How to Open a Physical Therapy Business: a 20 step guide to treating your first patient as a solopractitioner
Before we get started, is it even a good business decision to start a physical therapy practice?
Here are the five indicators Alex Hormozi uses to assess a market:
1. Is there Massive Pain in the current physical therapy market?
Traditional PT clinics are struggling to meet patient needs.
Insurance reimbursement has plateaued or gone down. Payments range anywhere from $17 to $125 per visit. More clinics are booking three to four patients per PT per hour to cover expenses.
The high volume schedules are pushing staff PTs to burn out. Treating 24 patients in an 8 hour shift is exhausting. That's before considering the atypical schedules we see in the outpatient setting.
Most physical therapy offices offer before and after work hours to patients. This means the therapist opens as early as 7am, closes late at 8pm, or sometimes - like I did - works a split shift. A split shift has a long unpaid break in the middle of the day (mine was 5 hours).
This seems like bad news.
But, patients are becoming more educated consumers.
People now have full access to information online to make decisions with. They no longer blindly follow MD orders.
i.e. physician referral to a specific practice 2-3x/wk for 6-8 wks.
In 2023, you can't get away with hooking someone up to e-stim to buy time in an overbooked schedule. College-age techs counting reps doesn't pass as "therapeutic exercise" anymore.
Patients are demanding individual attention. Patients are demanding quality care.
There is massive pain in the physical therapy market. One on one, out of network, cash pay practices can solve for the demands.
2. Is the physical therapy industry Growing?
The physical therapy rehab space has grown on average by 2.6% per year from 2018 to 2023. As of 2022 there were 38,000 PT clinics in the US.
We're seeing a shift from the pre-2020 pattern. Big box PT clinics were buying out mom and pop neighborhood practices. Now, fewer physical therapists want to work for corporate chains. Most PTs are willing to forego traditional benefit packages in exchange for quality of life. There’s an active shift towards working for - or opening - a 1:1 practice.
Cash based physical therapy is a growing section of the industry.
3. Do the patients you want to work with have Purchasing Power?
The first step in the guide below is to choose your patient population. This is one thing to keep in mind when narrowing down your niche in the physical therapy space.
The most common knee-jerk reaction to this question goes something like, "Crossfit is an expensive sport. Those people have money to pay out of pocket for PT." My eyes are rolling writing this.
Crossfitters spend money on their sport because they love the benefits of the sport. They love how their body changes over time, how their coach holds them accountable, and how their community rallies around them.
Just because someone spends money on one thing, that is not a guarantee they will spend money on your thing (PT sessions).
Define benefits your patients will receive from out of network care before answering this question. Hint: It is not an hour of your time.
4. Is the patient population you want to treat Easy to Target?
This is a great segue into your first step to opening your physical therapy practice. When choosing your target patient population, focus on psychographics more than demographics.
Psychographics are personality traits, lifestyle, interests, opinion, attitudes, beliefs, and values.
Demographics are age, gender, income, family size, and medical diagnosis to name a few.
The more specific you are, the easier your patients will be to target for new patient referrals.
5. Do you have a direct Connection to the patient population?
Another very common (but wrong) assumption, "I see successful PTs in the crossfit niche. I need to work with crossfitters."
I've even heard a practice owner say, "I want to work with women. They book appointments easier than men."
Without direct experience, passion and interest, or deep connection to the niche - it will be very difficult to get referrals.
In 2017 I decided it was a good business decision to open a PT practice. If you feel that way right now, here’s the exact process I followed:
The 20 steps I took to open my physical therapy practice in NYC (that I now run from Florida)
1. Established my target patient population
Most people think of a niche in physical therapy as a diagnosis, sport, or body part. The ACL Doc, the Run Doc, the Shoulder DPT...
I designed my ideal patient using a different strategy.
First, I looked at patterns in the patients that referred friends to me. It was close to 50/50 male/female, wide age range, variety of sports, hobbies, and occupations. One common factor was a high stress lifestyle. Another was hearing HCPs say "if it hurts to do X, then stop doing it." The major uniting feature was stress. If they couldn't do the thing that relieved their stress, then the stress would domino into every aspect of their life.
Next, I chose a 5 star patient as my avatar. A 5 star patient is someone you love working with, they love working with you, and they pay full price. The trifecta if you will. I remember her name but for HIPAA purposes we can call her Laura.
I learned everything possible about Laura. Personality traits: Laura was kind, hard working, and confident. Lifestyle: Laura was a new marketing associate in a competitive environment. She worked long hours, had little time for meals, lived on shakes and takeout, worked out at 5am, stayed in the office past 8pm.
