A Closer Look at the Cohort: Creating Non-Clinical Revenue with Subflow

Good morning, Friends of Project Healthcare.

Over the next several posts, I’ll be introducing you in more depth to our Class of 2024 Cohort? and their innovative businesses. My goal is to bring you beyond their pitch decks and elevator speeches and into how we see them here at Project Healthcare. With over 50 company applicants to our program, we believe these 18 startups represent the best that Nashville (and beyond) has to offer to the future of healthcare.?

As the Chair of Project Healthcare, I am honored to be able to shepherd innovative leaders and their big ideas. The sheer diversity in this thing we call “healthcare” is astonishing. In the coming articles, we will run the gamut – from AI in its many forms and uses to SaaS companies impacting education, patient experience, and staff performance.?

In today’s article, we will be traveling to an emerging new intersection – the nexus of digital health and the growing transition for many providers into concierge care models. Our guide will be Mitch Lawson of Subflow, a virtual health ecosystem increasing patient engagement with a unique strategic advantage.?

Physical therapy is only one example of practices where this evolution is taking place, but it serves as a great landscape for our purposes today. So take a minute to read this quick disclaimer while I put on my knee brace.?

This article is a sponsored post in partnership with Subflow as a 2024 Project Healthcare Cohort member. I write these posts about companies currently in our program that I believe can both provide value to and lead relevant discourse for the diverse audience of Friends of Project Healthcare. If you represent a company not currently in our program and are interested in a similar sponsored post, feel free to contact me at [email protected].

The Big Picture/TLDR

Here are the big ideas:

• Subflow is a centralized virtual health ecosystem that empowers healthy lifestyles through tailored subscriptions.?
• Physical therapy is in a state of post-Covid disruption. With low margins and low reimbursement, the historical fee-for-service model is no longer working.?
• Roll ups and concierge care models are changing the ownership structures of PT providers, many of whom are bypassing insurance and taking only out-of-pocket payment.?
• With the pool of potential clients limited to those who can pay out-of-pocket, PT groups are in need of non-traditional and non-clinical revenue sources.?
• Subflow creates additional lines of revenue while also increasing accessibility for all patient types, making value-based care affordable for PTs once again.?

The State of Physical Therapy

There are several aspects of the traditional PT model, both in patient care and back-office, that are contributing to increased turnover and decreased margins for therapists. The three biggest hurdles are:

1. The growing cost to become a PT
2. Decreasing reimbursement from insurance companies
3. Significant turnover and therapist vacancies

Let’s tackle these in order, shall we?

Cost, Debt, and Workload

The average total cost of a professional Physical Therapy program has increased roughly 435% since 2003, from $23,647 to $103,000 for a public school. The 2022 survey backing these findings also discovered that 91% of graduates surveyed had student loan debt. The average debt at graduation was $138,361.?

By comparison, salaries are not keeping up. In 2000 the average salary was $56,500. In 2022, the US Bureau of Labor Statistics placed it at $97,720, a 79% increase compared to the 435% increase in the cost of education.

What do you get when you put all of this together? A higher number of working hours, a longer time horizon until retirement, and lower job satisfaction, according to a BMC Medical Education article. These factors are leaving a lot of physical therapists, especially more recent graduates, wondering why they thought going into the field was a good idea.?

Payers Aren’t Paying

Reimbursement for physical therapy treatments is a sore subject (wince).?

Not only are payers paying less for treatments, there seems to be little rhyme or reason as to how certain codes are paid out from state to state. To protect margins, PTs are seeing more patients per day and spending less time with each.?

Medicare makes this even trickier. The Mandatory Claims Submission rule makes it illegal for a physical therapist to charge a Medicare patient out-of-pocket for services that Medicare might cover. So if a Medicare patient requires 8 visits and Medicare will only cover 3, the physical therapist is legally unable to provide the additional 5 visits to the patient, even if the patient wants to cover the cost. Not only is this a care issue, it is also a recurring revenue issue.?

The angst of navigating an increasingly unreliable reimbursement matrix has many practices dropping insurance of any kind and shifting to a completely out-of-pocket model. While this is more predictable from a revenue standpoint, it also:

• Makes physical therapy more difficult to access
• Reduces the available market size for practitioners
• Requires physical therapists to learn a relatively new skill in the field – sales

To make up for lost Medicare dollars and bring in new recurring clients, many clinics are looking to create programmatic services, like pre- and postpartum therapy and exercise readiness (think marathon prep).?

