The Future of the Physical Therapy Industry: Mike Horsfield on Reimbursement, Cash Pay, and Hiring

[00:00] Neil Trickett: Hello and welcome to the 100th episode of The Practice Marketing Podcast. Like always, we’re highlighting successful strategies from North America’s fastest-growing clinics and industry experts so you can learn from their wins and power your practice growth. I’m your host, Neil Trickett, CEO of Practice Promotions, and today’s focus is the future of the PT industry, with Mike Horsfield, president of the American Physical Therapy Association’s Private Practice Section. He’s also the CEO of Rock Valley Physical Therapy, one of the largest therapist-owned PT practices in the nation. Today he’s going to talk to us about the future of the PT industry: are we looking at the best days behind us, or is the future bright, and what can PT practice owners do to still create thriving businesses in today’s economy? I’m really looking forward to hearing Mike’s expertise on our 100th episode. Mike, welcome to the podcast.

[01:16] Mike Horsfield: Thanks, Neil.

[01:16] Neil Trickett: Awesome, well, let’s jump in. You have your foothold in a lot of different areas, you see a lot of different things happening. What would you say is the number one challenge PT businesses are facing in 2024?

[01:30] Mike Horsfield: You know, in the past that’s always been an easy question. It’s always been payment, payment, payment, payment, for all the years I’ve been a PT. But I think over the last couple of years it’s a combination of payment and workforce. Depending on where your practice is and what your access to great talent is, for some people it’s still payment, and there’s always ways to improve there, but for others they just don’t have enough coworkers. So I think those are the two issues that have really come together and are a challenge for most in private practice.

[02:02] Neil Trickett: Yeah, absolutely. I think this is something we were seeing even prior to COVID, and then COVID accelerated what was already happening in those two critical issues. As we go into next year, I know there’s a lot happening on the Hill with advocacy. What do you see developing for 2025?

[02:25] Mike Horsfield: You know, again, just recently, as you may have seen in the final rule, we had a couple of wins with PTA supervision, which helps us be more flexible in the outpatient setting, by getting it to the same supervision requirements as everyone else. So that’s a big win. The administrative burden of the plan of care is a big win. As we head into the future, I think it’s really about giving the individual business owner more autonomy to run their practice.

One of the things I see as a priority, which we’ll get into as part of our priority-setting with APTA Private Practice and this new Congress that comes into office in January, is how we make it easier for people to run their businesses and give them more autonomy over their decisions. Some of that has to do with administrative burden, a lot of it around MA [Medicare Advantage] plans: what can we do legislatively to limit the administrative burden of those plans moving forward.

And then I really believe the other top priority is going to be opt-out with Medicare. We do a survey every year, a KPI study for APTA Private Practice where people input their data and key performance indicators, and we always ask a special question. Last year’s question was: are you limiting access to Medicare patients, do you have a waitlist, or are you no longer taking Medicare because of payment? 17% of respondents said yes.

One of the reasons this issue hasn’t passed in Congress before is the fear that if physical therapists can opt out, Medicare patients won’t have access to care. The last time I was on the Hill, I could share that data with my representatives and say this is already happening: Medicare patients aren’t getting access to care right now because of payment. The question is, do you want them to be able to pay for it, for those who can afford it? Once we have that ability, we can engage our seniors alongside us in advocacy on the Hill, to say this payment should be at a rate that gives seniors the access to care they deserve.

[05:16] Neil Trickett: Absolutely, and I know that’s not limited to just physical therapy, there are a hundred other associations fighting along that same physician fee schedule line.

[05:25] Mike Horsfield: Yeah, the fee schedule. There’s a bill recently introduced by the “Doc Caucus,” a bunch of doctors in DC, that talks about applying an inflationary index to the Medicare fee schedule. That would be wonderful. I’m an optimist by nature, but also a realist, and when you recognize the total cost of that and the financial situation in DC, I don’t think we should count on that happening. But ideally that would be the fix, where we could count on some type of reasonable increase tied to medical inflation, instead of cuts every year.

[06:22] Neil Trickett: I like the direction you’re describing there. I remember being in practice and just feeling the burden of the administrative side. How can we remove those barriers to actually delivering care? That’s part of the business model, and we’ve got technology emerging that we’re implementing to make things easier. But I think that has a trickle-down effect on efficiency, which comes back to better patient care, and also retaining staff. It’s not just that we’re losing PTs to competitors, they’re leaving the profession altogether for other kinds of jobs.

