2023 #Physicaltherapy Predictions

This has become an annual tradition for many years (includes 2022 and prior links). Here are some from last year:

1. PT Schools will have a declining application pool and test failure and dropout rates will be at all-time highs.

2. PT shortages hit record levels in all settings causing hospitals to move to institutional credentialing and legislators to bring the wrong legislative changes.

3. Direct to consumer (DTC) marketing in physical therapy increases drastically.

4. There will be continued emphasis on replacement and displacement of physical therapy by digital solutions.

5. VR gains traction in health care but so does evolving technology.

6. Direct to employer via self-insured gains traction for physical therapy.

Here are Others. I will defer offering my opinion of my prognostications over the years but no doubt most 2022 predictions were demonstrated in one form or another. What wasn’t predicted? Primarily inflation which hit labor and supply costs and coupled with a shortage that based on an estimate of 22k PT’s leaving during COVID (Definitive Healthcare Report) caused huge operational challenges. The combined impact significantly impaired all healthcare earnings in 2022 with physical therapy groups not being spared with a general decline in overall revenue growth, margin reductions, and staffing shortages. With medicare’s 4% reduction last year and stagnant reimbursement rates, further headwinds prevailed which will further have an impact on our beloved profession in 2023. It’s not all negative though as physical therapy, particularly when at the head of the pathway, continues to bend costs of healthcare in musculoskeletal (MSK) spending which is now well over $300B and growing fast. Our services will shine in low cost provider mode but can we meet the demand?

2023 Predictions:

1. Artificial Intelligent (AI) Chatboxes like ChatGPT will trickle to consumer healthcare consumption, including those seeking physical therapy as a solution. While this won’t near term replace Google searches, it will impact consumer healthcare as well as the business of healthcare PT practices for everything from marketing messages to scheduling to email responses. Admittedly, healthcare is a technology-adopting laggard but there will be keen interest in this approach. I actually had hoped that ChatGPT would write this blog post for me, but when I asked it for #physicaltherapy predictions for 2023, this is what I got:

I’m not able to make predictions about the future of physical therapy in 2023. However, I can tell you about some current trends and developments in the field of physical therapy that may continue or evolve in the coming years.

One trend is the increasing use of technology in physical therapy. This includes the use of virtual reality (VR) and other interactive technologies to enhance patient treatment and rehabilitation. Another trend is the focus on preventive care and wellness in physical therapy, rather than just treating injuries or conditions after they occur. This includes the use of exercise and other lifestyle modifications to help prevent injuries and improve overall health.

It’s also worth noting that the demand for physical therapy services is expected to increase in the coming years due to factors such as an aging population and the rising prevalence of chronic conditions. As a result, it’s likely that physical therapy will continue to play an important role in the healthcare system.

2. Physical therapist shortages will continue and this will cause a bunch of downstream effects. While this was correctly predicted last year, shortages has to be highlighted again in 2023. The numbers just don’t mislead. We simply don’t have enough PT’s graduating per year to meet the increased demand. Physical therapy is involved in roughly 12% of MSK cases. Arguably, we should be involved in all of them. If we increase just a few percentage points, we likely won’t have enough PT’s. We have roughly 11k graduating per year but recent trends demonstrate that 10–15% only want to work roughly 30 hours per week which effectively lowers the number. Add those PT’s that work in environments outside of outpatient, and you have a very limited pool that conservatively leaves about every 7 PT locations in the U.S. seeking one of these new grads. All in all, this leads to significant downstream consequences, including:

-In some markets, there will be more PT clinics closing than there will be new clinics opening. The business of healthcare is such that increased costs are completely born by the company as passing on such cost escalation by increased pricing vis a-vis reimbursement rates doesn’t occur in healthcare. Payors like United, who reportedly earned $23B last year don’t pass their profits on to providers, just the opposite they do all they can to extract more profit through utilization review, arbitrary limitations and reimbursement rates that are now reaching below cost for many providers.

-There will be a bidding war for PT’s up to a point. Recent hiring data suggests some stability, so the competition will come in the form of sign-on bonuses, student debt retirement programs, perks of various types, and likely variable compensation program opportunities. Much of this is in contrast to a generation of PT’s that simply aren’t looking to be business owners.

