Do you want to start a home physical therapy practice? If YES, here is a complete guide to starting a physical therapy business with NO money and no experience plus a sample physical therapy business plan template. Even though a physical therapy practice might sound exciting, not everyone is suited for this career because there are more responsibilities, risks and stress in it coupled with the fact that you would have less time on your hands.
What this means is that asides from being able to provide the best care for your patients, you will also have to be astute in business in order to be able to succeed. Once you have decided that this is truly the business for you, then you must decide on the kind of practice that would be suitable for you as you can either start the business alone or get others with similar goals to run the business together.
While running the business alone might be a fantastic idea, the American Physical Therapy Association (APTA) feels that having partners in this kind of business can be more beneficial and this is due to the fact that each partner will possess a skill set that others might be lacking.
Another thing you would need to take into consideration when starting your physical therapy practice is how you intend to get paid. There are two options that a physical therapist is faced with when it comes to receiving payments from clients and they are either via cash or insurance.
Most practitioners in the healthcare industry usually enter into contracts with large scale insurance companies in order to be able to provide services at an agreed upon reimbursement rate to beneficiaries. However, due to the fact that the reimbursement rates have been decreasing in stark contrast to an increase in doing business, most physical therapy practices have either opted out of the network or are simply going into cash based practice.
Finally, just like any other business, writing a business plan for your physical therapy practice is very necessary. While writing a business plan might appear cumbersome to you or perhaps you have other priorities you would like to focus on, you can engage the services of a business plan writer or partner to help create a comprehensive business plan.
17 Steps to Starting a Physical Therapy Practice Business
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
The industry which is referred to as the outpatient rehabilitation market is one that is valued at $30 billion and has been projected to grow at five percent or more. The sector which is in the health industry is one that is largely fragmented as there are no companies that have a dominant market share. The active and aging population in the united states has caused a sustained demand for physical therapy and with more people growing old; this demand will also grow as well.
According to the World Confederation for Physical Therapy (WCPT), there are more than 350,000 physical therapists globally. The regions that have the primary market globally are North America and Europe, with a potential growth in the African region where healthcare access is limited.
There are close to 35,000 physical therapy establishments in the United States of America, generating nearly $26 billion in combined revenue annually. This number of establishments consists of companies that own just a single location and those that have multiple locations in several areas all over the United States.
According to IBISWorld, the physical therapy rehabilitation industry generated an annual revenue of $30 billion with a growth rate of more than 2 percent between the periods of 2011 to 2016. There are more than 38,000 physical therapy rehabilitation centers employing more than 396,000 people. The industry is one that is recession proof as the last recession did not have any negative effect on the industry because the industry relies majorly on reimbursements from Medicare.
Revenue in this industry is expected to grow even as the reforms in the healthcare sector will cause an increase in the demand for physical therapy services. Also, the industry is expected to play a huge role in home health because more of the aging population will require physical therapy in their homes in order to stay agile and also be self-sufficient. This does not however mean that the industry will not experience some challenges as the reimbursement by Medicare will cause a constraint in the revenue growth experienced by the industry.
The life cycle of the physical therapy industry is reported to be at its growth stage, and between the periods of 2012 to 2022, the industry is expected to grow at an annual rate of nearly 3 percent, while in comparison, the GDP of the U.S in that same period will grow at an annual rate of just 2.1 percent.
This therefore points to the fact that the industry is growing at a pace that is faster than that of the economy especially due to the string growth experienced in the industry from the elderly population that is still growing. Also, other factors that will prompt the demand for physical therapy during these periods are the increase in chronic illnesses as well as more people having health insurance which will enable them to demand for physical therapy.
Typical physical therapy clinics usually occupy between 1,500 to 3,000 square feet of leased property which can be located either in an office building or within a shopping center. Most of these clinics are also located on the ground floor of these buildings to enable patients to easily access the clinic. Most patients are often treated for one hour, twice or thrice a week for a two to six weeks period. Physical therapy has become well accepted due to the fact that the payments are usually handled by managed care programs, Medicare, commercial health insurance as well as workers’ compensation.
The physical therapy industry is however hampered by constraints to its growth which comes from major factors such as equipment needed for rehabilitation, leasing of a location that is suitable for patients and employees, as well as advertising and promoting their services to the intended target market.
There are also manpower constraints experienced in the industry especially as the practice is physical and can only accommodate one patient per session. Also, a physical therapy practice gets its reimbursement from insurance companies and as the insurance industry is consolidated, the practices have to accept the rates given them in order to be able to receive payments.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the services of a physical therapist cannot be limited to only elderly folks who require physical therapy in order to keep them mobile and active but to those who are involved in one physical activity or the other – young children, teenagers, adults and middle aged folks.
