The economic landscape has been changing quite a bit since COVID-19—inflation, the Ukraine-Russia war, supply chain backlogs, etc. And some of these things will obviously affect the PT industry. But exactly how and to what extent? What can be done to alleviate the negative trends? Dimitrios Kostopoulos, P.T., M.D., Ph.D., D.Sc., ECS, of Hands-On Diagnostics and Hands-On Companies, shares with us his view of current and future trends, what may be coming down the line from Medicare, and what can be done to survive the changes.
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Current And Future Trends In The Outpatient PT Industry With Dr. Dimitrios Kostopoulos
I have one of my good friends, mentors and colleagues. He is someone I look up to, a visionary himself, Dr. Dimitrios Kostopoulos. Dimitrios, thank you for coming on again.
Thank you for having me.
It’s great to have you. Dr. Dimitrios Kostopoulos is Chairman of the Board of Hands-On Diagnostics and Cofounder of Hands-On Companies. We’ve had you on 2 or 3 times. You shared your story initially in the first couple of episodes. If any of those reading haven’t read my conversations with Dimi, he has got a great story. He comes from Greece and lives between New York and Clearwater, Florida. One of the things I wanted to bring him on for especially is because we had a Hands-On Diagnostics Conference that was a successful leadership academy in Clearwater Beach.
You have your hands in a lot of things that are going on at the national level, APTA, diagnostics, but also with efforts across New York and the nation in terms of the profession. Based on some of your presentations, I was excited to have you on because you have an overview or a perspective of what’s happening in the profession. I wanted to talk with you about some of the things you brought up in the presentation itself and see what we can do as a profession or where we’re headed as a profession going forward.
Let me start by saying how much I appreciate as a physical therapist, as a member of this profession, as a member of our values and advocacy organizations, and as a private practitioner, about all of the great work that you are doing and for providing information, new ideas, and disseminating to the physical therapy community about how we can have a worthier profession. Not worthier from the point of view of what we offer, but worthier profession from the point of view of what we receive for what we offer.
The value doesn’t match.
Unfortunately, the indicators that we have in front of us, especially economic indicators, show that this mismatch between the very valuable work that physical therapists offer compared to what they receive back has a great discrepancy. You asked the question of where we are heading as a profession. The first thing we have to examine is where we are heading economically as a US economic system as well as a worldwide economic system. Those of you who follow data on the economy, I am certain that you have heard of Ray Dalio. He’s a famous world economist.
Isn’t he the CEO of JPMorgan Chase?This mismatch between the very valuable work that physical therapists offer compared to what they receive back shows a great discrepancy. Click To Tweet
That’s right. For years. Now, he has the Ray Dalio Company and Ray Dalio All Weather Portfolios. I want to describe to you what he is talking about as an economic cycle because I’m going to make a point about how that will translate to some degree having a prediction about the future of the physical therapy profession. He’s saying that when you have a big change in the world, you have a new world order.
There is a period of time when there is peace, prosperity, and productivity growth. As that continues, people get greedier. They want to make more. They want to consume a lot more. Sometimes, we want to consume a lot more than what we produce. We have a debt bubble and a very big wealth gap where the rich become richer and the poor become poorer. There is a debt burst and an economic downturn. What the government does is have inflation. The government starts printing money and the inflation becomes greater. Sometimes, we have revolutions, wars, and political restructuring, and then we’re ready for new world order.
Here’s the interesting thing. According to Ray Dalio, we are somewhere in the area of printing money, revolutions, and wars. How do we see that? We see that because with COVID, the whole period of time from 2020 until 2022, you know how much money was given around the world, especially here in the United States, like the PPP money, SBA loans with low interest, and 0% interest.
There was a lot of credit and money that were given out there without necessarily having production. If you don’t have production and don’t get enough products in the marketplace, the things that exist in the marketplace cost more. If they cost more, we have inflation. The question is, do we have inflation within the physical therapy profession also? For the costs, but not for the revenue. We have one-sided inflation on the money we spend because the rents are higher. The products, equipment, and supplies are more expensive. Salaries are crazy. On the other side, what you got from the insurance companies is the same amount you’re receiving, and in some cases, even less than that.
