The tradition of predictions is as old as Mesopotamia. Generally viewed as a way to obtain strategic competitive advantage, forecasting has become an annual tradition on all aspects of life and business. These so-called informed “guesses” broadcasted broadly are, by any objective standards, generally inaccurate. Case in point, virtually 100% of all banks and economic experts predicted that there would be a recession in 2023–100% were wrong. Despite the assumption that a scientific approach and AI would enhance accuracy over the years, data itself has shown that, once again, this assumption prediction is also wrong! Humans being human, weather patterns, the existence of viruses, and the complexity of behavior, amongst other uncontrolled variables, bring too much variability, so we result in predictions for the pure sake of fun and annual tradition and perhaps a little bit of guidance. For me, this has run in the form of #physicaltherapy predictions for many years and in keeping with such, here we go, this year in 2 parts.
Results and review from 2023 predictions is the substance of this Part I and 2024 predictions will be part II.
By way of reminder, my 2022 predictions (this links predictions going back to 2019) were pretty solid but likely predicted a year too early as these became more 2023 vintage, particularly in the areas of the declining application pool for PT schools (acceptance rates are now around 80% and roughly 50% application reductions), continued shortages which in many ways worse than predicted and further detailed here and a substance of part II, DTC marketing, and more direct to self-insured offerings, all of which accelerated in 2023. But, let’s leave any memory of 2022 alone given its unprecedented labor and general inflation and review the 2023 prognostications and then let’s forget about them as well.
2023 Predictions:
1. Artificial Intelligent (AI) Chatboxes like ChatGPTwill trickle to consumer healthcare consumption, including those seeking physical therapy as a solution. While this won’t near term replace Google searches, it will impact consumer healthcare as well as the business of healthcare PT practices for everything from marketing messages to scheduling to email responses.
While there is clear evidence of increased use and tools for AI in healthcare, it hasn’t really moved the needle relative to clinical care or uptake by clinicians. I used ChatGPT to help predict 2023 and judging by its results, will not ask it for 2024 although I will address AI in next article. Perhaps AI, due simply to utility or learning curve to broad adoption, is currently a far cry from common Google searches even when in long tail “asks”. Data continues to tell us that women make the decisions for themselves and their families in part through online Google searches and various rating systems, which are gaining traction. The positive trend of more consumer research bodes well for physical therapy-especially for those who want to avoid surgery, get better faster, and save money in the process!
2. Physical therapist shortages will continue and this will cause a bunch of downstream effects. While this was correctly predicted last year (2022), shortages has to be highlighted again in 2023. The numbers just don’t mislead. We simply don’t have enough PT’s graduating per year to meet the increased demand. Physical therapy is involved in roughly 12% of MSK cases. Arguably, we should be involved in all of them. If we increase just a few percentage points, we likely won’t have enough PT’s. We have roughly 11k graduating per year but recent trends demonstrate that 10–15% only want to work roughly 30 hours per week which effectively lowers the number. Add those PT’s that work in environments outside of outpatient, and you have a very limited pool that conservatively leaves about every 7 PT locations in the U.S. seeking one of these new grads. All in all, this leads to significant downstream consequences, including:
-In some markets, there will be more PT clinics closing than there will be new clinics opening. The business of healthcare is such that increased costs are completely born by the company as passing on such cost escalation by increased pricing vis a-vis reimbursement rates doesn’t occur in healthcare. Payors like United, who reportedly earned $23B last year don’t pass their profits on to providers, just the opposite they do all they can to extract more profit through utilization review, arbitrary limitations and reimbursement rates that are now reaching below cost for many providers.
Closures of clinics did not happen in large numbers as predicted, however, many simply existed without the light’s on. I have a lot of funny habits when I travel for leasure-I like to visit key local brands of grocery stores and visit private PT clinics. The former out of pure curiosity, the latter to learn. My visits this year included drive by’s of a substantial number of clinics that weren’t open at all or had limited hours with a PT “circuit breaker” (side note, “circuit breaker” is an old term used in 1980’s to describe a PT that traveled about just doing evals while a PTA or tech did the day to day treatments-it was broadly adapted by skilled nursing facilities and outpatient understaffed PT practices). There was a significant slow down on new clinic openings throughout the US. This was in part because practices at scale (public and private equity) limited “denovos” likely due to staffing or more likely simply wanting to find staff for the vast numbers that were opened in 2021 and 2022. Let’s also remember the other externalities against new practice openings-many insurers don’t let you on the panels and then of course-commercial real estate and cost in general have escalated making the viability of the 1700 square ft. 1 person PT clinic akin to We Work-a model that doesn’t work.
