COVID-19 is affecting businesses of all industries and sizes, and private practice is certainly not exempt.
We’re in the midst of an unprecedented event with no clarity on the best path forward. There are a lot of unknowns, particularly concerning the long-term impact of the coronavirus and how owners can start planning now to mitigate any negative effects on their business.
How can I best plan for ensuring my business can survive the financial impact?
First and foremost, practice owners should plan on keeping their marketing alive. Many owners make the mistake of pulling back on marketing when money is tight because it’s a cost they can control (unlike overhead, for example). But the fact remains that you still need new patients coming in, you still need to hold onto current patients, and people still need PT. Pain doesn’t take a holiday when a crisis emerges, and you need to be there during times of need.
The situation isn’t going away in two weeks, and it’s anyone’s guess as to how long it will last. Regardless, you need to put on your own oxygen mask first. Take care of yourself and your family. Get enough sleep, go outside for a walk, eat well, and stay vigilant of any changes every day. This is going to be a marathon, not a sprint, so it’s best to prepare mentally and financially for the long term.
You also need to think about how you’re going to take care of your practice. This might mean cutting expenses at some point. Dialing back payroll and operating hours, reducing staff, and cutting any unnecessary spending can help you make up for any potential loss of revenue if your phones aren’t ringing as often or patients are missing appointments.
I recommend using our Gray-to-Black planning methodology. I go into more detail at our Facebook PT group, but this plan focuses on less-than-ideal scenarios: what would happen if you had a 50% reduction in income over the next 60-90 days?
Mike recommends talking with vendors or creditors to see if you can get some leeway on payments or pursuing lines of credit to keep business going. Also, make sure you’re reaching out to current patients to see how they’re doing to encourage them to continue with their plan of care. Now is a critical time to engage with them and show them you’re invested in their progress and are here for them.
What are the best practices for continuing to treat patients safely?
We don’t want to put patients or staff in a compromised position, so it’s important to respect boundaries. It’s not our job to convince or coerce staff or patients to come in, so be respectful if they decide not to come into the practice.
Follow reliable guidelines from the WHO, CDC, and local authorities to ensure you’re taking all the right precautions – we have put together a COVID Physical Therapy Guide to help PT Therapists and practice owners here. Look at how your clinic is set up to make sure clients can safely distance themselves from other patients. Consider steps like installing a hand-washing station, putting out hand sanitizers, and propping open the front door so people don’t have to touch it to open it. Limit visitors that accompany patients.
Anything you can do in accordance with expert recommendations will help create a safer environment and instill confidence in your patients and staff.
How would you go about implementing telehealth as an option?
Telehealth in PT (and the medical industry at large) is an extremely hot topic at the moment. Telehealth isn’t a new concept, but it’s also not widely implemented just yet. During COVID-19, many PT practice owners have expressed interest in offering telehealth as an option to keep patients safe and continue to provide care to their patients.
Here’s the reality: several years ago, we actually offered telehealth as a cash-pay option. We ended up shutting the program down because, at the time, the rules and laws around telehealth were very grey. The laws are better defined now, but there are still misconceptions surrounding the service.
One question that’s come up many times recently is whether you can use telehealth to replace income loss. What I recommend is looking at the codes that CMS just put out. You might be surprised to learn that the reimbursement rate is considerably low—anywhere from $15 to $37 per visit. If you’re getting $90 per visit in the clinic, you’re not likely to replace that loss with telehealth.
Another thing to consider is that patients may not be able to adapt as quickly as you. This is a drastic change, and you may not be able to get your older patients to hop on a Zoom call.
The way you might consider using telemedicine is with no expectation of reimbursement from the insurance company. You can use it for a check-in or follow-up with a patient (which is what we do at Madden PT) or if someone wants to hop on a call because they took themselves out of care.
Ideally, only take advice from PTs who had done telehealth before the COVID-19 crisis. There’s too much misinformation out there right now to dive in head-first with the wrong expectations.
How do you work through the decision as an owner to close or remain open?
There are two sides to this: first, you want to realistically look at your practice to see if you’re set up to provide a safe environment for your patients and staff. And second, you should follow the directives of your state authorities. Every state is a little different at this point, so make sure you’re tracking updates as they become available.
Even if the decision is made for you, and you’re forced to close temporarily, doing so isn’t easy. You worry about the well-being of your patients and employees and have no time frame to give them as to when you will reopen. But remember that it’s essential for you to keep their safety (and your own) as a top priority.
It’s not an easy time to be a small business owner. COVID-19 is temporarily changing the way many industries do business, and private practice Physical Therapy owners are feeling its effects, too.
Depending on where you live, you may find many non-essential businesses around you shutting down. Your phone may be ringing less, and you’re likely experience more missed appointments and cancellations.
No one asked for a pandemic, but now that it’s here, practice owners must do everything they can to weather the storm as safely as possible.
To Close or Not to Close During the Coronavirus Pandemic?
One thing many practice PT owners are wrestling with is the decision as to whether or not to close for safety reasons. It’s a valid argument—businesses around you are doing the same, and your staff may fear potential exposure.
We were in the midst of making this decision for Madden PT and consulted the CDC and local legislative websites to see what information they were sharing. These resources said that any healthcare facility or provider, specifically physical therapy, has a social obligation to maintain normal business hours. That made the decision a lot easier for us.
Your main focus, then, should be on the relationships you’ve been building for your entire career and the level of care you provide. Specifically, these are the relationships with your patients, your staff, and your community. As a practice owner, you need to be in the mindset of putting yourself in the best position to maintain those relationships. Here’s how.
Control the Controllable
You can’t control whether people show up for appointments, how they’re reacting to the pandemic, or how long the pandemic lasts. But during times of crisis, it’s important to focus on what you can control—and give those things all of your energy.
What you’ve always been able to control is the experience in your PT clinic. You can control how your staff interact with patients, the impression people get when they walk through your doors, and the level of care they receive. Those things are now more essential than they were before because there’s so much outside of your control that could influence your business.
