What Hinge Health, Sword Health, narrow networks, and Medicare's ACCESS model mean for outpatient physical therapy — and how independent practices can compete, partner, and protect value.
For most of the last decade, "digital physical therapy" was easy for clinic owners to dismiss: app-based exercise programs sold to employers as a wellness perk. That era is over. The largest digital musculoskeletal company is now publicly traded, guides to roughly $880 million of 2026 revenue, and has built a contracted network of about 5,500 in-person locations — mostly physical therapy and imaging — that it steers members toward at rates it describes as up to 50% below PPO pricing.18,19,3 In July 2026, Medicare launched a ten-year payment model that pays for technology-enabled musculoskeletal care based on patient-reported outcomes.9
Digital MSK is now simultaneously a competitor for commercial patients, a potential referral channel, a price-setter, and a preview of how Medicare intends to pay for outcomes. This paper lays out the evidence, the economics, and the strategic options for independent practices — and how buyers now evaluate a practice's "digital readiness."
Hinge reported 2025 revenue of $587.9 million, 2,830 clients, and full-year non-GAAP gross margin of 83%.1 Growth has since accelerated: Q3 2026 revenue rose 52% to $235.0 million, clients grew 28% to 3,270, non-GAAP gross margin reached 88%, and Hinge now guides 2026 revenue to $879–$881 million. It has also bought Cylinder, a digital digestive-health company, for $105 million, and says more than 10 million lives now have access to more than one Hinge product.18,19,21 Its customers are self-insured employers and health plans, which pay for access on behalf of their members.
Sword raised $40 million at a $4 billion valuation in June 2025, and its CEO indicated an IPO was unlikely before 2028.6 In January 2026 it acquired Kaia Health in a deal valued at $285 million and said it would move Kaia's U.S. MSK members onto Sword's platform.7 It then signed a definitive agreement to acquire Headspace in an all-cash deal worth up to $300 million, expected to close at the start of the fourth quarter of 2026 — pairing MSK with behavioral health in a single employer sale.20,21
Digital MSK companies contract with employers and health plans, which promote the program to members before a patient ever searches for a clinic. In employer-heavy markets, some commercial MSK episodes are now routed before they reach a referring physician — or your front desk.
Hinge describes its exercise therapy program as AI-powered and its stated mission as automating care delivery; its 88% non-GAAP gross margin in Q3 2026 reflects that model.1,18 The economics differ fundamentally from a clinic: the incremental cost of serving one more digital member is far below the cost of one more in-person visit.
In June 2024, the Peterson Health Technology Institute (PHTI) published an independent assessment of eight virtual MSK solutions after reviewing more than 2,000 pieces of literature.8,15 Its conclusions are nuanced — and more favorable to physical therapists than many clinic owners assume.
| PHTI Category | Examples Assessed | Clinical Finding | Spending Finding |
|---|---|---|---|
| App-based exercise therapy (limited PT involvement) | Dario, Kaia | Improved pain compared with no in-person PT | Budget impact not estimated (insufficient pricing data) |
| Physical therapist–guided virtual care | Hinge, Omada, RecoveryOne, Sword, Vori | Improvements in pain and function comparable to in-person PT | Net decrease in spending at current prices |
| RTM-augmented in-person PT | Limber | Better pain and function results than in-person PT alone (limited evidence) | Increased net spending |
The evidence does not say technology replaces physical therapists. It says physical therapist guidance is what makes virtual care work — and APTA highlighted that PT-guided solutions outperformed interventions without a PT.15 The competitive question is therefore not "digital vs. PT," but whether patients receive PT-guided care from your practice, in a hybrid model, or from a national digital platform.
Hinge reported an average of 20.1 million eligible lives over 2025 and an "annual yield" (members as a share of eligible lives) of 3.9%; by Q3 2026, average eligible lives had reached 25.5 million and the yield 4.6%.1,18 Roughly 22 million of Hinge's ~25 million contracted lives were in self-insured employer plans as of its Q4 2025 call — the working-age, commercially insured patients that make up a large share of most clinics' commercial volume.2
Track commercial new-patient evaluations by employer group and payer over 24 months. A decline concentrated in large self-insured employers — while Medicare and workers' comp intake holds — is the signature of channel diversion, and buyers will look for it.
