This is a two-part 2024 Predications series this year. For Part I recap, click here as well as here for prior years’ predictions.
For 2024, there will be some consistent themes as the last few years and a few reaches! In no particular order:
Medicare Advantage backlash
In 2024, there will be unprecedented Medicare Advantage (MA) backlash by providers of all types. By way of reminder, MA is the Gov’t program that has been the biggest windfall and source of profit for United Healthcare and other large payors of the U.S. In essence, they get paid to administer Medicare at a fee by our taxes that is greater than the cost the government would have if they administered it themselves. It has resulted in years of direct-to-consumer (consumers being medicare patients) of unending mailers, advertorials, commercials, seminars that sell their wares in the name of health fairs, and sources of various payors trying to merge (e.g. the failed mega insurance mergers of the past and fairly recent). Medicare Advantage is now a majority, meaning that over 50% of Medicare-eligible patients receive their care from one of these private insurers. There is some speculation that, over time, the federal government might just get out of administering Medicare, the worst nightmare for providers given the strange truth that private payors are harder to deal with than Medicare intermediaries. The beneficiary data tell us that 5 payors have 72% of the market share, so if you don’t think they have incredible power over providers of all types, think again. How do they exhibit this power? Paying providers less than medicare rates (e.g., 70% of Medicare fee schedule), imposing additional rules and regulations (arbitrary limitations of visits, codes, documentation requirements, etc.), and forcing providers to take their rates by simply saying “you, Mr. Independent Primary Care Doc-want to take our commercial product at 101.1% of medicare? If so, you have to take our medicare advantage product at 70% of Medicare.” Lastly, when it comes to claims management, MA payors “Deny, Deny, Deny” further eroding the payor/provider relationship. And so it goes.
In 2024, providers will stop saying the famous Animal House spanking scene, “Thank you, sir, may I please have another,” and revolt in the form of lawsuits, refusal to take their patients, sending the patients to their competitors, filing lawsuits, and walking away from contracts. Rural hospitals are leading a revolt and will be joined by many.
Continued drop in PT applications to PT schools
Do we have a shortage of physical therapists? Of course, we do, but the shortage is a bit impacted by the number of applications to PT school with current acceptance rates for the approx 12k slots in 300 programs of 80%. On the one hand, this is positively leading to a more diverse group of applications, on the other, might indicate less academically prepared students-will let the academics who teach these students weigh in. As best I can tell from the data, we have approx 12k applicants applying to an average of about 5 programs in 2023. This is down from prior year and I suspect that it will be decline slightly in 2024 (hopefully stay flat!). The central application pool does enable multiple school applications which makes the data a bit hard at times to analyze. This is occurring when more schools are wanting to both add PT as a new program and incumbents trying to expand. Suffice it to say, any academically prepared student will likely be able to get into PT school.
There are lots of reasons for the decline in applications and they are speculative. A 3 year grad school tuition (for most programs) and student debt above 150k plus salaries not in lockstep to tuition demands (despite considerable labor increases the last few years) appears at least to be some of the culprits. PT’s like many other healthcare professions has suffered from academic creep-bachelors to masters to 3 year doctorates. We also have to keep in mind that it was not the profession that drove the doctorate (it did Master’s) but higher education in an attempt to get more tuition dollars. A good analogy although not technically a medical profession in most states is athletic training curriculums. Their move to a Master’s without any market compensation increase has wreaked havoc on those programs, with many closing, having admission of less than double-digit students, and some creatively combining programs from various universities. It is very hard to unring this academic bell but one group respectfully that has done this is OT’s. They mandated a move to doctorate only to surprisingly derail it a few years later. Unfortunately, many programs went to longer OTD and convincing an University CFO to roll it back is about as likely as unwinding college NIL opportunities.