Don’t worry about what other businesses are doing and what’s going to happen in the world tomorrow. Those things are not things you can control, so they shouldn’t claim your energy.
Focus on the Value You Provide
We’re providing an essential service to our patients, even though it doesn’t relate to COVID-19. Our mission as PT providers will never change, even in the face of a crisis. Though fewer people may want to leave their homes during this time, they still need us now just as much as they always have.
At Madden PT, we’re checking in on patients via telehealth, email, texts, and phone calls to continue the relationships and make extra touch points. We’ll also use Facebook Messenger if that’s how a patient prefers to communicate. We’re not just talking physical therapy in these interactions but checking on their well-being and whether they need anything. We’ve also seen some practices that send people out with deliveries if their patients need anything (typically older patients), truly going above and beyond the call of duty.
Another thing you could do is to create a home exercise video or one with tips on how to safely work at home (e.g., good posture). Think about where you can provide value to your patients during their times of need—it might not give you an immediate ROI, but it will pay dividends in the long run.
Connect with Your Team on a Personal Level
Staying open during slower times comes at a price that practice owners need to anticipate. For some practices, this could mean temporarily downsizing to make up for lost revenue. You may have staff that choose to remove themselves from the practice to lower their risk of exposure, but in some cases, you may have to make the decision to cut hours or reduce payroll.
Before this becomes the case, go ahead and do some research and put together resources that can help your staff. This way, you’ll be able to assist them in the event that you have to reduce hours or make other changes that will impact your employees.
Connecting with your PT team on a personal level is your clearest path to encouraging them to step up as leaders in the practice. Have one-on-one conversations with every member of your staff and meet them where they’re at. Be realistic with them about the present outlook of the practice and how it may affect them in the coming days and weeks.
On a similar note, now is a good time to do a thorough self and staff evaluation to make sure you have the right pieces of the puzzle in the right place. Sniff out how your team members are feeling about the current climate. Are they nervous? Are they taking it in stride? Most importantly, can they continue to serve your patients with confidence?
You need your best employees on your front line. Maybe this means that you’re putting one of your physical therapists at the front desk answering phones and greeting patients if they’re better equipped to interface with patients and handle their questions and concerns than your front desk person. Whatever path you need to take, be honest and open with your team. They’re likely to reciprocate, which will help you work together toward common goals.
Plan for the Rebound
Remember that our current conditions aren’t going to last forever. When we come out on the other side of the pandemic, our patients will still be here to support us, and we must be prepared to return the favor. This means having enough staff in place to continue serving patients, as well as continuing with marketing just like before to bring in new patients.
Pain doesn’t go away in the face of a crisis. Now could be an excellent opportunity to ramp up marketing efforts while more people are at home in front of devices. They might not want to reach for help during this time, but when it’s over, you could find yourself facing a much greater demand and should be prepared to serve new patients as quickly and efficiently as possible.
The past few weeks have been a whirlwind with new information and an ever-changing landscape for everyone including our admins, Physical Therapists, Staff and PT practice owners.
A lot of hard decisions are being weighed and getting the right and most up-to-date information about our PT community is key. To help you and the community, we have created a free Facebook Community to speak with other PT practice owners.
There’s an informative summary about COVID-19 as it relates to Physical Therapy…
We touch on how to provide care for patients while minimizing exposure and ensuring peace of mind…
And then finally, the top strategies and pitfalls many owners are overlooking.
Best Practices for Navigating Your PT Clinic Through A Crisis
How can I best plan for ensuring my business can survive the financial impact?
1. Continue Marketing.
a. Provide value to current patients by checking in on their well being. Keep in touch via emails, texts or phone calls. Make lists of who you’ll need to get re-engaged and when.
2. Reserve Cash.
a. Take a look at your books and trim expenses where you can. Talk with your vendors and try to negotiate better terms.
3. Think Through the Hard Questions.
a. What does a reduction in income look like for 60 or 90 days?What are the repercussions of that? How are you making it to the end of this crisis?
4. Communicate With Your Staff.
a. Maintain trust by being honest with your staff during this crisis. Let your staff know that you are available to talk with them about any issues weighing on them.
What are the business best practices for continuing to safely treat patients in the clinic right now?
1. Respect Boundaries.
a. If someone isn’t comfortable coming in, don’t push them. Support their decision. This applies to patients and staff members.
2. Follow Guidelines.
a. Take a look at your local guidelines. Reference the CDC guidelines. Print and post guidelines and steps you are taking so patients can read as well.
3. Clinic Set-Up.
a. Keep doors propped open to avoid touching handles, hand washing stations, sanitizer on the walls, sanitize all equipment, remove lobby chairs to space people out, offer masks during manual therapy, etc.
b. Rearrange your clinic to follow 6 foot social distancing guidelines and ensuring all equipment is washed and put away by staff only is essential. Be intentional about having staff cleaning in front of patients so they feel more comfortable.
How best to assess and approach implementing Telehealth as an option?
1. Understand Reimbursement Rates.
a. There is a misconception that practice can use telehealth to replace lost income. Make sure you understand the reimbursement rate for telehealth in your area before making the switch.
2. Keep Patients In Mind.
a. It is unlikely that all your patients will have the technological know-how to fully utilize telehealth. Plan with this in mind.
3. Find an Expert with Experience.
a. If telehealth is a must for you, only take advice from therapists who have done telehealth before this crisis. This is a very hot topic within our industry so watch for misinformation.
4. Madden PT Case Study
a. Madden Pt is using telehealth with no expectation of reimbursement. We are not billing insurance companies and are using this as an avenue to check in with patients and engage with them. Maintaining relationships with patients is where we are currently seeing the most value in telehealth.
How to work through the decision as an owner to temporarily close doors or not?
1. Safety First.
a. Ask yourself, “Are you, your staff and facility physically able to provide a safe environment for patients? Is it reasonable to do so?”
2. Follow Local Laws.
a. Many states consider physical therapy an essential business that is allowed to stay open, but this may change at any time. Reference credible sources before making any decisions and follow the advice of your area’s Department of Health.