[07:24] Mike Horsfield: You’re exactly right, Neil. There’s some really interesting data coming out of a study that benchmarks PT education against medical education, and they’re finding that a lot of therapists are coming out of PT school even more exhausted than some med school students. No one knows the exact reason, but I think it points to burnout in our profession. My theory: how much of our day is actually spent doing the work we went into this profession to do, taking care of people, versus everything else? Those things that don’t fit within our purpose are exhausting; the things that do are what give us energy.

I always picture the version of this job where I’m just in the clinic, in the gym, taking care of people all day, and when I’m done, I go home. If we could get closer to that, with less time checking boxes, we’d fix a lot of the issues related to burnout in PT. So yes, I’m for better payment, but I’m also for putting more purpose back into our profession.

[09:45] Neil Trickett: I think, too, on a state level there’s some pushback against authorizations and limitations of care, the excessive demands insurance companies place on proving therapy is warranted. Have you heard of that happening?

[09:53] Mike Horsfield: Oh yeah, it’s happening all over. UnitedHealthcare came up with prior authorization on their MA plans, and it’s been a huge deal. We’ve been communicating with them at the national level and working through every legislative and regulatory channel we can, because it’s simply unnecessary. It’s clearly set up to make it difficult to see patients. You read about this across the medical space, not just PT, where people wait too long for necessary procedures. If you follow the incentives, it makes sense why payers do it, but that’s exactly why we have to come together to remove those barriers, or at least make clear to the public what’s happening. If we keep the patients we serve at the center of our advocacy, we’ll be better served, because this isn’t about us. It’s about the people we take care of every day.

[11:02] Neil Trickett: What I’m seeing now is that this spans the whole healthcare spectrum. Issues that used to be more PT-specific 10 to 15 years ago are now cross-cutting: the AMA is backing things, lots of other big associations are in the advocacy mix too. Do you see more alignment on the Hill across these different associations?

[11:35] Mike Horsfield: 100%. Most of what we bring to the Hill is a coalition: us, speech therapy, occupational therapy, we’ve always been aligned. But even in areas that used to be a back-and-forth battle, like removing plan-of-care requirements when there’s a referral, the AMA and even the orthopedic section were supportive, because it’s less headache for them too, they don’t want to track and sign those forms either. When it comes to applying an inflationary index to Medicare codes, everyone agrees. It’s when you get into “the pot is only this big, now we have to decide how to split it up” that everyone starts competing for their own best interest, which makes sense, we do the same thing.

[12:44] Neil Trickett: You’re connected with hundreds, maybe thousands, of PT practices out there. From your point of view, are you seeing innovation at the clinic level, more focus on cash pay alternatives, or additional service lines?

[13:09] Mike Horsfield: Yeah, I have. APTA Private Practice, along with the orthopedic section, created a payment consortium we’re calling SPARK, focused on state payment and educating people on how to negotiate contracts. It’s nicknamed “Contracting for Smart PTs.” I’ve talked to a lot of people in the cash-based world. Our company started in a more traditional insurance model, and I really believe we’re all going to end up in a hybrid if we’re smart about it.

When I talk to cash-based practices, I tell them: your market is really limited to people who can afford to pay cash or prefer to. And honestly, if you knew what I get paid from some payers, you’d be willing to take those contracts too. They’ll say, “we take the good payers, we just don’t take the bad ones,” and honestly, that’s smarter than what a lot of insurance-based practices do, which is accept everyone and only later work toward being selective.

I always say: if we all only took contracts that allowed us to take great care of our patients and our coworkers, we’d all win, because the payers at the bottom would have to change. They need “network adequacy” to sell insurance in an area, and if all the providers say no, that doesn’t work for us anymore, they have to respond. We’re already seeing that: increases in commercial payment, wins at the state level, 40 advocacy wins across the nation last year.

Neil, like you were saying about your own business, the opportunity right now is that demand is greater than supply. Every business would love the problems we have right now, where more people want what we have than we have coworkers to provide it. Usually businesses would raise their price to make those two things equal; we can do that if we just stop taking the contracts at the bottom of our list. That’s the opportunity in front of us right now, and I see people doing it successfully.

