Opening a new physical therapy practice is a great way to supercharge your career; it sends you down a path where you can learn more skills, influence the lives of more patients, and increase your personal wealth. But opening a new clinic is no easy task—especially when it comes to saving up the capital necessary to, at bare minimum, get the clinic up and running.
Speaking of capital, how much does it cost to start a physical therapy practice, anyway?
Well, it depends on a lot of factors. Chief among them: Your location, your specialty, and how thrifty you’re willing to be. Beyond that, startup costs vary for a lot of different reasons—but there are some universal basic costs that intrepid therapy entrepreneurs must account for. So, let’s start there.
State and Local Permits
The very first business expense that fledgling practices must cover is the cost of obtaining a state (or other local or regional) business permit—and the price tag varies drastically from one location to the next. In Arizona, for instance, an entrepreneur without a PT or PTA license would need to shell out $50 for a state business license (though a PT or PTA would not have to get one at all). If that same entrepreneur opened a practice in Phoenix, then the practice owner may also need to get a massage business license ($30) and a privilege tax license ($12).
In terms of licensing costs, prospective Arizona practice owners get off easy. According to this article, a permit to open a physical therapy practice in New York costs $2,000. (See what I mean about price variances?)
When pricing out permit costs, reach out to your city and/or state clerk. These folks should be able to tell you:
- How many permits you need to open your business,
- Which permits you specifically need for a physical therapy practice, and
- How much those permits cost.
Rent (or Mortgage) and Utilities
The next expense to consider is the rent (or mortgage) for your clinic space. Where are you planning to open your practice? Will you have a smaller location in a high-traffic downtown hub, or will you venture into the suburbs or city outskirts to secure a bigger building for less money? What do building prices (for rent or for purchase) look like in your city?
Your answers to these questions will majorly influence the amount you must allot for your rent (or mortgage)—but you can still get a ballpark estimate without nailing down your exact location. In this article, Dr. Jarod Carter recommends calculating the square footage you think you’ll need and then either searching online to get a feel for the local market, or asking “a commercial real estate agent the going rate/sq-foot in order to get an idea of your up-front rent costs.”
Remember that if you do choose to rent, you will likely need to budget “the first and last month’s rent plus a security deposit” in order to lock down the location. Additionally, you’ll need to find out if the landlord will pay for renovations—or if you need to do them yourself.
Once you have a solid idea of how much you’ll need to spend on the space itself, you’ll need to account for utilities like:
- Water/sewage, and
Some landlords may factor water and sewage into their base rent, but electricity typically isn’t included—and it often requires an initial deposit to open the account. While Internet providers don’t usually require new customers to pay a deposit, you will have to shell out for your first month of service upfront.
Now, it’s time to consider equipment costs. What is your planned specialty or treatment niche? What equipment will you need to work in that niche? According to this source, “The basic equipment includes treatment tables, which retail from around $1,500 each, fitness equipment such as upright bicycles costing from $800, and treadmills, which start at $1,800 each. Miscellaneous equipment such as heart rate monitors sell at around $150. You will also need items such as several ultrasound muscle stimulators, which sell for around $3,600 each.”
Those price tags may look intimidating, but you can always find good deals—if you’re willing to look. In this article, Jack Sparacio says it’s possible to significantly cut back on your equipment costs if you’re willing to put in the legwork and compromise a little bit. “Why spend $3,500 on a high-end ultrasound-electric stimulation combo machine when you can buy separate portable ultrasound and electrical stimulation units for about $100 each?” he writes. He also encourages therapists to think outside of the box in terms of equipment: “You can buy a $3,000 automatic high-low treatment table or an economical wooden table (with an adjustable backrest) and a step stool for under $500. Or, watch for other clinics going out of business, and you may be able to snag a high-low table at a discount.”
You also may be able to secure provider discounts through one of your vendors. For example, at WebPT, all Members with our EMR have access to the WebPT Marketplace: a Member-exclusive, online rehab therapy equipment shop with deeply discounted prices.