In June 2025, Hinge launched HingeSelect, a curated network of in-person physical therapists, imaging centers, and physicians, with in-person care offered at what Hinge describes as up to 50% below PPO rates.3 By Q3 2025 it reported 3,300 provider locations in all 50 states and planned to offer HingeSelect to all employers in 2026 across more than 100 metro areas.5,4 By Q3 2026 the network had grown to roughly 5,500 locations, mostly physical therapy and imaging, and Hinge added surgical care in June 2026.18,19
For a clinic with open capacity, network participation can add volume. For a clinic already near capacity, it can replace full-rate commercial visits with discounted ones. The decision is a capacity and cannibalization calculation, not a branding decision — see Section 05. Notably, Hinge said on its Q4 2025 call that 85% of HingeSelect program participants moved to conservative, typically digital, care plans — the network routes patients away from in-person care as often as toward it.2
ACCESS gives technology-enabled organizations a direct path to Medicare fee-for-service beneficiaries — historically the one market digital MSK could not easily reach. At $180 for a year of care, the MSK payment is less than two in-person visits at USPH's 2025 average net rate of $105.76 per visit: Medicare is pricing a low-touch, technology-led program, not a full in-person episode.22,16 The MSK track launched as a single 12-month care period focused on resolving chronic pain; on September 15, 2026, CMS announced that new tracks beginning April 1, 2027 will add ongoing support for chronic MSK pain for certain conditions beyond that initial period.9,17 The next participation start date is January 1, 2027, and applications are accepted on a rolling basis through April 1, 2033.17,11
The Signal: ACCESS, the two-tier conversion factor, and the MIPS shift to specialty Core Measures all point the same direction — Medicare is moving payment toward measured outcomes. Practices that can document patient-reported improvement will have options; practices that cannot will be price-takers.
CMS's 2026 rule added RTM codes including 98985 (MSK device supply for 2–15 days in 30) and 98979 (treatment management requiring at least one real-time interactive communication), making hybrid programs viable for shorter episodes.13 For 2027, CMS finalized that RTM applies only to established patients and requires a separately reportable initiating visit; a requirement that RTM be performed by practice-employed staff was delayed to 2029.12
The Consolidated Appropriations Act, 2026 extended Medicare telehealth flexibilities — including PT eligibility and the home as an originating site — through December 31, 2027.14 Use the window to build hybrid workflows, but do not build a business that depends on telehealth past that date without a contingency plan.
Consider a hypothetical network offer at $70 per visit for a clinic whose blended commercial rate is $100. Whether that offer creates or destroys value depends on whether the visits fill idle capacity or require new staff — and on whether existing patients migrate to the lower rate. As a reference for a fully loaded cost per visit, USPH reported adjusted total operating costs of $85.56 per visit in Q4 2025.16
| Scenario | Rate per Visit | Relevant Cost per Visit | Margin per Visit | Interpretation |
|---|---|---|---|---|
| Network visit fills idle schedule capacity | $70 | ~$15 (variable only) | +$55 | Accretive: rent and salaried staff are already paid for |
| Network visit requires a new hire | $70 | ~$85 (fully loaded) | −$15 | Dilutive: growth at a loss per visit |
| Existing patient migrates from $100 plan to network | $70 | Unchanged | −$30 | Pure revenue loss on a visit you already had |
Compliant RTM workflows, consistent patient-reported outcome collection, fast time-to-first-visit, and documented outcomes that support payer negotiations and value-based contracting.
Declining commercial evaluations in employer-heavy markets, no outcomes data, RTM revenue that cannot be reconciled to software logs, and telehealth revenue presented as permanent run-rate.
The same data serves MIPS Core Measures, ACCESS-style models, payer negotiations, and buyer diligence.
Build RTM around the 2027 rules: established patients, initiating visit, documented data days and interactive time.
Digital platforms win on convenience. Measure and shrink days from referral to first visit; publish it to referral sources.
Use capacity and cannibalization math, not volume promises. Negotiate rate floors and termination rights.
Onsite injury prevention and direct contracts compete for the same employer dollars digital MSK targets.
Assess whether to apply directly or partner with a participant; CMS accepts applications on a rolling basis for future cohorts.
Spot channel diversion early, and explain it to buyers with data instead of letting them discover it.
Isolate telehealth revenue and build an in-person or RTM fallback for each telehealth-dependent program.
Mihama helps practices quantify their commercial exposure, evaluate network offers, and present outcomes data and hybrid capabilities in a way buyers reward.
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Company metrics are as reported by Hinge Health and Sword Health and in contemporaneous coverage. PHTI conclusions reflect its June 2024 assessment. The network-participation table uses hypothetical rates and costs except where a USPH benchmark is cited.