The American Physical Therapy Association (APTA) has waged a decades’ long campaign to bar orthopaedic and other physician groups from providing physical therapy (PT) services. APTA and its state chapters actively discourage their members and other physical therapists from working for physician groups and have led legislative efforts that would, if successful, result in job losses for physical therapists affiliated with physician groups.

APTA wants PT provided by therapists who are regarded as “doctors” of physical therapy and recognized by both patients and healthcare professionals as practitioners of choice. It wants patients to have direct access to these therapists for diagnosis, treatment, and prevention of musculoskeletal problems.

APTA explains its position against physician-owned physical therapy services (POPTS), which it now calls “referral for profit,” in numerous publications. It contends that when a physician group provides PT, physician shareholders refer patients to PT for profit rather than medical necessity, that physicians force employed therapists to treat patients without regard to patient needs, and that physicians pressure patients into therapy based solely on financial gain.

APTA primarily cites two studies as the basis for its argument that physician–owned therapy results in overutilization and excessive costs. These are “Increased Costs and Rates of Use in the California Workers’ Compensation System as a Result of Self-Referral by Physicians,” by Swedlow et al (Swedlow study) and“Physician Ownership of Physical Therapy Services: Effects on Charges, Utilization, Profits, and Service Characteristics,” by Mitchell and Scott (Mitchell study).

Both studies were conducted more than 20 years ago, before enactment of the Stark rules imposed significant restrictions on self-referrals. More importantly, both used questionable research methods and arrived at highly dubious conclusions. APTA not only cites these outdated and flawed studies as the primary support for its campaign against POPTS, but also misstates their conclusions.

Swedlow study
According to the Swedlow study, POPTS have a “significant adverse economic impact on consumers, third-party payers, and physical therapists.” More specifically, it found that physicians in self-referral relationships ordered PT for 68 percent of their patients while physicians who used independent PT practices referred only 30 percent of their patients for PT.

However, the Swedlow study also found that the mean cost per case for PT was significantly lower in the self-referral group ($404) than in the independent-referral group ($440)—a finding that APTA and its California chapter, the California Physical Therapy Association (CPTA), invariably fail to mention. This finding is consistent with the 2005 Medicare Payment Advisory Commission (MedPAC) Report, which found that for all conditions, Medicare spending per PT patient averaged $653 in private PT practices and only $405 in physician groups (for a 38 percent savings in physician groups). MedPAC also found that for PT patients with knee and lower leg musculoskeletal conditions, the average PT cost per Medicare patient was $874 in private PT practices and only $639 in physician groups (for a 27 percent savings in physician groups).

Although the Swedlow study purported to survey one of the largest databases of California workers’ comp (WC) claims, it found only 76 providers in the state who treated 10 or more musculoskeletal injury cases during the 9-month survey period (Oct. 1, 1990–June 30, 1991) and only surveyed those providers. With about 2,000 orthopaedic surgeons in the state as of Dec. 31, 1990, in addition to other physicians who treat musculoskeletal injuries, the inclusion of only 76 providers raises the question of whether this study satisfied even rudimentary sampling standards.

In 2010, Ancillary Care Solutions, LLC, which collects and analyzes data from hundreds of thousands of PT visits per year, surveyed California physician groups that provide PT. Of more than 300,000 individual patients treated by these groups, less than 10 percent were referred to group-owned PT services—a much smaller percentage than that cited in the Swedlow study. Although 300,000 patients is a small fraction of the California patient population, it is still more than 45 times as many patients as included in the Swedlow study.

APTA also claims that the Swedlow study “concluded that referring physician investment in physical therapist services for workers’ compensation in California generates approximately $233 million more per year in services delivered for economic rather than clinical reasons.” In fact, the published study does not mention this figure at all. Even APTA admits that this reference is from an “unpublished addendum” based on “course notes” from a symposium.

