6 Key Questions to Ask When Considering an Ancillary Physical Therapy Program at Your Practice

Written by Lindsey Dunn | May 25, 2010 | Print  |
Physical and occupational therapy services, along with athletic training, make up one of the most profitable ancillary service lines offered by orthopedic practices. As pressures mount against physician fees, especially for specialists, ancillary service lines are increasingly important to maintaining the financial success of practices. Physical therapy services, however, can be challenging to establish in markets that already have a large presence of private physical therapy providers.

Jeff Goldberg, director of operations for Resurgens Orthopaedics, a 90-plus physician orthopedic practice with 20 locations in and around Atlanta, shares six considerations for developing a rehabilitation program within your orthopedic practice.

Recruitment challenges

Mr. Goldberg, who is a licensed physical therapist and previously served as Resurgens' director of rehabilitation services, says that practice-owned rehabilitation programs provide more collaborative care for patients but are often looked down upon by the physical therapy industry. "The American Physical Therapy Association disapproves of physical therapy services owned by physician practices, so PT students are commonly discouraged from going to work for physicians," he says. "The ones that do, however, recognize early on that they are able to provide a higher quality of care with this type of relationship. Physical therapists and physicians can easily communicate, and medical records are shared. That's not the case in a private PT practice." Prejudices against working for physicians are not held by the national organizations for occupational therapists, certified hand therapists or athletic trainers, who are also valuable members of a rehabilitation team, notes Mr. Goldberg.

While a bias against physician-owned PT services and an overall PT provider shortage may make recruiting more difficult for some practices, Mr. Goldberg says recruitment and start-up concerns are outweighed by the benefits of a having a program, as long as the physicians have enough referral volume to support the group. "Some physicians do have concerns about dedicating resources to get a program started, but often physicians can use their existing relationships with local physical or occupational therapists to recruit those therapists or their colleagues to the practice," he says. "Even though we are seeing a decrease in the volume of therapy because of increasing deductibles and co-pays, it still provides a very good revenue stream for physician practices in addition to making care more accessible to the patient. Patients continually express to us how much they appreciate the fact that they can see their physician and rehab provider at the same location."

Start-up considerations
Practices exploring adding this ancillary service should consider the following questions.

1. Will your physicians create enough demand? Generally, two to three physicians will produce enough referrals to sustain one physical therapist, although this can vary by subspecialty, says Mr. Goldberg. Practices should ensure they have enough demand for services before hiring a therapist or developing a program. "In our practice, we find about 10-12 percent of our physician visits end up being therapy patients," he says. In addition to covering therapist salaries, the expected revenue will also need to cover the cost of space to house the program and necessary equipment.

2. What are the expectations for profitability? PT programs increase in profitability as they grow in size. "It is really difficult to be profitable with a low number of therapy providers and almost impossible with only one provider," says Mr. Goldberg. "Two or more therapists in one location are really needed to become profitable." While on-site physical therapy may be provided as a convenience to patients, practices with a goal of increasing profits through PT will need to ensure it can produce the volume needed to support several therapists.

3. Will commercial insurers contract with your practice? The access your patients will have to your physical therapy services can vary greatly by region. "High managed care areas may present a challenge because they often have exclusive contracts with private therapy providers," says Mr. Goldberg. "You need to look at your payor mix and the access that mix will have to your services. If you know that 60 percent of your volume is from a payor that won't contract with you, it may not make sense to add PT."

4. Will your therapists see Medicare patients? Another consideration for practices is whether or not its PT program will see Medicare patients. Resurgens decided not to see these patients because of the additional regulations on documentation requirements CMS places on therapy providers. "It can be a full-time job to manage the administration involved in treating and receiving reimbursement for these patients in a large practice," says Mr. Goldberg. "We weighed the risks and the benefits and in the end determined that referring our Medicare patients to the quality private therapy providers in our communities was the best model for our practice." This decision actually helps generate goodwill in the community because the practice continues to refer a number of its patients to these private PT providers, Mr. Goldberg notes.

5. Who will manage the program? The development of a rehabilitation program should be overseen by an experienced physical therapy program manager. In most cases, this will be a licensed physical or occupational therapist who has managed another program and ideally has developed a program at another practice. This way, he or she will be familiar with recruitment and the regulatory and financial issues involved in a start-up. For smaller practices, this person can also see patients in addition to his or her administrative duties. However, if the program grows to include multiple locations (more than five locations would be an appropriate guideline, according to Mr. Goldberg), a dedicated manager will likely be required

6. Who will manage the billing, coding and collecting?
Finally, practices will need to consider if the existing business office staff will be able to support the billing, coding and collecting processes for the PT program. Practices may need to train existing office staff on supporting this service line, or if the program is big enough, dedicated business office employees may be needed, says Mr. Goldberg.

Learn more about Resurgens Orthopaedics.

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