It’s so awesome to see so many cash-based physical therapy businesses starting around the country.
It’s really been an amazing experience for us at Champion to be out-of-network with health insurances for over 10 years.
In this episode, we have some advice, pros, and cons for those looking to succeed with this model.
To view more episodes, subscribe, and ask your questions, go to mikereinold.com/askmikereinold.
#AskMikeReinold Episode 354: What it Takes to Start a Cash Based PT Practice
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Transcript
Gavin Harden:
All right, so today Samantha from Virginia asks, “I’m a physical therapy student, but worked for a few years as a personal trainer before going back to school. My goal is to open a cash-based PT practice. Do you think it’s reasonable for a new grad PT to consider starting a cash-based practice?”
Mike Reinold:
I love it. Great question, Samantha. Great question. I feel like more and more of our PT students are saying this when they’re in clinicals. And I think this is great, there’s a lot of perks to cash-based. I mean, it’s probably not as different as people give it credit. It’s just opening up a different type of a practice.
But I’m excited to hear people’s thoughts on this because I think we could probably attack this from a dozen different ways. But why don’t we do this? Why doesn’t everybody kind of think of a pearl that you think would be very good for a student that is looking to get into a cash-based practice and some of the things to help them succeed. Because I do think there’s a lot of things we do here. I think some of us have worked elsewhere and come here back to Champion. Some of us started this from a student to right into working at Champion. So again, maybe you don’t even realize some of the things we do are probably key to success, but why don’t we start with that? Who wants to go first? We could go a lot of different ways.
Dave, let me hear. Let’s all try to give one little pearl, because I think we’re all going to have a slightly different thought. But Dave?
Dave Tilley:
Yeah, mine is that if you would like to work in cash-based practice, you have to realize that personally and financially upfront, you’re going to have to not depend on a weekly same salary. You’re going to be your own marketing machine, your own lead generation. So whether you start at a place or create your own place, you are the engine behind that financially in terms of getting people. So I had to make sure that I wasn’t going to plan any big trips or do anything crazy during the first two months that I started. Because again, I was more or less going to have to get on my feet versus when I worked in a regular ortho non-cash based place, I had a stable paycheck every two weeks or whatever. So that’d be my nugget, is just set yourself up to make sure you’re not over your head.
Mike Reinold:
I like that. So the first tip is planning for the worst, kind of.
Dave Tilley:
Yes.
Mike Reinold:
Which isn’t bad. That’s a good way to start. I mean we’re very conservative with the way we plan at Champion. I think that’s part of it. So I like that. Good. All right Dave. I like that. Kev, what do you got?
Kevin Coughlin:
Yeah, I was just going to say that I think there’s a huge difference between joining a cash-based clinic as an employee and trying to open it yourself. I think that if your goal is to open one, kind of like you and Lenny did, you should really wait a little bit longer in your career. I just feel like if I pictured myself coming out of school and trying to open my own cash-based clinic or any business, it’s going to result in worse care because I’m spending so much time learning about how to operate a business that I can’t put as much energy into learning how to be a good physical therapist. And I think with that type of model, when someone’s paying out of pocket, you really need to deliver high-quality care. It needs to be different than the type of care you get in an insurance-based clinic.
So I do think that it’s a good ambition and I think it’s good that more people want to do it. It’s a lot of fun to work in this model. But I think to rush into it after just graduating… I have some classmates who wanted to go down that path. I think that it takes away from what we actually need to be good at, which is treating patients first, and then when you get a little bit of experience with that, then you can try to look at the business side and open up a cash-based. So I would just encourage people not to rush into it too, too quickly until you have your skills down as a physical therapist.
