Transforming Rehab Therapy: The Dual Impact of Value-Based Care and Technology in Hospitals

In the rapidly shifting healthcare landscape, the transition toward value-based care principles and payment models marks a significant evolution, one that emphasizes outcomes and efficiency over the traditional volume-based approach. 

These efforts are critical within hospitals, where interdepartmental collaboration and communication are key to ensuring patients receive optimal care before safely transitioning to the next phase of their healing journeys. Hospitals are increasingly being evaluated and reimbursed through the lens of value-based care, which has largely manifested into strategies to reduce complications and lower readmission rates. 

Hospital acute and outpatient rehab therapy departments are not immune to the transition to value-based care. In fact, they often play a pivotal role in helping hospitals achieve value-based goals related to patient safety, rehospitalization, and discharge planning. 

A 2021 study on hospital discharge planning and readmissions, in fact, found that readmission rates for patients with no physical therapist (PT) on their interdisciplinary discharge teams were 3.78 times higher than those who had a PT on their teams. Central to this impact is the ability of rehab therapists to recognize and manage functional impairments in patients and their ability (or lack thereof) to thrive in a new environment. 

In this section of our e-book about value-based care, we take a wider look at the impact hospital rehab therapists have in ensuring patients’ safety and success while contributing positively toward various value-based payment programs. We’ll also discuss the impact these programs are having on the therapy teams themselves. 

From streamlining interdepartmental integration and collaboration to tracking rehab therapy efficiency and patient outcomes, technology already plays a critical role in the overall operations of hospitals. Also in this chapter, we will further explore the important ways technological tools and solutions are affecting, and will affect, value-based efforts in hospitals. 

Rehab Therapy in Hospital Acute Care   

Rehab therapists in hospital acute care settings play a critical role in delivering quality patient care, with a focus on improving patient outcomes, expediting recovery, and ensuring safe transitions from hospital to home or another care setting. Their goals are geared toward maximizing patient independence and functionality within the constraints of their medical conditions. 

The primary goals of hospital acute rehab therapy teams include: 

  • Improving functional independence 
  • Reducing complications 
  • Pain management 
  • Safe and effective discharge planning 
  • Educating patients and families 

By achieving these goals, rehab therapists in hospital acute care settings significantly contribute to the overall health and recovery of patients, reducing the length of hospital stays, preventing readmissions, and improving quality of life. 

Their role is integral to transitioning patients from acute care to their next phase of recovery, whether at home or in another care facility, with the skills and resources needed to continue improving. 

If they don’t improve, however—if they develop complications, get injured from a fall, or must be readmitted to the hospital for another reason—hospitals may be penalized financially due to one or more of a growing number of value-based payment programs implemented privately or through the Centers for Medicare and Medicaid Services (CMS). 

The Impact of Rehospitalization on Value-Based Payment Programs 

One of the primary measures of the success or failure of a hospital’s performance is its readmission rate. Not only do readmissions increase hospital costs, but they also negatively impact overall patient outcomes. 

As part of a widespread effort to reduce hospital readmissions, CMS has implemented three value-based payment programs for hospitals: the Hospital Value-Based Purchasing (VBP) program, the Hospital Readmission Reduction Program (HRRP), and the Hospital-Acquired Condition Reduction Program (HACRP). 

“The big buzzword in all of these programs from a therapy perspective is readmission reduction,” said Holly Hester, PT, DPT, CHC, CHPC, Senior Director of Client Experience with Net Health. 

HRRP, for example, reduces dollars to hospitals under the Medicare payment system when there are excessive readmission groups, one of which includes patients who have elective total knee and hip replacement surgeries. Readmissions can result in a payment reduction of up to 3% for unplanned readmissions. 

Similarly, the Hospital VBP program also monitors groups of patients who have elective knee and hip replacement surgeries, along with other categories of patients. Under this program, Medicare payments can be deducted if these patients experience increased complications during or after their hospital stays. 

“Nothing in these programs say, ‘Thou shalt have therapy in the hospital setting,’ but that’s two instances right there where hospitals could potentially have their payments dinged if their outcomes are not successful for their elective total joint patients, and that’s [primarily] therapy related.” 