This exercise continued for Interests, Opinions, Attitudes, Beliefs, and Values.
About halfway through, I realized this person had very similar characteristics to me. It makes sense that I would attract someone that I understood on a personal level.
Your ideal patient avatar may be a version of yourself.
Why not open a business you wish existed to solve your problems?
My ideal patient is someone who uses exercise as their stress relief.
Specific without isolating based on physical attributes.
I can - and have - targeted this person very well.
2. Calculated my first financial goal
This is the formula I used to set my first year income goal:
Clinic Salary/.50% = Revenue goal year 1
86k/.50% = $172k
(Revenue goal/48)/weekly visits = $ charge per session
($172k/48 weeks)/36 weekly visits = $99.5 per session
I started out with $90 because I felt more comfortable asking for that amount. The emotional part of this decision is important to consider. It took me some practice to work my way up to $105 after I had some confidence.
Later on I tested the limits of what I could charge. I will give you a full explanation of what I learned from charging $275 per session another time.
Using the formula above, I planned for a salary of $86,000 by treating 1:1 for 36 visits per week taking 4 weeks of time off.
Formula from Profit First by Mike Michalowicz.
3. Determined how I would pay myself at first
Will you save 6 months personal expenses ahead of opening?
Will you keep a paycheck job during the startup phase?
Neither is correct. Neither is final.
You always have the option to pick up extra work or leave your paycheck job sooner than expected.
I kept a part time home health job for the first 4 months of business. Nights and weekends. Looking back, I should have held onto it for another 6 weeks til I was cash flow positive. In the moment, I needed to focus all my energy on the practice.
It was tight. I was tired. Plan ahead.
4. Defined my services
Pay per session? Typical length of stay (LOS) is 8-12 visits.
Package? Discount for pay in full.
Program? Includes asynchronous component.
I went with pay per session in the out of network (OON) model.
I have since helped practice owners sell all three.
5. Created a break even spreadsheet
First, I calculated minimalist start up costs. Keep the phrase 'simple scales, complex fails' in mind when you do this!
I planned for 25k. I had a unique situation that more than tripled my budget.
Start up costs included: rent (3k); first and last month deposit (6k); architect, permits, contractor, electrician, plumber, special inspector, toilet, sink, shower (60k); treatment table, desk, chair, rolling stool, basic exercise equipment (10k).
In order to have an accessible office, I had to move the bathroom entirely.
I took on a bigger project than I was ready for. And I'm glad I didn't know the full cost until I was in it, because I had no choice but to finish.
You will plan ahead. You will have my mistakes to learn from.
Next, I estimated monthly variable expenses (massage cream, gloves, laundry service, all supplies...)
Then, I estimated fixed monthly costs (rent, utilities, garbage pickup, all recurring bills...)
Finally, I determined the number of visits required to cover expenses each month. This is your breakeven point.
Mine was close to $4,500.
At $90 per visit, I would break even at 12.5 visits per week.
The first 12.5 visits would cover expenses.
The next 20 visits would cover my salary (20*90*48=86k).
Anything above 32 visits would be set aside for taxes and profit.
My goal was 36 visits for a total of 172k revenue.
6. Chose a structure with my accountant
My accountant recommended a PLLC for my business.
Note: PTs must use a professional LLC due to our license. The extra step is verifying your license with the Department of Education.
Consult with your accountant to choose a structure.
7. Picked 3 business names
Have 2 back up options.
There are strict guidelines for professionals opening a business. Their goal is to match the service provided with the license you hold. For example, a licensed physical therapist may need to include the term 'physical therapy' in their business name.
Small Business Administration: Choose your Business Name
Search the SBA website to see if anyone is using your preferred business name.
Google the name to check if there are similar businesses that may cause confusion.
Check that the domain name is available to buy (~$20 is average).
My 3 choices:
House of Physical Therapy
Shane Health and Strength Physical Therapy
Shane Physical Therapy
The DOE denied House of Physical Therapy. I went with a name so long even my family doesn't remember it. My legal business name is Shane Health and Strength Physical Therapy, PLLC. Rather than use a confusing abbreviation "SHSPT" (try saying it out loud), I filed for an assumed name.
An assumed name is also known as a D.B.A. or doing business as.
The process of filing for an assumed name is very simple.
Keep this in mind if your first choice doesn't get approved.
Including the terms 'Health,' 'Strength,' and 'Physical Therapy' in the legal name was a good way to cover the business. We can offer wellness, fitness, and PT services under this tax identification number.
8. Registered and obtained a Tax Identification Number (TIN or EIN)
I started the process of registering the business myself. After following steps from the SBA website, I hit a wall.
