Costs.
In the last several posts, we have taken on the discussion of insulated idealists vs. practicing practitioners, the defending of PTA’s, and now payors.
I am suggesting that private practices take on an unholy alliance with payors. The reason is simple, they NEED us but they don’t have to have us.
Let’s imagine that all private practices are eliminated tomorrow (ok, I know, most of the population doesn’t know that we exist anyhow). Who will provide PT and at what will it cost payors?
Yes, it will predominately be hospitals who enjoy “most favored nations” status due to their strong negotiating leverage. The conversation typically goes something like this:
Hospital CFO: “I am the only center that can provide TURP procedures, therefore you have to give 90% on my grossly inflated charges for outpatient ancillaries”
Payor Exec: “Call it 85% and you have a deal” (never mind that this ends up being 2–3x what an outpatient private practice fee schedule looks like)
Hospital CFO: “87% or you get no TURP jobs”
Payor Exec: “Deal”.
Yes, folks, we are often referred to during these negotiations as outpatient “ancillaries”.
Before I get hate mail from hospital PT’s, please know that I have no inherent disrespect at all for hospital based PT. In fact, in 23+ years of being in this business I have worked in them, have had multiple contracts with many hospitals and joint ventures of all types and flavors. In fact, I think the best alliance is with private practices and hospitals.
Back to them NEEDING us.
If we are out of existence, their outpatient costs go up significantly and patient access is severely impeded (typically doesn’t matter to a payor I realize but in consumerism lingo does carry some weight).
Why do they pay us so much less? Because we don’t have leverage in negotiations and we don’t do TURPS or have inpatient facilities that payors have to have for their beneficiaries. We readily accept their fee schedules-even the absurd below the cost one’s. It is referred as “Limbo Negotiation” (how low will you go) and PT’s will go to unprecedented low levels to assure that they can see patients and under some false pretenses that they are being more “competitive” in the marketplace and doing “good for mankind”.
Ahh, but we do have leverage. Our existence! Payors will have much less margin if all of their patients go to hospital or provider based centers (those reimbursed like a hospital). We can leave “quality” out of this equation because this is never a concern to a payor. From their perspective, “quality” is like “common sense”-everybody says they have it but nobody can define it or prove it and even if they could it is an assumption that they already had it. Besides, PT is deservedly viewed as a “commodity”-undifferentiated in the marketplace (I would have said “widget’ but the analogy doesn’t hold up because widgets have consistency and less variation, something PT doesn’t).
In most supply chain management interactions between buyers and sellers, competition has forced a closeness to the point that the suppliers share their financials to the buyer. In my opinion that is how we need to think. We have to make sure that transparency exists so that buyers can keep us in business.
Some examples (just examples folks, not product or retail recommendations) from typical supply chain management:
Major auto manufacturers want to make sure that the amount they are paying their suppliers assures some margin. They argue of course over that margin but an auto company needs sustainable suppliers so they can complete assembly of vehicles to market demands. The Japanese in fact create incredibly close “family” relationships to their suppliers.
Walmart has to make sure that P&G makes a profit on Tide so that they can continue to sell it at a low price to consumers because consumers want Tide.
How does this fit into private practice?
Show them your costs-primarily labor (typically 70% of overall cost). PT’s are a well educated bunch and coupled with a supply demand curve just this side of the Wii, prices are up without concomitant rise in reimbursement. The same for operating costs and facility leasing (roughly 20% of revenue costs). All in all, costs in most locations throughout the US are going to be $65–80 per visit. If you want to get real specific, get a cost accountant but you probably don’t need to go to that level.
You can also point out the over regulated part of our industry driving costs up as well as the excessive amount of time spent in documentation and non-billeable services.
Costs of private practices are much less than our institutional counter parts-they almost always will be.
Will it work? Probably not but it is much better than accepting contracts below your costs-something that is very contagious in the PT world.
But, it worth a chance and if it doesn’t we might all just might be working for the Turp factories.
Thoughts?
larry@physicaltherapist.com
However, there is more to evidence and to evidence-based practice than outcome studies.
Let's do a thought experiment. Let's say that tomorrow a large RCT is published on the treatment of thoracic back pain with JFB-MFR. As many of you know, we don't have much quality evidence to choose from in considering options for a patient with thoracic back pain - relative to cervical or lumbar region pain. Let's say this RCT found that the MFR treatment produced clinically-meaningful improvements in a patient-centered outcome survey and in pain rating scores. Would that give you any information at all about the truth of energy medicine, stored memories and emotions in the fascia, the applicability of quantum physics to patient care, or the validity of myofascial restrictions?
I would hope your answer here would be "NO!"
We see here that demonstrating that the intervention is effective does not do some of the hardest work that we need to do in science - it doesn't help us formulate a scientific theory or "deep model" that we can use to guide our practice and research. At the end of that notional RCT, we are no closer to determining why the patient got better than we were before we did the study!
You see, its a basic theory or deep model of function that underpins it all. It drives our education. It becomes part of our therapy culture. It's imparted to patients during treatment. We cling to it for support when we have a lack of outcomes evidence to guide us.
The late Jules Rothstein PT PhD, in one of my favorite editorials "When Thoughtfulness Dies", encouraged us to not just lob outcome studies at each other, but to develop a good theoretical base for our education, explanatory models, and treatment development. He even referred to it as a "secret weapon". I contend it's only a secret because we don't examine our interventions and teach our students the way other scientists do - we don't start with a sensible explanatory model or theory. It's at that level that JFB-MFR is dead in the water. An RCT would be a waste of time if the treatment makes no sense. That is where JFB-MFR and the alt-medicine treatments fail - at the basic level, they just aren't consistent with human physiology. Seen in this light, NCCAM could save a lot of money by requiring a good deep model from their investigators before throwing gobs of money toward outcome studies that somehow never seem to bear much fruit. Those who recognize the role of theory in practice are not surprised at this lack of success.We should focus as much on challenging our explanatory models and teaching in ways congruent with actual human physiology as we do on producing outcomes research, or the next generation of DPTs will be just one or two RCTs away from doing Reiki and Therapeutic Touch. Hey, if there's "evidence to support it", it must be good, right? Can you see the problem with outcomes-only evidence?
I can think of a few deep models in the therapy culture that haven't held up to examination, but that some therapists still cling to - and these false ideas still are common in our educational programs. I'm thinking of the disc model often referred to by some McKenzie advocates and the facet joint subluxation and motion palpation examination model often referred to by some in the manual therapy community. These deep models have been shown to be inaccurate, but they persist in part because some of the interventions that are thought to rely on them (directional preference exercise and manipulation) have good supporting outcomes evidence. These incomplete and inaccurate deep models, when kept in our therapy culture, keep us from looking for other explanatory models that still fit the outcomes evidence but that are more accurate. That updated deep model opens up new avenues for treatment and research. If those models aren't challenged and updated, we miss those opportunities. This is how science progresses in many areas - a constant reexamination of the underlying theory in light of empirical evidence.
What do you think about the role of theory in practice?
What would you say to a colleague who practiced based more on a solid theory than on outcomes research? Could that still be considered "evidence-based" practice?
Your comments are welcome.
-Jason Silvernail DPT