Therapy equipment isn’t the only furniture your practice will need to succeed. Other pieces you’ll want to purchase include:
- A desk and chair for you and/or other personnel you hire;
- A computer or tablet for scheduling appointments, documenting during appointments, billing payers, and tracking finances;
- A front desk for you reception area;
- A few chairs for your waiting room;
- Lamps (if you need additional lighting);
- Decorations like framed pictures or plants to make the space feel more inviting; and
- Other miscellaneous supplies like personal protective equipment (PPE), hand sanitizer, cleaning products, bathroom items, pens, paper, and printers.
When shopping for your equipment, don’t forget to consider the constraints of your clinic space. A new whirlpool might sound really neat, but if you can’t comfortably fit it between your all-too-crucial high-low tables and your critical fitness equipment, then it’s probably not time to branch into hydrotherapy. (Not yet, at least!)
The next cost to consider when pricing out your PT practice is software. Now, you might be able to get away with completing some of your admin and documentation work on paper, but you’d be doing yourself a disservice. The world is digitizing—fast—and I strongly recommend digitizing your clinic along with it.
Electronic medical record (EMR) systems are arguably the most important software purchase for new practices. They help you document patient progress (and keep tabs on it) while remaining compliant with all relevant regulatory guidelines—thus safeguarding you from future audits.
EMRs can climb in price pretty quickly, because there’s no shortage of nice-to-have features that companies offer. But, if you’re building a practice from the ground up, there’s no need to invest in a bunch of bells and whistles right away. EMR vendors usually offer a low-cost package that includes only the basic essentials. At WebPT, for instance, we offer a simple version of our EMR to small startup clinics for as low as $59 per month.
Along with an EMR, you’ll also probably want to purchase a scheduling software—preferably one that integrates with your EMR. Remember, you can’t just whip out the free version of Google Calendar to schedule your patients. All patient information (including names) is PHI, which means using a non-HIPAA-compliant software to manage your schedule could land you in legal hot water.
When it comes to billing, you have a couple of options. You could purchase a billing software and handle claims in-house—or you could offload your billing to another company altogether. If you plan to perform your own billing (or hire an in-house biller), then you’ll need to purchase a billing software—ideally one that’s fully integrated with your EMR so you’re not stuck entering data twice.
However, this may not be the most cost-effective option when you’re first opening a clinic. It may make more financial sense to outsource your billing to a medical billing company. These companies take a percentage of all the money that you earn—but there are rarely large upfront costs. Ultimately, you have to weigh the pros and cons of outsourcing your billing versus keeping it in-house.
Remember that you will probably also need to invest in non therapy-specific software that helps you run your business. Think: HR or payroll programs like UltiPro and ADP ($600 per year for every five users and $160 per month for every ten users, respectively), or payment processing and accounting programs like QuickBooks (starting at $7 a month).
Labor costs are generally a business’s biggest expense, and—like almost every other item on this list—they vary greatly from state to state and position to position. If you want to hire another therapist, it’ll probably cost you more than a biller, who will cost you more than a front desk admin, who will cost you more than a tech. You get the picture. Ultimately, you must research local pay scales and then use that information to decide which roles are absolutely mission-critical.
Remember that you don’t have to hire full-time workers from the get-go; you could start by hiring some part-time staff members. Alternatively, this article recommends recruiting PTs who work for commission (i.e., they earn a percentage of the revenue generated from their patients). At the end of the day, though, that same source recommends budgeting for “at least six months’ salary for all positions in your startup finance plan.” This will help you keep your practice stable in the event of an emergency or disaster.
Part of the reason that labor costs are so pricey is because a flat salary isn’t usually enough to entice the best employees. Great employees look for competitive pay, yes, but they also look for decent health coverage, a reasonable PTO and sick time plan, and other various benefits like bonuses, 401k matching, loan payments, or flexible hours. As a small startup, you may not be able to offer all of these items right off the bat, but you may find it difficult to attract stellar employees without offering at least a health insurance stipend.
To give you a rough idea of what that might cost, let’s say you have a full-time employee who works 40 hours a week, 52 weeks per year. That employee works 2,080 hours each year. According to the Bureau of Labor Statistics, health insurance costs, on average, $2.73 per hour. That means paying for that employee’s health insurance would cost $5,678.40 annually.
