Attract And Retain Staff According to National Acquirer
One issue facing physical therapy rehab business owners this year is a lack of available staff. This week, Paul talks to Steve Chenoweth, CEO of Therapy Partner Solutions, and gets his take on these shortages, as well as strategies to attract and retain new staff members.
Full transcript
Generated from the episode audio and lightly edited for readability.
Good afternoon and welcome to another episode of Paul Martin's Crucial Conversations. Today really excited we have with us Steve Chenoweth. Steve is a physical therapist. He is the CEO of Therapy Partner Solutions. And Therapy Partner Solutions, for some of you that may not be aware of them, they are private equity-backed physical therapy company, physical therapy company based out of Fernandina Beach, Florida. But that does not really give the full picture of this company. Therapy Partner Solutions currently has clinics in nine states and they have aligned with what they describe as partnership solutions in the areas of compliance, rehab billing and collections, contract management, clinic development, recruiting, all the things that you need to successfully run a physical therapy business.
Steve, it's great to have you with us today. Hey Paul, thanks. We appreciate the opportunity and it's great to be with you. And Steve, for our audience, any updates that you may have on therapy partner solutions beyond what I just described? You guys really seem to be, you know, moving and shaking as they say, but any updates from your perspective? Yeah. No, you did a you did a great job of of promoting who we are for sure. And u No, we're just we're having a great year.
We were we were glad to put 2022 in the rearview mirror. It was a tough year for everybody for our industry and a lot of industries. But we've you know kicked off 2023 in the right direction. We're excited about where we're going and our continued expansion. Awesome. Awesome. Well, you know, as we continue on our series of how do we maintain our value in these extremely difficult economic times, inflationary times, etc., etc. You know what we're doing is going out to extremely bright and some of the thought leaders in our industry yourself, Steve, CEOs, and really wanted to have a conversation about, you know, what you see will be the top three challenges that physical therapy business owners will see 2023 and into 2024.
That will continue to h actually potentially decrease the value of their business. So, what do you see as those challenges? Yeah. No, I mean, it's a great question and I think it's one that's on everybody's mind right now, especially coming off that tough 2022 as most of our industry did. And I'm going to I'm going to probably give you a single answer and you asked me for three, but I'll give it in three different versions. It's really staffing, and staffing. And really what I mean by that is, you know, staffing as it as it relates to finding and retaining good licensed staff.
Staffing as it relates to productivity. And then staffing as it relates to reimbursement, for the care that we're delivering on a day-to-day basis. Yeah. Yeah. I, you know, we are hearing it day in day out talking to companies across the United States. Their difficulties and challenges they are having with staffing. So in terms of attracting finding staff kind of that first part of this what are some of the best practices or strategies that you have seen to kind of overcome that challenge? Yeah, you know finding and retaining staff is it's really a full contact sport these days.
Pract practice owners, licensed staff members are getting job offers weekly if not daily right now. I mean it's really competitive. Our industry suffered the great resignation during COVID just like all industries. U but PTS always suffered a little bit differently as well from kind of what I would say is are the optionally employed or rather those folks that you know don't have to work might choose not to work or that might choose to work only part-time. We've seen the data from the APA workforce study. We've seen the data from recruiting platforms like Indeed and from the PT centralized application system.
PTS are one of the absolute hardest jobs to find placements for right now. So practices better be looking inward first and making sure they're retaining good staff. Compensation for both PTs and PTAs is going up. Benefits are changing and really what today's generation of therapists value it it's really much different than what previous generations valued as it relates to job satisfaction. Our industry's gone from an industry where salary was almost exclusively what therapists valued after their practice setting choice to now it's an industry where time off and flexibility of schedule are equally if not more important to those same staff members.
So you know, owners of private practices have to rethink their compensation packages. They've got to start thinking and talking about total compensation. They need to find out what their competitors are offering and they need to be creative when it comes to time off policies. The amount of time that clinicians can take off and the flexibility of a of a clinician's schedule. So owners need to be willing to pay a recruiter to help them. I mean, we've got to we've got to find folks where we can and how we can.