It hit me hard because I was talking to a client that I coach in Virginia. I didn’t think about it, but he said, “The $65 UnitedHealthcare flat-rate payment that I get now is the same flat rate payment that I received twenty years ago with my UnitedHealthcare contract.” That $65 doesn’t get you as far anymore. It doesn’t cover the cost of expenses.
That is correct. I’m thinking about the future. Although we do not have magic powers to see into the future, we can make assumptions about certain things in terms of what will happen in the physical therapy profession. There are some data that I would like to share with your audience. This is the data that we have. A lot of this data comes from the private practice section of the APTA.
Some of you may be aware of this data. Let’s look, first of all, at the GDP. The Gross Domestic Product of the United States was contracted by 1.4% in the first quarter of 2022 while inflation jumped to 8.5%. That’s fine. We have a contraction of the GDP, but what happens? Are we on the road to producing more so we can balance out that contraction and decrease inflation because there will be more products in the marketplace? If we see that the healthcare costs in the United States are growing by 1.1% faster than the annual GDP, then that is not so encouraging for where things are going.
According to data from the Private Practice Section, you have the median revenue and the costs of physical therapists and physical therapy assistants. In 2019, the production per full-time equivalent physical therapist was $201,000 per year and the cost was $168,000 per year. You’re going to tell me, “I don’t pay my staff $168,000.” You don’t pay your physical therapist $168,000 a year, but you have the billing department, rents, support personnel, and front desk. We have all of these other expenses. The cost per full-time equivalent therapist production was $168,000 and the revenue was $201,000.
In 2021, the revenue dropped by $201,000 to $194,000. Do you know what happened to the expense? It increased from $168,000 to $171,000. The difference between your expense and income is what makes up your profit. If you have a lower income or lower revenue from your physical therapist and an increased expense for the physical therapy services, then what happens to your profit? Your profit goes down. We then have data from the PPS APTA, from the peer-to-peer group profit margins, going somewhere between 8% and 12% across the nation.
I can’t wait to see the 2022 data because the salaries that we’re hearing and whatnot are going up. Reimbursements might be similar, but between 2019 and 2021, that’s a $9,000 difference in profit between the production and the costs. It’s almost a 20% to 25% drop in profit per year. It’ll be interesting to see what happens. I don’t see it necessarily getting better.
I don’t believe it will get better, but there are things we can do. If we do nothing and take into account historically what has happened, especially with the federal government and the reimbursement from CMS, the Centers for Medicare & Medicaid Services, I believe that we are moving towards a three-tier flat rate from Medicare. I’m not talking about now. I’m talking 3 to 5 years from now.
I want you to think of this. In 2020, we started flagging the initial evaluation patients under Medicare under the new codes. You no longer have the original initial evaluation code that we were using. You have three tiers of codes. You have minimal complexity, moderate complexity, and severe complexity. Despite that, we get paid exactly the same rate no matter how you temporize those patients. Why do we do that? How can that be useful to Medicare aside from just data collection? It is assumed that if you have a lower complexity patient, you spend less time with them compared to a higher complexity patient.
What I believe will happen eventually is that Medicare will implement, 3 to 5 years from now, three different flat rates representing the low, moderate, and high complexity cases. I believe that those rates will be somewhere between $75, $85, and $95 based on complexity regardless of how long that patient stays in your practice and what you do to that patient. If you are a private practitioner since 2020, Medicare has data on what percentage of your patients are low, moderate, and high complexity. If in the future there is a price differential and you start flagging everybody as high complexity, then you’re going to get audited.
They already got your data. If all of a sudden your high-complexity patients went from 20% of your patient population to 60% or 70% of your population, that’s an issue.
We have to remember that what Medicare does, matters. It matters because the reimbursement rates from different insurance carriers are being determined based on Medicare rates and regional workers’ compensation rates. This is what they use as benchmarks despite what they pay you.
Is that something that concerns you? You bring it up based on what we’ve done here in the past couple of years as far as assigning complexity to new patients. I know you have some ins in some of these circles projecting the tiered flat-rate system. Is that a concern for you? How do you feel about that?When you have a big change in the world, you have a new world order. Click To Tweet
It is a concern from the point of view that a flat rate system does not truly represent the effort that the therapist may need to put into an individual case or on an individual patient. It puts everybody almost in the same category. I’ve always been against flat rates. A flat rate system is against a free market. It takes away opportunities.