General and Professional Liability Insurance
The next expense to consider is general liability insurance—but before we continue, please understand that I’m not a lawyer, and this does not constitute legal advice. I strongly recommend reaching out to a healthcare attorney to discuss the pros and cons of purchasing general and professional liability insurance.
General and professional liability insurance cover different scenarios and circumstances in your clinic that could result in a lawsuit. General liability, for instance, “covers physical risks, such as bodily injuries and property damage,” whereas professional liability “covers more abstract risks, such as errors and omissions in the services your business provides.”
With that in mind, if you do choose to purchase both general and professional liability insurance (which some websites advise), the cost will vary based on the:
- number of people you employ,
- size of your clinic, and
- insurance carrier you select.
Opening a new clinic is no easy feat—but anything is possible if you put your mind to it. Have more questions about startup costs? Leave a comment below, and our team will do its best to find you an answer!
The post How Much Does it Cost to Start a Physical Therapy Practice? appeared first on WebPT.
Are you ready for our third topic in our Study Success Series? Good, because it’s all about the best, most effective, tried and true study tips. From the easy and basic, to some creative and new study ideas, Picmonic experts are giving you their best here and we know it will help. Whether you are just […]
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The COVID-19 pandemic has been bad news for physician referral marketing and networking—and now, many PTs, OTs, and SLPs are wondering how the heck they’re supposed to build those relationships when they can’t simply drop in on their favorite referring providers. But here’s some good news: networking with physicians isn’t much different now than it was before the pandemic hit—despite social distancing and other precautionary measures keeping folks apart. To that end, here are five strategies rehab therapists can use to market to physician referrers during the COVID-19 pandemic:
1. Update your existing strategy with COVID-19 in mind.
Before you dive in, it’s important to review your current referral pitch and decide how you can adjust it to account for the pandemic. While the building blocks of your referral marketing strategy should remain largely the same, there may be opportunities to make it more timely considering the current healthcare landscape.
Boost your online reviews.
Your clinic’s reputation is probably the most important facet of marketing your practice—and that’s especially true now. We’ve mentioned before that having a large number of high-quality online reviews makes your practice more visible to potential patients on search engines, but reviews can also be a great asset when marketing yourself to physician referrers. After all, it’s one thing to tell folks how great you are at being a physical therapist—and another to have the reviews to prove it.
In addition to gathering reviews, be sure to collect and update your patient testimonials. If you use a tool to measure patient satisfaction or patient loyalty—Net Promoter Score® (NPS®), for example—you can easily identify your happiest and most loyal patients and ask them to provide a testimonial for the services they received from you during the pandemic. You can then feature those testimonials on your website and social media profiles—and share them with potential referrers.
Revisit your clinic’s value prop.
You should have already had a value prop before the pandemic, but there’s a good chance it has changed—even if only slightly—in light of COVID-19. The reviews and testimonials you’ve generated during this time offer the perfect tool for figuring out what differentiates you from your peers in the COVID-19 world. Consider the following questions:
- What does your practice bring to the table that others don’t?
- Are you doing anything to go above and beyond in ensuring patient safety?
- How are you making your care accessible to vulnerable or high-risk patients?
- Why should a physician—or any other referral source—send their clients your way?
- Are your patient outcomes exceptional?
- Do you have lower-than-average patient dropout rates?
Solidifying your answers to these questions will help you convince physicians that your practice is the best choice for their patients.
Craft a referral pitch.
Once you identify your value prop, start researching local physicians. Specifically, seek out physicians whose patients would overwhelmingly benefit from your specific PT services—and ideally, who contract with the same payers you do. Find out how the pandemic has affected their organizations—from hours to staffing to payer mix. (You can glean a lot of this information by reviewing practice websites or, even better, by sending a short and sweet check-in email to your past referring physicians to see how things are going.) Then, craft a patient-centric pitch that:
- demonstrates your value prop;
- explains how you can meet their current needs and serve their patients;
- is supported by data; and
- accounts for pandemic concerns.
Also, as you craft your referral pitch, communicate how your practice is:
- keeping patients safe (e.g., by explaining your infection control protocol), and
- continuing to achieve excellent patient outcomes (even through telehealth).