Mike Reinold:
Really good point. I mean I hate to say that, I always tend to lean on that too: don’t rush into this here. Because you do have to be an expert clinician to an extent. If you’re trying to do an exceptional service here, you have to be able to provide an exceptional service. I don’t think people know how much effort goes into starting a business. And even if you’re just a PT with a massage table in the corner of a gym, there’s still stuff you need to learn. And if you don’t, you’re going to be bad at business and that’s bad for lots of reasons. Maybe it’s not going to grow as fast as you are. So I kind of like that Kevin. Get comfortable as a clinician so that way you have the bandwidth to be also a good business owner and to learn that. Because I think people take that for granted, right? People have no idea how many hours of effort Lenny and I put into this at the beginning where we kind of said, “Okay, we have to figure out how to run a business.” And it was a maniacal consumption of our brains for probably the first four to five years. We didn’t grow as clinicians as much because that’s all we focused on. So I love that, Kev. Let me see. How about Dan Pope?
Dan Pope:
Well first I think it’s good. You see a lot of dentists, chiropractors, they go out, they have to start their own business. Obviously you can start another business, but it’s more common in other industries. And I think one of the common things you see with physical therapists is we’re not very good at running a business. And we’re in the United States and healthcare is very different from country to country, but where we’re at, I think that US PTs aren’t taught much about it and there’s almost like a sense of elitism against running a business. When a patient comes in, we have to practice obviously evidence-based care, but if you’re ever trying to get people through the door and you’re not trying to kick them out as fast as possible, that’s like a disservice to the patient, which I don’t think is a great way of thinking. And for every other business in the world, it doesn’t operate that way. So it ends up being kind of challenging from a physical therapy standpoint of what to do.
With that being said, if you’re going to start something that’s cash-based, I think one of the major changes from the more kind of standard insurance model is that you have to know how to market. And marketing ends up becoming a really, really big part of what you do on a regular basis. And I think that at Champion, we’re really lucky. Just because when I first started, I had to do much more marketing to get people through the door, but now I don’t have to do much of anything. It’s kind of self-propelled. And partly it’s because I’ve established myself, but also because Champion supplies leads regularly for me and I don’t have to do much of anything. But if you don’t have that, that’s going to be a ton of additional work. So you’re going to have to get out there, talk to surgeons, talk to different communities, ask people to write referrals or write reviews, then gain more referrals from those people. You probably need to track referral sources to figure out where people are coming from and then have to figure out your financials and just try to figure out if you’re making enough money in general. And it’s an enormous beast.
What I will say is that I don’t want to dissuade people from doing it, because in general, I want more physical therapists to be business-minded. But yeah, just be prepared to run a business, learn how to market, and then your skill set has to be much more diverse than just learning how to treat people well.
Mike Reinold:
This is awesome. I feel like this is backfiring, right? Because people are going to be like, I am not doing… At the end of this episode, they’re like, “Dang.”
Dan Pope:
Revoking your applications.
Mike Reinold:
I love it. Let me see. Anthony, what do you got for us?
Anthony Videtto:
Yeah, I mean I think for me, as someone who’s relatively fresh out of school, I don’t think it would be fair to my patients if I was also trying to run my own business at the same time. I think for me, I need to do such a better job of becoming a good clinician and I think that’s priority number one right now. So if I were to also have to work on leads and going out and meeting surgeons and promoting my own business, I feel like that would take away from the care that I would give to my patients. So kind of going off what Kevin was saying earlier, I agree with everything that he said. And right now having you guys take the lead on all of that stuff helps me become a better clinician in the meantime. And then maybe later down the road, 10 years, 20 years, whatever it may be, that might be something that I could get into. But right now, being able to focus on my clinical skills is kind of the priority for me. So I just don’t feel like it would be in the best care for my patients to do that.
Mike Reinold:
Makes sense. I like that. And you’re going through it right now as somebody that is just getting started, just kind of switching over to that cash-based model. It makes sense, right? You’re focused on being the best you can be as a clinician. So I like that.