I have not practiced for some time, so I’m a little bit naive and ignorant in this regard, but if a high complexity patient, for example, is someone who has a significant number of comorbidities, does that equate to a high complexity patient even though they came in with an arthroscopic knee post-op? The care would be the same, but the comorbidities are maybe a laundry list.
That remains to be seen because we don’t know what would be the actual criteria at the end of the day on how they will define that. There are some basic criteria, but I don’t know if the criteria will be the same or something they will be changing. Here is the thing. The viability of any profession, including the physical therapy profession, depends on the value it projects, the perceived value of the people in society, and then the efforts and achievements that that profession makes at a legislative level. Sometimes, you may be offering great value, but you may have legislative and political barriers that do not allow you to expand and do the things that you want to do as a profession.
There are practical things that can be done. The first thing is that we have to significantly expand as a profession our positioning within the spectrum of healthcare professions. Direct access was a major win across the nation. Remember, we do not have direct taxes with Medicare. We have direct access to the other insurances, but we don’t have direct taxes with Medicare. Still, for Medicare patients, you need to obtain the signed plan of care or prescription. An initial win in that direction would be the recognition of direct access to physical therapy within the Medicare system.
Without the signed plan of care, without the need for follow-up visits every 10 or 90 days?
Correct. We must not stop there. That will be the stepping stone to eventually reaching a recognition of the physical therapist as a primary care provider for neuromusculoskeletal problems, which means physician recognition within the Medicare system. It’s the same way that a chiropractor is a chiropractic physician, the podiatrist is a podiatric physician, and the therapist has to be a physical therapist physician.
Do you find that the APTA is focused on pushing for that at this point? As we were talking before we start, I didn’t know that there is a primary care special interest group in the APTA, and I don’t think you knew that either. It’s not getting a lot of promotion. I think that’s where this would start on a grassroots level to focus on physical therapists becoming primary care physicians in that scope. Do you see the APTA doing that?
I believe that the APTA eventually will get to that in a more active capacity. However, there is a progression of things. There is a gradient of things that programmatically can be achieved. I believe that short-term efforts are being done in areas that have to do with reimbursement, recognition of the PTAs, managing to console the 15% reduction for treatment by PTAs, and a series of other things before we get to something bigger like that.
Especially with the cuts and proposed cuts every year that we have to fight when it comes to Medicare, the obvious reduction in pay that we got with the PTAs, the fight for Telehealth over the past couple of years, and where that stands, I can see that not necessarily as a distraction, per se, for this because we want them to fight on those things. From a long-term view, I can see where that recognition of us as primary care physicians in the neuromusculoskeletal realm would pay huge dividends. We’re talking about not just increased reimbursement, but from a boots-on-the-ground perspective, hopefully, we would no longer be considered specialists by insurance companies and patients have to pay the specialist copay, but rather they pay the physician copay, which would allow for a huge influx of patients to get more physical therapy care.
That will be a major win recognizing the physical therapist as a primary care provider for patients with neuromusculoskeletal problems and them having to pay only the primary care copay rather than the specialist copay. At the same time, as physical therapists, we have to consider that it is unacceptable to be running a physical therapy private practice with a 10% to 12% profit margin. It is also dangerous. The moment you get the threat of Medicare or any other large insurance telling you that they’re going to cut reimbursement by 15%, that automatically becomes a major threat to the viability of private practice physical therapy.
What is the solution? Physical therapists must look for ways to expand their revenue basis. How can they do that? I would say that there are two major platforms. There are things that they can do in their practice that are not paid by insurance, but they have to collect cash from the patient. There are things that they can do that will get paid by insurance, and it is above and beyond just plain old physical therapy. What are these things? When it comes to cash-based systems, there’s a variety of things that therapists can do. I’m going to mention a few. They’re bringing in, for example, laser treatments, shockwave treatments, massage therapy, a product, a newbie, insoles, vitamin products, even white labeling of vitamin products, selling gym equipment.
I had one friend who is from Illinois or Indiana and one in Rhode Island that have taken in that StretchLab concept. If you’ve seen this StretchLab franchise pop up around the country, they said, “Why can’t we do that?” They have their own version of the StretchLab. They have plenty of patients that come and pay cash to get stretched and modalities without the oversight of the PT.