They should have relationships with as many recruiters as possible. And they also need to understand how to reach candidates. Not just those that are looking for jobs, but those that are looking but those that aren't looking for new opportunities right now. Most practices we're talking to currently have more business than they can handle. So they should really always be looking for staff right now. Additionally, the most progressive and valuable practices are those that have committed to and figured out how to effectively incorporate licensed PTAs into their practice in a in a really intentional, strategic, and significant way.
The most profitable practices that we see and really in most cases, the ones that have the best clinical reputations in their communities are the practices that have close to, if not a one:1 PT to PTA ratio. And typically what we see is that those PT and PTAs are very intentionally teamed together for a specific patient population. Those practices tend to be the most productive. They've got the largest market shares in their communities and are really the most well thought of in the community and really have the highest employee satisfaction.
We've found that those practices are able to have much more liberal time off policies and flexible schedules for not only patients but also for the clinicians and that they maintain a really high level of clinical excellence with production. So we run into a lot of practices today that are really resistant to use PTAs. Either because they think it's a substandard of care or they think it's negative negatively going to impact their reimbursement potential due to the recent changes and Medicare cuts directed towards PTAs. Owners are doing that doing you know this not including PTAs are doing this at the peril of their bottom line and they're doing this at the peril of market share in their community.
So owners just really better understand and realize that PTs are not plentiful right now. And that there is actually some availability of PTAs that's really going untapped. U, they should take it on themselves to put a model together that accomplishes their goals for high quality of care, high customer service, patient access to care, and really decreasing the day-to-day schedule pressure of their staff. Steve, you talked about a couple different things there that I want to see if we can dig into just a little bit further.
You talked a little bit about productivity and you know as we look out talking to small private practices the challenge that I see that they have is man if we press the productivity too hard our therapists are just going to go find somewhere else to work. They don't want to be pressed and pushed too hard. How do you find that balance and how do you get that motivation for your therapist, you know, have a level of productivity while at the same time not be scouting around for where can I maybe work that I'm not going to be expected to have this kind of productivity challenges?
How do you balance that, Steve? No, that's great. That's that's kind of that's kind of the second challenge that we talked about as it relates to staffing is staffing and productivity. And you know, I won't turn this into a conversation or a debate about what productivity actually is. You know, some practice owners talk about visits per day. But they don't they don't pay any attention to how many units are produced in each one of those visits. Other practices may talk about units per day for productivity, but they don't really pay any attention to what type of units are being delivered and charged for or whether they're actually getting reimbursed for those units.
So some owners will actually talk about productivity in terms of RVUs or relative value units, which is probably a better and more comprehensive assessment of productivity. But that's only if you can truly track RVUs by reimbursement. So number one, I mean, a valuable practice number one knows what productivity is. They can measure it and they actually know what it's worth. The real hard part is making sure that the staff are actually productive. Practices that have performance-based compensation models that are grounded in compliant productivity are creating real value for themselves in their practices from a buyer's perspective.
If they can define productivity, if they can tie it to compensation, if they can measure it and hold folks accountable, it'll be abs one of the absolute biggest difference makers for them in the industry that really has, you know, declining margins. If you're if your staff is truly productive in a revenue producing way, all of a sudden it's easier to pay them what they might what we might think are higher than average salaries these days. Or give them more than average amounts of time off if they're truly productive.
What can't happen and what we see happening is that we continue to increase salary that we continue to increase total compensation and time off without you know what I would call an equal exchange for productivity from the staff. Yeah. Yeah. Yeah. I think you know productivity high levels of productivity and patient outcomes have somehow been you know tied together in a way that high productivity means bad patient outcomes, low productivity means good patient outcomes. And I don't know about you, but I've never really seen that other than to the extremes.
But I've seen really good solid practices having very modest levels of productivity, you know, essentially, you know, making sure that therapist is you know, operating at a level of productivity in order to produce and generate a margin for the business and also have phenomenal patient outcomes. What's your experience with how you see therapists seeing this conundrum between productivity patient outcomes or are they not really concerned either on either side of that? No. Well, you know, it's a great question and it's a great point and and it's one that we see all the time and you know, one of our taglines for really all of our companies is we think that best clinical practices and best business practices go hand in hand.
