The 8-minute Rule Interview

Hey Kenny, thanks for joining us today. To kick things off, could you give us a quick background about yourself for our readers and audience?

I graduated from physical therapy school in 1998. Shortly after that, I worked in a large health system here for a short period of time, then my dad and I started a PT practice in the southern suburbs of Pittsburgh. He and I worked together, and we got that up and running. It was a small thousand-foot square foot office, and we grew that from zero to a point where my wife had come join me, she’s a PT, and she and I worked together. We did that until 2004. She stepped back a little from patient care when we welcomed our first child, but I brought in another partner and we grew it to where it is today - three offices across three different communities in the south of Pittsburgh.

I also started teaching at Duquesne about seven or eight years ago. A few courses here and there, I currently teach two courses there and run a mentorship group there. The courses I teach there are about the subjective exam, how you interview patients and develop relationships with them, lot of soft skills. We have that as the teaching piece of what I do.

In addition to that. I run a private practice special interest group there. This program is 100% voluntary on the part of the kids that are interested in private practice and business ownership and entrepreneurship and it gets very good engagement. We meet every two weeks, and that curriculum rotates back and forth between me presenting on topics (not covered in school) and a Q&A session with topics that are top-of-mind for them.

The third thing I’m most involved with professionally is I am the vice president of our professional association here in Pennsylvania. With that, I do a lot of advocacy for payment. I work with the biggest Blue Cross Blue Shield provider in our state. They’re one of the biggest in the country, called Highmark. I work with Highmark to improve payment for PTs and decrease administrative burden.

We’re trying to create value-based programs there. I represent three associations—the APTA, the occupational therapist association, and the speech therapist association. The three of them come together and I’m the point person for that. I do that through the vice presidency of APTA I was elected to. We meet probably three or four times a year with the Blue Cross Blue Shield subsidiary, Highmark. Their rehab management arm is called Helion, and we are developing more value-based pay, getting away from traditional fee-for-service towards something that is True Value - (Benefit divided by Cost) - and most importantly, creating ways that we can do that that aren’t administratively burdensome to the PTs. I spend a great deal of time on this project.

Awesome, I think there’s a lot of threads that we can pull on here, but I’m going to go with one that I’m personally interested in: what does it feel like to work with your dad in building out the practice and also with your life?

Those were actually the best parts. Working with my dad was something that I treasure. We had the ability to work side by side for a couple of years before he stepped back. It was so great getting to see a different side of him that I didn’t see growing up. I was newly minted.

I’d only been out for a few years. We started doing that in 2001. It was an opportunity for me to have some great mentorship—somebody I trusted and knew cared about me. He and I could bond. Again, it was a side of him I hadn’t seen and that was really unique. He’s still involved in the business to some degree. He’s getting older now, in his late 80s, but we still talk about it from time to time, and that was a really special time for sure.

Working with my wife was the best, because she and I still teach together, and she also works in the business in a coverage capacity. She’s constantly giving me counsel about all 3 of my roles and thats invaluable. We’ve been working together since just after the practice started, 2002. It’s really neat. When we were first running the practice—the two of us—and we had to have evening hours, I’d work in the morning, she’d work in the evening, and we did that every day, with one day reserved where we didn’t see patients in the evening so we could have some time together. It was what you did when you were starting the business. We did that, and she put a lot into it and has ever since, and we are very different people, so we lean on each other and get the best out of one another. Those are some of the best parts of it.

Tell me more about the business of running a PT practice. What are some lessons you’ve learned over the years?

I think it varies along the continuum, like everything else. The thing I’ve learned the most was about finding good people and allowing them to flourish. A lot of what you would call Decentralized Command—where you find really good people, tell them what the confines or constraints of where they’re working is, and then let them be creative. They can commit their energy to it and I stay out of the way.

Probably the first six or seven years before I got involved in the private practice section, I tried to do all the treatments and all the work and grow the business all by myself. I didn’t have a good understanding of the value of delegating. That’s the case with many private practitioners; we think we have to do all the work.

When I started getting more involved in the private practice section, I began to understand that the idea of mentorship, development of talent, talent acquisition, and finding and trusting people means I don’t have to be there. That enabled us to scale the practice. Then, as we got a little bigger—when you go from a group of two, three, or four to maybe 10 or 15 people—we did a lot more work on what makes us like one another. What is it that we like about each other? We teased out what our core values are in the practice. We started to rally around that. I put together a leadership team who can run the practice when I’m doing other things. They are empowered to make decisions in the best interest of all of us, beholden to those core values we identified. Our core values are professionalism, fun, flexibility, resiliency, Consider It Done, and team players. Those are the types of things any action we take should be imbued with. My leadership group can and does do the hard work of running the practice on a day-to-day basis.

I trust them completely because I know who they are. We only hire people who fit that, and we base our decisions on that. When you start the practice, it’s just you doing it all yourself. Eventually, you get to a point where your main focus is finding good people and making sure they’re happy, trusting them, and ensuring that everything we have is systematized for compliance while remaining profitable.

Any tips for hiring and interviewing, and finding the right people to join your team?

