Specialist
Former SVP at ATI Physical Therapy Inc
Agenda
- Physical therapy services – coronavirus impact on demand and delivery, including telehealth utilisation
- ATI’s (NYSE: ATIP) growth outlook – US geographic footprint and expansion opportunities
- Staffing relationships and labour cost dynamics
- Competitive dynamics and sustainable differentiation – clinic acquisition, consolidation and leveraging economies of scale
- Outlook for turnaround potential and strategic assessments
Questions
1.
What major trends and developments have you been following in the physical therapy sector over the past year or so?
2.
How has ATI’s story evolved over the past few years in light of the dynamics you mentioned?
3.
How are physical therapy volumes trending currently, and how do they compare to pre-coronavirus levels? Are we noticing any pent-up demand to offset reduced volumes amid the pandemic?
4.
Could you discuss any other coronavirus-related effects on ATI and the physical therapy sector? What’s your outlook given the resurgence of the Delta variant?
5.
How would you assess ATI’s historical efforts to recruit and retain high-quality staff? Is physical therapist churn a material issue for the company?
6.
Why do you believe labour is more of a concern for ATI than for competitors? It seems that players such as Select Medical have not experienced labour issues to the same extent as ATI. Are there any meaningful differences in ATI’s recruiting efforts vs its competitors’?
7.
What levers can ATI pull to mitigate the personnel turnover challenges? Which of those measures would be temporary, such as supplemental retention bonuses, vs durable, such as increased hourly rates?
8.
What kind of short-term hit to margins could there be from pay increases? What could be the bottom-line impact on ATI?
9.
What other retention initiatives could ATI explore beyond supplemental retention bonuses or increased hourly rates to rectify the labour issues?
10.
How would you assess ATI’s performance by state? Which areas have been hardest-hit by wage inflation trends?
11.
Are there any criteria that may determine whether a market will experience more pronounced wage inflation than others?
12.
How flexible can ATI be around where it opens clinics? How much ability is there to increase its exposure to areas with less inflation and stay away from areas with higher labour costs?
13.
What are the keys to driving higher average revenue per visit for ATI? How would you assess its ability to maximise revenue per visit?
14.
How much of an industry headwind is the 9% CMS [Centers for Medicare and Medicaid Services] rate cut for physical therapy services?
15.
What is the average rate breakdown across Medicaid, Medicare, commercial and workers’ comp? How do their percentage reimbursement levels differ?
16.
Would you say ATI was more impacted by reduced workers’ comp than competitors, and if so, why? When would you expect those volumes to come back?
17.
Has attrition from ATI consisted more of senior or junior physical therapists? How does the productivity of senior and junior physical therapists compare?
18.
Are physical therapist rates creeping up? What operational levers can ATI pull to preserve margins amid the labour issues as well as the reimbursement pressures we’ve discussed?
19.
How do you model out ATI’s revenue? Is it physical therapists per clinic multiplied by visits per therapist multiplied by the average rate? Is this a reasonable way to break down its basic revenue model?
20.
Are physical therapy assistants billed at the same rates as physical therapists for visits? Is there a meaningful difference in revenue or reimbursement between the worker types?
21.
How would you compare ATI to some of its major competitors? How are their service offerings, market shares and geographic reaches differentiated?
22.
What are your thoughts on Walmart’s partnership with Confluent Physical Therapy? How could this disrupt the physical therapy competitive landscape? How much of a threat does this JV pose to ATI and others?
23.
How is consolidation trending in the US physical therapy market? Do you think ATI may slow M&A given the reputational blowback you’ve previously alluded to?
24.
How do unit economics differ between acquiring clinics outright vs de novo growth? How does the timeline to profitability vary between them?
25.
Could you elaborate on the common integration challenges when consolidating smaller practices? Are there any pain points among physicians, physical therapists, ownership and ATI? How has the company done at managing the hurdles?
26.
How would an average of around USD 106 per visit fit into units per session? How much of this is per-unit? How would you aggregate payment per hour or per unit?
27.
What are your thoughts on the recently announced departure of Labeed Diab as CEO from ATI? How could changes in upper management shift the company’s strategic outlook and turnaround potential? Do you think it has the right management team to rebound?
28.
How could a turnaround for ATI be implemented? What are the necessary strategic moves to get the company back on track?