Complementing these payment programs is the Hospital-Acquired Condition Reduction Program (HACRP), which targets a set of hospital-acquired conditions identified by Medicare as critical indicators of quality of care. Trauma associated with falls, such as a hip fracture, is included in the formula for measuring hospital-acquired condition (HAC) scores. 

Hospitals that fall within the lower 25 percentile of scores at year-end receive a 1% payment reduction on their overall Medicare fee-for-service payments for the fiscal year. 

“This is one of those pure, true-blue value-based care reimbursement models where hospitals get penalized for patients who fall and fracture their hip, and they get penalized in a double or triple way,” said Kevin Keenahan, Chief Product Officer at Net Health. “First, they don’t get reimbursed for repairing that hip fracture. So, they must eat that cost and then treat all the patient’s primary and secondary diagnoses out of pocket. And then they may get dinged through HACRP.” 

Other Common Hospital Value-Based Care Efforts  

Outside of CMS-developed programs, hospitals often participate in other initiatives and groups, such as accountable care organizations (ACOs), which are created to achieve many of the goals of value-based care efforts. These include reducing costs, enhancing care coordination, stimulating quality improvements, and encouraging an evolution toward a more patient-centered approach to care. 

An ACO is a network of physicians, hospitals, and other healthcare providers that voluntarily come together to give coordinated, high-quality care to their Medicare patients. The primary goal of an ACO is to ensure patients, especially those with chronic illnesses, get the right care at the right time while avoiding medical errors and duplication of services. 

Several ACO models exist, some of which allow providers to share in the savings they generate from Medicare by meeting certain efficiency and quality targets. More advanced models also involve sharing some of the financial risks if the costs exceed benchmarks, pushing hospitals to optimize care processes and resource utilization. 

It’s also common for hospitals and providers to contract with managed care organizations. This is a type of health insurance provider that establishes contracts with healthcare providers and medical facilities to offer care at reduced costs. These organizations strive to control costs, offer quality incentives, coordinate and manage care, and innovate new payment models. 

The primary forms of managed care organizations include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Point of Service (POS) plans. 

The Impact of Value-Based Care on Hospital Acute Rehab Therapists 

Value-based care initiatives and payment programs have had, and will continue to have, a significant impact on hospital acute rehab therapists in several key areas, reshaping their roles, responsibilities, and how they interact with the healthcare system. Here’s a breakdown of the major impacts:  

Increased Focus on Functional Outcomes 

Value-based care places a strong emphasis on patient outcomes. For rehab therapists in acute care settings, this means a heightened focus on achieving measurable improvements in patient mobility and function. 

Therapists are increasingly responsible for ensuring that their interventions lead to clear, positive outcomes that can be documented and analyzed. Tests like the Activity Measure for Post-Acute Care (AM-PAC) assessment are centered around evaluating and improving patient functional independence, ensuring safe discharge planning. 

“Predischarge functional status represents an important modifiable risk factor involved in early readmission,” stated a recent study linking AM-PAC assessments with readmission prevention. “Using functional status to identify patients at risk for unplanned readmission may enable strategies for earlier resource allocation, such as rehabilitation interventions, to minimize functional decline while in the acute care setting.” 

Greater Role in Discharge Planning 

As part of value-based care models, rehab therapists are more frequently included in interdisciplinary teams responsible for discharge planning. Their expert assessment of a patient’s functional status and capabilities is crucial for developing effective, safe discharge plans that reduce the likelihood of readmission. 

This involvement also extends to recommending appropriate post-acute care services and supports, ensuring continuity of care and optimizing recovery trajectories. 

As stated earlier, one study determined that hospital patients are nearly four times more likely to be hospitalized when a physical therapist is not part of the discharge planning team than when PTs are included in these discussions.  

“One of the biggest roles and responsibilities of the therapist in acute care is to be part of that discharge planning process and to make the recommendation of where the patient needs to be after they leave,” Hester said. “If they’re 75 years old and they lived alone in a house with stairs to enter, and they can’t go up and down stairs, then they can’t go home by themselves.” 

Enhanced Use of Technology  

The push toward value-based care has accelerated the adoption of advanced technologies among hospital rehab therapy teams, especially those solutions that enable them to work more efficiently, better schedule and coordinate their team, communicate with other departments, and track and record patient outcomes. 