3. Balancing Production vs Relationships.
a. Focus on maintaining relationships with your staff, patients and the community.
b. Sometimes great leadership means delegating to internal staff who may have more experience in management/leadership/etc. if you feel overwhelmed or too stressed.
And then shifting gears….
Focus Points and Pitfalls to Avoid
Control the Controllables.
– Focus on things that are within your control.
– What can you control? Patient experience in the clinic and your staff’s interactions with them.
Focus on the Value You Can Provide to Patients.
– Emails, text messages, phone calls. Have a conversation with patients and see what they need help with.
– Many people are working from home. You can provide material, videos, messages that are helpful to the community during these times, like exercises or correct posture. Consider sharing on clinic and personal social media pages.
Focus on Your Team at a Personal Level.
– Have conversations on the right things to do for each individual. This may be time off or extra precautionary measures. Meet them where they’re at.
– Research resources to be able to guide them through potential changes in their employment. Have a plan to help them get through this.
– Create an open door policy so staff feels comfortable coming to leaders about issues they’re facing. Never have an “I told you so” approach.
How to Plan for “The Rebound”
– Maintain relationships with patients. This will be the foundation after the crisis.
– Support the local community. You can ask your patients if they have or know anyone who has a small business you can support.
– Social distancing can create a lack of movement. There’s a decrease in mobile activity. People’s problems aren’t going away so realize there’ll be a big demand after the crisis. Be ready to serve as quickly as possible.
And there you have it.
We are fortunate to have such a dedicated and strong group of PT owners in our community, like you, to keep moving our industry forward.
This hasn't been the first crisis facing private physical therapy clinics, and it won't be the last. History has told us that it is possible to come …
I know you have a million questions running through your head as a leader and PT practice owner with the weight of your clinic and staff on your shoulders (I am right there with you myself!)
…You’re trying to figure out how to handle communication with your team around the COVID-19 pandemic and what we need to do as Physical Therapists & PT Private Practice Owners during this time…
And here’s what I’ll say:
Our community needs us and we are essential to helping people in pain get back to normal naturally.
There are some immediate steps we can take as PTs and they are the same steps I took for my own staff communication at our practice in Harrisburg, PA – Madden PT.
*This information is accurate as of 1:30pm EST on 3/19/2020*
For more COVID Physical Therapy Practice Owner Resources and Guidelines and the most up-to-date info, please join our Facebook group: https://covidptgroup.com/
Here is the 6-Step framework for communication with your staff… at a minimum, these points should be covered:
Acknowledge that we’re in a state of emergency.
This is real. This is happening. Try to avoid “we’ll be OK” and other false assurances.
Be transparent with your staff
about the possibility of having to cut hours/pay or even close your practice temporarily. These conversations are difficult but necessary as it allows your team to prepare.
As a necessary service provider, we will remain open until we are ordered to close.
However, if a team member is feeling stressed/worried/in a position they feel they can not serve – you should have an open door policy where they can discuss their concerns and take appropriate action.
As a company, we’ve been through trials like this before.
This time we are significantly more prepared and in a better position. We will do our best to hold the line as long as possible.
Right now, focus on value you can be providing to our patients
weekly phone call/email/text check-ins if they can not attend PT. Filming videos for people stuck at home.
The key for us is to weather the storm – cope – and be ready to ramp up as quickly as possible once this is passed.
This event is finite: there is a beginning and end.
Follow those 6 steps to help you navigate this challenging conversation.
The key on the personnel communication side is to be real with your staff, be transparent.
DO NOT make the same mistake I made in the past… DON’T have a lack of transparency and say “hey, everything is fine.”
That is not helping anyone.
Meet them where they are at. Share that it’s a dangerous time and that we are all trying to work through it.
3/14/20 Interview with Mike Lewis, practice owner and currently earning his PhD in Healthcare Leadership. Mike’s Physical Therapy clinic is 3.5 miles from the Seattle nursing home where the first US cases of COVID-19 popped up. This interview kicked off “How to Handle COVID-19 at Ground Zero”
I’m still (almost) speechless at the amazing turnout and takeaways we experienced at the Breakthrough Summit.
This was our biggest event ever, with more than 350 PT’s and professionals joining us, along with a killer list of speakers that shared their strengths and insights to help other PTs grow their practice.
We had a lot of positive feedback from PT owners, and I personally received more text messages and emails from owners about how much their business was growing than in the last eight events combined. It was jam-packed with energy and high-value information, and I can’t wait to see what other PT owners do with what they learned.
It wasn’t all business, either. I’m sure you can find plenty of videos of our mechanical bull riding—more than 100 people tested their skills!
In case you missed it, here’s a quick summary of the event, along with some changes in Breakthrough to look forward to.
An All-Star Lineup of Speakers
Our speakers covered everything from taxes to teamwork and brought their expertise to the stage. Some of the hot topics included:
Judy Cirullo on unifying and motivating your staff
Chandler Bolt on what he’s accomplished with self-publishing and how to use a book to establish yourself as an expert in your community
Karl Dettmann on wealth management and building wealth legally and ethically
John Logar on PT marketing strategies for 2020
Chris Reading with U.S. Physical Therapy
Kathy, Carl, and Mel from Breakthrough on Product X (now Growth X)
New this year, we hosted round table discussions, which allowed the Breakthrough team to sit down and discuss PT with other owners.
We also took a deep dive into the political landscape of PT and how we’re battling things like declining reimbursements. Chris Reading was an excellent resource and was able to provide specifics on how we’re dealing with shifts in PT.
The Future of Physical Therapy Private Practice
Declining reimbursements and dwindling referrals were a hot topic at this event. With many owners wondering about the future of private practice.
The good news is that there is plenty of opportunity out there – all 50 states now have some form of Direct Access.
But Direct Access is simply a vehicle for patients, and it’s up to each of us to seize this opportunity and start marketing direct to the public.
It won’t be easy, but the future is bright for PTs who are ready to stop thinking like clinicians and start growing their rehab practice like business owners.
Developing New Solutions for Private Practice
If you’ve been with Breakthrough for a while, you’re probably already familiar with most of the names on our team. But soon, you’re going to start seeing some new names, including Summit presenter Kathy Borkoski.
