Owning Your Own Physical Therapy Practice – 1 White Paper Starting Your Own Physical Therapy Clinic By Jerry Henderson, PT Do Your Research The Complete Checklist for Buying Clinical Software Every potential physical therapy facility owner has their own reasons for starting a clinic. Many enjoy the freedom and independence that comes with owning a clinic. Others like the challenge of running a busy clinic. Of course, there is always the possibility of a good financial reward. It is easy to imagine yourself as a clinic owner. It’s harder to make a dream come true. This guide will show you how to make your clinic successful from the start. Research the potential success of your clinic before investing. The biggest mistake you can make is to open yourself up to an idea without doing the necessary research. There are four C’s you should know before opening your clinic. These are: customers, competition, compensation and costs. 1) Customers It is important to know the number of potential customers in your area. By determining the size of your market, you will get a good idea of whether you can fill your appointment book. This is especially important for rural areas or if you have a particular focus on your clinic. You should be able to answer the question: How many people live in your area? How many will seek the care you offer? You should also research referral sources. This will make it easier for you to find out if you already work in the area where you want to open a clinic. You need to know: How many doctors in your area refer patients to your specialty? How far do referral sources recommend patients travel to receive care from your practice? Also, ask yourself if you’re the type of person who feels comfortable with a referral source you don’t know. Where to find customer information: The Internet is a great resource for customer demographics. Demographic websites like infousa.com and the United States Census, census.gov, will provide important information about your area. Your local library also has access to a demographic database with more specific information, such as household age and income.
2 2) Competition Living in a densely populated area can be a boon for a new physical therapy practice. However, you will also find more competition in urban areas. Sizing your competition is an important part of your research process. Need to know: How many physical therapy clinics are there in your area? Do you specialize in certain specialties that are underrepresented? One of the problems associated with physical therapy is the insurance panel. It’s easier to get and keep patients if you’re part of an insurance plan. To keep overheads low, insurance companies limit the number of therapists allowed in each panel. Your potential success on the insurance panel is directly related to the amount of competition in your area. Don’t break your heart by investing in a clinic only to find you can’t get on the insurance panel for your area. What you need to know: What are the steps to becoming a provider of choice for payers in your area? How hard is it to be the provider of choice? Is the insurance panel saturated for your specialty? Where to find this information: Networking with other physical therapists in your area is key. If you are not yet a member of the Private Practice Section (PPS) of the American Physical Therapy Association, now is the time to do so. Joining allows you to attend local chapter meetings. APTA’s PPS Member Mentoring Program also connects you with experienced private practitioners across the country. 3) Compensation Compensation rates vary from country to country. Your expectations should match the actual compensation you will receive as the owner of your clinic. What you need to know: How much should you pay per visit? How much do you have to write for denials, underpayments and patient payments? Where to find this information: Athena Health’s PayerView provides a comprehensive overview of major payers nationwide. Also, you can get information from the payer who will charge. Of course, friends and mentors in the physical therapy industry are great resources. 4) Costs The number one question every therapist asks is How much does it cost? I have talked to therapists who spent as little as $100,000 and as much as $500,000 to start a clinic. Real estate and salaries are two of the biggest costs you’ll face in your clinic, and they vary from region to region. You will need to determine the costs of your facility, clinic equipment, employee salaries, and marketing. Where to find this information: While some of this information is available online, it’s also a good idea to talk to a local real estate agent. If you live in an urban or suburban area, you can find someone who specializes in health care. Contacting APTA PPS can also give you some basic estimates. After your research Now that you’ve done your research, it’s time to think about your potential for success. Are there enough potential customers? How many competitions are there? Is the compensation good enough? Is the price low enough? How many clients do you need to see per day to make a profit? 2
Owning Your Own Physical Therapy Practice
3 It is a good idea to make a table that records the initial investment, the incurred costs and the revenue forecast for the next fiscal year. Choose your market, define your clinic Often clinic owners try to cater to everyone and therefore cannot focus their message or expertise on a specific market. Choosing a specific customer market and defining your clinic according to the needs of that market is an important step, as you will focus your marketing messages and efforts on meeting the needs of that market. Create a Business Plan After you’ve done your research, chosen your market, and defined your clinic, you’re ready to write your business plan. Creating a business plan will help you to: define your goals; develop strategies to achieve these goals; decide how best to use human and financial resources; communicate your plan to employees, colleagues and potential supporters; and monitor the results of efforts and modify plans and work practices as necessary. Also, you need to start with a good business plan if you want to expand your business. The Small Business Administration has excellent resources for creating a business plan. Check out the website Think about how you will run your clinic on a daily basis. Clinic workflows describe the movement of tasks and data through work processes. A workflow describes the actual tasks, who performs them and in what order, how information is organized to support the tasks, and how the tasks are tracked. Draw a basic workflow diagram, thinking about the information that needs to be collected at each step, from appointment to treatment to billing. Include this information in your business plan. When planning your business, you need to predict your profits. Plan to increase your cash flow. Most clinics report a turnaround time of 3 to 6 months before they have the money to pay the bill upon admission. Hiring Professionals When developing your business plan, you should start working with professionals to help you get your business off the ground. get up and walk It’s all too common for penny-pinching entrepreneurs to not invest in other people’s expertise. You are a physiotherapist. Stay focused on the physical therapy aspect of your business. It is very difficult to do all the accounting, invoicing and marketing yourself and still have time to run the clinic and see your patients. Hiring an expert to help you is money well spent. Financial Expert If you don’t have money to invest, you need to get financing. Ask some successful entrepreneurs to recommend a good banker. In addition to a banker, you should look for a lawyer and a certified accountant. Two worthwhile financial investments are accounting software and a lock box. Using an Internet-based accounting software package will allow you to securely access your financial information anywhere, anytime. A lock box is a mailbox associated with a deposit account. Payers mail the Check and Explanation of Benefits (EOB) form to a lock box. Checks are automatically deposited into your account. Bank clerks scan checks and EOBs and provide an online view of the scanned copy to your collection staff or collection service.
Physical Therapy & Rehabilitation Clinics
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