Lenny Macrina:
But keep in mind, when Anthony, he had rehab with us in high school and college, he went to PT school and did a rotation with us, and then he went out and worked for what, a year or so at a previous facility in a traditional insurance-based model. So he is newer as a PT, but he has a lot of experience with us and he has patient experience.
So I think yes, we do drive a lot of the leads and marketing just by the name and just relationships with doctors. So I think it makes it easier for people like him and others. I’m curious to… Not to hijack this, but I’m curious to hear what Scaduto has to say as somebody who came on as a student and had no experience besides being our student, which was big. So yeah.
Mike Reinold:
You just called Mike out on that. So I guess we’re going to Mike next. What do we got, Mike?
Mike Scaduto:
Yeah, time for a rebuttal. No, I’m just kidding. My thought is what are the major challenges that you’re going to face as a cash-based PT clinic? I think customer acquisition is going to be a challenge early on and then maybe churn. You get people in the door, it may be tougher to sell your product versus an insurance-based model where they get a script for three times a week. So I think if you try and do everything all at once, if you’re trying to be very broad and treat all different kinds of conditions or surgeries, that may be more challenging for you, you’re going to be very spread… You’re going to be spread very thin.
So I think we say it every time. Basically I think you have to have something that you really excel at in a specific field. Whether that’s baseball, a specific sport, or a specific type of injury. I think that helps from a marketing perspective, but it also probably helps you retain clients over the long run and you maybe have to spend a little less time going out and searching for all these different types of patients with different surgeons or different doctors or in different communities. You can really focus and try and capture a certain percentage of X doctors’ patients and maybe your time is more well spent there.
So I think having a plan on how you’re going to retain clients over time is probably the most important thing. Instead of trying always to find new patients, how you’re going to keep people in the door.
Mike Reinold:
Makes sense. I think that’s a good one, Mike, too. And just to relate a little bit at the beginning of Champion, the whole concept of the red velvet rope. When you’re first getting started, you can’t say no to anybody, right? Well one, you have to eat, you have to pay your rent. So that’s a big part of it. So kind of like the floodgates are open. And then as you get more established, I think you start finding your niche population a little bit more. Like your ideal client a little bit more. And then, obviously, I think that’s what catapults you to success, is that if you’re going to be a general cash-based PT, I think it’s harder to have long-term growth and success. If you’re a specific expert in something, then it’s going to grow.
So you have to flip that from the beginning. Because at the beginning there’s no red velvet rope. Everybody’s in because you need patients, you need to pay the rent. You have to not get stuck there. Because you need to slowly start getting more specific to your niche or you’re going to probably not hit that catapult of a progression. So good one Mike, I like that. Lisa, what do you got?
Lisa Lowe:
Yeah, I mean building off kind of what everybody else has said, but I feel like… So I’m about to start my sixth year at Champion. So five years in, I believe if I’m doing my math correctly, it might be a year off. But either way, this past year was the first year where I feel like my schedule was fuller than the time that I had for people. So it took that long. It took a good few years even with everything we’ve said of a cash-based place with a lot of leads and connections and all that kind of stuff. But because as the rowing niche person, it took time for me to build to the point that I have a caseload, that is I have a much more dependable paycheck. My schedule is always pretty full. I have many more people sending me patients, all that kind of stuff.
And that was even with when I was working before I joined Champion. I did a lot of pro bono work with rowers, so I had my name kind of already out there. So I just feel like it really depends on where you are and what your niche is and how much time you have to network and all that kind of stuff for… I really, like everybody else has said, I really can’t imagine doing all that on top of learning how to be a PT in the real world. You come out of school and you have some good ideas, but I mean all of us are kind of fans of “you don’t know what you don’t know until it comes upon you.” And I would feel really bad personally if I was hitting too much of that like, “Wow, I really don’t know what to do with this” if someone’s paying me cash. I feel like in the insurance model, it’s a lot. I felt less guilty personally learning through that when that was the model that people were coming to me in.
