Robert Hall

Seize the Day: How More Physical Therapy Practices are Winning Higher Payment Rates in a Volatile Payer Market

For many physical therapy practices, ensuring adequate payment for PT services has been an ongoing challenge. Even with these financial hurdles though, a growing number of physical therapy practices are finding success at increasing their payment rates through devoting some time to preparing for and actively negotiating with payers.

Even with the DC emphasis on value-based care, the paradigm shift to pay providers based on the quality, rather than the quantity, of care delivered has stalled. But it’s pretty clear it’s not going away. Physical therapy practices are embracing this shift by using the landmark APTA report demonstrating the tangible value they bring to patients’ lives through improved outcomes, reduced hospital readmissions, and enhanced patient satisfaction. By focusing on delivering exceptional care and documenting measurable results, these practices are successfully justifying, and securing, higher payment for their services.

Payers don’t generally understand that within the profession of physical therapy there’s a growing crisis – the physical therapy workforce shortage. As demand for rehabilitation services escalates, fueled by an aging population and increasing prevalence of chronic conditions, the scarcity of qualified physical therapists poses a significant challenge to the delivery of optimal patient care. As that demand is fueled and the supply of PTs to provide care remains relatively constant, basic macro-economic theory predicts that prices (here, payment to PTs) should rise.

Additionally, consumer-driven trends are reshaping the economics of healthcare, with patients increasingly seeking transparency, convenience, and value in their healthcare experiences. Recognizing this shift, forward-thinking physical therapy practices are investing in patient engagement initiatives, such as mobile health apps (including Remote Therapeutic Monitoring), online appointment scheduling, and personalized rehabilitation plans. By empowering patients to take an active role in their recovery journeys and delivering a seamless, patient-centric experience, these practices not only differentiate themselves in a competitive market but also command higher payment rates for their specialized expertise and high service quality.

There is one curve ball that physical therapy practices are wrestling with and that is the recent Federal Trade Commission decision to ban most non-compete clauses. The FTC made this change based on the following economic projections:

The FTC estimates that the final rule banning noncompetes will lead to new business formation growing by 2.7% per year, resulting in more than 8,500 additional new businesses created each year. The final rule is expected to result in higher earnings for workers, with estimated earnings increasing for the average worker by an additional $524 per year, and it is expected to lower health care costs by up to $194 billion over the next decade.

If this is true, the non-compete clause ban will create a more efficient labor market for most PTs. But it will have an impact on PT practice owners who use these non-compete agreements as part of their contracts. In any event, the enforceability of the FTC’s ban may be suspect because of litigation undertaken by the Chamber of Commerce to defang the ban, and a more general question being decided by the Supreme Court that may have the effect of limiting the authority of federal agencies to produce regulations that are granted the benefit of the doubt while being litigated (so-called “Chevron deference”). The FTC regulation even delays implementation by six months from its promulgation, so while PTs may have heard of this issue, keeping its movement through the courts on the radar screen and decreasing the use of non-compete clauses may be the most appropriate action to take in the medium- and short-term.

The most successful physical therapy practices are implementing a transformation, driven by a confluence of factors ranging from value-based care initiatives and technological innovations to strategic partnerships and consumer preferences. In this dynamic environment, winning physical therapy practices are capitalizing on these trends to boost their payment rates and secure their financial viability in the long term. By embracing proactive negotiation, innovation, collaboration, and patient-centered care, these practices are not only thriving in an evolving healthcare landscape but also fulfilling their mission of empowering individuals to live healthier lives filled with movement.