I’ll admit I’m guilty of wanting to take care of all my neighbors, and having a hard time saying no. I think payers use that “big PT heart” against us, that sense of obligation to take care of everyone. But if we don’t detach the heart from the mind here, eventually we won’t be able to take care of anyone, because we won’t be taking great care of our coworkers, and that’s our primary responsibility.

[16:38] Neil Trickett: That’s such a great point, and it’s something you can control as a practice owner. If you know your value, what it actually costs you to deliver a patient visit, plus whatever profit margin you want, don’t take anything less than that.

[16:55] Mike Horsfield: I think we’re all guilty of that at some point, remembering being in practice and thinking, “we need to get new patients in, and if we take this insurance from a doctor they’ll send us other referrals.” It can be hard, nerve-racking, a little fearful to say no to an insurance. But what I see with clients we work with is that when they have more control over their marketing and more confidence in it, knowing they can attract people to them, especially in a market like this, they can bring in the higher payers and say no to the low ones. That’s the hardest thing.

Shameless plug: one of the things APTA Private Practice is launching later this year is a negotiation series. Taking away the fear, I always say these kinds of decisions should be hard. If it’s easy for you to deny someone care, maybe you’re not in the right business; if it’s hard, you probably are. The question is how you do it, and part of the series is helping owners predict the other side of that decision, whether to hire the next coworker or drop the lowest-paying contracts, with tools to look at your business’s financials and have some sense of security about the outcome.

[18:47] Neil Trickett: I love that, and the way APTA is approaching it. Sometimes in practice we expect APTA to fix everything from the insurance world, and this flips that on its head: how do we rise the whole tide, when a lot of this has to happen at the local level? I remember getting into a habit of asking for a contract negotiation about every six months.

[19:21] Mike Horsfield: And I think we as practice owners have to implement that kind of rhythm, pushing back on what payment we need from insurance companies for certain services. Honestly, it’s also about who you know in that world, and a little relationship-building. Chocolates and flowers went a long way with network managers for me. I was able to get the highest rate for United Healthcare in three counties just by being persistent.

[20:02] Neil Trickett: And you’re doing the right thing bringing it back to the practice owner. There’s a real difference contract negotiation can make, and there are tools out there to help.

[20:11] Mike Horsfield: You’ve got to ask. Very rarely will someone give you a raise if you never ask. You have to start there, be kind, be persistent, and also be willing to walk away when it doesn’t make sense. Those aren’t easy things. Before I got involved with APTA and APTA Private Practice, I had some wrong assumptions. Yes, APTA is working on state regulatory issues, protecting the PT license and your Practice Act, and working federally on Medicare advocacy and regulations. But APTA can’t negotiate your private payer contracts, that’s illegal for them to do. When we rolled out the negotiation series, we actually talked to an antitrust attorney in DC about what we can and can’t do. But I’ll say this: there’s nothing APTA will do for private practice if you take bad contracts, that’s up to the individual practice owner. I’ve been guilty of that too, I’m not casting blame, but we as an organization need to be better at helping with this, and we’re committed to it.

[21:51] Neil Trickett: I love what you said earlier about the hybrid model. Patients come in with insurance, but they probably need more care than insurance will pay for, so you have to get better at marketing and better at sales. If you get better at that, and have better processes and systems, you’ll have a lot more control over your revenue.

[22:17] Mike Horsfield: I’ve seen a lot of clinics bringing in additional service lines, and what I find is they’re actually more marketable. The public likes a one-stop shop. If you offer multiple service lines, that’s more attractive to a buyer, and I think one area our profession could really strengthen is continuous care. So many times we discharge a patient and say “you should keep going to the gym,” but they’re 65, 70 years old, don’t know what to do at a gym, and there’s no gym set up for them, so they don’t go, and six months later the problem flares up again. What could we be providing so we can continue to help them?

One of the genius things to come along recently is StretchLab. They beat us to the mark. It’s a subscription model, one of the fastest-growing franchises in North America, because the public likes to get stretched, and that’s something PTs do all day already. Why don’t we have a subscription model for aftercare? There’s a lot of opportunity to think about cash-based value-add services for our practice lines.

