In 2009, the United States spent more than $2.5 trillion, or 17.6% of its gross domestic product, on health care.1 Furthermore, expenditures are projected to grow an average of 6.1% per year from 2009 to 2019.1 Long-term performance of the health care delivery system is widely viewed to be unsustainable economically.2 Concern about financial sustainability is magnified by the recognition that increased health care spending does not fully address the needs of Americans or result in higher-quality care or greater patient satisfaction with the delivery system. The Institute of Medicine (IOM) noted that rapid technological expansion and subsequent complexity resulted in safety failures and suboptimal benefits.3 This report, along with other health policy studies,4–6 indicated a high variability in health care delivery across the nation.
Sociodemographic disparities and inadequate access to needed services for many individuals are compounded by the high cost and variable quality of health care.7 In 2010, the Agency for Healthcare Research and Quality (AHRQ) reported that racial and ethnic minorities and individuals with lower socioeconomic status often receive poorer quality of care and have greater difficulty accessing care compared with individuals who are white or who earn higher incomes. Furthermore, 1 in 5 Americans experience delays in or denials of needed health care.8 Inadequate access is particularly troubling given the projected need for services. By 2030, individuals aged 65 years and older will account for almost 20% of the total US population. Approximately 40% of this cohort is estimated to have a disability and is in need of health care services.9
This paradox of high costs, variable quality, and inconsistent access to services in the face of overwhelming demand was central to the health care reform deliberations that resulted in passage of the Patient Protection and Affordable Care Act (PL 111-148) in 2010.10 Although elements of this legislation continue to be debated, the commitment to value-based health care services already was well-established among policy makers, regulators, third-party payers, and some consumers. Value-based health care aims to improve access to quality services and lower cost while requiring greater accountability on the part of all stakeholders within the health care system.11 Provider accountability is achieved through the implementation of evidence-based practice standards, directed toward the reduction of unwarranted variation, against which performance is measured. Cost-effectiveness is achieved, in the short term, through financial penalties for poor provider performance and, in the long term, through a reduced need for more complex and expensive services resulting from unattended diseases and disorders. Policy makers and payers contribute to the value equation by designing health policies and benefit packages that promote beneficiaries' access to and use of timely, appropriate health care services. The interaction of these elements to produce value-based health care is illustrated in Figure 1.
Physical therapist practice is not exempt from this growing value expectation. Utilization and costs of physical therapy services on a national scale commonly are measured using Medicare Part B data. These expenditures, estimated to be approximately one third of total spending for physical therapy across all settings and payers, have grown at a faster than average pace over the last decade. The actual dollars spent constitute only 1% of all expenditures in the Medicare system.12 However, federal scrutiny is persistent due to cases of fraud and abuse and inappropriate billing of physical therapy services.13 Policy makers are questioning the importance of patient outcomes achieved relative to the costs incurred. Several studies specific to physical therapist practice also suggest potential gaps in quality.14–22 The population's need for physical therapy services is clear from the demographic data previously cited; however, problems with access also are present. Physical therapists are represented disproportionally in suburban rings of major cities, with gaps in available professionals in rural and urban areas.23 Other workforce dynamics also play a role in the availability and distribution of physical therapists and physical therapist assistants.24
The federal government has articulated a vision for health care quality and access based upon the “triple aim” of improving the individual experience of care, improving the health of populations, and reducing the per capita costs of care for populations.25 Commercial payers also are focused on improvement in these 3 areas.26 The visibility of physical therapists in the health care delivery system is affirmed by their recognition as providers in both federal and private pay-for-performance systems. This recognition brings with it obligations to demonstrate the value of the services provided that have far-reaching implications for how physical therapists practice and for the research that supports their efforts. This article explores these implications in the context of a call to action to define and deliver the value added by physical therapist services.
Defining and Measuring Value in Health Care
Value in health care reflects the relationship between the quality of services provided and their associated costs. Donabedian proposed that quality can be related to the way in which services are organized (structure), the manner in which services are delivered (process), and the end results (outcomes) achieved by the services provided (Table).27 Patient-centered outcomes are viewed by many as the aspect of quality that is most relevant to the contemporary value equation in health care.28,29 Costs typically reflect expenditures related to the use of technology, supplies, and facilities, as well as the contributions of clinical human resources to health care service delivery. At the micro level, the quality-cost relationship is focused on the impact of health care service delivery on individual patients, as well as on the decisions of individual providers and organizations that manage the care. At the macro level, this relationship is evaluated based on population impact and the costs to society to achieve a positive health status for large cohorts of people. At both levels, the underlying assumption is that value is attained when the quality of health care services meets an agreed upon standard relative to the costs required to achieve it.