Last September, Kathy joined our team as Head of Product and delivered an exceptional presentation on how we develop solutions for your PT practice.
But what’s more important is that Kathy and her team are working on our suite of Breakthrough products that will improve the end-user experience and allow you to achieve a higher level of growth.
Typically, product development initially takes a “duct tape” approach. We’re looking at the issues our owners face, then piecing together solutions that will help to eliminate those issues. Then, once everything is developed, we circle back to connect and streamline each element.
Now we’re focused on systematizing practice solutions that not only solve today’s challenges but will also help to solve future ones that result from growth as these challenges are introduced.
And at the event we revealed the following changes to the Breakthrough product lineup:
Introducing Breakthrough University
Breakthrough got its start with Killer Marketing, which is a Masters-level class focused on ways to market your practice by going direct to consumer. From there, we progressed to Max Value, All Star, and PT Experts, and a whole heap of other knowledge resources. Now, we’ve brought all of these elements under the same umbrella—introducing Breakthrough University.
Our core focus is and will always be to help owners grow their practice. Breakthrough University is an accumulation of all the data and learning resources we’ve developed over the last five or six years.
Product X Is Now Growth X
When we launched Product X, it was the only end-to-end business growth system with guaranteed results that turns people in your community into patients.
That’s still the case, but Product X has been renamed Growth X.
What’s unique about Growth X is that it specifically addresses the cold traffic problem. This is our solution to converting people in your community who may not know or trust you yet into patients.
We focus on building expertise around your name and, ultimately, practice growth.
Get Familiar with Launchpad
If you’re a Growth X user, you’re already familiar with the software component of the product, referred to as the portal. This is the dashboard that helps you manage going direct to the consumer.
We’ve rebranded the portal to Launchpad, which will continue to serve as the Business Growth Dashboard. It will also be the home of the full workshop process to help you manage and view the results of your workshops.
Surprise Announcement at the Awards Ceremony
To close out the summit, we hosted an awards ceremony to give everyone one more chance to network. Tony and Melissa Cere of Kinetix Physical Therapy took home the title of Practice Owner of the Year.
We also made a special announcement that we are hosting an event here in Hershey, PA over the summer. The event will be held at the Breakthrough office, so you’ll get an exclusive look at where the magic happens. We announced 12 owners who received a coveted Golden Ticket to the event. More details to come soon.
In our last post, we discussed advice from top industry experts, Paul Welk, Greg Wappett, and Eric Major regarding selling your practice. They offered insights into the process from the viewpoints of an attorney and financial advisors, respectively.
Key points we touched on include understanding your earnings, variables that affect the rate of your multiple, and how to find the right buyer.
Today, we’ll round out your team of experts with advice from Steve Mountain, Thomas Carden, and Chris Reading. They each bring a unique perspective on the topic from the roles of a president of a consulting company, senior managing director of mergers and acquisitions, and CEO of a PT company.
We’ll start with Steve Mountain.
Advice From Steve Mountain
Steve Mountain is the Founder and President of MT Consulting.
Beginning the Merger and Acquisition Process
First and foremost, remember that this is a difficult process. This is a huge physical task, and you must be willing to do your due diligence. It’s common for people to underestimate the amount of work that’s necessary, so don’t be alarmed if you find yourself a bit overwhelmed.
Emotion is a normal part of this process. You may find yourself excited at the beginning, overwhelmed shortly after, elated for securing a buyer, and even a bit depressed if a deal falls through. Expect an emotional roller coaster and learn to hang on through the ups and downs.
Remaining organized and accurate will help keep you moving forward through the process, despite inevitable bumps in the road.
What Is Your Goal?
Steve’s next bit of information is that you should always know what you’re trying to accomplish.
What is YOUR personal end goal in selling your practice / business? A few common objectives are:
Make lots of money and completely check out from the business
Willing to work hard and stay involved in the business
While the first option might seem enticing, the second option is much more valuable to the potential buyer and is thus the more favorable choice.
Once you’ve recognized what your goal for selling is, it helps to have an idea of the intangible factors that go into the process.
For instance, the mindset change from your company turning into another is not simple or easy.
However, if you decide to use an advisor, understand that it is their job to find capable buyers. Knowing you have a capable buyer coming in should help ease your worry throughout the transition.
To attract capable buyers, you need to first realize that there are several types of buyers. It’s important to understand what the different types are and to talk to more than one. We touched on this in part one of the series if you need more information on which buyer is most appropriate for your business! (link to part one here).
Despite which type you work with, it’s safe to say that very few will have a desire to fix things when they are looking to purchase a business. This includes problems from physical shortcomings, to underperforming employees.
Taking care of problems as they arise and having an expert in each position in the clinic can help attract buyers by showing them you’ve created a reliable, well-managed business.
According to Steve, there are a few recent trends that can have a big impact to sell your practice or business.
The value of private practices has increased due to more private equity coming into the marketplace. Multiples are higher than they’ve ever been, which while inherently a good thing, does not come without complications.
More private equity has also led to multiple levels within private equity groups. For example, while previously you may have only dealt with another PT, you’ll now be dealing with a private equity firm, the bank, and the operator who knows the business.
Another recent trend is an increase in the financial mindset coming into the marketplace. This means the level of invasiveness and analysis by people who don’t necessarily understand PT specifics (think Medicare guidelines) is on the rise.
Steve’s recommendation for this is to find a capable and competent advisor throughout the process who understands the specifics of the language being used.
Advice From Thomas Carden
Our next expert is Thomas P. Carden, the Senior Managing Director of Mergers and Acquisitions with Martin Healthcare Advisors.
Thomas suggests that, for a successful merger or sale of your private practice, there are three pivotal steps to undergo.
3 Steps For a Successful Merger or Sale
Professional Business Assessment
A potential buyer will want to have a complete understanding of your practice. This includes in-house operations, patient care, payer mix, and referral generation.
In order to provide this information, there are some important questions you must first ask yourself, such as:
Are we providing the best care?