I mean, we don't think that they're mutually exclusive concepts and we put that right on our website because we believe in that. And you know, I would I would kind of, you know, sarcastically say, you typically want to go to the practices that are the busiest. There's a reason they're the busiest. It's because they're the best. And so you can have a high level of productivity and high quality care outcomes as well. For sure. And so, it it's a matter of striking that balance. And most of the times when we walk into a practice we can ask therapists how many patients they're seeing.
We can ask them how many units they're billing. And typically they're billing about 75% of what they think they are. Whether it's because of the number of patients they're seeing or the number of units they're billing. So really, you know, our value proposition, and honestly, I think a lot of the acquirers out there, the value proposition is to just get therapists actually doing what they think they're already doing and trying to be able to balance that in a way that you don't you don't go home and kick your dog and yell at your husband or your wife.
To do it in a way that that's satisfying. And you can, you know, close your computer and your documentation system when you're when your last patient walks out the door. Yeah. So what I hear from that is that there's continual training to therapists, you know, therapists who come even with a lot of experience you know as we watch practices who tend to be really good at this is that they're looking at it week by week and they're looking into the very fine details again as you described of what therapists are billing for, what they're actually doing, what they're charging for and that ongoing training seems to be very readily accepted because as you know if like you said if you ask a therapist how many patients do they see a day it's going to be how many do they see on Monday and Wednesday.
That's right. It's those other days that you know you sometimes don't get counted quite as much. That's right. How do you keep that continued education going when these therapists and in many cases are very busy? Yeah. Well, you walked right into my third point, you know, and the third challenge in the industry, which is staffing as it relates to reimbursement, you know, and so we we've talked about the fact that you've got to find and retain staff and the fact that it's got to be the right staff.
And that the staff has to be productive. But you also have to make sure that your staff is aligned around product and reimbursement and that your staff understands reimbursement. I mean, let's face it, generally reimbursement is not going up in our industry. U, you know, with that said, better practices are continuing to create value for themselves by going back to thirdparty payers and asking for better reimbursement. But regardless of that act, regardless of that ask, u the absolute need for our profession to renegotiate contracts with payers, you know, we've got to make sure that our revenue producing therapists understand exactly how they're generating revenue for the practice.
The better practices and more valuable practices are those that are spending time educating their staff not only on best clinical practices, but on the billing habits and the coding that goes handinhand with those best clinical practices. We walk into practices all the time who are doing amazing and just really valuable therapy. But the practice and the therapists have little to no idea how to effectively and accurately code or bill for what they're doing. Everyone in our profession is so concerned about overbilling or upcoding. When in actuality what we see is the vast majority of our profession is undercoding and underbilling for what they do each and every day because they simply don't know what the definitions of the codes are and they don't know how to accurately bill.
So, we spend gosh, I mean, we probably do twice a year training with our folks to make sure that they understand the updates and the CPT codes. That they understand that what they're doing has specific codes tied to those and that they're accurately billing for what they do on a day-to-day basis. If a if a practice or a therapist is to be judged on the quality of care by solely their claim form, I think some of our therapists would be embarrassed at what their claim forms say about their practice.
I know I know that they're doing high quality care. I know they're doing things like neuromuscular re-education and manual therapy and functional training, but gosh, we look at claim forms and it looks like they're doing range of motion and strengthening and that's it. And I just don't believe that about our profession. U, especially when I walk into them every day and see what's going on. Yeah. It it goes to I think a couple really quick things kind of in follow up to what you just said.
I think one is it, you know, we all as therapists want to provide skilled care to our patients. Well, when you look at the codes that we use as therapists, as you just mentioned, neuromuscular re-education, functional activity or therapeutic activity, you know, manual, those are all skilled services, right? That's right. But therapeutic exercise, I probably could teach a Labrador retriever to help somebody do therapeutic exercise. Right. I mean, that's right. Well, you and the funny thing is you walk into a practice and if you just observe and you talk to the therapist, they will tell you what they're doing and very little of it is actually therapeutic exercise.
