Virtual Health in Physical Therapy: Navigating the 2025 Landscape and Beyond

Last week, I published my annual Prediction Edition and included a prediction that Virtual PT care would undergo a reset. I promised a deeper dive on this topic, and here it is. While much of this piece will be commentary, there are some predictions thrown in for good measure. For full transparency, I’m a proponent of virtual and omnichannel solutions and have worked with them for quite some time, experiencing both successes and frustrations. I’ve tried to let market forces and trends dictate my views on the current and near-future states of virtual physical therapy.

So, let’s dive into the landscape, evaluate the past and current state, and then explore some predictions.

The 2025 Landscape: A Digital Revolution in Progress

We’re in 2025, a year where physical therapy’s digital transformation is well underway, but still marked by twists, turns, and significant questions about the future of care delivery. Virtual health is no longer a novelty; it’s actively reshaping how we deliver outcomes, engage with patients, and, most importantly, how (and if) we get reimbursed. The efficacy of virtual PT isn’t in question anymore, however, efficacy has rarely been a primary driver in healthcare adoption. The more pertinent questions are: Can the service be paid for based on the value it creates? Will patients readily adopt these new models? This shift is also introducing new challenges, like the encroachment of AI as a displacement and the ongoing reimbursement struggles. At the center of this evolving landscape are key players like Hinge Health and Sword Health, whose stories provide valuable lessons in the opportunities and growing pains of this emerging industry. From a purely physical therapy perspective, their strategic pivots are a bit concerning, considering they have largely shifted away from traditional digital physical therapy delivery. On the other hand, they’ve always been a technology company and venture capital plays at their core, and their pathways, strategies, and funding have always reflected that culture.

Hinge Health: A Case Study in Digital Health’s Growing Pains

Hinge Health has experienced a rapid rise, but has also faced its share of turbulence over the last few years. Here’s a look at its trajectory:

• 2021: Ambitious Goals and Massive Funding: Hinge Health secured a significant $300 million in Series D funding, valuing the company at $6.2 billion and positioning it as a frontrunner in digital musculoskeletal (MSK) care. They announced public ambitions to go public in 2022, highlighting its rapid growth and innovative approach to virtual physical therapy.
• 2024: A Year of Tumult:
• Layoffs in April: Hinge Health laid off 10% of its workforce, including numerous physical therapists. While the company framed this as a restructuring, it raised concerns about the sustainability of tech-driven healthcare and the role of therapists in a digital-first model.
• September IPO Plans: Despite these cuts, Hinge announced plans to go public, hiring Morgan Stanley to guide the process. An IPO could provide capital for expansion but could also increase pressure to prioritize growth over quality care.
• Expanding Horizons: Hinge has diversified its offerings, launching:
• Women’s Health: A partnership with MIDI Health to broaden access to menopause care.
• Chronic Pain Solutions: A new digital program to manage persistent pain.
• Amazon Collaboration: Integration with Amazon’s digital health benefits, which significantly expands its reach but also sparks concern about corporate control in healthcare.

Sword Health: The Pivot to AI-Driven Care

Sword Health recently made a significant move by positioning itself as an AI-driven care company, signaling a major shift in its business model.

• AI as a Replacement for Physical Therapists?: Sword’s focus on AI has sparked controversy. By increasing its use of artificial intelligence, Sword aims to reduce the reliance on human therapists, automating much of the care process. While AI offers benefits like scalability, cost-efficiency, and data-driven insights, it also raises concerns about the quality of care and the potential marginalization of therapists in favor of algorithms. It’s a classic displacement of physical therapist strategy that has yet to see any success in the virtual digital entrants. Physical therapists are licensed, use “hands on” skills, have empathy, compassion and the ability to think critically, all in combination with one another much of which can’t be done by AI.
• The $3 Billion Question: Sword’s valuation reflects investor confidence in its disruptive potential. However, the pivot to AI also signals a move away from the traditional therapist-led model, creating uncertainty about where physical therapists fit in this new landscape.

To put the valuations of Hinge and Sword into perspective, if you were to combine the market cap of the five largest physical therapy companies — both private and public — you would find that despite the fact that they generate significantly more cash flow than either Hinge or Sword, the combined valuation would be far less than the sum of Hinge and Sword. Of course, this assumes you have interested investors or buyers. Furthermore, digital health valuations have been notoriously volatile in recent years.

Digital Health: Sometimes Worth the Cost

Despite these challenges, the arguments in favor of virtual health remain strong. A recent report from Peterson Health highlighted that virtual physical therapy can offer substantial benefits, particularly for patients with limited mobility or chronic conditions. When implemented well, virtual care provides similar outcomes to in-person therapy while improving access and engagement.

However, it’s not a universal solution. High implementation costs and insufficient reimbursement continue to be barriers for smaller practices. For some, the potential patient outcomes make virtual care worth the cost. For others, the financial and administrative burdens make adoption a tough sell.

Opportunities in 2025

1. Hybrid Models Gain Traction: The most successful virtual health implementations will combine in-person and virtual care, offering patients flexibility while leveraging physical therapists' hands-on expertise. Patients with limited access to clinics stand to benefit the most, achieving better compliance and outcomes.
2. RMT and Virtual PT as Tools, Not Threats: Remote Therapeutic Monitoring (RMT) and virtual PT platforms are powerful tools that can enhance — not replace — therapists’ roles. Clinics that thoughtfully integrate these technologies will be able to expand their reach and improve patient engagement. Investing in RMT — whether in-house or through partnerships — is likely to be advantageous.