[24:46] Neil Trickett: I think you’re right on that. Even the word “discharge” bothers me. If you’re that patient’s physical therapist, not just someone they went to physical therapy with, and you own that relationship and their health and wellness, what do they need, and how can you be that advocate? If there’s an additional revenue stream there, and you’re acting in their best interest, I’m all for it. I’m not big on upselling things just to make the business work, but when it’s aligned with what the patient wants and needs, and they’re the ones asking for it, you should have your ears open.

[26:04] Neil Trickett: Let’s shift gears toward retention of employees, and meeting a growing industry. Demand is going through the roof as the population ages. What’s PPS looking at for the workforce, in terms of retention, maybe even on the training or university side?

[26:23] Mike Horsfield: I mentioned earlier the universities are looking at why students are leaving school even more exhausted than medical students. I think that’s something we have to address, and I trust academia to investigate it. When they enter the workforce, I think it’s our responsibility to ask: why did you get into this profession, and are we really fulfilling our promise of giving them meaningful, purposeful work, or does it feel like a mill?

I love economics. I say I have a love-hate relationship with both the laws of gravity and the laws of economics, but you can complain about them or use them to your advantage. From a PPS standpoint, there’s a lot of education happening: several topics at our annual conference on employee retention and engagement, including “joy at work.”

One of the blessings of COVID, honestly, was that my coworkers asked me to do a talk on work-life balance, so I took a Harvard course on happiness. One of the things I took away: a lot of happiness comes from the achievement of something difficult and overcoming it. Sometimes when we hear “I’m stressed out” or “work-life balance,” we want to take everything away, instead of understanding what people actually enjoy and helping them work toward something difficult: a fellowship, a certification, a step into management.

[29:36] Neil Trickett: I think you have to balance two things: retaining the great employees you have, and attracting good new ones. The good news is, when you focus on retention, you naturally start attracting top talent too.

[29:52] Mike Horsfield: Right, you don’t necessarily have to take things away from a person, you have to align with their interests and purpose. One mistake practice owners make is getting so fixated on the business side that we forget about the growth of the actual PTs in the clinic. It doesn’t have to be complicated: simple things like a mentorship group, continuing education, or a discussion group on cases over half an hour to 45 minutes a week. It gets people thinking beyond their day-to-day, and it builds a sense of community.

On the numbers side, I think one thing we can always do better is how we message metrics. They should be feedback, not weaponized. An arrival rate is simply a reflection of how great you’re doing. That person chose, out of everything they could do with their time, to come see you 92% of the time. If that metric is framed that way, with context about what might be missing, more tools in the toolbox, more continuing ed, it becomes engagement around becoming a great clinician, rather than a number thrown on someone’s desk with “do better” attached, with no context for what it actually means.

Simple changes in wording make a huge difference: “you have a 7% cancellation rate” feels very negative, but “93% of people came in to see you this week, good job, what do you think we could do better?” creates dialogue and gets people thinking the right way.

I’d also point to soft skills, especially with new grads, since it takes years to develop them. A senior therapist can sit comfortably with a patient and sell them on their plan of care; new grads are still thinking through the technical side. That’s something to actively develop, through observation and debriefing: pairing someone who needs help with your best person for a given metric, and having them observe and debrief afterward.

[36:04] Neil Trickett: As CEO of a large PT group, what have you tried that’s worked for attracting therapists, mentorship or internship programs?

[36:21] Mike Horsfield: We’ve always been big on continuing education allowance, above what competitors offer, and committed to professional development. We’ve had partnerships with universities. Rich Shields at the University of Iowa came to us years ago wanting a structured six-month program for new grads, almost a mini-residency without the cost of paying an actual residency. That became a year, then two years; we call it ROC-U now. It’s evolved into clinical training, professional development, customer service, understanding how the business works, and philanthropic work in the community. Across our three states, it creates a sense of community for therapists who start together that year, and they become informal mentors to each other going forward.

From a leadership standpoint, the reason Rock Valley is growing is that we didn’t want to lose good people. If we didn’t grow, and didn’t have opportunities for advancement, we were at risk of losing our best coworkers. So we created the “GAS Gang,” our young leadership development group: nine to twelve people a year identified by their coworkers as potential leaders. We also run informal niche interest groups over lunch: vestibular therapy, pelvic health, pediatrics, low-cost ways to build community and engagement. Our primary mode is retention and engagement; attraction is mostly a byproduct of that, through word of mouth.

