Doctors' employment of physical therapists at risk

Physicians say in-house physical therapy is better for patient care.

By Myrle Croasdale — Posted May 2, 2005

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Organized medicine leaders are alarmed over recent legal decisions that prevent physicians from employing physical therapists and threaten to undermine their ability to employ other health care-related professions.

Federal law allows doctors to refer patients to employees within their practice. But Delaware, Missouri and most recently South Carolina have made self-referrals to physician-employed physical therapists illegal or nearly impossible for physicians because of licensing penalties imposed on physical therapists who receive a paycheck from physicians.

In February, a South Carolina court upheld restrictions that went into effect in March 2004, leading E. Neal Powell Jr., MD, an orthopedic surgeon with Carolina Orthopaedic Surgery Associates in Rock Hill, S.C., to worry that his patients might take a longer time to recover from surgery. When patients come into his office for physical therapy, he said, he is able to monitor their progress and fine-tune their treatment more effectively than he can by sending patients off-site.

Robert H. Haralson III, MD, executive director of medical affairs for the American Academy of Orthopaedic Surgeons, said he fears that other licensing boards could use the physical therapy situation as an example of why they should be able to keep ancillary health professionals out of physicians' offices.

South Carolina Medical Assn. President John Evans, MD, agreed.

"This has the potential to affect any of the other professionals employed by physicians, such as radiology technicians, nurse practitioners, audiologists, perhaps even physician assistants," he said.

Restricting self-referrals

The South Carolina Assn. of Physical Therapists in January 2004 asked South Carolina Attorney General Henry McMaster to interpret the Physical Therapy Practice Act so that physician self-referrals would be eliminated. Physical therapists believe self-referrals give doctors undue influence over patients. In March 2004, McMaster issued an opinion eliminating self-referrals.

His opinion allows the state's physical therapy board to pull a physical therapist's license if a physician who refers the patient to the physical therapist is the same person who pays the therapist's salary.

The South Carolina Medical Assn. and the newly formed South Carolina Assn. of Medical Professionals sued the South Carolina Board of Physical Therapy Examiners and requested an injunction to keep the state from interpreting the law that way. But in February, South Carolina Circuit Judge J. Ernest Kinard Jr. upheld the attorney general's opinion.

Physicians have until May 25 to get legislation passed to protect their ability to employ physical therapists. At press time, a South Carolina House committee was moving forward in the hearing process, and a Senate bill was scheduled for a committee hearing the third week of April.

Laws restricting physicians' employment of PTs already are established in Delaware and Missouri.

Delaware's interpretation of the state's physical therapy practice act is similar to the one South Carolina adopted. That interpretation, in effect since 2002, is not being actively challenged. In 1995, Missouri lawmakers passed a law that prevents physicians from referring patients for therapy at clinics in which they have any degree of ownership.

Opposing views

Orthopedic surgeons want the option to employ physical therapists because they believe that a patient who receives physical therapy in a physician office setting gets well faster. They say there is no evidence that physicians overuse therapy when they self-refer.

Dr. Powell, who helped form the South Carolina Assn. of Medical Professionals to fight the prohibition of doctor-owned physical therapy services, employs two physical therapists, two physical therapy assistants and three support staff for the therapists.

He said keeping a patient within the practice is good for the patient's care. Dr. Powell said he knows his physical therapists' skill level, information he would not have if the patient went to someone outside of his office. He can set a patient's postoperative therapy protocol, which he considers tighter than the average physical therapist's. He is also immediately available to treat a medical problem that a therapist might see during a session, preventing the patient from having to make another appointment.

Physical therapists, though, say self-referral needs to end because physicians overuse physical therapy when they are allowed to self-refer.

Fran Welk, DPT, a physical therapist in Bloomsburg, Pa., and chair of an American Physical Therapist Assn. task force on the issue, said the conflict of interest inherent in physician ownership of physical therapy services was the same as physician ownership of specialty hospitals that the Medicare reform bill put under a temporary moratorium.

Before Stark regulations clarified that physicians could refer patients to their own physical therapists, doctors sent their patients to physical therapists based at hospitals or independent clinics, Welk said. When physicians began hiring their own physical therapists in the late 1990s, independent and hospital-based therapists began losing patients. He said most patients will stay in-house for physical therapy if that's what the doctor recommends.

"We think there's not a level playing field with physician-owned therapy," Dr. Welk said.

"If physicians can receive some financial benefit by retaining the patient in their practice, there's potential for conflict of interest to the detriment of the patient."

Dr. Powell counters with data from an audit of his group's practice, which found that his group was sending 54% of referrals out of the practice. Either the patients' insurance determined where they could get therapy or it was a patient's choice to have therapy closer to home, he said.

Dr. Haralson also has data that supports the physician side of the debate.

He said a review of data from BlueCross BlueShield of Tennessee showed that patients with knee replacements had fewer visits when going to their physician's therapist than those who went to outside clinics.

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Who can you hire?

Some states are restricting who physicians can employ, which doctors say ultimately affects how they practice medicine and the level of care patients receive. So far only physical therapists have been affected, but doctors worry that the limits will expand to include other health professionals.

States where physicians may not employ physical therapists: Delaware, Missouri, South Carolina

States where PT practice acts are open to interpretation that could result in prohibitions: Arkansas, Arizona, Florida, Louisiana, Tennessee, Wyoming

Sources: American Academy of Orthopaedic Surgeons; American Physical Therapy Assn.

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