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Paul Martin

Good afternoon, and welcome to another episode of Paul Martin's crucial conversations. I can tell you, we are so excited today to have with us from us. Chris Redding, let me introduce Chris to you guys. Chris is the president and CEO of US US Physical Therapy and has been since 2004.

That has got to be the longest reigning CEO in the outpatient rehabilitation industry. Chris, that's a long time, and.

Chris Reading

That just means I'm all. So thank you, Paul. Good to be here.

Paul Martin

You know, Chris is a physical therapists. He earned his master's degree, his degree from the Medical College of Virginia. And yes, speaking to his age back in 1985.

Thanks, Chris. It's been. Chris has been a longtime colleague and friend of mine, as well as Martin Health Care Advisors, and it's just had an enormous impact on the physical therapy profession as a whole. So again, welcome Chris.

Chris Reading

Thanks, Paul. Good to see you. You're looking good, man.

Paul Martin

You as well. You as well. So, Chris, you are. Have you started on the ground floor of this group called a p t q i that has really elevated the visibility of the physical therapy industry? What led you and the others to create APTC UI?

And what's the main purpose of of this group?

Chris Reading

Yeah. Thanks for that, Paul, and thanks for the kind words about I think it's seven years ago, spring, about seven years ago. Luke Dreyer, who's a good friend of mine, founder of Draya Physical Therapy, now part of Upstream Lou, called me one day and said, Hey, there's some stuff going on with the PTA, with the new coding initiative something. And do you know about it? And I'll confess back then both, you know, I won't speak for Luke, but for myself, you know, I wasn't as plugged in. You know, my head was very focused on our business and and, you know, work with our partners in growing the company and in trying to do the right thing, you know, inside our business. And I hadn't really been as active as I should have been. And that's an understatement. You know, with respect to the rest of the industry, the regulatory environment, other things. And so I didn't know what what Luke was referring to.

I made some calls. I couldn't find out. So Luke and I got together and pulled together a few other leaders. We got John Dugan from Slack Medical, Marc Kaufman from Athletico, and we set a meeting with a PTA at that time to try to learn, you know, what was brewing. And out of that, all of us came away with the sense and I won't get into all the details, but we came away with the sense that, you know, we've got to get much more involved in everything kind of behind the scenes in our industry that's driving regulation and reimbursement and pricing and coding and all of the things that affect our companies. And so we created this group from Luke's original phone call. We pulled together a subset of of providers that we had worked with before. And then it's just really it's grown enormously since then.

And you know, I try not to be proud, but I'm very proud of the work that that group's done. It's a it's a great association, personally very fulfilling for me, for me.

Paul Martin

Yeah, you know, it's really it's interesting as well as I speak to the audience, you know, empty queue, I pooling together some of the largest companies in the country, the larger companies in the country, but they are fighting for the industry. They're not fighting for us physical therapy to simply get better reimbursement or whatever it may be. This is fighting for the industry and this is something I think that has really been needed and necessary to pull together the big companies and the smaller, privately held companies.

And you see, now seven years later, when you go to a private practice action conference, you see sitting side by side, guys like Chris Redding, guys like Luke Dreyer, guys like Larry Bentz sitting and talking and right next to independent private practitioners and not just talking about, can we acquire you? But talking about the industry and how we can help the industry as a whole. So it's a credit to you, Chris, to look into the others. And again, I applaud what you guys do in the work that you do.

So, Chris, let's start with the hottest topic for our audience. And you know, we can all say that once to you reimbursement. Yeah. What do you see as the path to improving reimbursement from payers across the country for all of us?

Chris Reading

This is why everybody might not agree or like my answer, but I'm going to give an honest answer because I think that's what everybody deserves. Look, I think we're undervalued by most players. I don't think that I know that, but our value proposition as a profession is incredible. It's it's enormous. We are the primary care equivalent for musculoskeletal problems in physical therapy. The industry, however, doesn't quite view as a value proposition where they should yet. Paul, the only thing that I think is going to move the needle.

The biggest thing again, the point that everybody might not want to hear is further consolidation in the industry. The one thing that hurts all of us, both large and small practices, is when people take contracts that they shouldn't take, they take reimbursement levels that they shouldn't shouldn't take on.

Some premise that there's maybe it's incremental in some way in terms of volume. I mean, the fact of the matter is all these insurance companies pay hospitals 300 350%, 250% more than they pay outpatient providers to be more efficient, more effective on the outpatient side, better environment and probably higher trained, longer tenured people. And it's not right and it's got to change. But they do because they can, and they will continue if they can. And until they can't. And the only way that it's going to change that, in my view, the biggest way it's going to be companies.