For smaller clinics: you don’t have to do all of this yourself. There’s probably a therapist on your team who loves teaching. Carve out time for them to help with internships or mentoring. A Mayo Clinic study found that staff only need to spend about 15% of their day doing what they love to avoid burnout; they call that your “red thread.” It’s not always intuitive, so I’d recommend practice leaders go through their day (and have their coworkers do the same) noting what drains energy versus what gives it. You might find what drains you is what someone else loves. I had no idea people loved putting stuff into spreadsheets, but our CFO does.

[41:51] Neil Trickett: One of the things I’ve always admired about APTA and the PPS section is how many people volunteer their time to advance the profession. Why should a practice owner care about being part of APTA or PPS?

[42:17] Mike Horsfield: That’s a great question, and I don’t know if I can make anyone care, but I can share why I do. Two things: first, when you give, you get more back than you give; that’s been true for me. Second, I look at it as stewardship. I grew up on a farm, and I have a sense of leaving the land better than I found it. If I’m going to donate my time to make this profession better for the next group, I want to do it with people who’ll be here long after I’m gone. That’s APTA and APTA Private Practice for me.

I don’t agree with everything APTA does, or everything Private Practice does, we serve a diverse audience, but that’s the beauty of belonging: you learn you can have a different opinion and still get along. For our audience: you need to be part of your profession. There are fantastic peer-to-peer groups, and clients of ours have gotten connected and learned so much from each other. You don’t have to go it alone as a practice owner.

The honest truth is, non-members get the benefit of advocacy wins too. When something passes in DC, it’s not just for members. So people ask, “why join if I get it anyway?” What you won’t get is the personal connection, the sense of community. There’s a Swedish proverb: a shared sorrow is half a sorrow, and a shared joy is twice the joy. Private practice can be lonely, especially for small practitioners. You don’t always have someone to share the worrisome moments with, or the successes. Once you engage with Private Practice, you realize: these people get me. I didn’t have to explain anything, and that’s usually everyone’s reaction the first time they show up.

[47:23] Neil Trickett: Mike, looking forward, what’s one main thing practice owners could do to grow their business going into 2025?

[48:05] Mike Horsfield: I think this is pretty general business advice, but it translates well: know what you do well, and maybe more importantly, what you don’t do well. Have an honest conversation with yourself. Metrics are feedback for owners too, and it’s hard to look at sometimes. If you’re honest, you’ll find things you’re genuinely good at that you should do more of, and things you’re not good at that you should stop doing, and we don’t often ask ourselves that second half of the question: what are the “sacred cows” we’re still doing that our customers, or our coworkers, aren’t actually appreciating?

Right now, demand for what you do is greater than it’s ever been. One way to get that feedback: look at publicly traded companies’ same-store sales growth, how much they’re growing year-over-year, and how fast the market is growing overall. If you’re not growing as fast as the market, that’s feedback that you need to find help or do something different.

[49:56] Neil Trickett: I’d add, as a practice owner, you have to carve out the mental capacity for that reflection. You can’t do it if you’re treating 40 hours a week of patients and handling every fire on top of that. You have to step back, get out of the practice, and create your plan.

[50:30] Mike Horsfield: So important, Neil. I assume that reflection is happening, but I realize it often isn’t. Working that extra patient or two in the day instead of spending time on management is a vicious cycle that doesn’t end well.

[50:46] Neil Trickett: Mike Horsfield, president of the Private Practice Section of the American Physical Therapy Association and CEO of Rock Valley Physical Therapy, thank you for your time and expertise, we learned so much today.

[51:01] Mike Horsfield: You’re welcome, Neil, thank you. I really appreciate your support, and what an honor to be the 100th guest.

[51:08] Neil Trickett: My pleasure. And to our listeners, thank you for being with us through our 100th episode. Don’t forget to subscribe and follow us on YouTube and our podcast. We’ve got free downloads and tools at practicepromotions.net. Neil Trickett here from Practice Promotions and the Practice Marketing Podcast, wishing you much success in your practice.