Is There a Guru Effect in Cash Based Physical Therapy?

Value is a hot topic in the PT world right now. There is a constant back and forth between value and volume. How well you treat each patient vs how many patients you treat total. The current insurance system definitely rewards volume financially. This is a scenario those in private practice know all too well. 16 patients/day at $80/visit comes out to about $320,000/year revenue as compared to the $160,000/year revenue for a true 1 on 1 single patient/hour model promoted by the value proponents. Sadly, as you can see, in the private practice outpatient world one patient/hour just will not work to pay a therapist salary, cover benefits, provide PTO, con-ed allowance, cover the cost of the facility, utilities, office staff pay, mal-practice insurance, etc, etc, etc. 

This scenario has led many physical therapists to step out of traditional insurance based systems and into the world of cash based pay for their services. They usually charge anywhere from $100-200 cash per visit and function in low overhead cost practices in order to make a good living. They HAVE to charge more than insurance pays in order to survive, and they have to find enough patients willing to pay these rates. To do this, these therapists have to convey a high level of VALUE for their services. These therapists usually have a niche practice in which they market themselves as having skills/interventions/knowledge that can’t be found in the normal insurance based world. There are normally tons and tons of testimonials on their websites about how amazing they are and how they “fixed” a patient after all other had failed. The question is, are they really that good? Is it that the truly great physical therapists tend to feel restricted by insurance regulations and aren’t able to justly practice to the top of their skills which ultimately leads them to shift to a cash based approach? Are they really worth the $150/session they charge in order to provide one-on-one coverage for patients? Is their VALUE in line with the cost of their treatments? In short, I will go ahead and say YES. Physical therapy done the right way is EASILY worth this much, but let’s take a deeper look. If we truly look at what value is we will see some interesting trends start to emerge.

The definition of value is:

As a noun-

·         the regard that something is held to deserve; the importance, worth, or usefulness of something

As a verb-

·         consider (someone or something) to be important or beneficial; have a high opinion of

What we see when looking at the definitions of value is that there is clearly a strong amount of opinion related to PERCIEVED value. At the end of the day that opinion is the opinion of the consumer A.K.A the patient. “Something is only worth as much as people are willing to pay for it”. So what dictates whether or not people are willing to pay and how much they are willing to pay?....MARKETING!!! I’m going to go out on a limb here and state that the high price for these sessions is indeed a bit of marketing in and of itself. 

Humans have in inherent perception that the higher the price on an item or service the better it must be. Think about it. Is there really a difference in quality or materials between a $200 Calvin Klein hand bag and a $2,000 Prada hand bag? Surely, there MAY be some differences, but are we really going to say there is an $1,800 difference in the quality of the materials, its function, perform its job of holding your crap, and how long it will last? I think not. The difference in price implies greater value, and consumers covet the higher priced bag subconsciously because the price itself carries face validity and represents superiority. It is a brand that implies a certain level of wealth and socioeconomic status. A way for women to flash their peacock feathers so to speak. If the brand wasn’t this expensive it wouldn’t be nearly as successful as it has been. Designers have long known this. Pricing and marketing fuel almost everything we do to some level. 

We can see quite a similar situation in this study with wine. People drank THE SAME EXACT WINE with a different label and price tag on it, but consistently rated the more expensive wine as tasting better.  We PERCIEVE more value in something based solely on the price we have to pay for it. We want to feel justified with our choice and know that our hard earned money was well spent. Since, I’m a wine drinker myself we will continue with the wine theme for another example. In this study here, researchers had people drink wine while in an fMRI machine to look at brain activation patterns. What they found was that again people rated more expensive wines as tasting better and that there was actually more brain activity (specifically in the orbitofrontal cortex) with drinking the SAME EXACT WINE with a different label and price tag. This is proof that your perception based on price actually changes how your brain fires which in turn allows you to have a totally different experience with THE SAME EXACT product. This gives us more PERCIEVED value solely based on price. Subsequently, paying more for an item or service ACTUALLY CAN make it truly better…At least to your brain.

So this brings us to is the question of whether cash based PTs are really better. Do clients perceive more value, therefore leading to different cortical activity, and subsequently a better experience and improved outcomes? Can charging more for our services actually make our services better??? Surgery sure seems to be expensive, yet repeatedly show to be no better than conservative care in many conditions. Likely, the biggest component of cash based PT and the one-on-one model is that these PTs tend to be great at developing a strong therapeutic alliance combined with the subconscious increase in perceived value by the client based on high prices. 

I don’t personally practice in a one-on-one model because well I’m in private practice and we have to keep our doors open in order to actually be able to treat patients. Do I think cash based one-on-one therapy is superior to the model I am in of 1.5 patients/hour. Yes, in some cases I certainly do. You have full focus to build maximal relationships with clients. You also may start off with a subconscious head start that what you can do is better than what Joe’s PT down the road who takes insurance can do based solely off of your price. You also weed out all of the people not truly invested in getting better by charging this rate. This shift in the demographic of your patient pool automatically improves in regards to those motivated to succeed.

Believe it or not motivation to get better greatly affects one’s ability to get better. Are some cash based PTs truly clinically better than your average insurance based PTs? Absolutely. Are cash based PTs on the whole clinically better than insurance based PTs? I think that is a tougher sell. Is there a guru factor and degree of improvement based solely on perceived value due to marketing as well as the sheer cost of services? Certainly. With that in mind should we be charging more for our services as a whole profession? Maybe. $200/visit over the course of 10-12 visits is still only 20-40% the cost of RTC surgery not counting the required post-op physical therapy course that will include AT LEAST 12 additional visits.

I don’t have the answers, but I’m sure someone does!

Thanks for reading,

Jarod Hall, PT, DPT, CSCS

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