Be genuine and empathetic.
The past few months have taken a toll on everyone in the healthcare community. Use this shared experience to build genuine connections with fellow providers. Most importantly, aim to be overwhelmingly human. After all, a kind-hearted question or check-in on the physician’s wellbeing can go a long way.
2. Host a virtual event.
The way people connect has changed drastically over the past six months, with people limiting in-person social interactions and relying on video calls as a substitute for face-to-face meetings. This has certainly proven challenging when it comes to networking—especially if you were always more comfortable making office calls in person. However, it has also unlocked a unique opportunity: hosting virtual events.
If you’ve historically hosted events in your clinic to draw in potential referral sources, consider hosting a virtual conference, info session, or town hall meeting instead. You could use the first portion to teach something valuable to attendees and the second half to facilitate dialogue about patient needs during the pandemic—and how the people on the call could collaborate to meet those needs.
3. Invite referrers to an online happy hour.
Let’s face it: as great as virtual events and video calls have been during the age of COVID-19, many of us are feeling a little “Zoomed out” right now. Furthermore, heightened stress levels mean many providers are in need of some serious R&R. So, instead of asking referral sources to attend a more formal business meeting, consider hosting a casual digital get-together instead. Invite some of your colleagues or physician peers to a virtual happy hour, and keep things light by playing games or shooting the breeze.
You can put a moratorium on “shop talk” if you wish, but it may be more beneficial to let the conversation flow naturally. After all, COVID-19 has placed a massive burden on all healthcare providers, and it’s a great opportunity to talk to physicians about the issues they’re facing in the clinic. Then, shoot them a follow-up email a day or two after the happy hour to thank them for coming, and include something along the lines of, “I was thinking about the issue you mentioned, and I might have a solution.” Try to approach this the same way you would following an in-person networking happy hour, and again, be genuine with your intentions.
4. Offer to author a post for the provider’s blog.
These days, many physician practices and hospital systems have their own blog to help build their thought leadership and improve their search engine optimization. That said, sometimes the ol’ idea well could use an outside perspective. Try reaching out to these providers and asking if they’d allow you to write or co-author a blog post or two for their website. Not only will this enable you to build rapport with the provider or practice—and showcase your expertise—but it’ll also get your name out to an even wider audience online. (Need help deciding what to write about? Get some inspiration from this post on awesome PT and OT blog ideas.)
5. Ask how you can be of help.
Finally, make yourself useful. The pandemic has created some unique hardships for every practice, and supporting one another is essential to getting through it all. So, reach out to your peers—through email, phone call, or video chat—to check up on them, see if all their needs are being met, and if there’s anything you can do to lighten the load. Even if all you can offer is a venting outlet, they will undoubtedly appreciate the sentiment.
Ultimately, physician marketing during COVID-19 isn’t too different from any other time. Just remember to be sincere—and safe—and your efforts will not go unrewarded. And of course, if you have any questions, feel free to let us know in the comment section below!
The post 5 Socially Distant Strategies for Physician Referral Marketing appeared first on WebPT.
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We have a long way to go before the world gets back to normal (or some semblance of normal), but we’ve made good progress. According to this report from the Bureau of Labor Statistics, unemployment fell to roughly 8.4% in August. That’s substantially better than the 14.7% unemployment rate reported in April—but there’s still a huge number of unemployed (and consequently, uninsured) people in the US. For the 8.4% of working adults who are unemployed, money is tight, and healthcare coverage is often nonexistent—but that doesn’t mean their need for care has gone away. These patients could theoretically seek out cash-pay healthcare services, but many of those come at a premium.
So, how do you, as a provider, set a cash-based fee schedule that both serves a struggling community and pays the bills? Read on to find out.
1. Calculate your treatment costs.
The first step to creating a cash-pay fee schedule (especially one that serves patients who are struggling financially) is to calculate the bare minimum cost of providing treatment in your clinic. (Yeah, you’ve gotta do some math. Sorry about that!)
Start by tallying up all of your annual expenses—both fixed and flexible. Consider rent, loans, salaries, employee healthcare costs, taxes, equipment purchases (e.g., masks and TheraBands), and any other business expenses you can think of. Don’t forget to include a small cushion for emergencies. Heidi Jannenga actually recommends that every “business—regardless of size—should have a three-to-six-month emergency cash reserve.”