Are we getting paid?
What is our payer mix and reimbursement rate for our area?
Do we compare to others in the region or nationally?
What is our one, three, and five-year subbing plan?
How much do I need to retire, and how do I get there?
We’ve previously discussed EBITDA and the importance of this value in determining how much your practice is worth.
You must calculate EBITDA for your business, as well as understand the composition of it. Are you primarily cash-based? Insurance-based? Somewhere in the middle?
Once your EBITDA is established, you have to then determine if it is sustainable. For instance:
Are you averaging a reasonable number of visits for a new patient, with well-supported therapist documentation? If so, this would be considered a sustainable EBITDA.
Additionally, you must consider your capitalization rate (cap rate), which shows the potential rate of return for your business. It should be about equal to the inverse of your multiple. So if you have a multiple of 12, your cap rate would be 8%. As the seller of your practice, the lower your cap rate is, the higher your selling price can be.
By putting all of this information together you’ll be able to determine if your business if declining or climbing.
Control The Variables You Can
What are your reimbursement rates?
What does the labor market look like in your area?
How are you compensating for referral sources drying up?
You need to be able to show that you are able to grow in spite of challenges that are presented along the way.
A Note on Mergers
There will be different valuations when exchanging stock due to the different multiples of each company involved.
Company A is a $5 million company with multiple of 10, making them worth $50 million.
Company B is a $1 million company with a multiple of 5, making them worth $5 million.
If they merge, the earnings of the company are now $6 million, with a value of $55 million.
Since Company B only contributes $5 million to that total, they are worth 1/6th of the total earnings, but only 1/11th or 9% of the value of the larger company.
The bottom line here is that earnings are not equal for different sized companies when considering a merger.
Other considerations are who’s going to be in control once the process is complete, and geographical decisions based on areas that may be declining or barely profiting.
Historically, the market for Private Practice PT is stronger than it’s ever been, but that doesn’t make it easy. You must put in your due diligence, have your financial statements in order, be organized, and most importantly, be careful during this process. Understanding the deal structure and adhering to sound advice are definitely your best bet.
Think of it like buying a new house… You’re going to get the best realtor, use a professionally-designed process list, and have a well laid out deal structure in place before you even consider selling your home. The same concept should be applied to your practice.
Closing Insights From Thomas
It’s a competitive market out there. Do yourself a favor and hire a professional firm who understands outpatient physical therapy, not your CPA down the street.
Advice From Chris Reading
Chris Reading is the CEO of U.S. Physical Therapy, Inc.
Chris’ company has opened hundreds of new clinics across the US, as well as performed acquisitions with a number of clinics to continue the growth of his company. He completes our panel of experts by offering advice from the viewpoint of the buyer or potential partner himself.
Perspective of a Potential Partner
Get your business ready! Remember when we said buyers don’t want to fix things? Well…it’s still true. To be ready, you need to be providing good patient care, have a team of key people already in place, and, as the owner, have availability throughout and after the transaction.
Chris’ company won’t even consider purchasing a business if the owner’s only goal is to retire. Buyers want certainty, and this means the key person steering the ship will still be around after the sale to guide it safely into harbor. Additional factors that buyers are on the lookout for are diversified payer mix and diversified referral sources.
Ideal For The Buyer
It’s much easier to become the ideal business partner if you know what buyers are looking for.
Below is a list of things included in a preferred deal structure from a buyer’s perspective:
No compliance issues
Net rate/visit allows for profit
Opportunity for growth in the geographic area
Business is on a positive trajectory
Buyer has interest in a particular market (i.e. pelvic health)
Range of Private Practices
When it comes to making a deal, size really does matter. Based on 2016 market values, a clinic with earnings of $300,000 a year would have a multiple of 3-4x. As a buyer, these figures often make it difficult to get a deal done.
In contrast, a clinic earning between $1,000,000-$3,000,000 a year with a multiple of 6-8.5x creates a much more certain deal structure for buyers to get a return on their purchase. By understanding this information, you can create a deal structure that works best for the size of your company, or if need be, get creative with the type of buyer you choose to work with.
Additional Merger and Acquisition Considerations
During this type of deal, owners typically don’t want staff to know what’s going on, however, this can make it nearly impossible to gather necessary information. You have to let key staff members know what’s happening so they can assist you in finding and organizing information buyers must have to move forward with the transaction.
At a minimum, hire a good attorney who has deal experience within the physical therapy space. Want to go beyond that? Consider the cost benefit of using a merger and acquisitions firm. It is a competitive market and having someone who understands the inner workings of it can be invaluable.
During this series, we’ve learned that selling your practice is no small task. Through the insights of our experts, Paul Welk, Greg Wappett, Eric Major, Steve Mountain, Thomas Carden, and Chris Reading, we now know that it takes time, a lot of hard work, and the experience of those who have been there before to prepare your business for purchase.
Most importantly, it takes a successful business to create a successful sale. Successful selling comes down to building the right systems into your practice. If you want to get started building the right marketing & business systems, check our Resource Center.
This question came from a practice owner: What can PTs do about declining reimbursements?
Costs are going up for private practice owners. Meanwhile, reimbursement rates relative to inflation are going down. Compared to 20 years ago, we’re paying more for staff salaries, operating space, supplies, and all the other costs of doing business.
If you look at all 50 states, the average reimbursement has only gone up about 29% in the last two decades, yet operating costs have climbed much higher than this.
A lot of private practice owners are facing this issue, but they’re reaching the wrong conclusion. Here’s what we should be doing instead.
No One Is Going to Save Us
Many PTs think that the government or healthcare associations are responsible for fixing this issue. They believe that the government will pass some form of legislation to protect us from declining reimbursements. As a result, they are waiting around for someone else to make change happen.
This is a big mistake, and it’s one that practice owners need to address head-on.
At Breakthrough, we look at Ray Dalio’s model of believability-weighted decisions: Has this happened before? Is there a track record that can lead you to believe that this will happen?
In this case, we would ask ourselves, “Does the government have a history of stepping in and paying physical therapists more?”