I completed the process with BizFilings.
You can register your business with BizFilings, LegalZoom, or a lawyer. They can complete all the required paperwork for you.
The filing service will get your Employer Identification Number (EIN) for you. Another name is a Tax Identification Number (TIN).
9. Updated my Professional Liability Insurance
Self Employed, Full Time, through HPSO.
10. Found my Individual NPI
Your first employer will usually file this for you.
https://npiregistry.cms.hhs.gov/search
11. Obtained a Practice NPI
Same site as above, for the practice instead of provider.
Must have both to treat under your business.
12. Secured a website domain
I chose the exact business name in full without abbreviations.
HouseofPhysicalTherapy.com
Speak the name out loud.
Type the name on your phone.
Is it easy to tell someone?
Note: wait for name approval from DOE before creating a website.
Keep the website simple until you have cash flow.
Think of the website as a sales page; the only action we want prospective patients to take is to contact you.
I used SquareSpace. I borrowed my roommates laptop to play the tutorials while I followed along on mine. It took me one weekend.
You do not need to list every diagnosis, service, or your entire resume on your website. This is an outdated strategy. Anyone teaching this is pre-chatGPT.
Create a contact form that generates an email to your new HIPAA compliant email address.
13. Made a HIPAA compliant email
SquareSpace connects to Google Workspace.
This is how you get an email @yourdomain.com.
Remember, it is not HIPAA compliant to email patients from a personal address.
14. Changed my mailing address
I registered my business before I signed my lease. Once I had the office, I changed my mailing address and updated the legal business address.
15. Selected a phone number (online)
GoogleVoice will give you a free number that you can forward to a cell phone and answer in a browser.
Now, 6 years in, I love this option. My office manager takes calls from her laptop. We forward it to my cellphone if she is on vacation. My staff therapists can text patients from the same line if someone is running late. All patient conversations in one place.
Remember! It is not HIPPA compliant to text patients from a personal number - for the owner or staff PTs.
16. Signed up for a fax number (eFax)
RingCentral is the fax provider I use. Any eFax will due.
17. Completed search listings
Google Business Profile
Yelp (Free listing only)
LinkedIn
Note: If you are mobile, complete your google listing with the address hidden. Add “Service Area” to populate in search.
18. Built my Refer-Out Network
I came from a multidisciplinary practice with professionals at my fingertips. My biggest fear going out on my own was not having the right person to help take care of my patients.
I built my own Refer-Out Network.
The yellow spiral notebook. The summer before opening I filled this notebook with hundreds of contacts. I gave speeches on the strategy used to fill those pages.
Here is the overview:
1. Search 3 categories in Google Maps in your area:
Local healthcare providers within the same patient demographic (RDN, DC, L.Ac, MD, PCP...)
Non-healthcare service providers (wellness and fitness pros)
Local businesses in the neighborhood (a salon owner has been my best referral source)
2. Think of anyone that could be a good resource for your patients.
Introduce yourself and ask how to refer clients to them.
Create a master list to connect patients who need these services.
3. Become part of the community.
19. Collected reviews from past patients
Before leaving my clinic job, I searched my emails for any success stories from my patients. It's against HIPAA to forward patient information. I wrote down quotes from these emails (without patient identifiers).
I saved public reviews that referenced my name on Google.
These quotes became my initial marketing material. Both the copy on my website (copy = written word) and the captions on my social media posts.
This is what I've developed into the Multiply your 5 Star Patients strategy. I will share this lesson in another post.
I’ve read that 25% of total patients will leave feedback for a medical professional. If I find the original source I will come back to link it.
25% of new patients will be willing to leave a public review. This is a good metric to start with. Aim for 25%.
20. Blocked my Calendar
They say dress for the job you want, I say show up for the schedule you want. If you say you can treat for 36 hours, be in the office 36 hours.
Here's how I managed my calendar in the first year:
Blocked out of office hours in green
Set reminders for recurring bills such as rent
Marked available patient slots (1,2,3...up to 36)
Booked the entire plan of care at the evaluation
Showed up during available patient hours
Used any non-treating time to build my Refer-Out Network
Being present in the office helped more than anyone gives credit. It created opportunity to meet the neighbors, have coffee and meals at local shops, and treat curious walk-ins.
Be present.
21. BONUS
You will never feel ready.
There is no one who can tell you you're ready.
The only way to be ready, is to start.
This is how I opened my physical therapy practice in NYC in 2017. This is not the right way or the only way. I’m sharing my experience to give PTs a better starting point.
This is not financial advice. Check up to date local laws.