Often, this involves using rehab-specific electronic health record (EHR) software that improves documentation accuracy and efficiency. Digital patient management boards are being used more frequently, ensuring therapists see patients more rapidly, which may result in quicker discharges.  

Finally, value-based care relies heavily on data to drive both clinic and cost-based decisions. This has led rehab therapists to become more involved in collecting and analyzing data related to patient care, mobility, discharge, efficiency, and productivity. 

Increased Accountability 

As factors such as productivity, efficiency, and patient outcomes can potentially impact hospital payments and reimbursement via value-based care programs, hospital administrators are becoming more vigilant about receiving regular reports and insights related to these matters. 

Hospitals and their staff, including rehab therapists, are held accountable for the cost and quality of care under value-based models. This results in increased pressure on therapists to ensure that their practices are clinically effective and cost-effective. 

Therefore, physical therapists, occupational therapists, and speech-language pathologists must consider the wider implications of their treatment choices, striving to provide the highest quality care within the constraints of the hospital’s budget. 

Collaborative Care Approaches 

With value-based care comes a stronger emphasis on interdisciplinary collaboration within hospitals and large medical facilities. 

Rehab therapists often work more closely with a broader range of healthcare professionals, including physicians, nurses, social workers, and other specialists, to provide coordinated and comprehensive care. This collaborative approach is essential for addressing the complex needs of patients in a holistic manner. 

Collaboration, according to Hester, includes communicating with healthcare professionals who will be involved in the patient’s episode of care following discharge. 

“When you’re trying to contain cost and get the best outcome that you can, which is the definition of quality … you have to coordinate,” she said. “You have to communicate. You have to know who’s involved with this patient. What’s the next step in care? Who do I need to communicate so that no balls are dropped, if you will, from transition from one place to the other?” 

Professional Development and Training 

To meet the demands of value-based care, rehab therapists may need additional training and professional development. This could include education in new treatment methodologies, data analysis, and the use of digital health tools. 

Keeping up to date with these developments is crucial for therapists to remain effective within the changing healthcare landscape. 

Overall, the impact of value-based care on hospital acute rehab therapists is profound, pushing them to adapt to new roles that require a blend of clinical expertise, data proficiency, and collaborative practice. These changes are intended to improve patient care, reduce healthcare costs, and enhance overall system efficiency. 

Rehab Therapy in Hospital Outpatient Care 

There are arguably more similarities than differences between private practice rehab therapy clinics and hospital outpatient rehab therapy clinics. While hospital clinics may treat more patients who have been hospitalized or had a hospital-based procedure (though this isn’t necessarily guaranteed), both types of clinics treat patients with similar goals in mind: 

  • Restoration of function 
  • Pain management 
  • Musculoskeletal injury prevention 
  • Chronic disease management 
  • Prolonging personal independence 
  • General wellness and improved quality of life 

Hospitals, however, generally have greater resources that lead to better facilities and equipment. As they’re tied so closely with teams of other healthcare professions, hospital clinics often also have a leg up when it comes to care coordination and the integration of services. 

Billing processes and payer coverage may also differ between hospital and private practice rehab therapy clinics. While not always a given, hospitals may accept a broader range of insurance plans due to established agreements. 

From an operational perspective, however, one difference between the two types of outpatient programs is undeniable. While private practice rehab therapists can bill Medicare through a value-based payment program (the Merit-based Incentive Payment System, or MIPS), no such program exists for hospital rehab therapists. 

This, however, does not mean that hospital outpatient rehab therapy programs have no incentive or directive to provide a value-based quality of care. 

The Impact of Value-Based Care in Hospital Outpatient Rehab Therapy 

The impact of value-based care on hospital outpatient rehab therapy is considerable, reflecting broader shifts within the healthcare industry toward more accountable, patient-centered, and cost-effective care.  

Despite being excluded from participating in MIPS or a MIPS-like program, which can have a direct positive impact on Medicare reimbursement rates, the transition from volume-based to value-based models in outpatient rehab therapy can impact hospital outpatient rehab therapy departments in several ways. These include: 

A Greater Focus on Tracking Patient Outcomes 

Judy Holder, Account Executive with Net Health’s Focus On Therapy Outcomes (FOTO), summed it up best by saying, “I think that what you measure, you improve.” 