There’s not much believability in this statement, and PTs shouldn’t sit around waiting for it to happen when it’s not even likely in the first place.
A few years ago here in Central PA, I was in a meeting with a few other practice owners in the area, and the general consensus was that “they” needed to do something about the state of the physical therapy industry. It was never about what we could do, but rather what government and associations should do to step in and fix things.
But here’s the thing: We can’t rely on factors outside of our control. At that meeting, I voiced my intention to put all my chips into marketing instead of wishing and waiting for change, and that move changed my practice for the better.
The truth is, physical therapy is a low-cost healthcare option. This will always be a good thing because it means that PT will always have a place. We provide a better outcome for less money than any other form of healthcare. Conservative care is trending upward, and momentum is shifting in our favor.
And despite declining reimbursements, private practice owners can turn around the fate of their practice—if they make the right decisions and take responsibility.
What Can You Control?
There’s a lot working against PTs as far as declining reimbursements, and much of it is completely out of your control. The best response, then, is to focus on the things you can control to make the most of the situation.
Let’s look at seven things you can do before relying on someone else:
1. Influence Your Payer Mix
It may sound shocking, but if you have a bad payer in your payer mix (e.g., a private insurance company that only gives you $50 a visit no matter what services you perform), you don’t have to play the victim. Instead, you can drive in enough new patients, create a waiting list, and go out of network with that provider.
2. Go Direct to Consumer
If a physician refers patients to you, there’s no way you can control the type of patient or insurance. But when you go direct to consumer, this becomes something you can influence.
For example, you can go to a large employer in your area that offers the insurance you want to accept. Or you can go to more affluent populations with direct response marketing.
3. Control How Fast You Get Paid
Declining reimbursements are bad enough, but if it’s taking you longer to get paid, that’s a whole new (and expensive) problem. Tightening up your billing systems can help you get paid faster so that collecting money doesn’t become an expensive headache.
4. Create a Backend Cash Pay Service
Not all the services you offer have to be insurance billable. One California practice owner we work with decided to add a laser unit to augment their treatment. It’s a cash service, and it adds about $5 per visit.
This is a prime example of taking control rather than waiting for a government superhero to swoop in and save your practice.
5. Consider the Current Clinic Location and Future Locations
Is your clinic in a place where affluent people live? Is it in an area close to the people you want to attract? Where do they work?
You choose where your clinic is. If you’re not in a good location, you have the power to better position yourself in front of the audience you want to serve.
6. Get Paid for What You’re Providing
For most private practice owners, our well-being is directly tied to the checking account balance of our practice. If we have a big expense coming up and just paid taxes and payroll that cleared out the account, we start to get nervous.
But instead of looking at billing and accounting systems, we find a way to blame something else. This is not a healthy approach and will ultimately set you up to fail.
Instead, you can look directly at your billing system to ensure you’re getting paid for what you provide. You might be leaving money on the table if you’re not billing exactly what you’re delivering.
7. Examine Asset Utilization
Your two biggest assets in a practice are space and personnel. Let’s say you invested in 2,000 square feet of space, and you’re seeing about 60 visits a week—you’re not leveraging all the space you’re paying for. You could probably add about 140 visits per week in a space that size. Fill it up as quickly as possible to start getting your money’s worth.
The same holds true with personnel. Is everyone gainfully employed and contributing the maximum to the practice? Again, fill up your schedule as quickly as possible to ensure you have enough revenue to justify the personnel team.
Take Control of Declining Reimbursements
No one is going to bail out private practice PT owners. Your faith is best placed in your own abilities to own what you can and commit to minimizing costs and maximizing revenue.
I can’t tell you how many times I’ve had PT owners say this to me. They want an exact blueprint of how to level up their practice—something they can follow, step by step, without having to put much thought into it.
It’s logical enough: We look for advice from people that are farther along than where we are today. We want to know how they got there and what they’d do if they were in our current situation.
However, this type of mindset is not conducive to owning a successful private practice and growing your business. It’s not enough to go through the motions without understanding why you’re doing what you’re doing and how it’s going to contribute to your future success.
There are always ups and downs involved with owning a business, and any entrepreneur will tell you that they had to deal with many failures before they finally achieved success.
This tenacity is key to long-term achievement, but it’s not something you can “tell” someone else to do. Instead, let’s take a dive into how to use this knowledge to help you make progress on your goals even when there isn’t a clear path to success.
Exposing the Flaws of the Typical PT Journey
The PT journey follows a path that’s similar to learning how to drive a car, speak a new language, or develop any new skill. We start at the bottom of a learning curve that gradually trends upward to our goal. And while it might look like a straight line, we know it’s anything but.
If you zoom in on that curve, you’ll actually see a bunch of smaller transition curves, these little “Aha!” moments that show growth and development and will take you closer to your goal. Here’s what those smaller curves look like:
Think back to when you were working for another PT private practice or company, and you thought to yourself, “Wow, I’m going to open my own practice and change the world.” This is uninformed optimism; you see tons of potential in owning your own practice but don’t have the experience yet.
Then, you finally decide to set out on your own, and something happens: you realize you don’t know how to build a business, or you realize you can’t answer your phone and schedule a patient while treating somebody else. You’ve made some sort of error or incorrect assumption and you’ve hit a roadblock. Now, you have informed pessimism. You might be thinking, “This is a lot harder than I thought. I have to do everything. I have to be the marketer and the clinician. I have to do the billing and the scheduling, and not everybody respects me.” You didn’t know what you didn’t know, and now you’re having a crisis of meaning.
At this point, you can take one of two paths. The first is the path of informed optimism. You realize this is how things work, and you can start learning to overcome these challenges and position yourself for growth.
Or, you can decide not to change, and you end up crashing and burning. You close our practice because it’s too overwhelming or become that jaded therapist who’s barely hanging on and adamant about remaining small. The “just tell me what to do” mentality is a symptom of this path, and it severely limits your potential to learn how to develop sustainable, predictable, and repeatable success.
