Yesterday, Today & Tomorrow: How the Great Recession Has Affected O&P

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By Morgan Stanfield

The global economy is still feeling the pain of the largest economic downturn in more than 80 years. In the United States alone, the "Great Recession" has claimed more than 7.2 million jobs since January 2008, according to the Bureau of Labor Statistics, with overall unemployment topping out at 10 percent. This doesn't even count the 2.5 million people who were unemployed and ready to work, but who hadn't looked for work in the four weeks before being counted, and the 9.2 million unwillingly working only part-time. Canada has taken a softer hit, according to Statistics Canada-its national unemployment is only 8.6 percent, though Ontario's unemployment has crept up to 9.3 percent.

The news hasn't all been dark, however. Healthcare employment has been gaining steadily, adding 631,000 jobs in the United States since the recession began. How has O&P, a field that usually enjoys stellar stability, faring in this economic landscape?

To learn the answer, The O&P EDGE  informally surveyed a variety of types of practices-small and large, single-practitioner and multi-clinic, U.S. and Canadian. We asked four simple questions about how they were weathering the recession. The results of the survey are likely subject to what's known as selection bias-the tendency of respondents with negative news to refrain from answering and the tendency of surveyors to find participants who are eager to answer. However, the answers remain revealing, primarily due to practice managers' insights into the financial pressures on the field, and their resourcefulness in responding to them.

Question 1: To what degree, if any, have your revenues changed during the recession?

Practices reported a wide variety of experiences across the revenue scale. Many reported battling powerful external influences that can suck revenue but had actually grown, thanks to aggressive marketing and other tactics. Most multi-clinic practices reported growth, while more single-clinic practices-especially single clinician practices-reported stable or somewhat diminished revenues.


"My practice is experiencing tremendous growth through the recession, [but] even with the growth I still need to look at my expenses," said Brett Saunders, CPO, LPO, owner of Saunders Prosthetics and Orthotics Group, Lady Lake, Florida. Saunder's practice is based in an 80,000-resident retirement community, and his practitioners also travel to various local venues. He explained, "What I have seen is declining reimbursement per item, an increase in the number of people with financial hardship, a growing number of people without coverage, and more people that are underinsured-those with very high deductibles, where their insurance mainly serves as a discount card so the subscriber just has to pay the contracted rate."


Wendy Smith, CP(c), CCA, founder of and sole clinician at Lifeart Prosthetics, West St. Paul, Manitoba, Canada, was upfront about her downturn: "Revenues have decreased about 10 percent. Patients who pay for prostheses themselves are feeling the pinch of the recession and are waiting to have a prosthesis made until finances are more stable." Her main business is in highly lifelike prostheses, including custom breast forms, fingers, and facial prostheses-some of which patients might deprioritize when cutting out non-essentials.

Question 2: To what degree, if any, has your reimbursement process changed during the recession?

Respondents reported on two sides of this question: what payers brought to the table, and what their own practices did.


Chris Jones, CPO, founder and owner of Rebound Prosthetics, Denver, Colorado, gave an answer that many respondents echoed-he hadn't noticed an increase in denials, but observed that insurance companies seemed somewhat slower to pay.

Jeffrey Quelet, CPO, practice manager at the Ability Prosthetics & Orthotics office in Hagerstown, Maryland, expressed another common sentiment-the information that insurance companies are requesting has increased. "Letters of medical necessity, detailed [prescriptions], clinical notes from doctors, and clinical notes from ancillary providers," he listed. "I feel they [insurance companies] are asking for the same...information seven different ways-this can become very frustrating."


Most practice managers who reported changing their processes said that they had ramped up efficiency-which many said meant increasing communication. "We are always improving the method in which we seek authorization before billing," said the practice manager of a business that declined to be named. "We believe that through great communication and an efficient protocol, we have reduced the number of denied claims...."

Several Ability Prosthetics & Orthotics offices reported growth, attributing it to factors including patient education and claims-processing assistance."Even before the recession hit, I think one thing that has made Ability able to grow so fast has been our attention to [the idea], 'get paid for what we do and provide,' and do it with attention to detail," Jeffrey Brandt, CPO and CEO, reported from Ability's Exton, Pennsylvania, facility. "We have definitely taken a more proactive approach in educating our patients...during the initial evaluation about what the percentage owed will equal in actual dollars for them.... If an insurance company will not approve a device until they determine medical necessity at time of claim submission, then we encourage the patient to insist on an approval or denial of authorization-or to simply pay for the device until the claim processes.... And any patient that wants to advocate for themselves, we will gladly assist them in any efforts to appeal or refute denials in situations where we feel it is medically justified-which is all cases because we never take on cases that we don't feel are justifiable."

Question 3: What, if any, steps have you taken to increase revenue during the recession?


This question prompted the survey's most enterprising answers. Early adoption of technology; forming partnerships with manufacturers, vendors, and industry thought leaders; and bolstering technology infrastructure by purchasing practice-management software topped the list. Marketing was another major topic, with a number of creative variations.

"We have made it a priority to in-service our referral sources on current and new technologies," John Jacobs, CPO, of the Ability facility in Frederick, Maryland, said. "This empowers the caregiver on how patient care and outcomes can be improved and makes them aware that we embrace new technologies and strive to improve patient outcomes."

Question 4: In what other ways, if any, has the recession affected your business?

Participants both sounded off and gave their best advice in response to this question.

Jones, as well as several others, noted greater indirect costs. Jones said, "When gas prices increase, we pay more for shipping and freight.... Patients also have a difficult time when money is tight, with travel costs and trying to limit the number of physical therapy appointments."

Quelet said, "We practice continuous improvement of our internal processes to ensure that the cases we are working on move through the system in a streamlined and efficient fashion with no redundancy of data or tasks surrounding any of the cases...." He advised, "Read every single patient-satisfaction survey-your patients will tell you where the bottlenecks are in your practice/company."

Brandt added, "Ability on a whole was up over 30 percent in 2009.... We expect to increase existing office revenues by adding orthotic fitters to function as care-extenders as well as by new product and service offerings. We have also diversified by founding a product development company, Kinetic Revolutions."

Smith concluded by describing a practice that any business can benefit from-using the current situation as an opportunity to prepare for a better future: "I have chosen this time to change my business plan so that new initiatives can be implemented when the market is ready for them.... I have tried to streamline processes as much as possible and have done some research and development, so that when the recession recovery gets moving, I'll be ready for the increase in work."

Morgan Stanfield can be reached at