Yeah. But they will absolutely kneejerk and they'll put 97110 for four units on somebody who got a lot higher quality of care. And so that's really what I meant by being judged what's on the claim form. And really, you know, it it's because people don't know. That's why you have to educate them. And usually what we see when we go through those educational, you know, opportunities with our folks, is light bulbs going off. They're like, "Oh my gosh, I can't believe I've been doing this for 5 years, 10 years, 20 years." that's not what I do in physical therapy.
U, but that's what their claim form says. Yeah. And you know our experience is that therapists while you know sometimes we talk oh you know they don't want to be highly productive etc. I think totally the opposite. I think a they want to be productive. They want to be taught how to be productive and [clears throat] b they want to understand what really is expected of them. And then they want the opportunity to either buy into that or verbally face to face not buy into what the practice is asking them to do.
But if all the discussions are happening in a closet what we want them to do and they're out there just and then not enough, nope, that's not enough. Nope, that's not enough. We never have gotten their buy. How how Steve with your partnerships and with staff, how do you think to engage that buyin from your professional staff? How do you get there? Well, you know, for us, it it's about it's about continually having the conversation that best clinical practices and best business practices are the same.
If we if we talk about productivity, we have to talk about highest quality of care and current best practices. If we can't put both of those both of those concepts into the same sentence into the same presentation, then I can promise you we're losing our folks. But when we are when we are intentional about tying highest level of care to highest reimbursement and billing for what we do and the value that we provide as a profession, honestly it's easy. And we get a lot of buyin from our folks.
You know we've just been I think undereducated in that area honestly. Yeah. No, I totally agree. Totally agree. So I love your three challenges. Staffing and I don't get on a phone call today that there is not a discussion. It is it is truly amazing though that many practices that do some of the things that you're describing, the kind of communication that you're describing, incentive compensation, looking for ways to engage their therapists in utilizing physical therapy assistance you know, literally as a partner, you know, not like a physical therapy tech, but truly as a partner for their patients.
That those practices don't have quite as much difficulty attracting and retaining staff as practices that aren't doing those things and just have never been taught to go there. So really helpful. Steve, as a PT business owner in this current market that wants to sell their business in the next six to 18 months, where would you tell them to focus their attention? What what's most important? Right now for you guys for Therapy Partner Solutions as an acquirer. Yeah, I would tell business owners to focus on truly understanding their business and the levers they can pull to affect their bottom line.
You know, far too often we run into owners that don't understand their profit and loss statements. And they certainly don't understand their billing and collections performance. We don't look for perfect practices that are knocking every measurable out of the park. But we do look for practices who fully understand their strengths and weaknesses. That understand where there are holes in their business and that have a clear direction on what needs to be done to fill those holes and close the gap on profitability. That's the type of practice we can come alongside as a partner and help them execute in their efforts and continue to build value in their practices with them for them and their partners for their staff and for their families.
I truly believe the practices that understand this and the owners that are transparent with their staff around their operational, financial, and performance expectations are the practices that will be most sought after in the coming years and the practices that will really command the highest values. Yeah. Would it be fair to say, Steve, that the criteria by which you will choose a partner has maybe become a little tighter in terms of what you'll accept as a partner? Meaning, it sounds low as though you're looking for high-erforming physical therapy companies or at least solidly performing physical therapy companies versus let's see if we can find companies and kind of fix them up.
Would that be fair to say or maybe not? Yeah. No, it's fair to say. And look, fixeruppers are always the biggest contributors to to our value. We're going to usually quote unquote make more money off of fixeruppers, but they're hard. They're definitely hard to come alongside. I would say that yes, they've got to have some operational success. They've got to have some operational intention, but the probably the biggest thing is willingness. They've got to be willing to have a partner. They've got to be willing to look at things a little bit differently.
