Founder Letter: Cash Pay Is In, Acquisitions Are Out: 4 Trends Revealed in the 2021 State of Rehab Therapy Report

Every year, my team surveys the entire rehab therapy industry on a wide array of topics—from business financials to patient volume to job satisfaction—and compiles all of the findings into our annual State of Rehab Therapy report. But this annual report is so much more than a year in review; it also provides a glimpse into the future of the rehab therapy industry. And while we always uncover some fascinating results, this year was unlike any other.

It’s not hard to guess why. Last year, rehab therapy professionals—along with the rest of the world—were forced to drop everything in reaction to the COVID-19 pandemic. Providers suddenly had to balance delivering quality care with adhering to CDC guidelines. Entire clinical teams learned the ins and outs of telehealth overnight. Practice owners were forced to make the most difficult business decisions of their careers. In a matter of days, the entire industry was turned on its head—and we’re sure to feel the effects of that shakeup for years to come. So, as we compiled our findings for the 2021 edition of our renowned industry report, we set out to tell the heroic story of rehab therapy professionals as they shifted and forged ahead in the midst of crisis. Here’s what we learned:

1. Revenue diversification is a major priority for practice leaders in 2021.

Considering the financial toll of the COVID-19 pandemic, it’s probably not a complete shock that practice leaders are interested in pinpointing new ways to increase revenue in the year ahead. Overall, the most popular revenue diversification strategies therapy leaders plan to implement in 2021 are increasing cash-based service offerings and ramping up marketing efforts to attract more direct access patients. Additionally, 42.8% of large organizations (i.e., those with 17-plus providers) plan to open more clinic locations in order to increase revenue streams.

My team and I have long beat the patient marketing drum—and we’ll continue to do so. Historically, it seemed most PTs, OTs, and SLPs had a difficult time connecting the dots between direct access marketing and increased revenue—or failed to see the need for marketing at all. However, this trend toward marketing directly to patient-consumers is an incredibly positive sign. By circumventing the physician referral pathway, therapists not only increase visibility in their local communities, but also help position themselves as front line musculoskeletal experts. Ultimately, this movement will serve to improve population health and lower overall healthcare spending by increasing access to conservative therapies.

Technology has opened new doors for revenue diversification.

Though the rise of telehealth services in the past year is a direct response to the pandemic, it also opens the door to new alternative revenue streams. COVID-19 threw the growing convenience-based economy into the spotlight, with Americans relying on in-home, Internet-based services for just about everything—from groceries and entertainment to doctor and PT visits. According to our report, telehealth was by far the most-provided non-traditional therapy service across all practice sizes, with more than half of organizations offering remote visits in an effort to sustain care and stabilize revenue amid government-enforced lockdowns. And now that patients have experienced telerehab, the demand for remote care is likely here to stay. A June 2020 survey from Doctor.com found that 83% of patients expect long-term access to telehealth services, and the same percentage of respondents planned to use telehealth services after the pandemic has ended.

This revolution in care delivery not only encourages rehab therapy professionals to offer telehealth in order to remain competitive, but also opens a brand-new avenue to diversifying service offerings—by supplementing in-person visits with telehealth visits, packaging services differently to encourage ongoing patient care post-discharge, and incorporating alternative payment models grounded in the value-based care paradigm.

Given the reimbursement realities we, as a profession, continue to face, the answer to long-term sustainability and financial success does not reside in maximizing the number of patients a therapist can effectively and safely see in a day. According to John Brickley, PT, MA, Vice President of Ambulatory Operations and Network Development at MedStar Health Physical Therapy, “It resides in reducing business costs and identifying strategies that drive up revenue per visit. To do this, therapists should embrace new technology that improves efficiency and revenue cycle performance while reducing overhead costs—like interoperable, cloud-based tools or even robotic process automation solutions.”

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2. Few clinic owners are interested in selling their practices.

One of the more surprising trends our survey revealed involves consolidation and acquisition. Overall, only 14% of practice leaders are more interested in selling their business this year compared to last year. However, clinic leaders who showed the most interest in selling were those from small practices (i.e., two to five providers), with about one in five reporting that they are more interested in selling their business this year compared to last year.

This trend may point to concerns over limited growth amid the COVID-19 pandemic. After all, while cases are down and business is picking up, we’re not entirely out of the woods yet. Moreover, concerns over future waves and vaccine efficacy amid new viral strains may keep some would-be patients from venturing out of the house unless absolutely necessary. Add to that the looming threat of tax increases and reimbursement declines, and it’s easy to see why small practice leaders are playing it conservative with their business growth decisions.

New partnership models are growing in popularity. 

That said, the projected overall business outlook is positive. According to Adam Buglio, OT, Vice President of Business Development at Golden Bear Physical Therapy Sports Injury Center, “One growing trend we’re beginning to see in the merger and acquisition market is smaller practices entering into partnerships with larger organizations that have a deep bench of experience in de novo planning and implementation.” Not only do these types of partnerships help mitigate financial risk, but they also allow practice owners to focus on less tangible—though equally important—aspects of business, like company culture.