Factors Confounding Achievement of Value in Health Care
The ability to achieve value in health care in the United States is confounded by several factors (Fig. 2). First, there are a multitude of stakeholders engaged in the health care enterprise, each of whom has a differing perspective regarding what constitutes quality and which costs are necessary to accept.30,31 Generating consensus regarding what is acceptable quality and cost under these circumstances has been elusive. Agreement is particularly challenging to achieve regarding the methods used to distinguish between high and low provider performance on quality indicators.
One option is to define quality as the percentage of eligible patients who: (1) received a specified element of care or (2) attained a particular outcome (ie, at least 80% of eligible Medicare beneficiaries receive body mass index screening and follow-up).32 By definition, this approach allows for missed opportunities because the quality achievement threshold is less than 100%. Alternatively, quality may be defined as an “all-or-none” phenomenon in which positive performance occurs only when a patient receives all of the indicated interventions, or achieves all of the predicted outcomes for which he or she is eligible during a given episode of care. Each method has its proponents and detractors.33,34 In the absence of collective responsibility for a patient during an episode of care, accountability for adverse clinical and financial outcomes poses a substantial threat to the reputation and economic survival of individual providers and organizations.35,36
Second, measurement of quality is complicated. Structure and process indicators can be defined in a binary fashion that is administratively easy to track. An example of a structural indicator relevant to physical therapy is the availability of a board-certified specialist on staff (measured as “present” or “absent”). A comparable example of a process indicator is the application of a standardized balance test to patients with a history of falls (measured as “yes” or “no”). The ability to dichotomize outcomes, however, depends upon the availability of an established threshold that demarcates success and failure. Physical therapists recognize the minimal detectable change and the minimal clinically important difference as potential cut-points.37 Unfortunately, the psychometric properties of outcomes measures have been evaluated to a variable degree. The ability to establish meaningful thresholds for these instruments for different patient populations under different clinical circumstances is constrained by research and clinical communities' interests and resources. Further complicating the issue is the uncertainty regarding the causal links between outcomes and structure or process elements across the breadth of patient populations and practice settings.
Third, those involved in measuring health care quality must consider the level of analysis in which they are interested. Measurement of the quality of care for an individual patient commonly occurs through peer review of medical records, as well as administration of patient satisfaction or self-report health status surveys (eg, the Oswestry Low Back Disability Questionnaire). A reasonable question is whether scores on these instruments can measure appropriately the quality of care delivered by different physical therapists for cohorts of similar patients within or across practices. Aggregating these measures for comparison among practices or populations creates additional levels of analysis. In all cases, the usefulness of measures established at the patient level cannot be assumed for other levels of analysis. Psychometric evaluation must be repeated with large data sets with reasonable sample sizes.38–40
A related issue when comparing provider or organizational performance is case mix. Patients with the same diagnostic label (eg, stroke) may vary in the acuity and severity of the disorder, as well as in other demographic characteristics. These differences may influence clinical decision making related to which patients to manage and which services to deliver, as well as the end results of care.41–43 Exclusions from measurement, stratification based on specific patient characteristics such as sex or race/ethnicity, and statistical risk adjustment are all methods by which this variability can be accounted for.44 However, these methods have their own imperfections that inevitably result in some measurement error. The greater the likelihood of error, the greater the concern that a quality indicator will represent inaccurately the value of health care services provided.
The fourth confounding factor in value achievement relates to cost. Health care markets in the United States do not function like traditional commodity markets.45 Providers frequently deliver services first and collect the payment well after delivery. Typically, they also receive a lower overall payment than the amount charged for the service. Patients often do not have transparent and timely price information with which to guide their choice of services. Often they also are responsible for only a fraction of the total costs generated when they receive services. This dissociation among service selection, delivery, and payment creates a collective information and responsibility gap with respect to the nature and magnitude of the costs incurred. Even if the quality of services is undisputed, neither side of the relationship can assess accurately the value of health care provided.