3. Private Equity and Venture Capital: Fueling Innovation (and Expectations): Here’s where things get interesting: private equity (PE) and venture capital (VC) are heavily investing in virtual PT and RMT, and many entrepreneurial startups are self-funding as well. Without this capital infusion, many clinics wouldn’t have the resources to adopt cutting-edge technologies. These investors aren’t just bankrolling new tech, they are enabling providers to expand their practices in ways that were previously impossible and for that we should be thankful.

Of course, PE and VC expect a return on investment. This means physical therapists who partner with these firms must balance innovation with profitability. However, by end of 2025, expect these partnerships to play a critical role in the future of virtual health.

Reimbursement: The Eternal Struggle

Any discussion about virtual health is incomplete without addressing the elephant in the room: reimbursement. Whether it’s telehealth or RMT, the financial picture is still bleak. Medicare payments remain meager, private payers are slow to adopt coverage, and the administrative burden continues to increase. Providers are left to wonder, “How much more can we do for less?” We can anticipate that advocacy groups and professional organizations will increase their efforts to secure fair reimbursement for virtual physical therapy services.

Challenges in 2025

1. Reimbursement Woes: While Medicare will expand its telehealth coverage, reimbursement rates will likely remain low. Private insurers, meanwhile, are still lagging in covering virtual care, leaving clinics to shoulder the financial burden.
2. Provider Skepticism: After years of reduced reimbursement and increased administrative complexity, many providers are hesitant to adopt RMT and other digital tools. Outsourcing RMT to third-party providers may help, but skepticism persists — particularly about ceding control over patient care.
3. AI Anxiety: Sword Health’s pivot to AI exemplifies a broader trend that could redefine physical therapy’s future. While AI can streamline care, it also threatens to reduce the therapist’s role, raising concerns about patient outcomes and professional identity.

Predictions for 2025 and Beyond

Let’s move to what I predict will define virtual health in PT by 2025 and how it will reshape our practices.

• Medicare Coverage: A Small Step Forward (Sort Of): The big news in 2025 will be the expansion of Medicare coverage for virtual physical therapy. While progress has been slow, Medicare is likely to expand its support, allowing virtual PT to move beyond its limited pandemic-era allowances. While this may not have a significant impact in 2025, it does set the stage for further progress in future years.
• However: Reimbursement rates are expected to remain low, leaving providers to question whether the effort is worthwhile. As for private insurers, many still haven’t figured out how to pay for virtual care, leaving PTs to either foot the bill, or avoid virtual health.
• Remote Therapeutic Monitoring (RMT): Promise Meets Reality: RMT holds enormous potential, with wearable devices, apps, and real-time data enabling therapists to track patient progress remotely. This is a tremendous intervention for patients who can’t make it to the clinic regularly.
• However: RMT is hard to implement, especially for smaller practices. The tech is costly, the learning curve is steep, and Medicare provides only meager compensation. Most private insurers haven’t even developed payment policies yet. For small clinics, outsourcing RMT to third-party providers seems like a solution. However, handing off ongoing Medicare patients to a third-party is risky. Combine that with Medicare’s history of decreasing reimbursements and increasing documentation demands, and there’s a recipe for skepticism. The question is whether there is truly an “oura ring” for physical therapy that can be tracked and fed back to the therapist with minimal friction points. I hope so, and that all of our patients, to some extent, will be wearing a physical therapist who will monitor, coach, and recommend, primarily through the use of AI to augment a therapist’s role.
• The Patient Perspective: Patients will increasingly be warming up to virtual PT, especially when combined with hybrid models. Convenience and accessibility are key drivers of adoption, but convenience doesn’t automatically lead to usage.
• However: Not every patient is a tech enthusiast. Some still prefer the traditional in-person experience, while others struggle with technology or motivation. For RMT and virtual care to truly thrive, PTs must tailor approaches to meet diverse patient needs. Consumer willingness to invest in these products has limitations; for example, a survey found that 60% of consumers are unwilling to pay more than $20 for 3D glasses.

Final Thoughts: Clumsy and Fragmented Progress

Here’s my high level prediction for 2025 Virtual Health: clumsy and highly fragmented. The biggest digital health players have either shifted focus away from traditional “PT Telehealth” or are targeting niche markets. These areas have great use cases for blended or omnichannel care models, but the push for purely digital solutions seems short-sighted. Data suggests that while growth will occur, it’s likely to be modest, reflecting a market still finding its footing.

I see significant potential within value-based care (VBC) and risk-sharing models. However, VBC in physical therapy won’t see meaningful traction over the next year. These models make sense, but they have struggled to achieve profitability even in primary care. As the saying goes, “No margin, no mission.” Without financial viability, physical therapy is unlikely to see widespread adoption of value-based models anytime soon — except for outliers like total joint replacements or bundled payment programs which at this point are proven use cases.

So, while 2025 will bring incremental progress, the fragmentation, the lack of profitability in value-based models, and the limited scalability of purely digital approaches will likely keep Virtual Health in physical therapy in a state of cautious experimentation rather than widespread adoption.

Summary of Key Predictions:

• Medicare will expand virtual PT coverage, but reimbursement rates will still disappoint.
• RMT adoption will grow slowly, with larger practices leading the charge.
• Third-party RMT providers will refine their services and build trust with skeptical clinicians.
• Digital PT platforms like Hinge and Sword will continue to re-invent themselves as anything but physical therapy service deliverers
• Patients will growingly embrace hybrid models, but one-size-fits-all virtual care won’t work for everyone.
• Private equity and VC funding will drive innovation, offering growth opportunities that small practices wouldn’t achieve alone.

As 2025 unfolds, physical therapists face a choice: adapt and shape the future of virtual health — or risk being sidelined by algorithms and tech giants. Either way, the industry is poised for change. Let’s meet it with creativity, resilience, and maybe a little humor to keep us grounded.

@physicaltherapy