Competing with Chain Clinics through Successful and Sustainable Practices

Alan Fredendall // #LeadershipThursday // www.ptonice.com

In today's episode of the PT on ICE Daily Show, ICE Chief Operating Officer Alan Fredendall discusses the current state of the insurance-based healthcare systems, alternative practice styles, and the "magic" behind building a sustainable practice.

Take a listen to the podcast episode or check out the full show notes on our blog at www.ptonice.com/blog.

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EPISODE TRANSCRIPTION

INTRODUCTION Hey everyone, this is Alan. Chief Operating Officer here at ICE. Before we get started with today's episode, I want to talk to you about VersaLifts. Today's episode is brought to you by VersaLifts. Best known for their heel lift shoe inserts, VersaLifts has been a leading innovator in bringing simple but highly effective rehab tools to the market. If you have clients with stiff ankles, Achilles tendinopathy, or basic skeletal structure limitations keeping them from squatting with proper form and good depth, a little heel lift can make a huge difference. VersaLifts heel lifts are available in three different sizes and all of them add an additional half inch of h drop to any training shoe, helping athletes squat deeper with better form. Visit www.vlifts.com/icephysio or click the link in today's show notes to get your VersaLifts today.

ALAN FREDENDALL All right, good morning, PT On ICE Daily Show. Happy Thursday morning, I hope your day is off to a great start. My name is Alan, I'm happy to be your host today. Currently have the pleasure of serving as our Chief Operating Officer here at Ice, and the Division Leader in our Fitness Athlete Division. It is Thursday, it is Leadership Thursday, that means it is also Gut Check Thursday. This week's Gut Check Thursday is another qualifier workout, so it's on the more aggressive end. So we have every four minutes for four sets. You're basically going to go through one workout of the Hero Workout DT. You're going to do 12 deadlifts. You're going to go 9 hang cleans. The caveat this week is that they're hang squat cleans. So they're going to take longer to cycle and they're definitely going to take more out of your legs than the traditional power clean we find in DT. Then you're going to finish with six shoulder to overhead. So for most folks, that's going to be a push jerk. The weight there is 155-105 on the barbell. Ideally, we're finishing one round of that complex in about two minutes. And then in any remaining time in that four-minute window, we're doing as many wall balls as we can. Guys are going to throw a 20-pound ball to a 10-foot target. Ladies, a 14-pound ball to a 9-foot target. The goal of that workout is to get through the barbell and get to the wall balls and accrue some wall balls. Great scores are going to be really anything above 50 reps. Exceeding 100, making your way towards 150 is definitely going to be an exceptional score. Modify the weight on that barbell, modify the reps if you need to make sure that you get off the barbell in about two minutes and that you have time for wall balls. There is no rest between sets, so keep that in mind as well. You probably don't want to be doing wall balls right until the whistle and need to turn and pick up that barbell without a break. You're probably going to want to allow yourself maybe 15 to 20 seconds of rest on the last set of wall balls and then go and pick up that barbell when the clock beeps. So have fun with that one. That's from a qualifier workout for a really awesome competition we have here in Michigan out on the west coast of Michigan out near Grand Rapids called Fresh Coast Fit Fest. Really fun CrossFit workout two day event on the beach. So some of our teams here from our gym at CrossFit and Fenton are going to be doing that. So have fun with that qualifier workout. THE CURRENT STATE OF THE PT INDUSTRY Today what are we talking about? We are talking about cash-based practice, insurance-based practice, or maybe in between what we call a hybrid-based practice, where is the magic? So today I want to make a couple points. I want to really have a candid discussion on insurance and really the physical therapy profession in general. I want to talk about what it means to open a sustainable and ethical practice. I want to talk about the down-low with payment methods and payment amounts as far as how much we get paid. and I want to talk about the concept that I call the golden rule of private practice. So let's start with that discussion on insurance. So Kaiser Foundation back in 2022 published that about 95% of Americans have health insurance. Why do I bring that up? I bring that up because if you only get information from social media, which unfortunately many folks now do, you might have this perception that cash-based therapy, cash-based medicine in general, concierge medicine, has taken off and that if you still accept insurance, you are somehow maybe 100 years behind what's currently happening. and it could not be further from the truth. Most Americans, most consumers have insurance. Again, 95% of people. So certainly while folks are getting more used to maybe their high deductible plan and that they do probably need to pay out of pocket for some or maybe all of their health care, Certainly that's not the case for everybody. In this idea, this mantra on social media that Americans have just rebelled against health insurance and none of them have it anymore and everybody is totally willing to pay cash for everything and you can charge whatever you want is the name of the game could not be further from the truth. In fact, 33% of Americans have Blue Cross Blue Shield PPO insurance which means they carry pretty nice insurance that they probably pay a lot of money for. So I say all that to say this, we need to be realistic that most of us will