These are all wonderful things. If you want, in a future episode, I have even done research across the country. I have a whole presentation about the cost of the different types of equipment and services, average reimbursement, and the pros and cons of implementation. If you think of it at some point, we can talk about that.
We’ll schedule it.
There is the across-the-board parole and across-the-board challenge for these cash-based systems. The across-the-board positive thing is that it is some additional revenue that you don’t have to deal necessarily with an insurance company. The across-the-board challenge is that because it is a cash-based system, it requires someone to sell it to the patient. Somehow, you, as a private practice owner, have to train yourself and your staff or create some systems within your practice on how to sell all of these products or services that require cash.A flat rate system is against a free market. It takes away opportunities. Click To Tweet
I am going to give one more con on this compared to something else that doesn’t have to do directly with a private practice, but in general with a profession that still all this stuff can be viewed directly through the realm of physical therapy. They do not expand the degree of practices of physical therapy. They are viewed as something that is directly within the realm of physical therapy.
On the other side, things that can be reimbursed by insurance companies above and beyond physical therapy services are implementations in the physical therapy practice of musculoskeletal ultrasound, electromyography testing, and potentially evoked potential testing. These are things that physical therapists can perform for their patients. The physical therapist in the vast majority of states can bill and can get paid for these services from the insurance carriers for most insurances. Diagnostics, in other words. What are the positive things and what are the challenges? The positive thing about diagnostics is to expand the practice tremendously in terms of the way it’s viewed within the community. You are able to identify with greater precision your patient’s problem and manage that problem in a better capacity.
You know what’s going on at that point. You don’t have to rely on an insensitive, special test.
You are then able to properly modify your treatment plans based on the results of diagnostic tests and your physical examination. In the study that we published in 2020 in the Journal of Bodywork and Movement Therapies, in 465 patients, we found that about 62% of the time, the patient’s physical therapy plan of care was modified because of the results of EMG testing. EMG testing added something to the patient picture that we had to modify the treatment plan in order for the plan to be more effective.
Did that study also include musculoskeletal ultrasound or was it just EMG?
There were two studies done. One was a full-fledged study for EMG, and there was a pilot study for MSK ultrasound, which was very similar. We are working on publishing that MSK ultrasound study. The additional benefit from a financial point of view is that these tests are reimbursed by 3 to 10 times more than a single physical therapy visit. You’re talking about the significant difference. The challenge is that there is a learning curve. You have to take a few courses to be able to perform these tests and if you want to eventually get your board certification also. Use your time with your ECS.
That’s the challenge that I have seen and personally lived. The challenge to learn it, for me, came from the fact that it had been well over a decade since I’d been in physical therapy school and then I had to go back into neuroanatomy and neurophysiology on top of learning the electrical mechanics of the EMG itself. It was a steep learning curve whereas even if you didn’t go that far, the MSK ultrasound is much less of a learning curve. It is very much, if not more, implementable into the immediate practices of the owners that we’re talking to where ultrasound can give you some of those pictures that you otherwise can’t see and can’t ask for via special tests. You can see exactly what’s going on in the joints. It gives you a better idea of how to progress.
The other thing about the implementation of diagnostics within the physical therapy profession is that it expands the scope of practice of the profession. If you want the physical therapist to be a primary care provider for neuromusculoskeletal problems, as a physical therapist, you have to be able to perform some diagnostic testing on your patients to be able to know exactly what is going on with them.
We can’t back up that primary care position without having some form of diagnostics on board. I know there’s always been a push for us to be able to refer or even have X-ray in-house. That’s not a huge revenue generator. Hopefully, people aren’t seeing it as something that’s going to be a game-changer in terms of our productivity, because from what I can tell, and I’m sure you’ve done more research on it, the reimbursements for an X-ray are not all that great.
Usually, a shoulder X-ray is $16 or $19. The reimbursement for an MSK ultrasound, even a single unit, is $100 to $120.
The ability to refer out would also be nice, but as you can see from what physicians are doing, the more you can keep some of these diagnostic tests in-house, the better for your business. It’s not just all financial. The reward that comes from what’s in the best interest of the patients will turn out to be in the best interest of your business.
I want to make this statement. I gave this data in terms of economic data. What happens with the physical therapy profession? What are some of their projections, at least from the side of the Centers for Medicare & Medicaid Services that they have, and some solutions? Like everything in life, unless you do something about it, you’re not going to have a positive outcome or a positive result. The good news is that something can be done about it. We can change the future of this profession. We can change it in a more positive direction, a position of greater strength, or a higher position within the society with a greater perceived value, but also a greater financial value in return for the physical therapist.