The idea is sound. The execution is much harder. In addition to seeing patients, documentation, and ongoing education, some PTs are now creating bodies of evergreen content that may be used no more than a handful of times by a handful of clients.?

Turnover

Unpredictable revenue, increased job responsibilities, low margins, and personal debt? Sounds like a start-up to me. But, no. It is what was considered one of the hottest fields in medicine 20 years ago for its work-life balance and competitive pay.?

For many PTs, the parameters just aren’t working. According to a report issued by the APTA in 2022, the total vacancy rate reported by the 2,615 clinics surveyed was 16%. Further, 77% of clinic owners placed work-life balance in the top 3 reasons why employees left positions in their clinics.?

If it sounds like a mess, that’s because it is one.??

How Subflow Changes the Game

Subflow is a centralized virtual health ecosystem that empowers healthy lifestyles through tailored subscriptions to content. The platform has all the bells and whistles – automation, form creation, subscription and payment management, custom design features, and more.?

Users build and manage virtual content libraries that can then be pushed out to clients through text. According to Founder and CEO Mitch Lawson, texts (unlike emails or push notifications) have a 95% open rate.?

The big strategic advantage? End users are not required to create an account to have access to content, eliminating the log-in hurdle that affects many healthcare SaaS products.?

A New Source of Revenue

While SaaS engagement products are not new to the space for things like messaging, scheduling, and content sharing, Lawson is positioning Subflow to hit the revenue problem head-on.?

Through information sharing with Subflow, PT clinics can create new service lines that do not require clinical hours from practitioners. The lower cost service line can both trigger and recycle a higher value clinical sale.?

For example, a pregnant woman who buys a subscription to 6 months of prenatal pelvic floor content can then be upsold into an in-person birth preparation visit. Postpartum, that same patient can pay an additional fee for ongoing recovery content. Instead of just 1 or 2 recovery visits, the clinic has the opportunity to service this individual for up to, or in excess of, 12 months.?

The time investment for PTs is significantly less than what it takes to find and treat more and more new patients. For many practices, the content itself–videos, educational documents, workouts, etc.– has already been created; it only needs to be better leveraged. Subflow partners with its clients to get this done well.

Additionally, non-clinical revenue means that PTs can increase margins while not increasing patient load. This is why Lawson believes Subflow makes value-based care an attainable goal in an industry that is increasingly caught in the fee-for-service hamster wheel.?

Let’s Talk Business

Lawson is no stranger to digital engagement concepts. In his previous role as the Director of Digital Products for Lonely Planet (a leading creator and aggregator of global travel information), he faced the massive challenge of engaging 15 million monthly active users with less than a 5% monthly recurring rate. He told me he had “seen almost everything when it comes to increasing engagement–the good and the bad.”?

Subflow is benefitting from that experience. With 50 organizations and 10,000 end users currently on the platform, Subflow’s interface is well-tested, slick, and user-friendly. It hinges on what Lawson believes is the single best retention strategy – text message communication, no account required.?

That’s not to say that a premium experience isn’t available. Subflow released version 3.0 in March of 2024, which includes an enterprise level product. This subscription is packed with greater capabilities and increased access for those who create an account and engage in the app itself.?

Goals for 2024 include affirming true product market fit within the PT space. Subflow landed its first larger PT clinic, Lifeline out of Philadelphia, in Q1 of 2024. The two companies are working together to create a content strategy based on Lifeline’s key verticals, like pulmonary therapy and concussion protocol. Lawson would like to see similar sales become more standardized and repeatable over the next year.?

The company is also looking for more thought-leaders in the physical therapy space as it moves to penetrate the market. Lawson believes that Subflow has the potential to build a large content library through partnerships with leading providers that can then be offered as an additional service line.

The big picture: The traditional fee-for-service PT model is no longer working for anyone. One of the most attractive career paths 20 years ago is now a work-life balance nightmare. Subflow believes the solution is non-clinical revenue sources channeled through great content strategy and a proven engagement model. A quick survey of the landscape, and I tend to agree.?

To learn more about how Subflow is creating additional sources of revenue for physical therapists, check them out at Subflow.com or book a call with CEO Mitch Lawson.