-Our questionable inability to meet demand coupled with the continued rise in the use of physical therapy for MSK will mean much more encroachment-by personal trainers and other imitators including the trend toward franchises of stretch zones, group fitness models, hyperbaric recovery centers, and the tremendous number of alternative therapies. Many will try and mislead by claiming a physical therapist is involved and recent digital health solutions are already on this path bringing the completely justified clarification by APTA which highlights the commonsensical notion that physical therapy has to be directed by a physical therapist.

-Medicare patients will be selectively scheduled and given far less access as the business model of lower reimbursement and higher cost (burdened additional rules and regulation of medicare patients) will make non-medicare patients much more attractive. We will likely see more medicare patients opt out of traditional medicare by a willingness to sign waivers and many clinics doing the same or having some alternative model of accepting medicare patients who opt out to pay cash rather than be denied service or put in a 3pm Tues slot.

-More and more pressure will be put on PT programs and our PT regulator (CAPTE) to expand programs, start new ones, embrace innovation, or streamline the approval process, which is similar to what is happening in nursing. Hard to tell whether the application pool increases (if soft recession history says yes) or decreases (ROI of a PT education not being worth it vs. other professions).

-PT programs will continue to increase tuition far in excess of inflation. With looming relief of student debt, it simply means that increases in higher loans will ultimately be relieved and there is zero pressure to do anything but increase tuition and the forgiven portions will be paid by taxpayers.

3. PT First will continue to increase because it works! This will be much more common in self-insureds and will be recommended by TPA’s and encouraged by plan designs. The attempts at completely virtualizing physical therapy will be far fewer with many more opting towards a blended approach. This is the exact evolution of education and is much more consumer-friendly as it will meet patients where they are at. There is some evidence already that digital health providers were finding therapists who want to work from home but they didn’t find enough patients who wanted all their PT at home thus decreasing such employment. A related trend is the significant Primary Care shortage and exodus, which will create more opportunities for PT’s to be the MSK primary answering this demand will be difficult.

4. Less physical therapy transactions and lower valuations than the last 5 years due to cost of debt and overall business model of physical therapy. This doesn’t suggest that consolidation will slow down as the larger groups will be larger and the smaller will get smaller (just like last year). Most PT clinics and groups retracted their earnings last year due to labor costs and PT shortages thus making them less likely to sell because they would be at a lower valuation. Lots of practices will be struggling to find a business model that works and the expansion of cash-based service options and supplies will significantly increase. Valuations are partly based on growth and year-to-year declines make them less attractive to buyers. The flip side is that those who have overcome those challenges will still get premium valuations.

5. Significant changes in the digital health players and Remote Therapeutic Monitoring (RTM) will mostly fail due to variability and low reimbursement, lack of clarity of the right technology, and too disruptive for the already overburdened clinician. PT’s cannot meet current clinic patient demands, and their availability to add RTM or even hybrid solutions are simply too disruptive. Adoption is also hampered by shortages and patients nor payors don’t appear to be much in demand and won’t in 2023. There will be a few players adding value-creating remote solutions and adding value to patient care but getting to scale will be too difficult given the inability to access enough PT’s. All of this will lead to consolidation and significant devaluation of the current digital health players who have seen their valuations during fundraising be higher than adding the top 8 physical therapy platforms together despite the digital health companies having no positive cash flow. Many will follow a few of the current offerings and pivot completely away from physical therapy.

6. PTA’s will leave the outpatient profession in droves-salaries are part of it-they can make more in other setting and even in other vocations. PTA applications and schools will suffer. Many small PTA programs will close. The primary cause of course is Medicare’s failure to recognize them as caregivers by lowing their reimbursement rate by such an extensive amount in 2022.

7. MIPS in Medicare will be harder to understand and comply than ever and will wreak havoc in the profession. It currently remains elusive whether individuals vs. groups are going to be mandated or penalized and even conversations with CMS vs. their website are conflicting. Has any provider actually ever received a financial incentive in the program in the past few years?

While this year's predictions might, on the surface, appear a bit more skeptical than in prior, please don’t mistake that for pessimism as I am more optimistic than ever and physical therapy is bending the tremendous MSK cost curve as well as producing the best patient outcomes. Physical therapy is the health care system’s game changer.

Thoughts? As always, these thoughts are simply my viewpoints and do not reflect any group that I am associated.

Happy New Year to friends and colleagues. To a successful, healthy, #physicaltherapy year

@physicaltherapy