Value-based Payment (VBP) Models Won’t Move the Needle in Physical Therapy Payments but Alternative Payment Models (APM) will Begin in Earnest
Going into 2024, VPB conversations will increase but no meaningful impact for outpatient physical therapy directly but MSK VBP pilots will start and this will impact physical therapy. Coming off Covid, providers, having got kicked in the shins, were not exactly rushing into taking on more risk via capitation or other risk-sharing methodologies, and frankly, none were offered. However, the cost of MSK is so compelling with employers now spending $1 out of every 6 for all of life’s aches and pains and subsequent rises in surgery, pharma, radiology, and injections there will be some MSK alternative payment methods in markets where there is very high penetration of value-based primary care. Primary care is a likely driver given their experience and maturity in some markets of VBP as they are attuned to managing costs through the acceptance of total capitation in Medicaid and Medicare Advantage markets. There are a ton of dollars being counted on from Amazon to CVS to Optum who now employ roughly 70k physicians. This can be a great opportunity for outpatient physical therapy practices that have been beaten up for years in utilization review and silly superimposed rules and regulations. While direct value-based physical therapy is likely not meaningful in 2024, there will be a continued rise in APM’s which are not synonymous with VBP’s. This can take the form of payment for an episode of care, bundled payment, per diem, subcapitation, and a few others. This can bode well for physical therapy because these payment types tend to not include the overall CPT and superimposed rules allowing PT’s to operate at the top of their license something I have not seen since my military days. Unfortunately, the failure of CMS’ MIPS program to universalize outcomes might impair this evolution but for those practices who have built their culture around data and outcomes, opportunities abound.
AI Enters Physical Therapy but not via Consumers or PT’s but their Back Office
First some data:
1m+: The number of people who used ChatGPT within its first five days. Now, a year after the generative AI chatbot’s launch, 100m people use ChatGPT weekly and 2m+ developers are using the company’s API, including most Fortune 500 companies.
$10B: The amount of money Microsoft pledged to invest in OpenAI over the coming years, on top of the $3B it had previously invested, as the tech giant looks to keep up with AI.
$6B: The combined investment made by Amazon and Google in AI company Anthropic, OpenAI’s main competitor.
4.4%: The estimated adoption rate for businesses using AI to produce goods or services. While ~50% of S&P 500 earnings calls have referenced AI since May — on par with mentions of interest rates and the Federal Reserve — the hype isn’t trickling down to everyday use cases.
This last data point is the most interesting, “everyday use cases”. Generally, healthcare providers are laggards when it comes to adopting technology, so I don’t see that pivoting anytime soon. On the other hand, use cases for documentation, compliance (already in process), scheduling, chat functionality, verifying of insurance benefits, and revenue cycle management will enter our market. Generally, these technology entrants are expensive for providers (part of the reason we are laggards) but many of them are likely to be embedded by RCM and specialty providers. We should finally see some efficiency in tasks that are traditionally very manual and this exciting for the business of physical therapy.
Unfortunately, physical therapy documentation and coding will be amongst the last to get real traction in AI simply because of the combination of rules and regulations placed on providers from the 8 minute rule (not to be confused with the rule of 8's), antiquated plans of cares that have to be manually signed, and a host of additional requirements by payors particular worker’s compensation where PT is more highly utilized and the payors are more fragmented. A likely blended environment might exist where documentation can be transcribed by AI through digital recording interactions, and then the PT will spend time only on coding. I am optimistic AI will eventually impact patient care, just not much in 2024.
As to PTs themselves, there will be evolving applications in education primarily through the use of the ability to access large language models (LLM) quickly. The recent multi-modal AI ChatGPT app is fascinating in this regard (think accessing all applicable research and evidence like you would ask Siri or Alexa, but it is in a handheld app on your phone). This might also be the application for future note generation and also look for free-standing LLM AI handhelds or desktop appliances (e.g. like an Amazon Echo) with access points for multiple uses without needing a connection to the internet. Great stuff is coming!
Retention in physical therapy for new grads will continue to be challenged with turnover rates greater than 33% for new grads being the expected “norm” at the 18 month point.