Why “Just Tell Me What to Do” Is the Wrong Path
It is a good idea to seek advice and mentorship, especially from people who know more about a subject than you do. But if you are expecting someone else to solve all of your problems, you are in for a bad time.
The “just tell me what to do” mindset takes away your power and the role you must play as a leader if you want to achieve a high level of success.
Think back to the uninformed optimism that caused you to go out on your own in the first place. Maybe you left because you had a lackluster experience working for someone else. You didn’t like how things were done. You were passed over for a promotion, or perhaps the owner did something unethical. Regardless of your reason, you wanted to do things differently—your way. You didn’t want people to tell you what to do—you wanted to be your own boss.
But once you’re in that position of ownership and start encountering things you didn’t know before, you begin to experience that crisis of meaning. You didn’t realize you had to be good at answering phones or scheduling patients. You didn’t realize you had to be a marketing expert or financial genius. You don’t know what to do, where to go, or how to get to where you want to be.
Most PTs want to focus on being exceptional PTs and don’t want to invest in learning the other areas of a successful practice. But failing to do so is setting the stage for a disaster.
Successful PT private practice owners are those that can step out of the clinician mindset and into the role of a business leader. Doing this requires an ongoing commitment to learning. And to learn and grow, you must be willing to experiment and fail. These are investments in your private practice, both in the short and long term, that will ultimately help you feel more confident about your practice’s future.
The Real Blueprint to Success: Learn, Implement, Iterate
If you’re reading this, you’ve already decided you want to learn. You could be doing a million other things to “fix” your practice, but you see the value in learning that will eventually pay off in the long term.
There are several ways you can create a pattern of growth in your practice:
First, we’re in the information age. There’s a ton of free information floating around on the internet and at the library. You can take out books for free (I’ve shared a list of books I recommend that have helped me).
You can also find mentors that can act as sounding boards and learn from their experiences. Don’t rely on them to solve your problems, but rather work with them to gain inspiration and insight (plus accountability) that you can apply to your own unique situations.
Don’t resent the fact that you have to learn. Growing your knowledge and skills is a valuable opportunity that defines real, sustainable success.
Remember, everyone goes through the transition curve. Keep working and learning to come out on the other side. If you need help getting started or want to take advantage of high-value resources, visit our PT Marketing Resources and start growing.
You might feel like a superhero when you’re helping patients regain their quality of life, but even superheroes have their limits. At some point, you’re going to need to hire staff if you want to keep growing your practice.
You, personally, only have so much time in a day. Most private practice owners don’t want to work extreme hours, but on the off-chance you do, you should recognize that it’s not productive for a business owner. You should be working on your business; not in your business.
Furthermore, being exhausted or stressed out can hamper your ability to provide patients with the highest level of care.
Hiring new physical therapists is one of the most important decisions you can make, both in terms of gaining time freedom and ensuring your patients are well cared for. But if you’ve tried to hire in the past, you already know it’s not as easy as posting a job and seeing who bites.
Private practice owners are at something of a disadvantage when it comes to hiring top physical therapists – especially when compared to HOPTs and POPTs practices.
This can often make finding the right person to add to your team difficult for a number of reasons (more on this in a moment).
This guide will show you what to look for in an all-star candidate so you can start building a successful team. In the first half, we’ll cover some preliminary work to help you get clear on who your ideal hire is.
And in the second part of this piece, we’ll provide actionable steps to take during the interview and hiring process.
Hire for Personality
Before we can answer the question “How do you hire a great PT?” we need to take a step backwards and ask:
How do you become a great PT?
As we’ll discuss below, the right fit for your practice may not have a ton of experience under their belt. If you can identify some of the personality traits that make a good PT, this could help you identify an ideal candidate who perhaps doesn’t have the most polished resume.
How do you identify these traits? Use yourself as an example.
Before you start hiring, think about why you got into private practice. What motivated you then and what continues to motivate you now?
If you currently have some employees, try and figure out what motivates them (or ask them directly). There’s no “right” or “wrong” answers, but when it comes to hiring, you want someone who is in sync with you and the rest of the team.
For example, there’s nothing inherently wrong with being motivated by money or making a high salary. But it’s unlikely that someone with this as their primary motivation will be happy in private practice when they could take home higher pay at a POPTs practice.
Money is a byproduct of the job, but the deeper intrinsic value of helping people who need it is what really defines the success of your practice. Think of your “why” as your culture—the mission and vision you’re working towards each day. Every person you hire, whether it’s a PT, a receptionist, a marketing person, or billing specialist, should fit within this same culture and share your goals for a thriving practice.
Part-Time vs. Full-Time
You’ll need to decide whether your new PT (or other staff members) will work part-time or full-time. There’s no single best solution here, and pros, cons, and costs can vary greatly between the two.
Here’s some food for thought:
Patient Volume and Revenue
The more work hours, the more patients you can treat and the more revenue you can bring in. However, part-time PTs can be helpful for filling gaps, such as when another PT is on vacation.
When you have someone who can run your practice even when you’re not there, you can either use your time to treat patients to increase your revenue or work on other goals. Both part-time and full-time employees can help you earn more time freedom, but you’ll have more time to play with a full-time PT.
Salary and Benefits
It’s no secret that it costs more to hire full-time than part-time. For full time PT’s, the salary is higher, which means the payroll taxes are higher. Plus, you may have to offer benefits or perks to your full-time PTs that you wouldn’t have to with a part-time PT.
Personal Investment and Integration
There’s always a risk that a part-time PTs won’t be quite as invested in your company as someone who is there all the time. They just won’t have that deep connection to your company, and even if they want that connection, they’ll have less time to invest in it.
New College Grad vs. Seasoned Pro
Like the part-time versus full-time scenario, you’ll also need to decide whether to invest in a new college grad or go with a seasoned professional physical therapist. Again, there’s no clear best solution here, so do some soul searching.
Even though new grads may lack experience, this also means they (hopefully) haven’t developed bad habits, are trainable, and are eager to get started. You may also be able to pay a little less as they don’t have experience.
