Business Spotlight: Flexing Financial Muscle

A new partnership formed in late 2013 could impact physical therapy services in the Springfield area next year.

Overland Park, Kan.-based ARC Physical Therapy, which operates a clinic in Springfield, this month sold a 90 percent stake to U.S. Physical Therapy Inc. (NYSE: USPH), of Houston, for $36 million, according to Securities and Exchange Commission filings.

ARC Physical Therapy was founded in 2003 in Kansas City, growing to employ more than 90 professionals at 11 outpatient clinics – as well as some onsite clinics – including the Liberty, St. Joseph and Topeka and Wichita, Kan., markets.

The company provides occupational and physical therapy services, as well as rehabilitation, strength conditioning, ergonomic and onsite assessment, functional capacity assessment and results-oriented wellness programs.

“Because of our unique focus in the area of workers’ compensation, a large portion of our business has and will remain in the rehabilitation of injured workers,” says Brian Stewart, ARC’s chief marketing and acquisitions officer.

Its new parent company, USPh, is one of the largest publicly traded operators of outpatient physical and occupational therapy clinics nationwide. Running some 470 clinics in 43 states, 2012 revenue exceeded $252 million. Through three quarters this year, USPh is approaching $200 million in revenue and $9 million in net income, according to the company’s financial statements.

“The partnership with USPh provides us an infusion of intellectual and financial resources to help enhance an already successful business model,” Stewart says. “People should expect and demand communication, outcomes, value and transparency from their health care partners. We want to help redefine people’s expectations about the provision of health care services. This partnership brings that dream one step closer to reality.”

Not much will change in Springfield, and other markets. The name will remain on ARC’s buildings, as will the staff inside. “We were attracted to ARC because of the quality of their people and their deep commitment to excellence, which has led to their exceptional growth over the years,” USPh President and CEO Chris Reading says in a news release.

Stewart says ARC recorded $11.5 million in revenue, and the company has grown about 10 percent each year in its first decade. “Our new partnership is going to allow us to be a better resource for our referral sources in the Springfield market,” says Isaac Cowart, clinic director and physical therapist for ARC’s Springfield office.

Cowart says ARC connects with clients on a referral basis – there are no contracts – and the clinic has hundreds of employers on its roster, including Prime Inc. and Greene County. He says 80 percent of patients are workers’ compensation cases.

According to 2009 data on ARCPT.com, ARC clinics treated 217 rotator cuff patients with an average age of 51. Based on a key barometer the company uses to gauge outcomes – the industry’s official disability guidelines – ARC’s average visits per patient beat the best practices. ARC recorded 29 visits on average for rotator cuff patients compared, to 40 visits on average for the ODG best practices.

Now with a 90 percent controlling interest, USPh will give back-office operations support and other infrastructure help to ARC. That will free up clinic directors – like Cowart, who holds a doctor of physical therapy from Rockhurst University – to focus on caring for patients, hiring employees and forming relationships with referring physicians.

Also, the company hopes it will help drive down costs for consumers.

“We believe that Springfield, like all markets, can and will support innovative health care providers – especially in the employer-driven markets,” Stewart says. “Employers across Missouri are partnering with ARC Physical Therapy to drive down health related costs – especially in response to increasing costs. Employers are finally beginning to utilize their power to direct care as a fundamental part of their approach to health care costs.”[[In-content Ad]]