The pressure on employers for physical therapists will remain a factor with not enough available new graduates to fill the number of positions in a profession that has demonstrated cost-effectiveness, efficacy, and outcomes in MSK care and the preferred pathway. Practices will continue to follow the trends of nurses who are far ahead of our learning curve (particularly in hospital settings) with sign-on bonuses, perks, promises related to limited productivity, student debt retirement, and a host of other new-age items, including expanded paid time off. These “attractors” will work until, of course, the sign-on bonuses wear off, and other new age benefits and sign-on bonuses by other providers across town are available. Given preferences on work/life balances, the reality that few in the current generation will remain life-long with one employer or one geography there will likely be an emergence of local registries, which, outside of a few places in the U.S., are generally nonexistent in physical therapy (let’s not let constraints of credentialing and payor limitations get in the way). Use of travel PT’s will likely continue to increase, especially in the most difficult environments (acute care and SNF). A record year in PTA hires despite pay reduction in Medicare is likely.
Physical Therapy businesses will pass more work onto the patients
At one time, all airline tickets were sent in the mail or issued at the point of service on NCR paper. Over time, we were able to print tickets at home, and now we choose our own seats and save the boarding pass on our mobile phones. These are all forms of pushing work to the traveler or consumer akin to self-service gas stations and fast food ordering on a kiosk. In 2024, more of the work will likely be pushed to the patient from scheduling online or through an automated chat function to electronic payment to automatic deductions for copays, digital paperwork, automated and virtual reception. If done right, patients will view it as better service creating a win/win which simultaneously lowers cost for the practice-a necessity given the unholy triad of decreased reimbursement, enhanced regulatory pressure, and cost inflation.
Physical therapy transactions will rapidly increase in 2024 vs. 2023.
This prediction is the opposite of the 2023 vintage. PT practices had better performance generally in 2023 causing them to have better market valuations. If interest rates decline, many physical therapy platforms in the public and private markets will be back in a likely sellers market. Transactions will not likely to reach the fury of circa 2018–2022 but will be noticeably more frequent. The challenges for small and medium-sized practices are daunting staffing, technology spending, cost inflation, compliance, and ongoing reimbursement reductions thus the driver will be in part practices who will have more difficulty coping with the current operating environment.
Year of Ozempic Olympics
2024 will be the year of weight loss but not the old-fashioned way, but through injections of semaglutide drugs like Ozempi, Wegovi, and Mounjaro (amongst others). These drugs, created for treating diabetes, are the latest fashion statement and often paid out of pocket and, unfortunately, in some cases, create shortages for those diabetics that actually need it. The drugs are being highlighted for impacting everything from alcohol consumption and craving to a measure of prevention of heart attacks. The run on these drugs is so high that many self-insured employers are already limiting or putting requirements in place prior to subscribing. Some of these requirements are trials of physical therapy/movement, exercise programs, and behavior modification. While this might be a good outlet for PT’s, data is not on our side as most default to pills/injections rather than the harder work of exercise prescription and behavior modification. There are some even suggesting that these drugs will impart a healthier America and decrease healthcare utilization overall. From my perspective, this is laughable and will only increase healthcare costs through recidivism, complications, and the overall co-morbidities from yo-yo dieting. While I genuinely hope that the right drug gets to the right person and has the right impact, history suggests the unintended consequences of diet drugs have a worse impact than intended, Phen Phen(heart valve and cardio risk) and Beliq (cancer) are two that come to quickly come to mind.
Hope you enjoyed reading, something fun I have been doing for years and not to be taken uber seriously but for thought provocation. As we head into 2024, we don’t have to predict another great, move-forward year for our profession, as we know that it will be one. We are blessed to work in such a great field. Physical therapists have demonstrated for years our ability to be resilient, patient centric, and passionate about providing quality and differentiating care, something that will remain in 2024-and that is reality, not a prediction!
Cheers to a healthy, prosperous New Year.
Thoughts?
@physicaltherapy