Very rarely if ever, I mean, it's just not our model to come in and take the quote unquote therapy partner solutions way and lay it on top of a practice. U it doesn't work that way for us. We need to be able to come alongside what's made them successful. And we need to be, you know, an adjunct to that success. We need to be able to complement what they're already doing really well. And then also come alongside them and have conversations with them about better ways.
We our industry is changing. We have to change along with it. We just have to. Absolutely. Absolutely. Steve, are there any new offerings out there, new things that you're seeing that private practors, private practors, private practice business owners should be exploring in this current market? Yeah, I mean the simple answer is yes. There are some great cashbased service offerings and programs that are out there that can be a real asset and a market differentiator for PT businesses. Things like dry needling, cold laser, wellness programs and other cashbased value ad type programs.
They can truly supplement a bottom line and diversify a revenue stream. And honestly another area that's being overlooked is the shift towards teleaalth. We were all forced to dabble in teleaalth is a bit of a pivot to how we could see patients during the pandemic. But I would submit that was an overall failure for most practices. I mean it was very poorly executed. It was misunderstood and at best it was a distraction. Practices have to understand how they can use this as an adjunct to their current care model in a way that's valuable to their business but also to their customers.
Patients are simply demanding this access and the truly cutting edge practices are intentionally incorporating teleaalth into their model as a value ad and a differentiator in this new approach to the market. Yeah. Now we're talking to a lot of companies and many of them have kind of you know continued with the teleaalth and are you know there's a certain of patients that they just want to continue with it. It's you know it's like people that now are working from home. They just want to get going on things that they learned through co how about you know one of the one of the dirty little secrets you know about tellaalth is that you know we talk more people into getting better a lot of times than we actually put our hands on.
And and we struggle with cancellation percentages because life is just happening. And and people are perfectly willing to get a little bit of a tuneup or an over the teleahalth over the phone type visit that we have traditionally just given away. And now there's actually a mechanism to be reimbursed for that time that we spend with a patient. That will help decrease those cancellation percentages. If we can see them in the home or in the office over a telealth link it can be really transformational to fixing things like cancellation percentages.
Yeah. Keep that consistent care going when patients for whatever reason can't get out of their house or just don't want to. Yeah. No, it makes a lot of sense. A lot of sense. So how have you how have you guys seen these economic changes are impacting the way you approach your acquisition growth? What has changed? Well, I mean, we we've always had a pretty disciplined approach to mergers, acquisitions, and growth. We really seek out culture fits first. And I know everybody talks about that. But if we can get that right, the rest seems to follow.
But what I've seen recently in valuation, is that buyers simply aren't willing to pay for potential any longer. In the past several years of very low interest rates it was really easy for buyers to pay a little bit more for a practice that had the potential to be better for example if they could if they could get to four units of visit from where they were or if they could get to 12 visits a day per therapist. The buyers were willing to give some proforma or some practice potential credit on valuation.
The rising interest rates have put some pressure on that approach for valuations. Buyers really are only willing to pay for what the performance has been versus what the performance might be in the future. U execution buyers are still willing to give really good and aggressive valuations but only for demonstrated execution and not a promise of execution. Yeah. No, great point. Great point. You know, we continue to see, you know, acquirers in this current industry you know, wanting to grow, you know, gosh, the other day I was talking to a practice owner.
She said that they were talking to someone like myself, not us, but a different company, and they said, "Yeah, there's nobody's really buying anymore in the physical therapy industry." I said, "What?" I mean, we you know, we have six deals under letter right now. I mean, what do you mean? So no, I still think, you know, I agree with you. This is still a very strong market. As you said, some of the things that we saw in 21 and 22, we're not seeing in 23, but still very good, solid market with acquirers who are looking to grow and sellers who want to join them.
That's right. Well, Steve, this has been really awesome. And I really appreciate your time today. So, for all of you out there, if you have any questions related to the conversation that I had with Steve Chenoweth today, click below. And Steve, we hope to have you back soon. Thanks again. Absolutely. Appreciate the opportunity and and we'll see you soon. All right. Sounds good, Steve. Take care. All right. Take care. Bye. Bye.
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