But keep in mind that PT school isn’t cheap. This list of most affordable PT schools puts the lowest tuition at around $33,000, but most PT schools are much costlier than this. New grads are leaving school with a lot of debt and may have high expectations for salary as a result.
On the other end, a professional physical therapist with experience can be valuable, especially if you’re hoping for a “turnkey” approach to hiring. They may integrate into the daily flow better than someone fresh out of school and start taking some of the workload off your plate immediately.
One possible downside is that seasoned pros typically expect their salary to match. That shouldn’t be an automatic deal-breaker, though, as even a well-paid PT can deliver a high return on investment. Look at your financials to see what you can afford to pay (more on salary in the next section) and how much revenue they need to generate for the salary to make financial sense.
What Is a Fair Salary?
Context is important when it comes to handling salary discussions. Both employers and employees are bringing their own needs to the table, but looking at industry averages can help you find a fair compromise.
That’s why you should do some preliminary research before you begin the hunt for a new PT. And from this research you should be able to answer questions like:
What is the starting base salary of a physical therapist?
What is the average physical therapist salary per year?
How does my local area compare to the national average?
According to Salary.com, the average salary for all physical therapists in the U.S. is $86,524 as of 2019. However, you may find that salaries in your state are either higher or lower than this figure.
As per another report, physical therapists earn significantly more than the national average in Nevada, Alaska, New Jersey, New Mexico, California, Connecticut, Delaware, Texas, Massachusetts, and Virginia. The states with the lowest average salary include Vermont, South Dakota, Maine, Idaho, North Dakota, Montana, Nebraska, Missouri, Arkansas, and Colorado.
You can see the full report here to understand the potential for your state.
But you don’t have to stop there. Remember, these figures are averages and don’t account for things like experience or credentials. You may find the going rate in your area to be higher or lower than the state average. Consider the local economy, the candidate’s experience, and what they can bring to the table to help you decide on a fair salary.
Now that you have a clearer picture of your ideal hire, it’s time to begin the search and start the interview process.
Another thing to keep in mind, especially when hiring new grads, is to look at how PT salaries stack up to other, similar industries.
Don’t Gloss Over the Job Description
Though physical therapists can guess what their role will be, don’t treat your job description as a generic formality. A standout description can make your position even more competitive so you have more qualified PTs to choose from. It’s a direct reflection of your company culture, brand image, and overall success, so treat it with care and importance.
So, what does a strong job description look like?
So, what does a strong job description look like?
Invest in a good headline. Headlines can be the deciding factor on whether a candidate reads the rest of your description. Introduce the job. Don’t just jump into qualification or duties, but rather set the tone for your brand, reputation, and why a candidate should consider you. Talk about your practice. Paint a picture of what it’s like to work there, the patients you serve, history, values, and mission. Give an overview of the job. Include role responsibilities, whom they’ll report to, and what a typical day might look like. Be clear and realistic about what you’re looking for. From experience to personality traits, this section should define what a successful candidate looks like. Infuse personality. Cookie-cutter job descriptions attract cookie-cutter candidates. Your job posting should be inspiring, creative, and targeted to attract top talent—not just job seekers. Be clear on next steps. Include specific instructions on how to submit a resume, cover letter, transcript, credentials, or anything else you need to qualify the candidate for a first-round interview.
Every moment you spend on lackluster interviews is time away from treating your patients. The best practice is to pre-screen candidates and only move forward with the ones that show the most potential.
Hand over some of the pre-screening processes to your front office team (e.g., print resumes and cover letters, look for certain qualities)
Do first-round phone interviews to save time and trim your shortlist
Don’t go into too many details on the pre-screen—focus more on personality and cultural fit
What Questions Should I Ask During the PT Interview?
Your in-person interviews should be designed to learn more about education, experience, and thought processes. You want someone who can think on their feet, is motivated to perform their best, and will be coachable.
You may be able to add to this list, but here are some questions that can help you determine all of the above:
What were some of your most challenging cases, and what therapies did you use?
How do you track and measure a patient’s progress?
How do you motivate patients to continue their plan of care?
How do you keep family members engaged throughout the recovery?
Talk about how you resolve disagreements with other doctors/PTs or office staff.
What does a typical day at your current job look like?
What led you to become a PT?
Tell me about the types of patients you’ve treated in the past (e.g., children, geriatric patients, athletes).
Introduce the Team
Successful hiring is as much about culture fit as it is about skills and experience. A PT that doesn’t jive with your current ecosystem either won’t stick around long or will upset the balance you’ve worked hard to establish.
As part of the interview process for serious candidates, introduce them to your entire team and watch how they click. You can even assign them to observe each team member so they can get a feel for how the practice runs.
Or, you might even let each member of your team ask a question to learn more about the PT. This will help the candidate feel more involved in your practice and see your office culture first-hand.
Test the Waters
In a previous blog post, we covered the value of the work interview. This is a great way to see the PT at work and test their clinical decision-making skills, comfort level, and demonstration of everything they’ve told you about themselves so far.
Many practices (and businesses across industries) also implement a 90-day trial period to ensure they’ve made the right hire. This allows you to take on a new hire with lower risk and expense. If they end up not being a good fit, the dismissal process will be much easier.
It’s also beneficial to the PT. They’re testing the waters just as much as you are, and they’ll have an easier exit if they find they’re not in the right place.
Set these expectations up-front so your new hire knows exactly what is required of them.
Share Your Vision
The most important thing when interviewing PT candidates is to ensure they fit your vision for the practice, both in the short and long term.
Your vision isn’t just a framed document hanging in your office, but rather the words, actions, and processes you use every day. It’s why you got into PT in the first place, where you want your practice to be in one, five, or ten years, and the values you maintain to help you reach those goals.
Every employee in your organization must share that same vision and know what they’re working towards. Sharing this vision early in the hiring process can set the stage for a successful, rewarding experience for both sides.
Hiring, and getting the right people are your staff are important for the continued growth of your practice. And in addition to personnel, you want to make sure you have the right marketing systems in place so that you can keep your PTs’ schedules full.
We have tons of additional resources, hiring tips, and marketing best practices for you to explore the PT Resource Center.
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