Now that you know your required minimum gross income, “divide that by the number of weeks you plan to work in a year, factoring in vacation and personal leave. The number you get is your weekly gross income. Then, divide that amount by the number of patients you can realistically see in a week.” If you have other staff therapists at your clinic, don’t forget to account for their patient load capacities.
You should end up with an average per-visit dollar amount that, at minimum, will keep your clinic doors open. So, that’s your minimum cash-pay visit fee.
During this stage, set aside some time to research what other providers in your local market are charging for cash-based services. Finding a range of what they’re charging (e.g., between $80 and $140) will help you keep your fee schedule competitive and in line with demand. Besides, your competitors may have already drawn up their own plans for treating financially insecure patients, and they could give you some ideas on how to tackle your clinic’s fee schedule.
2. Create a financial hardship policy—and stick to it.
Now that you have an idea of what you need to charge to keep your clinic open while remaining competitive in your market, it’s time to set some prices and—more importantly—create a financial hardship policy. Now, keep in mind that I’m not a lawyer, but to my understanding, you’re generally allowed to provide discounted or differently priced healthcare services to uninsured patients if you create a uniform method for charging those patients (e.g., a clear financial hardship policy).
It’s up to you what that hardship policy looks like. You could offer:
- a flat discount to unemployed patients;
- a discount to patients who pay in full on the date of service;
- discounts for a fixed amount of time (e.g., two months), as this provider suggests; or
- a more flexible charging system (namely, a sliding fee schedule).
Sliding Fee Schedules
A sliding fee schedule is more or less what it sounds like: a fee schedule that changes based on the patient’s current income. Many providers use the US Federal Poverty Guidelines to set their scale. For example, patients who are at or below the federal poverty guideline in their state would pay the lowest rate you’re willing to offer. Patients who make more than twice the guideline would pay the next highest rate, those who make more than three times the guideline would pay the next highest rate, and so on and so forth—until you reach your regular cash-pay rate (i.e., the amount that would cover your expenses and allow you to profit).
Now, while a sliding fee schedule can be a great financial tool, it’s far from perfect. Meredith Castin warns that sliding-scale payment systems “are difficult to enforce and can cause major billing headaches. Plus, patients may talk to one another and start to resent what they perceive as unfair treatment.”
Financial Hardship Application
No matter how you choose to craft your financial hardship policy, you’ll want to include a financial hardship application that patients must fill out to confirm that they qualify. This application should include:
- a quick overview of the financial hardship policy,
- an explanation of how to qualify,
- a list of the documentation needed to qualify (e.g., proof of income, family household or size, etc.), and
- your fee schedule.
Laying everything out in simple, easy-to-understand terms will help streamline the process and prevent misunderstandings. Keep in mind that while it’s a good idea to verify that patients qualify for your discounted or differently priced services, you don’t want to make the process too tedious.
3. Check your legal boxes.
I already touched on this in section two, but it bears repeating: to my knowledge (and again, I’m not a lawyer), offering discounted or differently priced services to uninsured patients is generally okay—so long as you create a uniform discounting model.
That said, be very careful not to inadvertently offer a discounted or differently priced service to an insured patient without first looking into the insurance’s rules. Insured patients (especially Medicare beneficiaries) are subject to different guidelines. Some payer contracts forbid providers from undercutting their reimbursement rates, and Medicare has its own set of strict cash-pay rules. Additionally, some states have laws about offering discounted or differently priced services to patients. While these rules typically apply to insured patients, it’s always a good idea to check in with a legal expert who is familiar with the laws in your locale to ensure you’re in the green.
And yes, I get it—doling out a bunch of money to speak to a lawyer may feel like a frivolous expense right now, but it’s a heck of a lot cheaper than getting tied up in a costly lawsuit due to fraud or kickback violations.
Money is tight right now for a lot of people, but the need for medical care lives on. By creating a fee schedule that accounts for financial hardship, your practice can help meet that need during a very tough time. I think that’s something worthwhile; don’t you?
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