Employers on self-insured health plans have great control over the ability to reduce healthcare costs for their employees and the company. For example, most health insurance brokers are familiar with pharmacy “carve outs,” but there are plenty of other opportunities to cut healthcare costs. Another option: physical therapy.
Benefit advisers and employers spend countless hours researching and strategizing over how to reduce procedure costs. Look no further than the recent surge of interest in reference-based pricing. Post-operative physical therapy should be considered an extension of the costs of orthopedic surgery. We now have an additional $27 billion that we can reduce directly, in addition to the $213 billion annually lost due to back pain.
While physical therapy has been traditionally slow to innovate, one rapidly growing organization is entering the employer market to give companies and their employees access to industry-leading care at a lower cost. Ivy Rehab, which operates 87 clinics across 8 states, has been able to leverage its 37 New Jersey locations and 21 Virginia locations to offer accessible treatment for patients throughout those states. The company’s size combined with its commitment to finding and developing better treatments has enabled Ivy Rehab to break ground in physical therapy bundled pricing.
The easiest way to find reduced costs through physical therapy contracting is by using bundled payments after orthopedic procedures, resulting in up to an additional $5,000 in savings per surgery. Matt Lesniak, Director of Outcomes and Clinical Programming at Ivy Rehab, points out their organization’s efficiency and clinical efficacy enables them to provide greater results at a fraction of the cost of other facilities. For knee replacement, Ivy Rehab can complete “pre-op, in home, and outpatient care, all for about the same cost as in home therapy through a hospital,” he says.
Ivy Rehab will be kicking off its foray into employer healthcare through a partnership with SanoSurgery, which specializes in surgery center contracting to help employers access lower costs on procedures. SanoSurgery’s President and Founder Dutch Rojas reviewed 10 years of claims data to arrive at costs that work for both providers and their patients.
For Rojas, a partnership with Ivy Rehab completely aligns with SanoSurgery’s mission to lower costs in a way that helps both providers and patients. “We are in business to make healthcare affordable and accessible for all,” Rojas says, “and we do that by reducing and stabilizing cost in a way that makes the provider and employer happy.”
By ensuring an amount of volume, providers can assess and reduce their costs. SanoSurgery plans on taking the best of their orthopedic surgeons and Ivy Rehab’s physical therapy and selling those in a bundle to employers. “That’s the value-based business where we can create a correlation between the price and the outcome. Ivy Rehab, their efficacy and their geographic reach — they’re helping us take a total joint surgery and rehabilitation, which has an average reimbursement in New Jersey of $140,000, and cut that cost in half with even better clinical outcomes.”
Physical therapy is a generally fragmented industry with multiple tiers of post-operative care such as inpatient rehab, home PT and outpatient PT. With a larger infrastructure, Ivy Rehab has the capacity to do the scientific work required to figure out fair prices for their bundles. “The current move toward direct contracting with certain providers can save both money and confusion for employees,” notes David Kane, executive vice president of group benefits at York International, a Benefit Advisor Network Partner. Kane continues, “Self-funded employers need every lever they can pull to improve care and reduce costs. Ivy is adding another great tool for companies and their employees to lower costs.”
Wellness programs and prevention
Employer wellness programs in recent years have grown from biometric screenings and HRAs to include physical wellness and injury prevention. It’s no surprise, given that back pain affects 25% of the workforce and is estimated to account for 10% of healthcare spend, in addition to the cost of lost productivity. Everything from standing desks and ergonomic chairs to onsite physical therapists are pieces of this new focus on injury prevention. “We have employees at several of our facilities start with five to 10 minutes of stretching each day,” says Hap Perkins, CEO of Unicorr Packaging Group. “One back injury can end up costing hundreds of thousands of dollars, so we are constantly looking for the best in prevention.”
The need for easy access to effective physical therapy and prevention becomes even more clear when we realize that physical therapy can work just as well as surgery for back pain. And that’s without the costs of an MRI, surgery or lost time on the job.
For more than 20 years, research has cast doubt on the correlation between things like a bulging disk and back pain. “There’s an abundance of literature showing the prevalence of positive MRI findings on asymptomatic people without any history of back pain,” Lesniak says, “but once people are told they have a bulging disk or degenerative disk disease, it almost becomes a self-fulfilling prophecy and they start to believe they need narcotics or surgery.”
Those treatments, of course, come with an even greater price tag. According to the National Safety Council, injured workers treated with opioids average four times greater claims costs than those treated without opioids.
To address this growing demand for employer wellness and injury prevention programs, Ivy Rehab is going beyond typical preventative exercises and workplace ergonomic assessments. The pace of progress is often slow in a traditional industry, but as value-based care takes over, the companies that win will be those that deliver the best results. “We are partnering with innovative companies like Rekinetics, with their three-minute injury prevention technique, to lead the way,” Lesniak said, “because we have the resources to test and help develop new techniques. That commitment to progress is going to keep us 10 years ahead of our competition in delivering the best results for our patients and employer clients moving forward.”
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