3. The rehab therapy industry continues to lack diversity.

The fact that the rehab therapy profession is woman-dominated is a point of pride. In fact, nearly 70% of rehab therapy professionals are women. However, when we examine leadership roles, women continue to be under-represented, with about 40% of rehab therapy professionals in leadership positions self-identifying as women. This is on par with the findings in our 2019 industry survey, which saw 39% of leadership roles filled by women. While these numbers are better than those seen in many other industries (this study from Forbes found that only 21% of senior leadership positions were held by women in the United States), this lack of female representation in leadership aligns with a persistent issue of gender parity in the workplace.

The fact is, rehab therapy business leaders should be just as concerned about these numbers as the women they represent. When a clinic’s culture fails to encourage women to pursue leadership roles, the end result is a team that feels less inclined to contribute. As Ben Fung, PT, DPT, COO of UpDoc Media, points out, this lack of initiative creates a dynamic in which women feel disinclined to pursue leadership opportunities: “Power doesn’t like a vacuum. Therefore, the next available prospect fills the void with no notice by upper management in terms of any change—particularly, no notice in terms of the talent lost.”

Our survey also highlighted the stark gap in racial diversity in our industry: More than three-quarters of rehab therapy professionals are white. By contrast, according to 2020 US Census data, just under 60% of the US population is white.

Our profession’s diversity gap hinders our ability to reach populations that need our care.

As professionals in an industry where healing is our primary product, we must consider the repercussions such disparity can have on health outcomes. Thrive Network founder TaVona Denise Boggs, PT, has seen firsthand how this lack of diversity directly impacts the relationship between patients and providers in outpatient settings: “White providers have difficulty relating to, communicating with, and understanding Black patients who frequently use colloquialisms in their speech,” she said. “This is compounded by the lack of provider understanding around the socioeconomic factors that may be affecting Black, Hispanic, or Asian patients’ ability to ‘comply’ with a treatment plan.” Boggs went on to explain that “this may lead to assuming a patient is lazy or unwilling to participate in their recovery, which in turn breeds distrust of the healthcare provider.” For this reason, diversifying the rehab therapy profession can only foster increased understanding and improved outcomes for underserved communities.

4. Rehab therapists are more burned out than ever.

Prior to 2020, rehab therapists were already feeling the heat of the growing healthcare burnout problem. Between paltry reimbursements, high student debt levels, and increased pressure to treat as many patients per day as possible, it’s easy to see why so many rehab therapy professionals feel bogged down. The COVID-19 pandemic exacerbated this issue, with about half of therapy professionals reporting that they feel more burned out now than they did pre-pandemic. (Their top-cited reason: Concerns over contracting COVID-19 on the job.) 

Ultimately, it’s not just therapists who suffer the consequences of burnout; it’s their patients as well. Meredith Castin, PT, DPT, founder of The Non-Clinical PT, had this to say about the provider burnout problem: “The more undervalued and burnt out a clinician feels, the more likely it is to take a toll on patient care. Until we become a profession that provides true career growth rather than lip service about patient satisfaction, we will see burnout continue to be an issue. And it’s an issue that has a direct impact on patient care.”

Overall, therapists still love what they do.

Still, the majority of therapy professionals do not plan to make any career or retirement changes as a result of the pandemic, which speaks volumes about the level of commitment therapists have to their chosen profession—as well as their patients. Physical therapists, occupational therapists, and speech-language pathologists consistently rank on lists of professions with high job satisfaction, and according to our data, 84% of rehab therapy students are either equally certain or even more certain of their chosen career path compared to one year ago. This tells me that the passion is still there, but the industry must evolve to support and nurture it.

If you ask me how we can address this problem, here’s what I’ll say: every rehab therapist must rally and unite behind a common mission and thus, prioritize industry-wide advocacy efforts. Organizations like APTQI, APTA, and AOTA are the foremost advocates for industry progress. These associations represent the voice of all PTs and OTs on the state and federal legislative stages. And yet, our survey found that only about half of all PTs and OTs belong to their respective member organizations. (By contrast, 90% of all SLPs are members of ASHA.) Even if you don’t belong to APTQI, APTA, or AOTA, all of these organizations offer a variety of advocacy opportunities for members and non-members alike. 

To say that the past year has been a massive learning experience feels woefully inadequate. The pandemic has forced our industry to be more flexible, accessible, and adaptable, which can only benefit us in the long run. However, we cannot be complacent, and as our industry recovers from this crisis, therapists must resist the urge to return to the status quo. Despite all the uncertainty and constant change, we saw real, meaningful progress in the way of telehealth and our perception as essential healthcare providers. Now, we must capitalize on that momentum—we cannot allow ourselves to be cast aside and forgotten. If we can do that, then I know the future of our profession is very bright.