Doctor-Run Physical Therapy Clinics Scrutinized

Doctors who own physical therapy clinics may be over-prescribing treatment, under-serving patients and racking up hundreds of millions of dollars in health care costs for sub-standard services, some patients and physical therapists told NBC LA.

Update: Physical Therapy Bill Defeated

Documents: Physical Therapy Board of California Letter | Legal Counsel Opinion

Part of the problem may stem from confusing interpretations of the law and changes in the way it has been applied.

More than 200 complaints have been filed recently with the California Department of Consumer Affairs, about therapists who are allegedly working for doctors and often providing poor care and questionable staffing, according to officials at the department, which oversees the physical therapy industry.

"It runs up hundreds of millions of dollars per year for services that are substandard," said Paul Gaspar, a spokesman and activist for independent therapists like himself. "It will run up the cost of healthcare and it will affect taxpayers adversely.

Nationwide data from six months in 2002 showed that 91 percent of physical therapy billed by physicians and allowed by Medicare resulted in 136 million in improper payments, according to the US Department of Health and Human Services.

In many cases, the department found there was insufficient proof that licensed physical therapists had performed the treatment or that there was a "plan of care" to document the need for treatment.

According to California statutes, physical therapists cannot work for medical corporations owned by doctors any more than pharmacists can.

The purpose behind the laws, according to legal experts, is to ward off conflicts of interest, since a doctor who employs such providers might send patients to them simply for personal profit, not for health reasons.

Consumer Affairs reads the law just this way, according to one of its top officials, Steve Hartzell.

"As the law states today, it is a violation for physical therapists to work for a physician-owned medical corporation," Hartzell told NBC LA.

Yet some doctors are so determined to corner the lucrative physical therapy market that they have threatened not to send any patents to independent therapists, Gaspar said.

"I was told by a medical group: either you come to work for me or you will lose all your referrals," he said. "Now, a reasonable person would consider that extortion." 

The California Association of Chiropractors defended doctor-owned physical therapy clinics, saying they are a better deal for patients.

"What you are seeing in these integrated practices is actually some checks and balances," said Dr. Kassie Donoghue, who spoke to NBC LA on behalf of the group, "because you can talk with each other, and the various practitioners can debate with each other what would be the most appropriate form of care."

Most of the 25,000 physical therapists who minister to the strained muscles and post-operative aches of health-conscious Californians are well trained, properly licensed and legally employed.

But Anne Capella said that she didn't wind up in such competent hands. Instead the petite businesswoman from Redlands landed in a clinic where nothing seemed quite right, she told NBC LA.

"I didn't feel like I was progressing as well as I could," she said of the therapy she received after breaking her arm.

She described the process as an unnecessarily prolonged and painful, and blamed her attending physician for it. He set up the treatment, she said, by directing her to a physical therapist who worked for him. California law does not permit physical therapists to work for doctor-owned medical corporations.

"I was not familiar [with the law], so I agreed to go there," said Capella.

To make things worse, she said, she received substandard care at high cost, generating more money for the doctor who had already cashed in from setting her arm.

"It was only 15 minutes with the physical therapist," she said of each session. "And one time, they gave me to an intern, again for just 15 minutes. The price was the same for all visits."

An isolated incident? Not so, according to a young therapist-in-training who agreed to talk with NBC LA, but asked not to be named.

Not long ago, she was hired by a doctor-owned clinic near Los Angeles. She claimed she did not realize that therapists are barred from working for medical corporations.

But in this case, she said, the real problem was that the doctor knew she wasn't a fully licensed physical therapist, or "PT," and directed her to treat patients anyway.

"He would always introduce me as a PT," she said. "It was the same charge as if the PT was treating them."

To be sure, the law has not been consistently applied. In 1990, the Department and its subordinate Physical Therapy Board concluded that state-licensed corporations not organized as professional enterprises could employ physical therapists. This confusing interpretation of the law apparently led some medical corporations to hire "PTs."

But last November the legislative counsel of the state assembly re-examined the applicable statutes and found that they specifically bar therapists from working for such corporations.

A second legal opinion from the Department of Consumer Affairs itself echoed that conclusion.

But that hasn't made a difference, in the view of Gaspar.

He said in an interview that Hartzell and his colleagues have not even begun enforcing the law despite the recent legal opinions.

"They haven't even sent out [warning] letters to physical therapists practicing illegally," he said.

So why isn't the Department of Consumer Affairs doing its legal duty to prevent such alleged abuses?

"There are very strong forces within Sacramento that are causing delay in law enforcement," Gaspar claimed.

Hartzell acknowledged the department is currently delaying action in deference to the challenge to the recent interpretations of the law by state legislator Mary Hayashi.

"The [Physical Therapy] Board isn't taking any action largely due to the public issues that have been presented to us by Assembly Member Hayashi," he said.

Since February, Hayashi has been trying to push a bill through the Assembly that would allow doctor-owned clinics with their own physical therapy staffs. Public records show that her top campaign contributors are physicians and others who could profit from the bill, including chiropractors and podiatrists.

"Mary Hayashi is bringing this bacon, this pork barrel product, back to the California Medical Association," said Gaspar. "I don't think taxpayers should stand for it."

Hayashi declined to be interviewed, but she has said in written statements that she's simply trying to keep many therapists gainfully employed who relied on earlier interpretations of the law.

In a press release, she added that regulators are "threatening to impose immediate, severe penalties that will jeopardize patient care," and she said her bill would simply correct "ambiguities" in the law, even though the legislative counsel cleared up the ambiguities last November.

But to Gaspar and other independent therapists, all this sounds like a rationale for rewarding lawbreakers and keeping regulators at bay while Hayashi seeks to have the law changed to favor her powerful constituents.

"We are a nation of laws," said Gaspar. "Our enforcement agency shouldn't be selectively applying the laws because of certain powerful special interests in California."

Hayashi failed in a recent effort to nudge her bill through a state Senate committee. She's going to try again on Monday. Meanwhile the Department of Consumer Affairs says in a written statement that it is encouraging voluntary compliance with the law.