probably come and go from this profession before we really see a significant shift in how patients interact with the healthcare system, most notably from how they pay for their healthcare. Why does that matter? And why is that unlikely to change? I think looking at the state of the economy in general, again, if you get a lot of your news from social media, you may believe that the economy is on the edge of being destroyed at any minute. But again, that could not be further from the truth. We dodged the depression that was forecasted. The economy is at an all-time high. And that is shown if we look at insurance company profits. So let's go down this list. I love to look at data like this. Blue Cross Blue Shield last year, $457 billion. Almost half a trillion dollars. UnitedHealthcare right behind them, $414 billion. Anthem Blue Cross Blue Shield, so kind of a conglomerate of a bunch of different state Blue Cross Blue Shield associations, $109 billion. Cigna, that's a private commercial insurance, $76 billion. Humana is another private insurer, $55 billion. If we look at just the five largest health insurance providers in the country, they comprise 5% of the country's total GDP. All of the money that we essentially generate and spend across the span of a year. We also need to recognize as we've talked on here before that by 2030, 70% of Americans will be Medicare eligible. So if anything, what we see over time is that more people are carrying insurance, more people have nicer insurance, whether they're paying for that themselves or whether they're just being provided nicer insurance through their employer and that more and more Americans are also going to be carrying Medicare insurance as they turn 65 or whatever that age becomes over the next couple years. So why are we unlikely to see a significant shift in payment methodology in physical therapy or in health care in general? Look at all of that money, right? If we include all the other health insurers, we're looking about one-tenth of all of our money coming and being generated by health insurance providers. If we include what's being spent on health care, both through insurance and through private pay, that is beginning to comprise almost a quarter of our economy. What does that translate to practically? What can we glean from that? It really says that the chief product that the United States produces is sick, injured people in pain, and that our primary export is dealing with the subsequent secondary issues that come with a sedentary lifestyle that produces really sick people. So I think we're really unlikely to see things shift because a lot of people are making a lot of money either being on the health insurance side of the equation or being on the health care system side of the equation. And I think we are living in denial if we don't think that those giant companies that are making half a trillion dollars a year aren't making sure that some of that money goes to lobbying members of Congress to make sure that there are laws that require health insurance to make sure that we build brand new headquarters buildings that employ a lot of people where case adjusters and claims adjusters and all these folks that run a health insurance company can work and that that company can say to the government, look how many jobs we're creating. And when you really see that these companies are starting to take in nearing a trillion dollars, you recognize how much money is truly in this system. INSURANCE IS WEIRD & NEEDS TO CHANGE That being said, we need to be honest that insurance is totally weird. Health insurance is so weird. It is the most inefficient, weird thing that we probably do, right? We're used to having auto insurance. If you've ever had to make an auto insurance claim, you would probably say that by comparison to health insurance, it was a pretty easy process, right? If you've ever wrecked your car, somebody came out and probably said, Oh dude, that car is wrecked. Yeah, we're going to get you a new car. So we'll do some paperwork. And then you'll get a check and you can go get a new car, right? I just had a windshield crack. It was really cold here in Michigan. It was negative 20 degrees. Made a call. Somebody came out and said, yep, dude, your windshield is indeed cracked to the point where it's probably dangerous for you to be driving. Drop your car off here and in an hour somebody will fix your windshield. We don't see that smooth process with healthcare. We see a really weird process filled with a lot of paperwork, a lot of limitations on access to service, and otherwise, the health insurance company trying to hold on to the money that they're getting from patients. It would be totally weird to have insurance in a lot of the other things we do, right? Imagine you need to get your hair cut. I need to get my hair cut really bad. Imagine I go to get a haircut and they tell me, hey, your haircut insurance will only pay to cut half of your head today. You'll have to wait six months, and they'll cut the other half of your head. How impractical would that be? Yet, that's how healthcare insurance functions. So we need to acknowledge the dichotomy here. There's a lot of money in this system. It's probably not changing anytime soon. That being said, it's very weird and inefficient, and it's not working for a lot of people. So that being said, if this is the current state of our healthcare system, and our industry is physical therapists, how do we navigate this? NAME THE ENEMY We navigate this by naming the enemy, right? Corporate physical therapy with hundreds or thousands of locations, employing thousands or tens of thousands of therapists, overbilling patients, seeing multiple patients an hour, driving up that revenue for both their businesses and the health insurance companies, and really delivering low-quality care. We will never win against those folks one-on-one. We'll