Keeping healthy: operator of private physical therapy network pioneers way of capturing a piece of managed care system by providing flexible treatment options. (Small Business).

WHEN Michael Weinper opened his Tarzana physical therapy practice in 1977, it grew beyond his expectation. Another office opened four years later and two more followed.

But the 55-year-old Los Angeles native's success has as much to do with his skills navigating the health care revolution as it does his skill manipulating strained joints.

After he started Progressive Physical Therapy, it was clear that traditional fee-for-service plans were on their way out and health maintenance organizations and preferred provider organizations were the future. It also was clear that private physical therapy practices wouldn't thrive without a piece of that pie.

"I saw managed care on the horizon, and I was thinking I was going to be out of business," recalls Weinper.

Instead, Weinper and a partner created Physical Therapy Provider Network Inc. The company now goes by the name PTPN, because its network also includes occupational, speech and pediatric therapists.

The idea was to create a statewide group of private physical therapists large enough to induce big insurers to funnel patients to therapists within the network.

Therapists who want to belong to the PTPN network pay an annual fee. In return, the company negotiates on their behalf with insurers, setting the reimbursement levels. Membership in the network gives the therapist a stream of patients who are referred from primary care doctors. The therapist is paid directly by the insurer via claims routed through PTPN. If the therapist were not a network member, he or she would have to negotiate individual contracts with insurers that might pay less and refer fewer patients.

Most physical therapy used to take place in hospitals, and Weinper had to persuade therapists and insurers that it made sense to provide coverage through a network. He calls himself a "voice in the wilderness."

"Mike was a pioneer in coming up with the idea of going out and negotiating contracts with different insurance companies," says physical therapist Dan Dollar, owner of Newbury Park Physical Therapy Inc., a PTPN member. "He is one of the few of us who had a good business sense about this."

Weinper's business sense had practical grounding. Prior to starting Progressive Physical Therapy, he was chief executive of Washington Hospital Medical Center in Culver City. He received a Master's degree in public health from UCLA.

Still, it was slow going at first. When PTPN got off the ground in 1985 it had just 118 therapist offices statewide and not a single managed care contract. Weinper says the therapists signed up on faith that he would find some.

Within three years, the company had signed 20 contracts with insurers, helping PTPN reach critical mass. Today, it has contracts with more than 150 insurers channeling patients to 346 offices statewide with more than 1,000 therapists.

Eleven years ago, the company branched Out to other states. It owns networks in Colorado, and franchises its name, proprietary software and internal systems in 21 other states. In all, it has 1,000 offices with more than 3,000 therapists nationwide. PTPN establishes quality standards for the therapists and its franchised operations.

Within California, it has contracts with most large insurers in California (Blue Shield of California is an exception). "They have an extensive network throughout California through which they provide a wide range of outpatient therapy," said Brad Kieffer, a spokesman Health Net Inc., which came into the network last year.

Staying small

PTPN remains a small business. It operates out of a Calabasas office park with fewer than 30 employees and generated just $2.6 million in revenues last year, even though it processed more than $80 million in claims.

That's because PTPN, with the exception of one capitated managed care contract that pays therapists a set fee, does not take a percentage of revenue from office visits. The company generates its revenue by charging therapists annual dues.

The dues have risen from a fiat $1,800 in 1985 to the current $3,400-$11,500, depending on the therapist's volume. Dollar pays the top amount but says he makes it back "many times over" in the patient volume PTPN brings to his business.

By not taking a percentage of each office visit, PTPN acts as a watchdog for insurers that want to make sure care is not being over utilized. If PTPN took a percentage of the fee for each visit, Weinper says the company would be compromised and its services less attractive to insurers. (That is because aside from the capitated managed care contract, therapists are paid each time they see a patient.)

Weinper's therapy practice is far smaller than it once was given his duties as chief executive as PTPN, but he still sees a handful of patients regularly and claims to remain a therapist at heart. "I think we provide a good service for providers, and that is why we started this business in the first place' he says.

RELATED ARTICLE: PROFILE

Physical Therapy Provider Network Inc.

Year Founded: 1985

Revenues in 2000: $2.5 million

Revenues in 2001: $2.6 million

Employees in 2000: 26

Employees in 2001: 27

Goal: To increase therapists' managed care revenues by 10 percent this year while increasing company revenues 12 percent.

Driving Force: To maximize independent therapists' profitable participation in health care.