From Change, New O&P Business Models Emerge

Over the last two decades or so, healthcare has faced technological changes and digital advances, personalized medicine, electronic medical records, artificial intelligence, and the global health challenges resulting from the COVID-19 pandemic. In addition, factors such as an increase in vertical integration, third-party reimbursement policies, direct-to-consumer marketing, and telemedicine have had their own significant impact on the way in which healthcare companies—O&P included—do business. We spoke with industry leaders regarding ways they have adapted amid the changing healthcare landscape. The Effects on O&P We asked our experts what changes to the healthcare market they believe are having the biggest impacts on the O&P profession. Julie Alley, president of biodesigns, California, says “everything” is having major effects on O&P business, but vertical integration is a hot topic. “I know the theory was to help independent [companies] compete, but I’m hearing another side. In many cases when a clinic is being acquired, they lose everything that made them so good. We see how vertical integration is attractive to clinics, as a larger organization can provide more resources, product discounts, and greater marketing power, but if the larger companies are more interested in speed of delivery and the bottom line, with little to no concern with outcomes, the patient will suffer greatly.” Joe Fairley, CP, owner of Ascent Fabrication, New York, says reimbursement policies are affecting the decisions of the larger companies—Hanger, Ottobock, Össur, Eqwal—regarding vertical integration. He gives the example of Hanger acquiring SureStep, Eqwal purchasing Spinal Technology, and Ottobock investing in Cascade Orthopedic. “These business relationships often hamper the ability of smaller clinics to compete with operating costs in comparison to those larger companies’ costs,” Fairley says. “This then allows these larger companies to offer smaller companies a buyout that is more appealing than the smaller clinic trying to fight them for referrals in a congested market.” Fairley says this stifles creativity and the opportunity to offer the same patients a wider range of componentry “because those large clinics will only want their clinics to mostly operate within their vertical integrations to maximize their profits,” he says. Dennis Janisse, CPed, National Pedorthic Services, Wisconsin, who has spent more than 50 years in the O&P profession, says the biggest challenge comes with third-party reimbursements. “It can either limit care provided or limit access,” he says. When it comes to telemedicine, it was great during the pandemic, according to Alley. “We mostly used it for a pre- evaluation of patients who were interested in being treated in our clinic, but were out of state or in a different country,” she says. “It helped us do our job more effectively and benefits the patients who can’t always physically come to our office.” Direct-to-consumer marketing also has its place, says Alley, who is in favor of patients buying more items such as socks, liners, and suspension sleeves directly from shopping sites. “I know in California, with most private insurance we can lose money on some insurance plans when we replace a patient’s liner, seals, or donning sheaths, [but] if this process was streamlined, it would be a win-win for everyone.” Nathanael Feehan, LPO, Master’s Orthotics and Prosthetics, Washington, says the biggest impact has been third-party reimbursement policies. In general, he says, the O&P industry, vendors, and practitioners are now pushed by the margins to provide certain items. “Our entire process now is not driven by what is best for the patient but what is the easiest to get approved with the largest margin,” he says. “Patients suffer and so does our bottom line.” In addition, unlike Alley, Fairley, or Janisse, Feehan says he doesn’t believe the O&P profession in the Pacific Northwest has necessarily faced much threat when it comes to vertical integration or direct-to-consumer marketing. “The increase in regulation and difficulty in obtaining needed documentation from sources other than our own is raising costs for us,” he says. He also cites wages as a source of increased expenses. Feehan believes that a company’s administrative staff have likely seen the largest percentage wage increases of any O&P group, even above clinical and especially technical staff. “Due to market forces and high local wage markets some of our administrative staff are making more than our clinical fitters,” he says. Operating Successfully in a Changing Market Our experts say that businesses have to find ways to separate themselves to stay successful and competitive—that means striving to stay unique with their business models and in what services they are able to offer. “We are able to differentiate ourselves through our ability to have multiple revenue streams,” Alley says. “In our clinic, we treat all types of prosthetic patients, but especially cater to those individuals who are needing upper-limb prostheses, advanced systems, and/or those who are frustrated with their existing socket.” Direct Prosthetic Care Model Fairley has been leading the way in embracing a new direct care model. He opened Amplify Prosthetics in the fall of 2023, implementing and pioneering a pilot direct prosthetic care (DPxC) program. Direct prosthetic care, modeled after a direct primary care model, allows patients to manage their prosthetic care by paying a monthly care fee to Amplify Prosthetics, as well as having the option of a payment plan for their prostheses delivery, Fairley says. Third-party payers are not involved. “The noncustom components are charged at