Therefore if you are looking to start a physical therapy practice, you would need to be more open to having more people in the overall target market as this would help you pick out the right niche to focus on for your business.
3. Decide Which Niche to Concentrate On
The physical therapy practice industry is one that is huge and has therefore resulted in physical therapists choosing a niche with which to practice in order to set them apart from their competitors. In order to decide what niche would be okay for your physical therapy practice, you must be able to decide if you will enjoy that particular niche, what market potential exists for the niche, what patients will be available for you to work with, the experience you have or will be required to have regarding the niche you intend to go into as well as what competition exists in that niche you are going into.
Be that as it may, there are several niches that exist in this industry and you will just have to conduct a research in order to find out what suits you. Below therefore are some of the niche ideas that are available in which you can choose to major in.
- General Physical Therapy
- Sports Physical Therapy
- Pediatric Therapy
- Post-surgical Rehabilitation
- Women’s Health and Back Pain
- Hand Therapy and Splinting
- Cancer rehabilitation and Management
- Chronic Disease Management
- Teen sports Rehab
The Level of Competition in the Industry
The level of competition in the physical therapy practice industry is one that depends entirely on the location of the practice, especially as this is a practice that requires physically meeting with patients for several times in a period of weeks or till their issues have been adequately resolved.
The growth in the elderly population especially as there will be growing disabilities will lead to an increase in demand for rehabilitation services. This has therefore led to increased competition in the industry as the physical therapy practice strives to increase quality of care, treatment outcomes, have better locations for their clients and strive to reduce the overall costs of these services.
There are several physical therapy practices all over the United States of America and if you are therefore looking to start your own practice in the United States, you must consider the fact that you will be competing with companies that have several facilities in different locations (large scale companies) and other independent practices that can be regarded as small scale companies and who have several networks and relationships in place and be prepared to compete with them for clients.
4. Know Your Major Competitors in the Industry
In every industry, there are brands that stand out due to several factors and strategies that they have deployed in order to remain visible to their target market and the physical therapy practice industry is no different even though the market is reported to being a fragmented one.
Some of the strategies that have been deployed by some of the brands that have allowed them to stand out include; quality of service, availability of centers, customer relationship amongst others. Below therefore are some of the well-known physical therapy practices in the industry here in the United States of America;
- Healthsouth Corporation
- RehabCare Group
- Physiotherapy Associates
- Select Medical
- CommCare Corporation
- US Physical Therapy, Inc
Asides from the aging American population whose active lifestyle have caused a growth in demand for rehabilitation and outpatient services, another group of people, which consists of young and active middle aged adults engaged in various active lifestyles such as sports, fitness regimes and so on has also led to an increase in demand for services in this industry. Most of the common conditions that have been treated in this industry are shoulder and rotator-cuff injuries, lower back pain, knee disorders, spine, sprains and various types of strains.
Profitability in this industry is often hinged on how efficient the personnel in the establishment are. Large companies for instance have an advantage over small companies due to the fact that they have more financial capacity which allows them to get more personnel and establish more locations. Smaller companies on the other hand usually have an advantage by having a better customer service and developing closer relationships with their patients.
Physical therapy represents a significant part of the healthcare sector in the United States especially as it is a $30 billion industry that has an annual growth rate of 7 percent. Some of the factors that contribute to the expanding growth of the physical therapy industry include; growth in employment, growing aging population within the country as well as an increase in sedentary lifestyle.
However, despite how robust the industry is, it still remains a fragmented one as 25 percent of the revenue is provided by the top 50 companies. Most of the operators in the industry are small and independent practices and even though there are companies that can be regarded as being huge in the industry, none of them command over 5 percent of the total market.
5. Decide Whether to Buy a Franchise or Start from Scratch
The decision of either starting from the scratch or buying a franchise might be a weighty one for any entrepreneur. However, while this might be the case for other businesses, it isn’t so for the healthcare industry as there are no franchises available in the industry. The industry has either independent practices or practices that have consolidated in order to get a bigger share of the target market.
Starting one’s business from the scratch is a huge responsibility and as an entrepreneur, you must be ready to tackle challenges that will crop up. One thing with starting a business from scratch is that all aspects of the business must be handled properly from finances, location, and equipment to getting the clients or else the business might fail before it even starts.
More so, the physical therapy practice business is one that is not for everyone because not only must you have the necessary skill required, you must also have the business acumen to run the practice as a business that will generate revenue and grow. This is why it is important that you have a business plan before starting your business or hire a CEO to help you make the right business decisions for your practice.
