How to Make Next Year the Best Year Ever for Your Private Practice
In the winter months, as patient visits starting to wind down, now is a great time to get clear on what you want to achieve next year.
We hosted a Webinar on this exact topic, so this video will walk you through the entire strategy and plan!
Why Create a Private Practice Growth Plan?
Because if there’s one activity I’ve seen that separates successful practices from struggling ones, it’s this: Setting measurable objectives and creating a practice growth plan that gets you there. An astounding number of practice owners don’t go through this process. And they’re usually the ones left wondering what went wrong.
As healthcare practitioners, we face many challenges associated with a broken system. But with a bit of planning and strategy, you can take control of your own destiny and build a legacy that lasts.
It’s always important to have a clear physical therapy business plan, but this year it feels even more urgent. With high inflation and a competitive hiring market, our costs are higher than ever. There’s not much we can do about it. That means we need to get very strategic about what we can control: The amount of revenue we bring in. Follow the practice growth planning process below to develop your strategy for increasing top-line revenue.
How to Create an Annual Practice Plan
To do this process right, you should dedicate around two full workdays to building out your practice growth plan. If you have a leadership team, you can work through this process together.
I’ve created a tool to help guide you through annual planning: The Profit Planner Tool. Download the tool and get trained on how to best use the tool for your planning process.
For any private practice, there are 3 pillars of successful practice growth. An effective way to begin is by assessing each of these key areas and determining what’s needed to achieve your goals in each one.
3 Pillars of a Practice Growth Plan
What are my projected revenues and costs? Do I need to make changes to increase top-line revenue?
According to Greg Crabtree’s book, Simple Numbers, Straight Talk, Big Profits!, service-based businesses in the healthcare field typically have profit margins between 10 to 25%. The average margin in physical therapy is 14%.
I prefer to aim for the high side of that range, and regularly see margins upwards of 20% in my practice.
If your earnings are 10% or less, your business is at high risk. If this is you, then developing a strategy to improve profitability should be your #1 priority if you want to stay in business.
To calculate your profit margins, subtract your costs from your earnings. Start by calculating these numbers for last year, then project out to this year.
You can calculate total gross revenue by multiplying the number of treatment plans with treatment plan value.
Expenses are derived from personnel, billing, marketing, space, office expenses (e.g. office supplies), and clinical expenses (e.g. medical devices).
Once you’ve calculated last year’s earnings, it’s time to forecast this year’s profitability. Ask yourself questions like:
- How many treatment plans do I expect?
- Has the value of a treatment plan changed?
- How can I increase the value of each patient?
- Do I need to make any personnel changes?
- What is my marketing strategy and what ROI can I expect?
- Are there any changes in financial expenditures?
2. Personnel and Hiring Plan
Do I need to make any personnel changes to grow profitability?
If you have a full schedule, a waitlist, and space, then guess what — it might be time to bring on another clinician. Bringing on more clinicians enables you to serve more people in your community and increase profitability.
It’s a competitive hiring market, and there are a lot of changes in supply and demand in the workforce right now. This doesn’t mean you shouldn’t hire right now. You likely only need one or two new clinicians. Even in a competitive market, it’s very possible to find a great fit.
Follow best hiring practices: In your job ads and interview process, be very descriptive about what you’re looking for in the role. Make sure it’s a good culture fit and paint a picture of growth at your practice. Learn more about hiring mistakes and best practices in this podcast episode: 10 Processes for Hiring, Incentivizing, and Motivating Your All-Star Team.
3. Private Practice Marketing Plan
What strategies and systems will I use to increase revenue?
Your marketing strategy is your biggest lever for increasing top-line revenue. When evaluating what changes you want to make to your marketing strategy for the year, I recommend asking yourself the following questions:
- How will I attract more patients?
- Can I increase per patient revenue?
- What’s my plan for reactivating past patients?
As you answer these questions, consider: What goals do you want to achieve in each area? Which tools, systems and channels will you use? How much ROI can you expect from each strategy?
To keep your practice profitable and growing, you should spend around 10% of your total revenue on marketing. For established practices, you can split your marketing budget between attracting new patients and reactivating past patients. Newer practices (under 2 years old) will want to allocate the majority of marketing budget towards cold traffic and spend a smaller amount on engaging past or existing patients.
Ready to start planning for the year ahead? Start with the Free Profit Planner Template.