I agree. Action is required. We can’t have our heads in the sand and expect to pull our heads out a few years later and expect the world to be different. It’s going to be different because you’re going to be well behind the curve. Action is required in order for us to grow, expand, and progress. Instead of sitting back and complaining about these poor reimbursement rates, what are you doing about them? Are you denying those poor payers and focusing on higher payers? Are you adding services that provide greater value both for the patients and for your business?
We talked about a special interest group. Are you joining some of the special interest groups? Are you making your voice heard whether at a national level or a state level? In talking to a couple of owners I know in New York, there is a push in the State of New York alone to be recognized as one of those primary care providers. That could affect specifically your state. I’m sure if more and more states did that, then it would be easier at the national level to be recognized by CMS as primary care providers. Action is required, and not just continuing as we are.
I want to say the actions have to be on two different fronts because sometimes, people take only advocacy actions. We must take advocacy actions. In other words, join the APTA, PPS APTA, and special interest groups. Write letters to legislators. Go out on the streets and demonstrate. Do whatever advocacy activity you want, but the advocacy activity is something in the long-term. It will bring some results in a long-term capacity.
There are things that you need to do now. The advocacy action is not going to increase your reimbursement, but what will do that is by adding in your practice things that can offer greater value both for your patients and financial value for you. These are things that are either cash-based or things like diagnostics that are reimbursed by the insurance.Like everything in life, unless you do something about it, you're not going to have a positive outcome or a positive result. Click To Tweet
You shared a ton of value. If people wanted to reach out to you directly, how do they do that?
There are a couple of different ways. One is they can go to our website, HandsOnCompanies.com. They can find lots of information there. If anybody wants to meet directly with me for anything, I have a little website scheduler. It’s CallWithDimi.com. People can meet with me and ask me any questions that have.
That’s very nice of you to do that. I also want to put a plug in because, in September of 2022, there will be a Hands-On Diagnostic Symposium. It is the annual symposium. It’s scheduled in Clearwater Beach, Florida. For those people who might be interested in how diagnostics could impact their businesses, you might want to look into that as well.
They have some free dinners, lots of fun, and entertainment. They can get information on that at HODSSymposium.com.
Thank you for your time. I always appreciate it.
Thank you. Be well.
About Dr. Dimitrios Kostopoulos
Dr. Kostopoulos is world renowned, leading expert in Myofascial Pain and the co-founder of Hands-On Care Physical Therapy, Hands-On EMG Testing, PhysioCare PT and Hands-On Seminars in New York.
Dr. Kostopoulos earned his Doctorate (PhD) and Master’s degrees at New York University and his second Doctorate of Science (DSc) degree at Rocky Mountain University (Clinical Electrophysiology). He is also a medical graduate from UHSA School of Medicine.
Dr. Kostopoulos has extensive training and teaching experience in different areas of manual therapy with emphasis in Trigger Point, MyoFascial, NeuroFascial Therapy and Manipulation. He also specializes in Electroneuromyography Testing and he is a Board Certified Clinical Electrophysiology Specialist.
He is past faculty member of Mercy College, a Diplomate of the American Academy of Pain Management and an active member of the American Physical Therapy Association and the American Academy of Orthopedic and Manipulative Physical Therapy. Dr Kostopoulos is past Co-chair of AIPT (the private practitioners’ special interest group of the New York Physical Therapy Association).
Dr. Kostopoulos has taught students in the US, Europe, Asia and Africa and has published numerous research articles. He is an Associate Editor for the Journal of Bodywork and Movement Therapies published by Elsevier and Contributing Editor of the Indian Journal of Physical Therapy.
Dimitrios Kostopoulos and Konstantine Rizopoulos are best-selling authors of the Book, the Video and the Posters in “Trigger Point & MyoFascial Therapy” and a Video Series in Manual Therapy. They are also the developers of a comprehensive therapeutic approach that integrates trigger point, myofascial, NeuroFascial, Proprioceptive and manipulative therapy techniques. The work of Dr. Kostopoulos and Dr. Rizopoulos has enhanced the clinical skill of thousands of therapists who have become better therapists.