Health care utilization also depends heavily on an agency relationship between health care professionals and patients. Once a plan of care is established, the provider usually serves as the patient's agent to obtain needed or desired health care services and resources. In so doing, the provider often generates costs that are borne by others (eg, physicians order diagnostic services the costs of which are incurred by the hospitals that supply them). These costs become excessive in the face of overutilization. Defensive health care and a fee-for-service payment system that rewards higher procedure rates are 2 of the drivers to which overuse in the US health care system is attributed.46,47 Changes in referral patterns that have been documented when physicians or other providers have a financial ownership interest in the services or facilities to which they send patients for care suggest other perverse economic incentives.48 This ethical conflict plays out in terms of: (1) higher volumes of physician self-referral to ancillary services (eg, physical therapy), (2) provider and facility retention of patients that are less costly to manage or whose insurance carriers have more generous payment schedules, and (3) provision of unnecessary care by physical therapists and occupational therapists to optimize payment for skilled nursing facilities and home health agencies.49,50 Patients likely are insulated from the cost implications of health care professional decision making in these scenarios. As a result, they are less able to assess the value of the services provided.
The availability of employer-sponsored health insurance plans provides an analogous cost buffer for many beneficiaries. This deflection of the responsibility for costs to other parties can make both providers and patients economically insensitive to the impact of their choices. Employers and payers have responded to this insensitivity by restricting benefits and passing on a larger share of the costs to subscribers and providers. The financial burden of increased cost sharing in the absence of a complete picture with which to assess value encourages underutilization of both necessary and elective health care services, a situation that creates added demand and cost at future points when conditions are uncontrolled.43,51
A final complicating factor in the effort to establish the value of health care services lies with the cost calculations themselves. Direct costs for use of facilities, technology, and supplies, as well as the skills and judgment of clinical professionals, do not account for the total amount. Administrative overhead costs, estimated to comprise 7% of overall health care expenditures,52 as well as research and development costs, typically are distributed across service lines or cost centers. This accounting approach makes it difficult to determine the specific financial ramifications of these variables to the value of the services being delivered. When lost productivity and the need for long-term support services for people who are chronically ill and disabled are factored into the equation, the cost estimates are magnified further.
What is clear is that health care costs are outpacing the US economy's ability to sustain them. That fact, combined with evidence of practice variation and waste, high medical error rates, chronic disease proliferation, and growing dissatisfaction with the provision of care among all stakeholders, has given the concept of value-based health care considerable momentum.28,29 Pay-for-performance in the Medicare system is anticipated to shift from a voluntary reward-based approach to a mandatory, penalty-based system in 2015.53 As a result, physical therapists are among the many health professionals who must answer the call to define and deliver their value proposition.
The Physical Therapy Value Proposition
A value proposition is a “business or marketing statement that … should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.”54 A contemporary business example is the claim of more complete networks among competing cellular phone service providers. The proposed value added is broader signal coverage. A hypothetical example of such a statement relevant to physical therapy would be: “An exercise plan designed and supervised by a physical therapist may reduce the likelihood of the need for outpatient surgery.” The proposed value added is the opportunity to avoid the risks, discomfort, inconvenience, and cost of an invasive procedure. In both examples, the service providers must be able to deliver consistently the results they have promoted. Successful outcomes, however, are necessary but not sufficient in and of themselves. The providers in both of these examples also must connect with their potential customers' value priorities in order to persuade them that the options being offered are superior in ways that are meaningful.
Consider the physical therapy example. The ability to avoid surgery and its potential complications and increased cost has face validity. However, what if the surgery in question produces outcomes meaningful to patients that are comparable, on average, to those achieved by physical therapy? What if the exercise program requires a significant investment of time and energy each week to be successful? What if the cost in copayments for the physical therapy visits will exceed the deductible for the outpatient surgical procedure? For some groups of patients, the differences in time, effort, and expense between physical therapy and surgery might actually favor the latter option. These are the kinds of decisions patients will consider in the context of their value priorities. All of the other stakeholders in the health care enterprise concurrently are performing similar analyses on a daily basis.
Defining and demonstrating physical therapy's value proposition under these circumstances is a daunting, but necessary, task. Other health professions already have undertaken this challenge. Rutherford55 argued for the need to identify and measure nursing's value drivers. She classified these drivers either as the profession's tangible assets (knowledge, revenue, efficiency of care, and patient outcomes) or intangible assets (intuition, care, and trust). Alston and Blizzard56 used the relative value theorem to make a similar case for pharmacists. The most compelling commonality between these 2 articles is the claim that competence, caring, and economics are fundamental components of their profession's value. These 3 domains also are relevant to physical therapy (Fig. 3).