That’s the hardest thing. We have a very robust educational program. We bring out a lot of students. We have clinical affiliation agreements with all the local universities. That’s been the best way to find people; traditionally, a PT practice has them come out for a clinical affiliation and then try to get them to stay.

The problem is it becomes very competitive with PT practices because it’s a tight market to get that person who’s on their last clinical affiliation, so they can just stay through. You find that many PT practices are just taking those (terminal affiliation) students, which creates a problem for the universities. We don’t operate that way. We like to form relationships with people—long-term relationships. So we open our practice to the universities for all levels of clinical education.

The teaching I do is, to some degree, about finding the type of people we like but really, it’s more about giving back. Attracting new talent is always about people: through clinical affiliations, word-of-mouth—the best ways. We found a few people through advertising, but that’s the least reliable means for finding people who share our core values. Through word-of-mouth, affiliations, the teaching I do, and our professional association, when we’re looking for somebody, we try to find people who share our aims—that’s the best way to do it.

It’s the same way we find our patients. We don’t do a ton of advertising or direct-to-physician marketing. We are direct to consumer, but more importantly, it’s about word-of-mouth—even Google reviews, which we really treasure because that’s the new word of mouth. Same with finding talent: it’s about finding people like us through word of mouth. And then the interview process, hopefully, is long, because we’re trying to identify the right people.

Completely agree. And given that you’re also mentoring college kids and students in their DPT program, what do you think the younger generations look for these days? What motivates them?

That’s a great question. I think it varies along the continuum, like everything else. By and large, the people coming out now are focused on their quality of life, on work–life balance—the things you hear about this generation. But they’re also realistic because they face financial challenges. It’s expensive to become a physical therapist.

Frankly, it’s a little too expensive compared to before—you had to have a master’s degree, now you need a doctorate; higher education has become a lot more expensive in general. They have obligations they must meet. I’ve found that those interested in working with us are very interested in mentorship.

They’re interested in structure and protection. They don’t want to come out and plow through patients immediately. They want breaks in their schedule, time set aside specifically for mentorship. Professionally, they’re interested in that continuity.

We’ve interviewed some people who are more about a dollar figure and making X number of dollars, but we haven’t embraced those folks. I think they’re there, but they’re working somewhere else. I’ve set up compensation strategies in our practice that essentially allow physical therapists to operate as little private practitioners. They tell me how they want to make—design the schedule for themselves - then we compensate them based on revenue. They have access to our costs and our payment so they can make educated decisions.

In that way, if they want more mentorship, they can get it by having more breaks and a more structured mentorship. If they’re more seasoned and want a busier schedule, we can accommodate that. It’s putting the ball in their court in terms of how they want to work. It’s very transparent on the PT side, and we allow them to adjust as they develop professionally.

What kind of insights or perspectives do you want to share with the younger generations, or maybe to your own kids, what would you want them to gain in terms of advice on life?

In terms of life lessons, I think it all comes down to the way we treat one another. At the end of the day, every person we encounter is fighting battles we don’t know anything about and can’t possibly understand. The default is to approach people with kindness, empathy, and love. I try to do that, and I hope my kids do the same—every encounter is important.

Beyond that general life principle, in my experience, being a non-transactional person is far more effective than being transactional. Transactional people—a quid pro quo—you run into a lot of them. It’s difficult in our society because a transactional person is always going to be motivated by, “what’s my next best transaction”.

When you operate in a non-transactional fashion, you do things because they’re the right thing to do; you help people without necessarily expecting something in return. It leans on the idea of faith—that when you do good things, it will work out; you may not see it now, but it will happen in the future. Mentorship is built on that.

It’s not about a quid pro quo of “I’m doing mentorship so you can do something for me.” It’s not even about paying it forward, like somebody did it for me so I can do it for somebody else. It’s more along the lines of, “I’m going to do as much good as I can in as many ways as I can with as many people as I can,” and in doing so, the world will set up for me because that’s the type of people the world likes.

I know it might sound grandiose, but it’s very much grounded in my core. I’m a very faithful person and I’m a Methodist, and that is a very Methodist thing I just described - that we are going to do as much good as we can. We’re not going to be transactional about it; the chips will fall where they may and they’ll usually be okay at the end of the day. I think that’s the right way to live. Some days are better than others, especially in business—you do have to deal with transactions and that type of thing. But at the end of the day, people know what they’re getting when they deal with me, so I think that’s important.

Thanks so much for sharing that. I’m also curious about your thoughts on value-based care, because you mentioned you are leading some efforts with VBC, which is a pretty hot topic.

I’m working a ton on it. I’ve been trying to create something with different insurers since 2015 / 2016. We embraced an outcomes tool called FOTO which is expensive, but it’s worth it for what it is. It’s not about just that tool. You can use a simple PROMIS tool, a PSFS, or something where you have normalized data that establishes a baseline and an outcome, right? Then, take that and agree with the payor that the values we report are a proxy for the benefit the patient has received from PT—that would be step one. Then divide that by how much it costs to attain that benefit—the value equation: value equals benefit divided by cost. Then pay practices who create the most value (benefit divided by cost) better. That’s the general idea. I think getting paid that way makes the most sense for our health care system.