Basic scrutiny of this often-repeated claim indicates that it is patently false. The Swedlow study states that self-referral increases PT costs per 1,000 cases by a total of $143,672, or about $144 per case. At this rate, physicians with an ownership in PT would need to self-refer more than 1.6 million California WC patients per year to result in $233 million of additional costs. Yet only 787,400 California workers sustained nonfatal WC injuries and illnesses in 2000.

Likewise, the CPTA claims that physician-owned PT has resulted in more than $1 billion of unnecessary California WC costs during 2012 despite the fact that less than $150 million has been spent on all PT for California WC patients so far this year.

Mitchell study
APTA also repeatedly uses the Mitchell study to argue that physicians overutilize PT. This 1989 study of PT utilization rates in Florida compared PT facilities owned in a joint venture between physicians and third parties with “non-joint venture” facilities. It found that physician “joint venture” clinics received about 50 percent more visits per year, 39 percent more visits per PT patient, and 32 percent more net revenue per patient.

Conducted more than 20 years ago, prior to enactment of the Stark rules that effectively barred joint ventures, the Mitchell study did not survey any physician practices offering PT services within the practice. Since enactment of the Stark rules, physician groups that offer PT almost invariably do so within the practice to qualify for the in-office ancillary services exception. For all practical purposes, none of the types of joint ventures surveyed in the Mitchell study exists today.

Although APTA cites the Mitchell study to support the proposition that physician-owned PT results in more PT visits and higher costs per patient, these findings are in direct conflict with those of the Swedlow study and the MedPAC Report. APTA does not attempt to reconcile these conflicting conclusions, but “cherry picks” conclusions from each study to serve its purpose of barring POPTS.

Conclusion
Although APTA’s vision statement says that it is committed to evidence-based practices, neither the national organization nor its state chapters have conducted or sponsored any studies seeking to validate their allegations that POPTS result in overutilization and unnecessary costs. Instead, they insist on using selected statements from dated and misleading studies to support their position and ignore findings that do not support their position.

Cary B. Edgar is an attorney and one of the principals of Ancillary Care Solutions, LLC, an Arizona-based company that helps hospitals and health systems, physician groups, and therapists manage outpatient physical, occupational, and speech therapy programs.

References

1. APTA Vision 2020, www.apta.org (accessed June 12, 2012).
2. Position on Physician-Owned Physical Therapy Services (POPTS); Frequently Asked Questions about POPTS & Referral for Profit; A Guide to Surviving Physician-Owned Physical Therapy Services (POPTS); Referral for Profit: Spending More for Physical Therapy and Getting Less; Exclusive Physical Therapist Ownership of Physical Therapist Services: Economic Foundations for Professional Autonomy; Reactions from Members and Patients on Physician-Owned Physical Therapy Services; APTA Position Statements, www.apta.org (accessed June 12, 2012).
3. APTA Position on Physician-Owned Physical Therapy Services (POPTS). An American Physical Therapy Association White Paper, January 2005, www.apta.org (accessed June 12, 2012).
4. Swedlow A, Johnson G, Smithline N, Milstein A: Increased costs and rates of use in the California workers’ compensation system as a result of self–referral by physicians. N Engl J Med 1992;327(21):1502-1506.
5. Mitchell JM, Scott E: Physician ownership of physical therapy services: Effects on charges, utilization, profits, and service characteristics. JAMA. 1992;268(15):2055-2059. doi:10.1001/jama.1992.03490150107033.
6. California Orthopaedic Association estimate provided on June 21, 2011.
7. Referral for Profit: Spending more for physical therapy and getting less, www.apta.org (accessed June 12, 2012).
8. California Department of Industrial Relations, Division of Labor Statistics, www.dir.ca.gov/dlsr
9. California Workers’ Compensation Insurance Rating Bureau Report on 2010 California Workers’ Compensation Losses and Expenses (Exhibit 1.1).
10. Medicare Payment Advisory Commission, Medicare basics: Outpatient therapy services (December 28, 2005) (figures 6 and 7).
11. 42 U.S.C. §1395nn(b)(2); 42 C.F.R 411.355(b).