6. Know the Possible Threats and Challenges You Will Face
Every business that exists whether on a profit or nonprofit level that has to deal with clients will always face challenges and threats and the physical therapy practice is no different. Therefore as an entrepreneur looking to start a physical therapy practice, you must be ready for whatever threats and challenges are likely to arise when you start your practice and have laid down strategies to combat them.
Therefore, some of the threats and challenges you are likely to face are; location issues, competition from already existing practices as well as new entrants, funding issues from the federal government as regards Medicare and manpower constraints.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Choosing an appropriate legal entity for your physical therapy practice is very important as the legal entity you choose will have an impact on your operating structure as well as your tax structure. You have two options when it comes to picking a legal entity for your physical therapy business. It that is either running your business solo (unincorporated legal entity) or running it as a corporation (incorporated legal entity).
Whichever option you decide on should be dependent on the kind of services you intend to offer and the state in which you intend to operate from. If you are confused as regards what options to pick, seeking the services of an attorney with experience in the healthcare sector is always best.
8. Choose a Catchy Business Name
Choosing a catchy business name can be very difficult most times as one can be stumped when it comes to picking a good name. A good business name must not only be indicative of the industry it is in, it must also be memorable, distinct and easily pronounceable.
Below are some of the catchy names that you might need to consider for your physical therapy practice;
- JTCare Group
- Braces Physical Therapy, Inc
- Robocom Medical
- Armacom Corporation
- SilkCare Corporation
- Midas Touch Physical Therapy
9. Discuss with an Agent to Know the Best Insurance Policies for You
Having insurance policies for your physical therapy practice is very important as this will help protect you from having to pay personally for any liabilities that may occur whilst running your practice. If you aren’t sure of what insurance policies would be okay for you, seek the advice of an insurance agent or broker.
Below are some of the insurance policies that you should consider purchasing for your physical therapy practice:
- General Liability Insurance
- Information Privacy Coverage
- Personal Injury Coverage
- Assault Coverage
- Workers’ Compensation Insurance
- Property Insurance
- Business Owner’s Policy
- Cyber Liability Insurance
- Auto Insurance
- Umbrella Insurance
- Professional Liability Coverage
- Malpractice Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
The physical therapy practice is one that involves helping patients use parts of their bodies that they had difficulty with. Sometimes this might not be possible and the physical therapist in a bid to make the patient more comfortable may design an aid that might not only work for the patient but for several others as well.
It is in this instance that the physical therapist must look for a means in which the material or property he has developed is adequately protected by engaging a lawyer with experience in the healthcare sector as well as in copyrights to help file for intellectual property protection with the USPTO.
Asides from intellectually protecting a property that has been physically developed, physical therapists can also protect their company’s logo, name, slogan and other such materials they deem necessary. Filing for an IPP involves money and having to wait for a while and so you must have the money and the patience.
11. Get the Necessary Professional Certification
It is mandatory that an intending physical therapist sit for the National Physical Therapy Examination before they can practice. There is however no certification necessary except the physical therapist intends to specialize in a niche that is different from general physical therapy.
Below are some of the specializations that are available for a physical therapist;
- Certificate of specialization in Geriatric Physical Therapy
- Certificate of specialization in Neurological Physical Therapy
- Certificate of specialization in Pediatric Physical Therapy
- CPR Certification
- First Aid
There are several certifications by different accredited organizations and physical therapists that are looking to have an edge over their competitors should endeavor to take them.
12. Get the Necessary Legal Documents You Need to Operate
In starting your physical therapy practice, you should ensure that all your papers are updated and are all that is required. Not having the required documentation would make you have problems with regulated authorities, as you would not only be penalized financially but you might be banned from running the business anywhere in the United States of America. If you are not sure of what documentations you would need, it is best you consult a lawyer to help you out.
Below are some of the basic legal documents that you must possess if you intend starting your physical therapy practice in the United States of America;
- Certificate of Incorporation
- Operating Agreements
- Personal Physical Therapy License
- Business Plan
- Business License
- Business Permit and Certification
- Insurance Policies
- Employer Identification Number (EIN)
- Federal Tax Identification Number
13. Raise the Needed Startup Capital
The physical therapy business is one that requires a considerable amount of capital in which to start up and so you must be ready to source for the required capital especially if you do not have enough at hand. Sourcing for capital for your business can be a very demanding task for an entrepreneur but it is not something that can be avoided especially if you are serious about starting the business.