I think this will happen in some form, but the reason I’m not super bullish about it is because the devil is in the details of this thing. What I’m talking about is that, first of all, physical therapists would have to agree on an outcome tool they could be comfortable with. We do not have wide adoption of that idea because we already have so much administrative burden with other things. This is yet one more thing, but the challenge on our side is that truly tracking an outcome is very complex—way more complex than people give it credit for.

For instance, it’s easy to have all of your patients do a survey on the first day to establish a baseline. But what’s common in physical therapy is that people come for two, three, four, seven, eight visits—if on a 12-visit plan—and after they’re feeling better, they might not come for that 11th or 12th visit because they’re fixed - and if your plan was to collect that outcome survey on the last visit, you are never capturing the success stories or you are under capturing them. And if the outcomes you’re collecting are just from those who don’t get better, you’re missing all those great people who did get better because they didn’t fill the last survey out.

The way things work is those who are really good at collecting could win, even if they’re not good at getting that benefit. So some providers are going to be really good at collecting outcomes, and some are not. Our practice have a process for doing this since 2016, as we thought this was coming down the pike. But then, as I deal with the insurer, it’s so difficult to get them to move away from judging us by utilization and cost and including the benefit. Highmark is unique that way in that they’ve shown that it is of interest to them.

One of the big challenges on that side is that our insurance system is set up a certain way—and I’m not sure it’s set up for the long-term success of the patient. What I mean is that their horizon for what they consider an outcome is what saves them money downstream. You might think, if I have a bad rotator cuff but can avoid surgery by coming to physical therapy, that saves the payor money. But the problem is, they don’t frequently look at long-term outcomes because they tend to have a new customer about every three years. The average American changes jobs about every three years— and since that’s where the consumers typically get their plans —-that really compresses the horizon of how a payor’s investment in the patients care works. An insurer’s customers may be consistent, but their consumers have a new job, new insurance, and may be another insurer’s problem. This happens over and over until the patient is 65, and then that person becomes a Medicare patient and whatever problems the patient has at that point are there for good.

That’s maybe where long-term outcomes should be important—we could really have a value-based program there because Medicare isn’t getting rid of them. But the problem is Medicare is a budget-neutral government program that is subject to lobbying and influence of special interests. They’ve tried with PQRS, MIPS, and other things, but they’re a political entity as well. The one Payor who is best positioned to leverage value-based care—because it can save the most downstream costs—is kind of broken. All the others are fragmented with short horizons. We’re really struggling to get them off the idea of just saving money this quarter and this year, and instead looking at the benefit we provide. Many payors continue to push silos down, judging us by cost and utilization, and it’s challenging.

What do you think about managed Medicare—all the Medicare Advantage plans?

It feels like Medicare Advantage is another way to middleman the profit in our system. You have direct Medicare that goes from the consumer, through Medicare to the provider, and then they have to pay 20% of their coinsurance and a small deductible. Anytime there’s out-of-pocket costs for the health care consumer, there’s always going to be someone who tries to wiggle in and create value by managing the care. They’re the middle-man.

It’s funny because the evolution of those Advantage plans was during a time when Medicare didn’t even provide drugs—there was a time when Medicare didn’t pay for drugs, just for hospitalization. Then, as Medicare Part D came along—okay, we’re going to start paying for pharmaceuticals—and you and I both know drugs are very expensive, that’s where Medicare Advantage plans really started to flourish.

But now Medicare Advantage has expanded beyond that, and it’s getting tighter and tighter because it’s harder for them to save these people money. Participants want free Advantage plans because that’s what’s being offered. Medicare Advantage is a very competitive space for the insurers and I get the sense it’s low-margin business This means the payers will just end up managing the providers more to streamline costs. This creates adverse impact in the long term.

It was fine when it started because its function was to provide a piece that Medicare was missing. But where it has headed—and when I talk to the executives at the insurance companies—they tell us that the margins in that work are so slim and are getting tighter, because they’re not really collecting much in premiums. That’s not good for them, and that’s not good for providers either.

Is there a place for value-based care for Medicare Advantage plans, to create a win-win?

Maybe, except that those senior citizens reevaluate their Advantage plan every year, so they could leave the value-based care of the one we’re working with and go to a different one. Then we lose that horizon.

I wish we could get paid by benefit. I know I’m pushing hard for it and I believe in it, but I don’t know where value-based care is going to be. The devil is in the details - how good it is at identifying the best practitioners is the devil in the details. Paying a provider more for a better outcome is as good as that person is able to collect—accurately collect—the data and also not manipulate it.

As we go through these things, we’re constantly trying to find methods that are not easily manipulated because there will never be an insurance company that agrees to a value-based plan where everybody is in the top. That was the problem with the initial PQRS plan that Medicare did: everybody was good, so it didn’t separate the wheat from the chaff and there wasn’t any extra money to pay anyone. That’s very challenging because every single one of us is going to want to be in that top tier. At the end of the day, it’s only as good as the data that goes in, how you collect it, and the sensitivity of that data in discerning which provider is attaining the best results.

Really interesting and you gave us a lot to think about. Thanks for taking the time to chat, Kenny!

Thank you for having me!