for
so long, because, you know,
I would say just, you know,
my humble opinion,
I think in physical therapy,
we've operated out of a scarcity mindset
for a long time.
And like the practice across my street,
that's my competitor.
I've got to beat them for referrals.
I've got to, right.
And, and I understand that.
And to some extent that's been reality,
but when you're looking at, okay,
I can continue in the model that I'm
in now,
or I can partner with the other practices
in my area and say, Hey, let's,
let's start a network or like second door
health.
Like we have a network of practices that
are able to opt into employer contracts
and
let's band together and we can all treat,
win this contract and treat it this
negotiated rate.
So size can be a barrier,
but I think that's where,
like as an industry,
we have to be willing to come together
and say, like, you know,
rising tide lifts all boats.
Like let's all benefit from this and more,
and I want that more than I necessarily
want to beat my competitor across the
street.
Right.
How about, how about,
I don't know how to sell.
Yeah.
So I would say most practice owners don't
give themselves enough credit.
If you're a business owner,
you're selling, right?
And I would even say clinicians sell every
single day.
You've got to sell patients on a plan
of care.
Someone comes in for an eval.
You've got to sell them on, hey,
this is what I think is going to
be best.
This is how we're going to address what
you presented in the eval.
You're selling all the time.
But I also get
Most practice owners don't have the time,
right?
They don't enjoy it and they don't have
the time to go out and sell this
model to employers.
And I think that's where, you know,
I know some larger practices,
they have their own staff that goes out
and sells this model.
But for what we're doing at Second Door,
that's what we've basically that's what
we've been doing is we say, OK,
we know you don't want to sell.
We know that's probably not your specialty
and you don't have the time.
Let us go and sell for you.
And then when a contract comes in,
you just you you work with us through
the negotiation process.
Right.
When a contract comes in,
you treat it the negotiated rate.
And I think that's where, you know,
if anyone's ever seen anything I've posted
on LinkedIn,
Like the work that Second Door is doing
as a company,
I think is really important to the future
of the industry because I don't know of
many other organizations that are going
out there and selling that model.
I know that there's some like MSOs,
some of those types of organizations that
are trying to do some of that.
The hard part is...
now you're getting into understanding how
all of this crazy insurance works, right?
Like if I go to a self-insured employer,
do I need prior off?
Do I not?
Am I under direct access laws?
Am I not under direct access laws?
Yes, it gets convoluted.
I will say the answers to that are
pretty simple.
When a self-insured employer creates their
plan, they get to dictate that.
So if you go to an employer and
you say, hey,
we can save you twenty seven hundred
dollars per claim.
If you get your people into PT first,
they can say, OK, we don't want prior.
We just want our people to go that
they can set that up because they're not
they're they're not dictated by what
insurance says.
They make their they make their decisions
for their own plan.
If a clinic owner is listening right now,
more often than not, they're like, okay,
I'm nodding,
but I might feel stuck or there's a
barrier.
What's one practical first move you can
give them to make this quarter?
Something that checks something off the
box, but does move the ball forward.
Yeah,
I would say the first thing I would
encourage practice owners to do is sit
down and make a list or a spreadsheet
and think about all of the connections
that you have in your area,
that your staff has in the area, right?
You may have treated a COO at a
local company, right?
You may have treated someone who oversees
the benefits of a self-insured employer in
your area.
Start with that list and look at who
do I know?
What connections do I have?
And the reason I say start there is
because it's like,
how do you eat an elephant?
Like one bite at a time, right?
So like start there and see like, oh,
actually, I have just myself.
I have twenty connections between business
networking groups and other connections in
the area.
My staff maybe even has more.
There's real potential for this.
And then I would,
I would say reach out to someone like
Second Door Health who is already has,
has walked through that selling process,
who is doing that selling process right
now.
The people there, Scott Hebert,
Ryan Kleps, like their heart is,
is for the industry as well.
They love, they love, they,
Clinicians, they love practices.
They want to see the industry succeed.
And they have a ton of free resources
online as well that you can go and
download or even listen to their blogs
just to be able to see, okay,
is this something that's feasible for me?
And if it isn't,
There are other ways that you can pursue
to make that possible,
whether it be through someone like Second
Door who's providing a network where you
can band together and treat those types of
contracts with employers,
or whether that's joining an MSO if you're
not a part of an MSO or an
IPA, something like that.
So that's what I would say,
first and foremost,
start with who do i know and see
that there's actually like it's probably
easier than you think it is sure okay
uh looking towards the future there's got
to be pain if there's no pain people
don't move what happens if independent
clinics don't evolve i mean i'm i'm what
are mistakes besides just straight up
going out of business i mean yeah yeah
i in in my opinion
and I would say as someone who does
not claim to be an expert on this
matter, I've never owned a clinic, right?
I probably never will,
although I would love to potentially own
one in the future.
I think that
My hypothesis, just in my opinion,
I would say in five years,
it's going to be very,
very hard for the majority of private
outpatient practices to continue to
operate.
Those who are already at scale,
I think that they may be able to
continue.
But with...
where cost is going where reimbursement is
and we're reaching this point where like
even if we get a three percent increase
in reimbursement what did inflation do
this year killed it like yeah i mean
inflation increased more than three
percent so like you're still getting paid
less right and so my my fear and
my concern and why i'm i'm passionate
about this type of model for physical
therapy practices is i i want
practice owners to have the freedom to
treat how they want to treat.
If they want to start a practice and
scale to twenty locations,
I want them to have the ability to
do that.
If they want to start one single location
or maybe just treat out of a gym,
I want them to be able to do
that as well.
I think the problem with the
fee for service model at the moment,
is all of those things, who you treat,
how you get paid, when you get paid,
it's in somebody else's hands, right?
And so going going direct to employer is
hard.
And it's scary because it's new.
But what's the alternative?
Sure.
Keep waiting for someone else to make a
change?
Yeah.
I mean, it doesn't matter, you know,
even like the APTA,
all of the great work that they do
for lobbying, right?
You're going up against,
is the APTA putting more money into to
lobbying than pharmaceuticals?
Are they?
No.
And so, of course,
pharmaceuticals are going to push for
GLP-Ls,
and we'll probably see subsidies for
people to get GLP-Ls way before we see
any kind of subsidy for payment in
physical therapy.
And so we can continue to wait and
see who is something actually going to
change, or we can pave our own path.
And I believe the path is there because
employers can't continue to pay these
outrageous costs of healthcare.
Agreed.
All right.
Last thing we do on each episode is
called the parting shot.
This is the parting shot.
One last mic drop moment.
No pressure.
Just your legacy on the line.
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Simple way to meet those RTM requirements,
improve follow-through,
and actually get reimbursed for the care
between visits.
Easy to set up, simple to use,
and patients love it.
SarahHealth.com.
That's S-A-R-A-Health.com.
All right, parting shot, Matt.
What do you got for me?
Change the model.
The model has to change.
If physical therapy wants to continue to
be successful and to grow,
not just survive,
we've got to change the model.
Love it.
All right.
Find them on LinkedIn.
I'll give you a link in the show
notes.
Matthew Pratt.
Appreciate your time, man.
Appreciate it, Jimmy.
Thank you.
That's it for this one,
but we're just getting warmed up.
Smash follow, send it to a friend,
or crank up the next episode.
Want to go deeper?
Hit us at pgpinecast.com.
Or find us on YouTube and socials at
pgpinecast.
And legally, none of this was advice.
It's for entertainment purposes only.
Bullshit!
See, Keith?
We read the script.
Happy now?