While reimbursement in hospital outpatient rehab therapy care may not always be tied to the effectiveness of the treatment provided (there may be some exceptions for clinics whose hospitals are members of an ACO), measuring progress and success typically leads to improvements in patient care and outcomes. 

As will be discussed in the next two sections, being held accountable for these measures both internally and externally further compels providers to establish a more patient-centered approach to care. 

Increased Accountability to Hospital Stakeholders 

The increased use of outcomes management solutions and rehab therapy-specific EHR software tracks data and insights hospital administrators covet. This has led to a greater expectation for rehab therapy departments to regularly report on success rates and challenges related to patient outcomes, clinical productivity, operational efficiency, and growth. 

In the view of many hospital administrators, rehab therapy departments are still considered cost centers. By showing data around the value they provide patients and the hospital at large, rehab therapy departments can strive to carve out a larger piece of the operational pie, helping ensure they get the resources they need to generate even greater value. 

A Need to Establish Rehab Therapy’s Value to Referral Sources  

Like private practice rehab therapy clinics, hospital clinics rely heavily on referral sources. This includes referral sources (i.e., physicians and specialists) from their own hospitals, who by law have no obligation to refer patients to the hospital outpatient clinic if they feel it won’t provide them with the best possible care and results. 

This puts the onus on hospital outpatient rehab therapists to not only provide the best value, experience, and outcomes to their patients, but to use outcomes data to prove this to referring physicians. 

Also, some third-party payers may prefer to send patients to hospitals and health systems that are measuring and reporting quality outcomes. 

Incentive for Improving Patient Access to Outpatient Rehab Therapy  

As in private practice rehab therapy, hospital outpatient clients must compete for patients within their local markets. When a new patient comes in the door, ensuring he or she is fully engaged and invested in their plan of care is essential for achieving positive outcomes. 

A willingness to invest in digital tools that enable patients to access the clinic via services via telehealth, patient portals, remote therapeutic monitoring (RTM), direct secure messaging, etc., can create a new level of value that perhaps some competing private practices may not have the ability to offer. 

Staying engaged and remaining flexible to patients’ needs can cut down on cancellations and no-shows, improve home exercise compliance, and optimize patient outcomes. 

The Impact Technology Has on Value-Based Care 

According to Holder, FOTO was founded more than 30 years ago to prove that outpatient rehab therapy offers value. It is an effort that seems antiquated with the knowledge we have today but one that was critical before the days of universal licensure, direct access, and the repeal of the therapy cap. 

“That was where medicine was at the time in terms of looking at rehab therapy,” she said. “And that was the reason why they started measuring anything—to prove value.” 

However, it was difficult at the time to manage and develop insights from all outcomes data recorded by FOTO and others within the profession. Data was difficult to manage and only provided insights from the past. This was useful in case studies but provided no predictive guidance for clinicians and their patients. 

But then, Holder said, computer systems and solutions caught up with the needs of healthcare, which has become so data-driven that today, around 30% of the world’s data is being generated by the healthcare industry. 

“[Advancements in technology] have really taken FOTO from just being very much a manager’s tool, as it was in the beginning, to being something that is timely and clinically relevant,” she said. “Managing your patients with clinically relevant tools is what’s going to help you participate in value-based purchasing. You build your efficiency.” 

More Data Leads to More Challenges 

Despite all the advancements in EHRs, outcomes management tools, business intelligence, system interoperability, and even artificial intelligence (AI), it could still be argued that technology has some catching up to do in the healthcare space. 

For one, it’s been estimated that 97% of the 50 petabytes of data hospitals produce each year (1 petabyte = 1,000 terabytes) is going unused. Perhaps not all that data is useful, but this certainly indicates the tech world is still only scratching the surface when it comes to harnessing data-driven insights. 

It also has some work left to do when it comes to optimizing value-based care efforts, said Keenahan, especially as hospitals and health centers invest in various technological systems and solutions while still struggling with interoperability. 

“That’s obviously one of the barriers of value-based care is there’s a lot of different systems,” he said. “Unfortunately, systems don’t always talk to each other super well.” 

