Sramana Mitra: Talk to me about the insurance side. It’s notorious. Physical therapy not being covered by insurance is a notorious issue. How do you think about that? What can be done, innovation-wise, to address that issue?
Nancy Ham: Most insurance companies cover physical therapy but they, maybe, don’t pay a lot or there’s a high deductible co-pay that is financially burdensome. Most PT courses of care tend to be 15 times. If you’re in a high-deductible plan, that can get pretty expensive for you. There are some things happening that, unfortunately, aren’t broadly public yet.
One very large payer, who is quite focused on opioids, has come to an interesting analysis that says, “75% or so of opioids are prescribed for musculoskeletal pains. A huge proportion of those are for low-back pain. There’s good clinical consensus that for low-back pain, your first step should be towards conservative care, which includes physical therapy and chiropractic care.”
They are thinking about how they can align the cost to the patient and the reimbursement to the practice so that more people go to physical therapy or conservative care first. That’s really exciting. Probably by the end of this year, they will publish all this. When one big payer makes a change like that, other payers tend to sit up and take notice. I’d say we’re cautiously pretty excited about it.
Sramana Mitra: Once that comes together, you intend to do something about it and play a role in that?
Nancy Ham: Yes, we’re going to be their technology partner. We serve 35% of the industry. We’re at a unique place to partner at scale. It’s something I’m thinking about a lot. How do we create a network effect? Historically, there are plenty of people out there who say, “We’re believers of physical therapy.”
The industry is so fragmented. There’re just 36,000 clinics. It’s hard for us to organize and work with physical therapy as a group. Now that we’re able to come along we can say, “We have a third. Can we do something together?” I can’t do a program if it’s not available to all my patients. Creating this network effect is something we’re quite focused on.
Sramana Mitra: Here’s a question that you could even consider as an idea. It’s something like a crowdfunding platform, or you could even partner with a crowdfunding platform, to come up with innovations that are stuff that you don’t do yourself. Is that something you think about?
This is non-mainstream in your ecosystem but need input and participation from the physiotherapist community to bring to market those innovations. Have you had any consideration around this?
Nancy Ham: It’s an intriguing idea. To date, we do what we chatted about, which is giving them a place in our marketplace and a lot of exposure. Distribution is usually the issue and not the invention of whatever it is.
Sramana Mitra: I’ll tell you what the issue is. This is something that’s maybe helpful for you to think about in designing your follow-on ecosystem enablers. For new entrepreneurs, distribution is an issue. You’re absolutely right.
But in the validation phase, medical devices are notorious for not being able to raise pre-seed or early seed money. Entrepreneurs are in a chicken-and-egg position trying to get their concepts to some level of validation and get a few units out that can get in the hands of these physiotherapists.
Let’s say the invention is in place but getting 50 units in the hands of the people who would validate the product before any distribution is even viable, that’s a phase where there’s a big gap.
Nancy Ham: It’s a great point. It’s a very interesting idea that I will definitely think on. I appreciate the inspiration.
Sramana Mitra: That would be great. Just a bit of vital statistics, how far along are you right now? What else is going on that should be reported in the story?
Nancy Ham: A couple of external validations of growth. Last year, we were in the Inc 5000 list for the sixth year in a row. Less than 5% of companies are on that many years in a row. Last year, we did debut on the hundred largest healthcare IT list. I think we were 97. This year, we’ll be in the 80’s. Last year, we did north of $80 million.
Sramana Mitra: Fantastic. Thank you for your time.