This is why it is often encouraged that a business plan be written as this can be used by an entrepreneur to source for funds from private investors and financial institutions. Some of the options that are therefore available to an entrepreneur when sourcing for funds to start his or her physical therapy practice include;
- Sale of stock or property to get part of startup capital
- Approaching a private investor for startup capital
- Apply for a loan from a financial institution
14. Choose a Suitable Location for your Business
There are several factors that you need to put into consideration when choosing a location and they are how much you will be paying in tax and what fees are being charged for small businesses in the state or region you intend operating from. Other factors that you would need to consider include, how many people are living in the area where you intend to locate your business and how much of your target market is in the entire location.
If your target market is the baby boomer, you must ensure that the location you eventually pick must be easily accessible and that the restrooms and parking lot is highly convenient for your clients. If you will be having a mix of clients then you should make sure that you can be easily accessed by foot, public transportation or by a car and also ensure that your signage is very visible from the streets.
One other thing you would need to take into consideration is how much space you would really need for your physical therapy practice. In choosing a space for your practice, you should choose what is best suited for your needs and not throw away money in leasing space that you might not use up. This is why it is necessary to have a business plan as this will allow you know how big of a practice you intend to go into and how much of a space you would need.
15. Hire Employees for your Technical and Manpower Needs
When picking the equipment you will need for your physical therapy practice, you do not need to break the bank even though you would need to pick quality equipment. What usually drains the budget of most entrepreneurs is that they go for equipment that has so many frills forgetting that patients are not bothered about how beautiful equipment looks but that it is able to help them achieve their intended goals and objectives. Some of the equipment you would need to look into getting are; cable column, Pilates machine, redcord, sports cord, resistance bands and ballet bars.
If you intend building a successful and efficient practice, then it is a must that you take care in building a good business structure. This can be done if you take proper care in sourcing for and recruiting only those that are capable of helping you achieve your intended goals and objectives. Therefore some of the people you would need to recruit are: Managing director, admin and human resources manager, accountant, front desk officer, marketing executives, physical therapists and cleaner.
From the above breakdown, you would need a total of 9 people in order to run a successful and efficient physical therapy practice.
The Service Delivery Process of the Business
The physical therapy practice is one that requires a licensed physical therapist who seeks to run a business to set forth processes that will allow patients get the service that they deserve. First of all, you must have the business acumen necessary to make this business become a success or else stick to working under someone.
You must fulfill all the legal requirements from the state you intend practicing in. You must set up your payment processes so that you would not have issues when processing patients’ payments. You must promote your business in such a way as to get the necessary patients you would need for your practice.
You can decide to practice general physical therapy or specialize in a niche that will make you have select patients instead of having to deal with all kinds of patients.
16. Write a Marketing Plan Packed with ideas & Strategies
Marketing your physical therapy business is very necessary as this is how you can generate the revenue you need to grow and sustain your business. Even though the industry is a fragmented one, there are still lots of practices that have stood out majorly due to their marketing strategies. Therefore, if your aim is to penetrate the market, have a fair share of the market and stand out against your competitors, then marketing your business is very important.
While starting out, most entrepreneurs usually seek the services of marketing consultants with experience in the healthcare sector to help craft effective marketing strategies in line with corporate goals and objectives. You can also empower your marketing executives to help craft marketing strategies that are in line with your set goals and objectives.
Below are some of the marketing ideas and strategies you can use for your physical therapy practice:
- Empowering your marketing executives to market the practice
- Asking your satisfied patients to help spread the word about your business
- Ensuring that your practice is listed in yellow pages and in online directories
- Using your social media platforms such as Facebook, Twitter and LinkedIn to market your services
- Networking with other health care professionals and hospitals
- Placing adverts in newspapers, magazines as well as on radio and television stations
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
In every industry, no matter the business – profit or nonprofit – publicity has been used as a means of creating awareness. One thing with promoting a business is that not only do you boost awareness for the business, it will also help to generate revenue because the more people are aware of your business, the easier it is for them to want to patronize your brand.
Because of how effective publicity can be for a business, several businesses do not mind putting aside part of their earnings yearly in order to ensure that they promote and advertise their business to their various target markets. There are several ways by which a business can be publicized and the internet has made it easier for businesses to reach more of their target market in an effective and yet less costly way.
This is in addition to all the offline means by which a business can use to promote and advertise their services to their intended target market. Below are some of the platforms that can be used to promote your physical therapy practice;
- Engaging in different local community events
- Installing billboards in several strategic locations
- Distributing handbills and business cards in several strategic locations
- Joining local associations to network and promote your practice
- Placing adverts in newspapers and magazines as well as on radio and television stations
- Creating hashtags on social media in order to promote your practice