never be able to go toe-to-toe with them. If you missed Virtual Ice on Tuesday with Jeff Moore, our CEO, you missed a really good discussion on effortless clinical practice. And he really touched on the idea of the solution to high volume, low quality is not to try even more volume with even less quality. That is a losing game. We can certainly try the same strategy to win. What's probably going to happen is that It's not going to last very long, you're probably going to burn yourself out, and you're just going to become another clinic that gets bought up by one of those big chains. So we need to name that enemy, we need to recognize what's being provided, and we need to begin to chip away at them. We need to hit them where it counts, which is to take their patients away from them. How do we do that? We need to fundamentally understand and recognize and be comfortable with what an hour of our time is worth. WHAT IS AN HOUR OF YOUR TIME WORTH? This is something I heard many, many years now, almost a decade ago now from Zach Long, of no matter what you're doing, you should know what an hour of your time is worth and you should be trying to get that. It doesn't matter if you're treating a patient, it doesn't matter if you're doing back-end work, It doesn't matter if you're doing marketing for your clinic, you should be getting relatively the same amount per hour, and you should have a really good understanding of what an hour of your time is worth. Building upon that is how we build a successful, sustainable practice. We just crossed the halfway point in our most recent cohort of Brick by Brick, our practice management course, and this is something I really hammer on people with how to establish your practice, that before you launch, before you start seeing patients, Now is the time to make sure that you set your practice up so that you have a successful, sustainable practice because that is the only way that we're going to chip away at all of these high volume, low quality establishments in a way that we might actually turn this ship around. What's not going to work is doing the same thing of seeing and taking insurance that does not pay well, seeing two, three, four people an hour and getting stuck in the same volume trap that all of these clinics are already stuck in. $40 a visit is profitable if you see four of those visits per hour, right? We can't get caught up trying to fight fire with fire here. We need to go a different route. We need five high-quality, independent, private practices around every chain clinic to provide really quality service to take those patients away over time from the chain clinic and drive them out. And we need to replicate that across the country. The worst possible outcome of fighting fire with fire is that after a couple years, you decide that you're done and you sell your practice to one of those corporate chains, right? You become the enemy. you turn your practice into another version of something that already exists, the volume goes up, the quality goes down, you just become another cog in the machine. That is the worst possible outcome if you do not think about starting your practice sustainably. How do we do that? PAYMENT METHOD: THE PATIENT'S PROBLEM My third point is that it comes down to payment method. We need to understand and recognize that Some people want to use our insurance, but that some insurance simply doesn't pay us a living wage such that we can pay ourselves what we think we're worth. We can pay the people who may work with us what they're worth, cover our expenses and still turn a profit. We need to really think about sustainability. That means that you probably should not accept every insurance possible and that depending on where you live and depending on what an hour of your time is worth, maybe no insurance is good enough for you. And that's also okay, right? Hence, cash-based physical therapy. And that for the majority of folks, the magic is going to probably lie somewhere in the middle. Taking a handful of insurances that let you reach a moderate amount of patients, and everybody else is going to have to pay cash. With that comes the hard truth that not every patient is going to be able to see us. And that at the end of the day, how a patient pays for their service, their physical therapy, is really their responsibility. There are certainly ways we can help. We can offer cheaper rates. We can offer pro bono. And that's a topic for a different day. But at the end of the day, how they pay needs to be in a form that is sustainable for us to take. And I don't think we consider that enough when we're about to launch a practice. I think we go full spectrum. How many people can we reach? Let's take every insurance. Doesn't matter how terrible it pays. Doesn't matter how much paperwork is involved with seeing those patients. Let's take it all and then we'll deal with it later. And then later becomes, I'm tired of doing this and I'm going to sell my clinic to one of the big chains. Again, the worst possible outcome. We need to recognize that if we accept more insurance and we provide lower quality, higher volume care, that we're going to have a minimal impact overall, not only on our patients' lives, but on the profession in general. PAYMENT AMOUNT: THE OWNER'S PROBLEM Looking at payment amount, we need to recognize that there's a natural give and take between employer and employed. And at the end of the day, for those folks in management positions or leadership positions, We need to recognize and truly embrace the idea that the staff physical therapist, the person who comes to work every day and treats patients, is our frontline worker, and that they need to be supported more so than anybody else. Far and away in our industry, far and away across healthcare, the people who see patients are often treated the worst. They are the people who have been told, guess