cost to the patient, therefore translating to discounts and dollars saved, rather than being charged under the current constraints of our L-Code–driven payment system,” he says. “Amplify Prosthetics utilizes a completely digital workflow and 3D printing in order to have the ability to offer this type of care to its patients. By implementing both a fully digital approach as well as DPxC, we have become more self-sustaining and not as reliant on the external forces of the insurance reimbursement system, which does not seem to be changing in favor of the clinician or the patient.” Fairley says what makes Ascent Fabrications (central fabrication and external training) and Amplify Prosthetics (direct clinical care) unique is that each operate solely through a completely digital workflow in terms of limb shape capture (3D scanning), digital clinical modifications, and 3D printing of the patient end-use devices. “We are one of the few, but a growing number of clinics that utilize a completely digital approach, mainly for the benefit of making our processes more efficient,” he says. “As well as being able to provide prosthetic care in an expedited timeframe.” HiFi Technology When Alley, who has a background in advertising and marketing, first looked at the O&P business model, she says she thought, “This is nuts.” Often in healthcare, procedures are performed and then those services are billed. With prostheses, however, the high component costs can deter a clinician from providing a particular system. “The hydraulic knee, for example, is often chosen over the microprocessor knee or the body-powered system over the myoelectric one, even when the patient may not only be a candidate but far better served by the more advanced system,” she says. “We should be making decisions on what is in our patient’s best interest and not have the added pressure of what and when we are going to be paid for the system provided,” Alley says. Biodesigns has implemented scanning and 3D printing into its workflow and can still do casting if needed for complex upper-limb shapes, Alley says. “We use our patented HiFi Imager equipment to apply compression at scanning or casting, which allows a patient from the beginning of the process to provide feedback so we can make a much more intimate and biomedically advanced interface,” she says. Open-book Management Style Feehan says he grew up “living and breathing O&P.” His father wore a KAFO for 55 years and was a CPO for 32 years. “At 16, I volunteered at my father’s clinic and fell in love with the hands-on nature of the field,” he says. “When my father opened his own practice in 2003, I was right beside him doing reception, insurance, billing, bookkeeping, and technical work while getting my undergraduate degree in business.” When Feehan took over the business after his father died in 2015, he continued to look for ways to increase employee involvement and transparency. He adopted the Great Game of Business principles—an open-book management style that gives employees the power to make financial decisions and understand how their work impacts the bottom line—and adapted them to fit into the company’s business philosophy. Results were unprecedented, according to Feehan. “This resulted in a 1,500 percent profit increase and enhanced employee engagement by the end of 2022,” he says. Having studied the impact of inflation on O&P and healthcare as a whole, Feehan believes the business philosophy he applied at Master’s can help a business navigate current and future challenges. “I became a certified coach in the Great Game of Business this year to spread these principles to small business and O&P providers, enabling them to provide essential care while remaining adaptable,” Feehan says. Benefits of Direct Patient Feedback DPxC was conceived based on patient feedback, Fairley says. “We are constantly taking patient feedback into consideration when we are providing care,” he says. “Patients are tired of waiting months to be provided medically necessary care and clinicians are tired of being harassed by the reimbursement process.” “We get great patient feedback as they appreciate our passion, dedication, and focus on interface biomechanics,” Alley says. “They appreciate our pursuit of outcomes excellence as we try not to burden them with the realities of everything that goes into the process of delivering a finished prosthesis. “However, it is sometimes unavoidable, and the patient must get more actively involved, especially when insurance companies use tactics to delay authorization and/or push out payment,” she says. “I am still waiting for payment on a tibial prosthesis that was submitted in May [2023]. Nothing fancy, first prothesis for a new amputee, billed to Blue Shield PPO. The last thing I want to burden our patients with is getting them on the phone with their insurance company to help us fight for payment, but often it is what needs to be done.” Feehan says he and his employees have done little as it relates to patient engagement. The number-one thing that he and his team prioritize is that their patients have the best experience when it comes to their care—and that comes by hiring the best people. “When everyone in the process is doing their utmost for the patient’s experience, then the patient will have [the best experience],” says Feehan, who explains that the hiring process is long and extensive. “We have an eight-step interview process,” he says. “And the entire team is involved, so a 360-degree view of the potential team member is obtained.” The hiring process is not infallible, Feehan says. “[It] doesn’t mean we haven’t made mistakes and had to let people go,” he says. “But for the most part we have people with five-plus years of