Leveraging Technology to Drive Success in the Outpatient PT Space
Thought Leadership from the CEO's Desk
Richard Leaver, Alliance PTP CEO - Where there are threats there are opportunities. Depending upon your perspective, virtual musculoskeletal (MSK) providers are either a friend or foe to traditional brick and mortar outpatient physical therapy companies. While many of you may be aware of the existence of technology-led MSK providers, I am sure there is limited understanding of their business model or how disruptive they have become in the MSK space within a short period of time.
For or against telehealth physical therapy?
I understand the skepticism and general reluctance to embrace telemedicine as a conduit of care delivery by many outpatient therapy providers. Demand for virtual therapy is limited and considered by many a distraction from our traditional business model. Were it not for the COVID pandemic, many clinics would not have launched their own telehealth service and I would probably not be writing about the adoption of technology.
Having launched Agile Virtual PT approximately in late 2021, I have the first-hand experience of trying to build a technology-led MSK platform. I concede this has been challenging and as of yet, the monetization of the virtual service has been elusive. However, I am convinced there is a latent demand by consumers for virtual PT and the future of outpatient therapy must embrace such a product offering, along with many other technological solutions.
The threat of technology-led MSK providers to our business is one of many issues that we need to address going forwards. The commoditization of healthcare services is gaining momentum and is indicative of the increasingly complex healthcare environment in which we operate and the direct result of how we have tried to manage such challenges.
The key to maintaining our relevance as the primary solution to managing MSK is dependent upon whether we can successfully meet ever changing and increasing consumer demands and demonstrate value. Pivoting our delivery of care in a manner that addresses consumers expectations surrounding ease and convenience and having healthcare fit into their lifestyle and daily routine, not the other way around.
While we have been preoccupied with fighting reimbursement cuts and trying to maintain income margins, new providers with new methods of care delivery and creative reimbursement models have appeared and become formidable opponents in managing MSK. Two very different ecosystems now exist. The traditional ˜bricks and mortar' outpatient therapy providers and new entities that are technology-led.
Within a very short period of time the technology-led providers of MSK management have gained first mover advantage and established themselves as the self-proclaimed virtual solution for tackling MSK spend by many employers, commercial insurers, and a growing number of consumers.
The comparison of technology-led MSK providers to Netflix is valid. Not in the context of them being the demise of traditional ˜bricks and mortar' PT clinics, but rather pushing established businesses to enter the space and compete directly. For instance, Disney+ has successfully challenged Netflix and taken significant market share, even though Netflix was the indisputable leader and secured significant first mover advantage. Likewise, we are very capable of competing in the virtual space.
Even though telemedicine has grown by more than 40% in the past year, the majority of physical therapy visits remain in ˜brick and mortar' clinics. Even during the height of disruption associated with the COVID pandemic, the percentage of patients who received virtual care was small. And since society has returned to a degree of normality that number has fallen for most providers.
In addition, the technology-led providers have at this point played predominantly in the employer funded health insurance space. While significant and growing in scale, it represents a fraction of the entire patient population.
Even though we lost the first mover advantage of providing a robust virtual solution to technology-led providers, we are certainly not too late to the party. In fact, we maintain a strong competitive advantage overall. We have the necessary infrastructure and experience operating in a heavily regulated environment, with significant clinician labor constraints and challenging reimbursement landscape. Although technology-led providers are extremely capable of building a robust ecosystem to deliver services to a larger audience it will be difficult and time consuming.
The challenge will be whether we can sustain our competitive advantage given the anticipated cost of technology and the amount of resource and funding being invested in these virtual MSK providers.
Leveraging technology is non-binary
The case for virtual physical therapy must not be viewed as a binary decision. It is not an either / or scenario, a debt or credit situation or brick & mortar versus virtual. The application of technology, of which virtual physical therapy is one component, needs to be discussed alongside the 90% problem. Technology can certainly enhance the patient experience for the 10% we already manage. However, what is more exciting is the adoption of technology to allow us to access the 90% who we have failed to engage and did not previously have access. Many of the barriers that existed pre-COVID no longer exist. With direct access, reimbursement parity for traditional and virtual visits, reliable HIPAA compliant video technology and increasing acceptance by clinicians of the value of virtual care comes the opportunity to serve a vast untapped market.
The situation we find ourselves currently in is like that of Circuit City and Best Buy in the early 2000's. Circuit City doubled down on more and bigger stores. Best Buy, on the other hand, invested heavily in technology; customer facing; back office and supply chain management. The hybrid approach adopted by Best Buy, where technology complimented and enhanced the physical stores, was obviously successful as Circuit City closed their doors in 2009.
The question is not if healthcare consumers and other stakeholders see value in the adoption of technology, but rather how we can implement it to the advantage of the patient in a financially successful way.
When talking about technology, I am not referring to solutions, products or services that have yet to be developed. Instead, I am talking about the adoption and implementing of existing technology. Everything we need technology to be able to do, it can already do it for us.
From a practical perspective, what must be done immediately?
- Embrace and leverage the technology solutions we already have available.
- Implement technology solutions to increase ACCESS to therapy services.
- If not done already - Implement a virtual capability, to provide your patients with a choice of how they consume therapy.
In the long term
- We must use data to help demonstrate value to patients and outcomes to payors to reverse the declining reimbursement rates.
- Integrate technology to enhance the overall patient experience regardless of whether it is in clinic, virtual or hybrid.
- Leverage technology so we can do more with less without compromising quality.
Leveraging technology is instrumental in helping us deliver patient care in a manner that not only addresses the existing challenges but secures and maintains our position as the primary MSK solution for the future, regardless of whether it is delivered in person or virtually. Collectively, we must identify and implement appropriate technological solutions with sufficient speed to offset current and future challenges.
Collectively, we have the knowledge, experience, acumen and most importantly the resources to find the solutions. Collaboration needs to occur between traditional and ˜non-traditional' providers of MSK and Wellness if we are to achieve a paradigm shift and avoid becoming a Circuit City. We need the expertise of proven tech companies as much as they need our knowledge and resources.
In the long term, I do not see pure play ˜brick and mortar' providers or pure play technology-led MSK providers being successful. Just like Best Buy, it will be a hybrid approach that will likely dominate.