what? There's no money for a raise this year. Guess what? We're taking away your Con Ed money. Guess what? We were going to give you an extra week of vacation. We can't afford that now, right? We continually strip money and benefits and autonomy away from our frontline workers and then we're totally shocked that they leave and open up their own practice, right? Attrition is one of the worst things that can happen to your clinic and we need to understand that while payment method is the patient's responsibility, Payment amount is the owner, the leader's responsibility of controlling what we get paid is ultimately, for me here at our clinic, my responsibility. I need to make sure that we take in enough money, that the frontline workers are supported, and whatever's left is for the ownership. And far too often in clinics, it is the other way around. If the insurances you take aren't paying you enough to take care of your people, you should probably stop taking that insurance. If the insurances you take require you to hire another staff member to do all of their authorizations and certifications, you should probably stop taking that insurance. And if working with an insurance company requires you to reduce your quality or increase your volume and become a detriment to the healthcare system instead of a positive influence, you should probably stop taking that insurance. THE GOLDEN RULE TO SUSTAINABLE PRACTICE The golden rule, my last point here, what do I think the golden rule is? Is that you should only work with organizations that value and reward high quality physical therapy that pay you at or above what your desired rate per hour is. Folks often ask us, hey Alan, hey Mitch, why do you guys take insurance? Well, we only take three of them. We take our Blue Cross Blue Shield state PPO. we take Medicare and TRICARE. Why? Because they don't have any documentation authorization requirements, they pay at or above our desired rate, and they have a really quick turnaround on payment, usually 48 hours for Medicare TRICARE and about 10 days total for Blue Cross, about five to seven business days. So we have relatively no turnaround on payment and it pays at or above what we want to get paid. And I don't think enough clinics appreciate how important that simple rule is. SUMMARY So I think, will things be fixed? Probably not anytime soon. We need to recognize that most Americans have insurance. They want to use insurance. Cash-based therapy is getting more popular, but is widely dependent on geographic area and local socioeconomics. We cannot fall into the traps on social media where we see all of these paid ads maybe from cash-based physical therapy owners that tell you you need to be 100% cash-based or you're behind the times. We need to have some sort of compromise as long as that compromise doesn't require us to sacrifice quality in order to obtain really good outcomes at a volume of patient care that is sustainable for our therapists and ourselves in a manner that rewards them for the work that we put in. We need to recognize how much money is in the health insurance and the healthcare industry, and how little of it those of us going to work every day and treating patients are actually seeing. I laugh every time somebody lets me know they just scored a sick $500 quarterly bonus for treating 80 patients a week. Because I know that clinic probably made hundreds of thousands of dollars off those patients that quarter, and the staff physical therapist got $500. Whoopee, that means nothing, right? We need to acknowledge that amount of money, excuse me, and we need to know that that is part of the reason why things may not be changing as quickly as we want them to change. If we're thinking about opening our own practice, we need to make sure we do the things necessary to make it sustainable. We need to take a really long, hard look at our local socioeconomics, our population, In Brick by Brick, we have people do a SWOT analysis, strengths, weaknesses, opportunities, and threats. And one of the things we encourage students to do is who are the biggest employers in your area and what insurance do they carry. If you work in a town where 80% of the people are employed by the same employer and they have Blue Cross Blue Shield PPO or it's a military base and they have TRICARE, it's probably in your best interest to take those insurances provided it pays you what you want and the documentation requirements are acceptable to you. If not, we need to also recognize it's okay to not take every insurance and that hybrid practice is probably long term the best solution moving forward until we can make significant changes in the insurance market or until we can shift enough folks over to the cash based side of healthcare practice. So cash-based, insurance-based, hybrid-based, where's the magic? Probably somewhere in the middle as with most things, right? And not or, but also recognizing that we're on the same team, right? If you are operating a cash-based practice, if you are operating insurance practice or hybrid practice, and you are providing really high quality care, you are doing your part to chip away at the problem. And if you're working for a company that is not doing that, or you are part of the management leadership team at a company that is not, you do need to acknowledge that you are providing a negative impact on the healthcare system. and you need to be understanding and recognizing of that fact. So, I love this topic. I think about this topic literally a thousand times a day. So I'd love to hear your discussion, your comments on this. Have fun with Gut Check Thursday. I hope you all have a fantastic weekend. If you're gonna be at Fitness Athlete Live this weekend with Mitch, Don, and Raleigh, have a great time. Have a fun Super Bowl. Go Chiefs. Have a great weekend. Bye, everybody.

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