The “Science of Healing” and the “Art of Caring”57 represent the duality of a profession that is built upon the objectivity of clinical theory and research findings as well as the subjectivity of the therapeutic relationship. Taken together, they comprise cognitive, technical, and affective competence of practice. “Cost” considers both the resources consumed to deliver services, as well as the financial savings achieved from successful episodes of care. All 3 of these domains, linked together, contribute to physical therapy's value proposition. Each is referenced in some capacity in the American Physical Therapy Association's core documents for the physical therapist, along with the companion policies and positions for the physical therapist assistant.58 These performance expectations are operationalized in the context of a contemporary description of practice.59,60 These documents, coupled with the evolution of professional physical therapist education to a clinical doctorate, provide the framework for a powerful value proposition for 21st century health care.
Within that framework are the building blocks necessary to deliver on commitments made with respect to quality and cost. Physical therapist practice, at its core, is patient centered. “Patient centered” means “providing care that is respectful of and responsive to individual patient preferences, needs and values and ensuring that patient values guide all clinical decisions.”4 Physical therapists address this expectation when they design plans of care and implement best practices based on goals whose outcomes are measurable and meaningful to individual patients. They also meet this obligation through the “best available evidence–clinical judgment–patient preferences/values” triad that defines evidence-based physical therapist practice.36 The quality of clinical practice is enhanced further by scientists whose work informs decisions about diagnostic tests, clinical measures, prognostic factors, interventions, and outcomes. These approaches to patient management are consistent with the definition of quality promulgated by the IOM.4 With respect to cost, physical therapist practices have access to a wealth of data with which to evaluate the financial impact of the clinical decisions made on behalf of their patients. Researchers, moreover, have the knowledge and skills to perform sophisticated economic studies for larger segments of physical therapist practice.
Thus, the physical therapy profession is poised to articulate and demonstrate its value proposition: reduction of disability and improvement in health status of individuals and populations through more cost-effective physical therapist service delivery. What is needed is a commitment and investment across the profession to leverage and coordinate the necessary resources for this effort. It is no longer sufficient to rely upon a theoretical argument that physical therapy's contributions are beneficial to society. Consistent practice behaviors and a body of credible evidence are required if patients, employers, payers, and policy makers are going to consider physical therapist services among their value priorities.
A Call to Action for the Physical Therapy Profession
We believe that successful demonstration of the value of physical therapist services depends upon a united commitment by all stakeholders within the profession. First, the competing priorities that are generated by different clinical interests, practice settings, research agendas, and professional affiliations must be overcome so that a single message about physical therapy's value proposition can be articulated. That message should reflect the interaction between scientific evidence and therapeutic purpose and their combined impact on health at a reasonable cost. Second, physical therapy academic and clinical educators must develop and implement innovative methods for inculcating the value proposition in professional students so that they will be prepared to practice at the level promised. Third, those dedicated to advocacy for the profession also must use this message to persuade payers and policy makers to adopt rules and regulations that enhance access to physical therapist services in the context of a collaborative, financially sustainable health care system. This coordinated effort is essential to justify physical therapy's contribution to value-based health as defined in Figure 1.
We assert that the inter-related strategies needed to achieve a credible value proposition (Fig. 4) primarily are the responsibility of those who are active in clinical practice and research. We believe the majority of the effort is required of clinicians because they provide the point of contact between consumers and the profession. As noted previously, there is a rich collection of documents that describe the contemporary performance expectations for physical therapists and the support personnel they direct and supervise.53–55 These behaviors must be applied to clinical practice every day in order for the physical therapist–consumer interface to result in value creation. Similarly, researchers must expand their focus to address the increasing demand for evidence that will translate to and enhance clinical practice, as well as evaluate its quality and associated costs of the provision of services. Figure 5 lists the specific tactics we recommend for the physical therapist practice and research communities to address the first 4 of the elements of value-based health.
Several of the bulleted items for “Practice” in Figure 5 are directed internally to the physical therapy profession. For example, use of validated outcomes measures, implementation of clinical practice guidelines, and documentation of the clinical judgment applied during service delivery are essential to determining what constitutes acceptable variation in care and to reducing unwarranted service differences that result in unnecessary costs.61–65 Adoption of these behaviors by physical therapists practicing in all settings will help to standardize information that can inform consumers, payers, policy makers, and researchers. Clinicians, with the assistance of physical therapist scientists, also must be cognizant of the data they have within their practices to assess the relationship between the outcomes they are delivering and the costs generated to achieve them. Contribution to registries will provide the large pools of data necessary to evaluate effectiveness and to develop indicators of quality that can make meaningful distinctions among individual physical therapists and practices.