-There will be a bidding war for PT’s up to a point. Recent hiring data suggests some stability, so the competition will come in the form of sign-on bonuses, student debt retirement programs, perks of various types, and likely variable compensation program opportunities. Much of this is in contrast to a generation of PT’s that simply aren’t looking to be business owners.
This prediction was very accurate with the exception of stability-in fact far from it. Going through the various PT want ads, it appears to me to be a race to sameness, with almost all employers offering pretty much similar tactics-more sign-ons, many more adopting the IRS program for student retirement, and various perks consistent amongst the largest employers. What’s missing? Support of advanced clinical competencies in the form of employer-funded residencies or long-term training programs. These enrollments continue to stall as new providers seek more compensation to pay for continued escalating student debt and employers having to cut off something. The exchange of purpose and mastery for economic rent is as old as piecemeal factory incentives. Retention rates are the focus when the problem appears to be more of selection. More on this in 2024 but suffice it to say the turnover, retention, and recruiting challenge will continue on an upswing.
-Our questionable inability to meet demand coupled with the continued rise in the use of physical therapy for MSK will mean much more encroachment-by personal trainers and other imitators including the trend toward franchises of stretch zones, group fitness models, hyperbaric recovery centers, and the tremendous number of alternative therapies. Many will try and mislead by claiming a physical therapist is involved and recent digital health solutions are already on this path bringing the completely justified clarification by APTAwhich highlights the commonsensical notion that physical therapy has to be directed by a physical therapist.
The above predictions perhaps a little ahead of its time as these likely these add ons are not seen as replacements vs. another way to spend disposable income in the name of health and fitness. There has been no attempt to trade off physical therapy for any of these consumer franchise models.
-Medicare patients will be selectively scheduled and given far less access as the business model of lower reimbursement and higher cost (burdened additional rules and regulation of medicare patients) will make non-medicare patients much more attractive. We will likely see more medicare patients opt out of traditional medicare by a willingness to sign waivers and many clinics doing the same or having some alternative model of accepting medicare patients who opt out to pay cash rather than be denied service or put in a 3pm Tues slot.
-I was a bit over my ski’s on this one but again, perhaps a year too early. Medicare Advantage backlash by providers, including limiting access, will occur in the 2024 Part II. However, if the planned continued cut for 2024 stays in place, this selective scheduling will have to be in place at many PT clinics. With so many variations to medicare vs. medicare advantage, every clinic will likely have multicolored folders to remember what they can do with who and on what date.
-More and more pressure will be put on PT programs and our PT regulator (CAPTE) to expand programs, start new ones, embrace innovation, or streamline the approval process, which is similar to what is happening in nursing. Hard to tell whether the application pool increases (if soft recession history says yes) or decreases (ROI of a PT education not being worth it vs. other professions).
Ironically enough, this was not very accurate. While definitely pressure being put on CAPTE, this was offset by about every state developing a workforce development plan and incentives for healthcare workers that included about everything except anything on the educational institutions and guilds like CAPTE. If anything, the opposite of streamlining occurred at CAPTE, with new program launches being moved further out, not accelerated. Unfortunately, the monopolistic powers for our own guild, will be a friction point for supply meeting demand. On the other hand, consumer demand and demand to be a PT are not the same thing as we will explore in next article.
-PT programs will continue to increase tuition far in excess of inflation. With looming relief of student debt, it simply means that increases in higher loans will ultimately be relieved and there is zero pressure to do anything but increase tuition and the forgiven portions will be paid by taxpayers.
Spot on. Never underestimate higher education pricing power and debt retirement programs by the federal government were put in place last year if anybody can understand them.
3. PT First will continue to increase because it works! This will be much more common in self-insureds and will be recommended by TPA’s and encouraged by plan designs. The attempts at completely virtualizing physical therapy will be far fewer with many more opting towards a blended approach. This is the exact evolution of education and is much more consumer-friendly as it will meet patients where they are at. There is some evidence already that digital health providers were finding therapists who want to work from home but they didn’t find enough patients who wanted all their PT at home thus decreasing such employment. A related trend is the significant Primary Care shortage and exodus, which will create more opportunities for PT’s to be the MSK primary answering this demand will be difficult.
