Hope and Opportunity


Physical therapists have the ability to lower insurance costs for employers by simply communicating.

By Sturdy McKee, PT, MPT

Amid the doom and gloom and fear surrounding our profession, there is great hope and opportunity. Though clearance houses are still cropping up trying to take advantage of providers and payers, payment structures are fundamentally changing. Sixteen percent of covered workers at small firms (3-199 workers) and 83 percent of covered workers at larger firms are enrolled in plans which are either partially or completely self-funded, similar to 2012 (15% and 81%). Six percent of firms offering fully-insured plans report that they intend to self-insure because of the Affordable Care Act (ACA).1 This means that the employer, not the insurance company, is now on the hook for medical costs and will realize the savings if they manage their costs well.

Despite this shift, there remains a focus on siloed costs. By dividing orthopedic costs into separate silos, the traditional payers are missing the big picture. Not enough emphasis is on the overall costs of providing care to employees, and the resultant value from the money employers are spending exists. The employers’ frustration is both palpable and understandable. Health care costs and premiums are the only area where employers sit down with their vendors each year and get less and less while spending more and more. In nearly every other category, they either receive more for the same money or receive the same for less money.

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There is Hope

Michael Connors of Performing Arts Physical Therapy of North Texas in Fort Worth has contracted directly with the Texas Ballet Theater Company. His practice is able to bring exceptional value to the organization by preventing injury and treating injured dancers in order to allow them to continue to do what they love to do: perform. Michael estimates direct savings for the Ballet Company at $100,000 last year. Beyond the financial benefit, this past year the Texas Ballet had a grueling 28-day, 45-performance schedule for The Nutcracker. Compared to previous years, this past season saw them finish with no dancers missing a performance due to injury. That is right, zero missed performances, and the only change was bringing physical therapists in to help the dancers.

Marc Guillet of Agile Physical Therapy in Palo Alto has a direct contract with a major internet search company in Mountain View, California. Agile provides physical therapy treatment and prevention services onsite. Marc calculates that between hard costs and the softer costs of lost time from work, and travel to and from appointments, that the return on investment for the contracted company is three times their annual investment.

We know that reducing injuries in professional sports can keep players on the field and result in both dramatic results and savings. The same is true for employers of every stripe. The dollar amounts may not be as dramatic for a single employee, but the results and cost savings’ potential are still dramatic. We, as physical therapists, have an opportunity to help employers keep people working and productive while avoiding unnecessary imaging, injections, surgeries, and drugs. In many cases we are the most effective and the most economical solution. We simply have to do a better job of communicating this to employers. They are looking for solutions to this ever-increasing problem and are not aware that we can help. If they do not know about us because we are too busy in the clinic then there will be no change. And think of all the people we could be helping who are navigating the health care system without a map—going down the wrong paths and grasping at straws when we are right here ready to help them.

The underlying incentive structure has changed

While we have all been focused on the Affordable Care Act (ACA), International Classification of Diseases, tenth revision (ICD-10), Physician Quality Reporting System (PQRS), and the like, the underlying incentive structure for providing health care has changed. As referenced above, many employers no longer pay premiums to an insurance company, but operate under a self-funded insurance program. They no longer shift the risk to a third party payer, but are in fact increasingly that payer. They are now the ones assuming the risk. But they are taking advice from the now third party administrators who are still acting as if they were the payers. The problem with this paradigm is that individuals typically had coverage under the same payer for only about two years. The incentives were to delay care and manage the silo. They did not have an incentive structure to manage the full pie, at least to the same extent that now exists, and they never developed the tools and systems to fully realize the benefits of managing the entire pie.

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Most employers hope to keep their employees engaged for longer than two years. Therefore they have a vested interest in keeping their employees healthy, whether they are at risk for injury on the job or on the softball field. So there is an increasing incentive to invest in prevention, and to make substantive changes to clinical pathways, especially in areas still managed under the siloed model of controlling health care costs. Where the employer is the ultimate insurer, there is also less incentive to determine whether something is paid under workers compensation or under general health care benefits. However, because of the advice employers have been getting from traditional payers, this paradigm shift is slow in being realized.

There is a huge unmet market and need

Only 7 percent of people with low back pain who first see their primary care provider ever get to a physical therapist, and 30 to 50 percent of people with low back pain, depending on geography, see a chiropractor first for their initial care. Fifty percent of those who do see their primary care physician are given narcotics for low back pain. Screen Shot 2015-06-25 at 3.18.30 PM Prescription drug abuse is a growing problem in the United States. By getting someone to physical therapy within 14 days of initial onset from low back pain we know that we can save the system thousands of dollars, improve functional outcomes, and get the patient better faster.2 This means less lost work time, improved function, lower costs, and a potentially much larger market for physical therapists—simply a win for everyone involved. It is important that we begin telling the story and getting the message out to all of the parties who could share in this win.

Imagine if you bypass the major “payer” in your area and go directly to the employers who are now increasingly the actual payers. Imagine demonstrating the cost savings that they might realize by simply directing people to get physical therapy first. If we are only seeing 7 percent or fewer of the people who have low back pain then we are likely also not seeing a significant percentage of those with shoulder, knee, hip, ankle, or neck pain and dysfunction. Our market penetration is minimal at present. And that means we are not helping the majority of people we could be helping. And that also means we have an enormous opportunity through educating the public and employers to increase our market size while making the new third party administrator less and less relevant.


1. About.com. What is a self-funded health plan? From Kelly Montgomery, former About.com Guide. Updated November 12, 2008.

2. Vallfors B. Acute, Subacute and Chronic Low Back Pain: Clinical Symptoms, Absenteeism and Working Environment. Scan J Rehab Med Suppl 1985; 11: 1-98.

3. In Project Briefs: Back Pain Patient Outcomes Assessment Team (BOAT). In MEDTEP Update, Vol. 1 Issue 1, Agency for Health Care Policy and Research, Rockville, MD. (Total does not include lost employer productivity due to employee medical absence.)

4. Website www.drugabuse.gov/publications/research-reports/prescription-drugs/director. Accessed May 2015.

Sturdy McKee, PT, MPT, is a PPS member and the co-founder and chief executive officer of San Francisco Sport and Spine Physical Therapy, SleepSling, and ScheduleDoc.co. He can be reached at sturdymckee@gmail.com, www.linkedin.com/in/sturdy or @Sturdy.

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