experience, awesome chemistry, and no drama.” Because Master’s takes its time hiring, Feehan says, ultimately, “it saves us thousands of dollars in lost productivity.” Managing the Patient Experience Most patients want and expect undivided attention and care—the best experience possible. There are several steps practices take to ensure a successful patient relationship from beginning to end. Janisse says a good customer experience with his pedorthic business begins when the phone rings. “It starts with a good experience, a knowledgeable, caring person on the phone,” he says. “[Then] a warm, friendly office visit and an extreme caring patient appointment experience.” As a result, “Patients express that they enjoy and appreciate the personalized care and time we spend with them,” Janisse says. Fairley says by providing a direct care approach, “we are spending more one-on-one time with our patients, getting to know their every need, and actually hearing them out about any problem or suggestion they may have and thinking about how we could tackle it from a different direction that is not influenced by the reimbursement process.” Biodesigns maintains an open communication policy with their patients, Alley says. “We try to expedite the fitting process so that they are not waiting months for a new prosthesis once we have the approval process in place. We usually have two- to three-hour appointments so we can make significant traction versus many shorter appointments stretched over months,” she says. And how do O&P practitioners see the patient experience changing as the healthcare landscape continues to expand and change? Unfortunately, says Alley, to continue to provide high-quality service, biodesigns is likely going to have to implement fees for follow-up appointments beyond six months and fees for warranty replacements and warranty component servicing. “In other words, the patient is going to suffer as insurance companies and manufacturers make record profits,” Alley says. “Prosthetists should not have to eat these costs month after month.” What can be done to remedy that? “Manufacturers at a minimum, should provide at least shipping back and forth for warranty replacements and product servicing,” Alley says. “I know this is done on some higher-end components, but not with all companies or with the smaller items like liners and seals.” In terms of rising healthcare costs, falling insurance reimbursements, and the consolidation of clinic options for patients to find and have access to quality care, Fairley views the healthcare landscape as a slippery slope. “As acquisitions, mergers, investments, and vertical integrations continue to become more prolific, the patients will become more treated like a number and less like a human in need of professional support,” Fairley says. Regardless of how the future healthcare landscape continues to change and unfold, Feehan says that at Master’s O&P, “We are still going to care.” And the people on the team will differentiate the company from its competition. Change and Continued Success Our experts also gave their thoughts on the hardest thing about change when it comes to the continued success of an O&P practice and positive patient outcomes. All agree that the insurance reimbursement processes are trying for most in the O&P profession. It’s also fear, says Feehan. “It holds us back and prevents us from doing the things which we know need to be done.” Feehan gives the example of having to drop a particular insurance company that had been paying them below cost for nearly all but ten percent of their services. “We have been somehow engrained that you need to have every insurance to be competitive,” he says. Feehan says the decision to drop the company took courage, but it has seemingly paid off. “We found that 80 percent of our patients [with that specific insurance company] either paid cash or the insurance company paid us out of network at our usual and customary costs.” The change Alley sees in the industry is not good or productive. “I continue to see a business model that is not sustainable; an increase in administrative requirements, coupled with a decrease in reimbursement, followed with an increase in costs of goods and labor, topped off with a delay in payment,” she says. “Not a formula for success but pressure points that will probably cause many to lower their standards and/or the quality of their product. We love what we do, the patients we help, and the technology that is being developed and utilized, but as a business model, there are many flaws.” Alley advises, “Don’t get into clinical care unless you have something unique to offer.” However, she says, “With the right pressure and direction, much can be done to improve the field, but I don’t see prosthetists and/or our organizations fighting hard enough for the right things. Having the prosthetist’s notes as part of the medical record does nothing to speed up authorizations or payments. Real improvement would involve the prosthetist being seen as the authority with the doctor supporting the decision on treatment. Or the industry striking due to poor reimbursement rates. In California, private insurance (including pricey PPO plans) pay significantly below Medicare rates, and therefore we can only work with a handful of insurance companies. Finally, manufacturers should take on some of the burden for the increase in costs or come up with lower cost alternatives. I continue to get letters stating their rates/products are going up, even if the L-Code reimbursement doesn’t cover our costs. Yet, I am hopeful and energized there will be those who continue to push back.” Betta Ferrendelli can be contacted at betta@opedge.com.

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