Therapy Staff Layoffs Continue at Staggering Pace

Immediately following the Oct. 1 rollout of the Patient-Driven Payment Model (PDPM), news broke about widespread therapy staff layoffs throughout the skilled nursing industry.

The layoffs have continued — at a staggering pace — in the months since.

While PDPM is inherently different than the home health industry’s upcoming Patient-Driven Groupings Model (PDGM), the reimbursement models share many fundamental commonalities, especially when it comes to therapy. In fact, many industry leaders see PDPM as a predictor of PDGM’s eventual impact.


“If we saw utilization change on a dime for PDPM, we could see that happen in January for home health,” Cindy Krafft, president of consulting firm Kornetti & Krafft Health Care Solutions, previously told Home Health Care News.

In one of the earliest layoff examples, skilled nursing industry giant Genesis HealthCare (NYSE: GEN) reportedly cut its therapy staff by 585 jobs — about 6% of its overall therapy workforce — after PDPM went live.

A new poll from HHCN sister site Skilled Nursing News has now found that more than 40% of operators and therapy vendors have made some kind of staffing reduction after Oct. 1. Of those SNF operators that reported laying off therapy staff, a sizable portion said cuts accounted for between 21% to 40% of their workforce.


More than 100 self-identifying operators in total participated in SNN’s poll, though the number of responses varied from question to question.

No home health companies have publicly acknowledged cutting their therapy staff as of yet, but HHCN has received multiple emails from individuals claiming to be therapists who have been hit with reduced pay or hours.

“I have been a physical therapist for 30 years and have always been involved in home health care, even when working in other settings,” one emailer wrote. “I just got the word that my salary is being cut in 2020 by 25%. Maybe the execs are getting a pay bump, but seasoned employees … are getting their salaries slashed with no regard for experience or patient quality of care.”

Generally, home health providers have freely delivered therapy over the years under the current Prospective Payment System (PPS), often using the service to drive revenues. From 1997 to 2016, the portion of home health therapy visits skyrocketed from 10% of all visits to 39%, Medicare data shows.

That sudden spike is why PDGM restructures therapy utilization by making reimbursement tied to patient characteristics instead of volume. Many providers understand that shift, but worry it will prompt an over-correction to therapy utilization, causing patient outcomes to suffer as a result.

“I think some home health providers are simply not going to be able to support the financial cost of delivering that [therapy] service. It’s going to be so misaligned with revenue for those patients,” April Anthony, CEO of Encompass Health’s (NYSE: EHC) home health and hospice segment, previously told HHCN. “I see the attempt CMS was making, but, again, I’m anxious they’ve overcorrected in the case of therapy.”

A 2018 study found that people who received more than 2.3 visits of therapy on a weekly basis had 82% lower rates of hospital readmission compared to those who did not. Similarly, a 2011 study found that heart failure patients who utilized physical therapy saw significant functional improvements compared to those who did not.

“Under PDGM, underutilization of therapy may become a bigger problem than overutilization,” Dr. Jason Falvey, a postdoctoral fellow at the Yale University School of Medicine, said at an October industry conference. “If you short therapy on the front-end, you end up paying for it in the back-end.”

Even if Medicare-reimbursed health care providers aren’t laying off therapists, they may still be reducing their pay or hours worked.

For example, more than half of the SNF respondents in the SNN poll — about 53% — said they had switched some therapy staff to PRN status, a term that refers to as-needed labor as opposed to steady hours.

To avoid negative outcomes after PDGM, providers that decrease therapy staff may turn to more creative, cost-effective alternatives.

That may include a greater reliance on telehealth and telemonitoring tools, when appropriate. Alternatively, it may even include using more therapy assistants, who can often be sent into patients’ homes for less.

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