Although these recommended strategies for practice have professional and market incentives to support implementation, they remain largely voluntary. Engagement in externally driven quality initiatives is another matter. Physical therapists must begin retooling their practices to participate in quality reporting activities that are increasingly becoming mandated by federal and commercial payers. These activities include the adoption of health information technology such as electronic medical records. Currently, only 14% of eligible physical therapists submit data to qualify for bonuses in the Medicare Part B Physician Quality Reporting System (PQRS).17,66,67 Given that the Centers for Medicare and Medicaid Services intends to use data from participation in 2013 to develop the payment method that will be implemented in this system in 2015,68 the majority of physical therapists who bill under the Medicare Part B benefit are already behind the curve and likely will see reductions in payment due to lack of successful participation in PQRS.
Physical therapists engaged in research also must support the physical therapy value proposition. An expanded focus beyond traditional biomedical investigations is required to generate the types of studies that will inform a broader audience. Comparative effectiveness research that is relevant to practice is necessary to enhance physical therapists' efforts to adopt an evidence-based approach to their clinical decision making. According to the IOM, comparative effectiveness research:
Directly informs a specific clinical decision from the patient perspective or a health policy decision from a population perspective;
Compares at least 2 alternative interventions, each with the potential to be “best practice”;
Describes results at the population and subgroup level;
Measures outcomes, both benefits and harms, that are important to patients;
Utilizes methods and data sources appropriate for the decision of interest; and,
Is conducted in settings that are similar to those in which the intervention will be used in practice.69
In addition, economic studies are needed to evaluate the relative utility of physical therapist management in comparison with other health care options that consumers may consider. The examination techniques and interventions used by physical therapists must be assessed at both the individual consumer and population levels to determine their value in a societal context. Identification of and data about best practices are possible from this broader focus. These are the building blocks of clinical practice guidelines, the creation and maintenance of which require a consistent commitment from the research community. Finally, a critical need exists for investigators to identify and test the reliability and validity of quality indicators for physical therapist practice. The creation of patient registries and analysis of the data contained therein are essential to this effort because of the large volume of information required to evaluate performance at the provider and organizational levels. Taken together, we believe that these tactics for research will assist physical therapists in measuring performance in comparison with their peers and with other health care providers. As public reporting of quality becomes more common, these comparisons will assist consumers, referral sources, and payers in identifying high-quality, low-cost providers that fit within their value priorities.
The Role of Professional Associations
Given the tremendous amount of work to be done to develop physical therapy's value proposition, it is reasonable to wonder what role a professional association should play in this effort. We believe that the principal contribution of any organization representing the interests of the profession is to provide resources, tools, content expertise, and networking capacity to support the strategies we have described.70–74 What professional associations cannot do is deliver the value proposition itself. That obligation falls to members of the physical therapy profession, individually and in groups, because they are the point of contact for the people who use its services.
When physical therapists in practice or research implement the tactics we have described, they will create a credible argument to support advocacy efforts for health policies that increase access to timely and appropriate physical therapy services. The chances of success will be optimized if collaborative efforts are organized across the breadth of the profession and its representative organizations. One only needs to look at the challenges faced by physicians who are splintered into specialty groups with separate professional associations to understand the limitations of a divided approach to demonstrating value in a rapidly changing health care system.
The ability to demonstrate value is fast becoming a prerequisite to participation in the US health care system. Physical therapists have successfully positioned themselves as meaningful contributors to the health of individuals and society based on arguments that are supported by a limited body of evidence. Consumers, referral sources, payers, and policy makers no longer accept a profession's anecdotal reports certifying its value. Members across the profession, especially those active in clinical practice and research, must engage in a coordinated approach to develop and deliver physical therapy's value proposition in a manner that is relevant to all interested stakeholders. We present a call to action with specific strategies to implement in this effort. We believe that collaboration is essential between professional associations and the members they represent in order to expedite the work and enhance the chances of its success. Failure to demonstrate value may result in physical therapy's irrelevance as a healing profession.
The authors acknowledge Avalere Health LLC (www.avalerehealth.net), including Karen Linscott (now Chief Operating Officer, National Business Coalition on Health) and Fauzea Hussain. Their assessment of the opportunities and challenges for physical therapist practice with the passage of the Patient Protection and Affordable Care Act provided us with important insights for the manuscript.
Elements of this article were presented by Dr Jewell for the Magistro Lecture at Arcadia University, Philadelphia, Pennsylvania, in 2009.
- Received April 15, 2012.
- Accepted September 13, 2012.
- © 2013 American Physical Therapy Association