The Bright Side of Tech and Value-Based Care 

Despite these challenges, it’s clear that technology has reached a point that enables value-based care efforts to be successful in rehab therapy. From the advancement of EHR data analytics tools to the widening acceptance of digital MSK services, wearable devices, and solutions (like outcome management systems) that provide support for clinical decision-making, the tech pieces are in place to make value-based care efforts more universal. 

It’s already happening. According to the Health Care Payment Learning and Action Network (HCP LAN), almost 60% of all healthcare payments stemmed from value-based models as of 2021. This is possible today because: 

  • Data is readily available and can be efficiently utilized. Enterprise data management platforms enable the healthcare system to collect, organize, enhance, and share large amounts of data. This capability makes it possible for organizations to derive value from a variety of data types, including clinical, claims, and social data. 
  • Analytics deliver actionable insights. Advanced analytical tools, many of which utilize machine learning and AI, provide predictive and prescriptive insights rehab therapists can use for patient education and care planning. These tools assess risk, pinpoint opportunities for preventive measures, and enhance the quality of patient outcomes. 
  • Collaboration between payers and providers is enhanced. Workflow and care management tools provide payers and providers with actionable insights, helping to synchronize business objectives with the delivery of high-quality rehab therapy care. Cloud technology further enables the seamless sharing of data across diverse systems. 
  • Automation extends across multiple healthcare processes. Technological advancements have enabled the automation of various tasks that used to be manually performed, such as claims processing, data analysis, and patient care management workflows. 

From improving efficiencies and lowering costs to supporting multi-disciplinary collaboration and patient-centered care, all four of these technological applications support value-based care efforts in all rehab therapy care settings. 

Challenges with Technology and Value-Based Care 

Despite how far we’ve come, the application of technologies to support value-based care efforts presents several challenges that healthcare organizations must navigate to maximize benefits while lowering risks. These challenges include: 

  • Interoperability Issues: As discussed by Keenahan, one of the most significant challenges is the lack of interoperability among healthcare systems. Different software solutions often fail to communicate effectively or share data seamlessly. This hinders the ability to integrate patient data across various healthcare settings, which is crucial for a comprehensive understanding of patient health and for making informed decisions that improve patient outcomes. 
  • Data Privacy and Security: As more patient data is collected and shared across platforms, securing this data against breaches becomes increasingly critical. All healthcare organizations, including rehab therapy clinics, must implement robust cybersecurity measures to protect sensitive patient information and comply with regulations like HIPAA. 
  • Complexity and Usability: Technology solutions in healthcare can be complex, requiring considerable training for clinicians, administrative staff, and even patients. If these solutions aren’t user-friendly, they can lead to frustration, low adoption rates, and even errors, perhaps negating some of the potential benefits of digital tools. 
  • Cost of Technology and Infrastructure: The initial costs for implementing advanced technology solutions can be high, especially for smaller rehab therapy providers. Besides the upfront costs, there will likely be expenses related to maintenance, updates, and training.  
  • Analytical Capabilities: While data collection is now more feasible than ever, the ability to analyze and use this data to drive decision-making remains a challenge. Effective value-based care can, in larger healthcare centers like hospitals, require sophisticated tools that can perform predictive analytics and process large volumes of data to provide actionable insights. 
  • Resistance to Change: The integration of new technologies into existing healthcare workflows may face resistance from clinicians and staff members who are accustomed to traditional practices. Changing these habits requires training and a cultural shift within the organization. This can be difficult and take time. 
  • Regulatory and Compliance Challenges: Navigating the complex regulatory environment of healthcare, which varies by state and region, can complicate the implementation of value-based care technologies. Ensuring that solutions comply with all applicable laws and regulations is essential but can also be a significant barrier. 
  • Scaling and Flexibility: Technology that works well in one environment, like a private practice clinic, may not scale effectively across larger or more diverse healthcare settings. Additionally, healthcare technologies must be flexible enough to adapt to rapidly changing healthcare practices and patient needs without requiring constant, costly upgrades. 

Addressing these challenges is essential for successfully using technology to support value-based care efforts. Solutions need to be secure, interoperable, cost-effective, and user-friendly to truly transform healthcare delivery and achieve the goals of improved care quality and reduced healthcare costs.