With heft and resources saying we just we can't take it anymore, we don't need to be paid less than, you know, name that service provider that comes to fix something at your house on an hourly basis. We were, you know, we have doctorates in most of our staff.

We do a great job and we need to be reimbursed, you know, commensurate with that.

Paul Martin

Absolutely. And, you know, to speak to the consolidation, what we see and I think what Chris was alluding to is that with larger companies, there's leverage. If I have a single practice and I go to a payer and they tell me, this is the contract you're going to take.

Unfortunately, by taking those contracts that are lower is actually impacting the industry. But where's your leverage? And I think that's what Chris is alluding to, that that consolidation, you know, provides you with some of that leverage. Now we're talking about private payers now, but CMS, I feel like CMS still has this impression that we should have lower reimbursement. And you just talked about, you know, where the greatest value in health care, what is their thinking? And we're talking about a 15% cut in PTA for 2022 and additional cuts for 2022. What is CMS thinking here.

Chris Reading

In cuts beyond that to get to the ultimate 9% that they started with? Yeah. If for those people who haven't Had The privilege of going to see a mass and I'm going to say some things that are going to sound a little bit critical and I don't mean to disparage any, any any part of that organization or any individual. Paul, first of all, it's a massive institution. You can see the curvature of the Earth just in the parking lot. I mean, it's it's huge. And everything happens in silos there. And so it's not like you run your company or I run my company or anybody listening.

You know where there's there's tight coordination. You have a lot of silos that don't interact with other pieces, parts that need to. But that really only worried about their subset. And so part of this, you know, you know, is is, is this kind of paygo process where everything has to be budget neutral.

And so last year, you know, primary care picked up, I think, 14 or 14 and a half percent in the reimbursement. Now primary care deserved to pick up something for the work that they do, just like we deserve a lot better, you know, for our primary care musculoskeletal or they deserve to pick up.

Did they ever expect in their wildest dreams to get 14%? There's no way in a year, and there were other subsets that were double digits as well. And as a result, when they need it all together in order to give somebody that much, they have to take from somebody else. And we haven't been particularly strong as an institution of physical therapy, unfortunately. And I take responsibility for that and we all should. And that needs to change. We're focused on on connecting with key lawmakers who influence the direction of health care policy in this country. We're constantly doing fundraisers now with within AP TKI. We've met with a long list of senators and congresspeople because they don't think it's right. But again, seeing mass in and what happens, you know, with our congresspeople, those those are often, you know, our separate CMS sees the increased spend for physical therapy instead of a plus.

They see it as a problem. We have an aging population, we have a population that wants to remain active and physical therapy part of that solution, it's part of the solution for opioids. It's part of the solution to keep people moving because we know exercise improves, you know, health of diabetics, it reduces cancer risk. So many things. And yet they just want to look at the spend and we've got to get them off of off of that. And I think the only way to do it is going to be changing on a legislative basis. Some of the rules around, you know, how these how these pricing, how this annual pricing happens.

Paul Martin

So I hear you saying, you know, something that I say all the time that we are one of the greatest values in health care, but we're still getting cuts. So as for the private practices out there, what can they do? What can we do in order to support the efforts of APTC UI as well as APTA Private Practice section? What what can we do?

Chris Reading

We just had a big meeting in D.C. with API, with Mike Forcefield in the private practice group and all the big practice leaders, and it needs to be an even bigger meeting. But we need to work together. We're working together with the PTA with the Private Practice Group. We've recently opened up our membership to a much broader constituency. I'm not sure that's really been made public yet, but we're going to bring in at a much lower fee base. You know, we all contribute to kind of to our war chest every month since, you know, since we started, we have an affiliate membership or web PTA and rain tree or part of that. And now we've created this, this other tier of membership, which allows smaller or medium or even, you know, large practices at a certain level. Took come in for just $2,000 a month, and we use that money to, you know, do advocacy work to do fundraisers to to, you know, hire a lobbyist, which we've done and Liberty Partners to get us in front of the right people like we did last year to push back that nine and a half percent cut that we were supposed to get in one fell swoop last year.

