Which physical therapist delivers the best overall value for patients, employers and insurers–one employed by a physician, or one who owns his or her own practice?

When physicians own physical therapy clinics and refer their patients to those clinics, there is an inherent conflict of interest because of the “referral for profit” issue. Referral for profit has wide-ranging effects that negatively impact patients, payers and the healthcare community at large.

The consequences of physical therapy referral for profit are costly. Referral for profit services translate into higher healthcare costs for both consumers and payers because they generate more utilization and higher charges than do autonomous practitioners. The data regarding referral for profit services speaks for itself:

• Approximately 91 percent of physical therapy billed to Medicare by physicians in the first 6 months of 2002 did not meet Medicare requirements, according to a new report by the Office of the Inspector General of the Department of Health and Human Services.¹ These inappropriately paid services cost the Medicare program and its beneficiaries approximately $136 million.
• A study in the Journal of the American Medical Association revealed that visits per patient were 39% to 45% higher in physician-owned clinics when compared with therapist-owned clinics; revenue per patient was 30% to 40% higher in facilities owned by referring physicians.²

• The Florida Health Care Containment Board found that physician-owned physical therapy facilities provide 62% more patient visits per full-time physical therapist, when compared with non-physician-owned clinics. The patients referred have 43% more treatments when compared with non-physician-owned clinics.³
• A William Mercer study of workers’ compensation patients in California revealed that patients seen by physicians with ownership interest in physical therapy services received referrals for physical therapy 66% of the time; patients seen by physicians without ownership interest in physical therapy services were referred 32% of the time. The result: $233 million in services per year for economic rather than clinical reasons.⁴

Patient care may also suffer in physician-owned clinics. Both licensed therapists and non-licensed workers in those settings spent less time with each patient, indicating that a lower level of care is provided, according to the Florida study, which also found that assistants are substituted for licensed therapists more often in physician-owned facilities.⁵

The value of the independent practitioner

Substantial evidence supports the belief that the independent practitioner delivers better quality of care, more cost-effectively, than therapy provided in clinics owned by physicians. That is why the PTPN physical therapy network includes only therapists who own and operate their own clinics.

PTPN President and CEO Michael Weinper, who is a member of the American Physical Therapy Association’s Task Force on Referral for Profit, says, “Therapist-owned clinics deliver better care, leading to less utilization, and that’s why PTPN enrolls only therapist-owned-and-operated clinics.”

¹“Physical Therapy Billed by Physicians,” Office of Inspector General, Dept. of Health and Human Services, May 2006.

²Mitchell, J., Scott, E., “Physician Ownership of Physical Therapy Services: Effects on Charges, Utilization, Profits, and Service Characteristics, Journal of the American Medical Association, 1992.

³“Joint Ventures Among Health Care Providers in Florida,” State of Florida Health Care Cost Containment Board, 1991.

⁴Johnson, G., Swedlow, A., “Medical Referral-for-Profit in California Workers’ Compensation,” unpublished addendum to the authors’ 1992 article, based on course notes from their presentation of findings at a physical therapy symposium, January 1992.

⁵“Joint Ventures Among Health Care Providers in Florida,” State of Florida Health Care Cost Containment Board, 1991