Has not accelerated as predicted which is sad-but the data and efficacy of PT as a pathway for first or early and as a MSK disruptor is unarguable. I do believe this trend will become more common place as MSK spending continues to escalate-at least I hope so!
4. Less physical therapy transactions and lower valuations than the last 5 years due to cost of debt and overall business model of physical therapy. This doesn’t suggest that consolidation will slow down as the larger groups will be larger and the smaller will get smaller (just like last year). Most PT clinics and groups retracted their earnings last year due to labor costs and PT shortages thus making them less likely to sell because they would be at a lower valuation. Lots of practices will be struggling to find a business model that works and the expansion of cash-based service options and supplies will significantly increase. Valuations are partly based on growth and year-to-year declines make them less attractive to buyers. The flip side is that those who have overcome those challenges will still get premium valuations.
Pretty accurate although high interest rates also played role. Reimbursement headwinds, regulatory constraints, and cost are definitely impacting margins which can only get mildly better with scale. Part II will address this a bit more.
5. Significant changes in the digital health players and Remote Therapeutic Monitoring (RTM) will mostly fail due to variability and low reimbursement, lack of clarity of the right technology, and too disruptive for the already overburdened clinician. PT’s cannot meet current clinic patient demands, and their availability to add RTM or even hybrid solutions are simply too disruptive. Adoption is also hampered by shortages and patients nor payors don’t appear to be much in demand and won’t in 2023. There will be a few players adding value-creating remote solutions and adding value to patient care but getting to scale will be too difficult given the inability to access enough PT’s. All of this will lead to consolidation and significant devaluation of the current digital health players who have seen their valuations during fundraising be higher than adding the top 8 physical therapy platforms together despite the digital health companies having no positive cash flow. Many will follow a few of the current offerings and pivot completely away from physical therapy.
Again, pretty accurate. RTM is seen as a possible add on by using PTA’s but the dollars added are not substantive and if medicare advantage is paying are illusory or non existent. The efficacy and utility of RTM is fantastic and hopefully more solutions at scale and greater uptake will occur but ultimately it has to be paid a rate that makes sense and above cost. PT’s and company’s that utilize these codes are bewildered with the complexity of applying the codes. Hopefully the codes will be completely redefined in terms that clinicians can make sense of but I am not willing to make that prediction in 2024!
6. PTA’s will leave the outpatient profession in droves-salaries are part of it-they can make more in other setting and even in other vocations. PTA applications and schools will suffer. Many small PTA programs will close. The primary cause of course is Medicare’s failure to recognize them as caregivers by lowing their reimbursement rate by such an extensive amount in 2022.
Mixed bag prediction-wise. There is no evidence of PTA’s leaving outpatient in droves even with increased salaries. The smaller PTA programs are hurting. However, PTA’s are now being embraced in many medicare markets due to volume necessity even though they are finding it to be about a 15% fee schedule hit.
7. MIPS in Medicare will be harder to understand and comply than ever and will wreak havoc in the profession. It currently remains elusive whether individuals vs. groups are going to be mandated or penalized and even conversations with CMS vs. their website are conflicting. Has any provider actually ever received a financial incentive in the program in the past few years?
Prediction was spot on. MIPS is an unmitigated failure of a CMS program at every conceivable level and counterintuitively has produced fewer PTs doing outcomes, the exact opposite of its intention! There remains no evidence of real financial incentives, although there are threats of hiring PT’s that you may inherit their -9% to +9% payments for medicare 2024 (plus the cuts of course). There are so few PT’s that are mandated for MIPS that any needle toward making universal outcomes a reality has been derailed. There is virtually no PT (or for that matter anybody) who can clearly demystify the physical therapy MIPS process, the penalties, incentives, ranges, repositories, reporting, and utility of MIPS and then defend any rationale for voluntarily implementing them in your practice. That sentence might take a second read.
All in all, not a bad year of predictions-will let others decide. I know there is shared optimism and pessimism around much of this-and that is not a prediction but a reality of our profession that has been around in some form for me since 1985. Regardless, physical therapy is the best thing going!
Next, part II.
Happy New Year.
@physicaltherapy
larry
Opinions expressed in this blog post are mine