And so we need the resources to continue to do that. We need to work together. If somebody can't do that and there will be a lot of people who can't use our website, we have an easy conduit where all you have to do in the AP Typekit website is go in. There'll be a portal where you can communicate with your lawmakers just by putting your zip code in. You can see every letter that we've done, every position that we've taken. We have sample letters that you can send that literally take 30 seconds to just send off yourself. You can customize whatever you want to do. In addition, then we need a groundswell of support in in in an input to these lawmakers so that we can get some of these things, you know, redone.

Paul Martin

Yeah, so great ideas. And so we will today we will put at the bottom of this episode, we will put a link so that you can go directly to APTC UI. And yes, as Chris just alluded to, it's very easy.

They give you the format. And today, if everybody on this call, if everybody on the show today went in, we would have hundreds more advocates going straight to their local lawmakers about this issue. So, you know, another big issue, I just had the opportunity over the weekend just to be in and among a number of physical therapy business owners. And yes, there was a lot of conversation about reimbursement. But the other discussion that we were having is about the supervision requirements, the time requirements that really just handcuff physical therapists. We were talking about the days of, you know, seeing more patients and believing as though with utilizing text or assistance, et cetera, getting very similar outcomes without all of these time requirements and supervision requirements that chiropractors and other health care professionals don't seem to have. Where are we and where is APTC UI in the profession? Where are we on that, Chris?

Chris Reading

Yeah, you know, I would lump that into a broad category called an administrative burden, you know, or process without focus on achievement. And we're definitely front and center on that as well. And we're working on some key things right now Part of You know, as I've come to learn how the sausage gets made, it's it's as you would expect, it's a little bit ugly at point. Part of our challenge is that we're part of part of a benefit, part of our challenge.

We're part of the physician fee schedule. So one of the reasons we got cut last year and will be cut again this year is we're part of the physical medicine and rehabilitation subset in the fee schedule. So PM and our doctors who work in a variety of settings, many of whom you know in the orthopedic side work as pain management doctors make a ton of money. And we uncovered that MedPAC last year used a faulty formula in coming up with this cut assessment because they used effectively, they used only the annual incomes on an average basis of the physical medicine and rehabilitation doctors. But they didn't consider the physical therapists make much, much less efficient, much less than primary care doctors. And so when we brought that to their attention and to see him as his attention, the startling response we got was, Yeah, you're right, PITI is collateral damage in that Assessment. So they made a they made a wrong calculation. They didn't include the bulk of what gets billed under that current set, and yet they carried forward with it. And so these are some of the things that are outside the the the very, you know, regulatory complex environment of CMC.

We're trying to take direct to lawmakers because these people come from businesses. Some are lawyers. Some were, you know, own their own businesses. They understand that this burden is great, but it gets in the way of taking care of people and getting outcomes and only when we eventually move toward, you know, a completely outcome focused reimbursement environment, And if you can do that and take away some of the guardrails, not maybe the biggest ones that prevent fraud and abuse, but you know how you navigate and how you care for somebody as long as just with license people and you know, the right proportionality of support staff, you can be very creative and you can get people wow without all these elements getting in the road. We've got more work to do on that, for sure. We're focused on that heavily. You know, as we go forward and it's it's it's part of what we wake up and do every day right now.

Paul Martin

And you know, it's amazing, Chris. How? Ten years ago, maybe a little longer, you know, outcomes were just getting talked about. Now most companies are measuring outcomes. In some instances they're forced to measure outcomes. Yet I think a lot of companies out there are ready to be paid based on their outcomes.

And I think they believe, you know, in their souls that the outcomes that we're generating, we should be paid for those outcomes. And what we're saving insurance companies. But I still it still feels like that's a long way off.

Would you agree with that?

Chris Reading

I do agree with it. I'm not sure. Who cares right now. I know there's a lot of talk about it. Yeah, I do see it. You know, I don't. I'm not a glass half full guy by any stretch, but I see this part of our health care system kind of flawed from a payer perspective first of all, payers are making billions of dollars and and and providers continue to get caught. And I think even on the outcomes side, it's sometimes not the way to pay us the right amount or to pay us more.

It's maybe to keep the bar where it is and pay us less if we don't get to a certain level. I don't think it, it it. It's, you know, equivalent to where we should be at. And I think we, you know, we have a lot of work to do in that regard. It's unfortunate, but we still do. Yet companies, I can tell you when you're inside a company, a large self-insured company, they care about outcomes. They care about keeping their people at work. They care about productivity. Insurance companies talk about it a lot A lot. I think they care about it in some areas. I'm not sure it's made it to us yet.

Paul Martin

Yeah, yeah. Now, if your work programs, I'm sure you're experiencing better reimbursement because you're providing those outcomes and companies are willing to pay for that.

Chris Reading

And it saves them a lot of money. Exactly. It does, and they can measure it. And sure, unfortunately, on the broader health care system, you know, they're not good at measuring the downstream effect of preventing a surgery yet.

Paul Martin

Absolutely, absolutely. So Chris, again being one of the you know, well, let's call it founders of this industry all the way back to 2004. OK, I'm not going to mention your HealthSouth days, but you know, coming out of that.

Yeah. And as a physical therapy CEO, look, I'd love to get your perspective. We are seeing rapid consolidation as well as the on advent of a new publicly traded company in rehab. And the consolidation now is the big companies acquiring other big companies.

How has us adjusted its strategy to address this changing landscape that's changing rapidly?

Chris Reading

You know, we've adjusted a lot on one hand and on another hand. We haven't adjusted certain things very much and probably won't. Culturally and in value wise, we really haven't changed in terms of how we look at things and we continue to look at things maybe through a little different lens.

We're kind of a company that's built to be a forever company. We're not easy to acquire because of our model and our structure, which focuses on true partnerships. It's not under one brand. People make a lot of money or partners do really, really well.

That doesn't drop into other structures so easily. But yet we've adapted and grown into other areas where hospital management in some cases were certainly on site injury prevention, in some cases on site treatment. You know, we we've gotten involved in other things that are collateral to what we know and do well. But in terms of. How we view the market, how we face the market. We've obviously grown through acquisition and our way of doing it, which is to keep a partner. We've worked with you on that. We've worked with others. We're going to continue to do that. And to be honest, we feel like we're just going to run our own race. They're going to be other companies come public. It's a little bit it looks a little bit easier, maybe from the outside than it is.

And so you know what, what matters in a public environment is credibility and what you do over a long period of time and consistency. And those are hard for everybody, for all of us. Those are hard things to put together. And I think we've done a reasonably good job of that over time. And so we're going to continue. And yet there's going to be a subset of the industry that buys and sells and buys and sells and buys and sells, and that's going to continue as well. And eventually, there'll be a few really large players, some private, some public. And I think that's fine.

Paul Martin

Yeah, yeah. You know, Chris. As we describe companies and when we get to us, U.S. physical therapy and this goes all the way back to, you know, Roy Wright, Roy Spradlin and his vision of partners. You were the the start of partnership and this partnership model in physical therapy, and I've described you guys as you are the steamship that just continues to drive in the ocean and you continue to go in the same direction. You don't veer off. You don't change quickly as you see things out there. You're that steam ship that just continues to build and build and build, get better and better and better without the pressure of, as you've said, having to change quickly because you have your model. You were the inventor of the model, you were the initiator of the model. And as you just said, so many companies we look back to and we see ten clinic companies going to, 35 clinic companies going to twelve.

And it's remarkable and I applaud you for your discipline of staying that course.

Chris Reading

Yeah, no. Thank you. I mean, we're not we're not running for a transaction. We're working to leave a legacy for not just for our company, but for these partnerships and some new partners come up into these partnerships. one day, I'll ride off into the sunset or change my role, which is going to happen at some point in time. I'll move to an executive chair role and then make way for for one of our other, you know, very talented people to take over day to day. And then I'll work on the regulatory things and the development things as I have.

But you know, we're built to to be able to do that without the artificial influence that sometimes gets in the way when you have to get ready and pretty up for a transaction.

Paul Martin

Absolutely. And with Chris, I will tell you this whatever your moves are moving forward, whether it's a year, five years or ten years from now. Please stay connected to this industry because this industry needs you and has always needed you and it needs you in the future.

And we have always appreciated your advice. We've always appreciated your leadership, and thank you so much for the opportunity to talk today about some real difficult issues that you seem to just move through so easily. So thank you very much for your time today.

Chris Reading

You're, as always, the most kind and generous guy I know. So thank you for all the kind words. I'm not sure that I've earned all that, but I do appreciate it.

Paul Martin

Yeah, yes, he has. Thank you, Chris. And for all of you out there today, if you want to have further discussion again, we're going to give you the link to APTC UI. Certainly, if you want to have a discussion with Chris or the folks at us physical therapy, we can lead you that way as well.

Paul Martin

Or if you'd like to have a discussion with me, click below. I'll get in touch with you immediately. Thank you all for your participation today, and I look forward to talking to you again very soon.