Mike Reinold:
Yeah, makes sense. I mean for me, I think a lot of people feel that way too. You put a lot more pressure on yourself when you’re in this model. Especially if it’s your business too, you’re going to put more pressure on yourself too. So something to keep in mind. You have to be prepared for that.
Len, what do you got here? Getting back to the question, getting back to the question. I intentionally wanted to go with you last, but back to the question is what does it take to start a cash-based practice? I think we’ve covered a lot of stuff. I’m eager to hear what you did because you have done this. What do you got?
Lenny Macrina:
Oh, Pope stressed me out with his answer. Because I was like, wow. Yeah, we did all that. We got through that.
Mike Reinold:
I was actually thinking about quitting after Pope’s thing. I’m like, maybe I need to go back to insurance-based.
Lenny Macrina:
Yeah. I mean, because you do have to track all that. And rewind to what Dan said and others, but you have to track everything. And we track so much stuff. So you need to know what to track and figure that all out and have a good business mind and where can you be better and what’s the capital that you’re going to use to get going? And you’re going to take a loan, or is it going to be cash? Is it an LLC or an S-Corp? How do you go through all that? What’s the accounting process? Everything. You need to buy a table, you need to buy everything that you need for exercise equipment and maybe if you’re seeing people post-op wound care type stuff and just all that is just like this process.
With that, I mean, I know all of us are kind of discouraging, it sounds like. It’s very possible to do it. I think if you start small, you start with a low budget, you don’t go too big early on and literally your practice grows with you, you don’t grow into the practice. I think that’s key. If you have a little table in a corner of a CrossFit box or some kind of gym, maybe a good starting point and you better hope that that gym is going to feed you a lot of people because it’s not going to probably feed you as many as you think. It all sounds good in nature or on paper, but it oftentimes doesn’t materialize. So you better be able to pivot and have time to go see doctors, which takes you out of the clinic or your table area to go treat patients. And so it’s a process.
But I think this person was a strength coach for a while. So maybe you are established in the area and you are known by your clients and that might be a good starting point for you. I know people who were in that position or massage therapists that became PTs and were successful because they already had this group of people that they have interacted with and have that ability to communicate in a medical way.
And it just comes down to: do you know how to treat their newer injuries as a PT? Meaning can you progress somebody that’s two days out of an ACL out to return to sport? You have the facilities to do it, the ability to do it? Or for example, or other issues… Somebody comes in with a red flag. What do you do? Who do you communicate with? Or you have something that’s on your schedule, you have no clue. Who do you talk to? Do you have a mentor or somebody you could communicate with to get on the phone after the visit and figure out, “What did I do wrong? How can I make it better? Do I have to contact the patient and give them an update? Where do they go?” There’s so many different things to have to consider.
And so I think it’s possible. I definitely think it’s possible for a certain circumstance of people including yourself who ask the question, but just be ready for many circumstances to come about and have people around you that can support you.
Mike Reinold:
Sounds terrible.
Lenny Macrina:
I remember you and I communicating a lot. I was living in Alabama. You were up here and yeah, we talked a lot.
Mike Reinold:
I’m exhausted.
Lenny Macrina:
We had each other to bump ideas off of and, “What about this? What about that?” Yeah.
Mike Reinold:
Right. I don’t know if people appreciate that too. It’s always good to have somebody that you can talk to. So you’re doing this solo, it’s even harder. So Kev, did you have something?
Kevin Coughlin:
Yeah, I guess I had a question for you and Lenny… Now you see a lot of clinicians that put out blueprints for starting your own cash-based clinics or people take business classes. How did you guys do it? Did you take any business classes or did you just do your own research, I guess, and talk to other people who were doing something similar?
Mike Reinold:
You know me better than that, Kevin. So I wanted to win the world. So that’s my mentality on this. So I did everything. There’s not that much though. So first I bought every book about it. There’s not that many books about it. Even just starting a PT practice, let alone a cash-based one. I think there actually was a cash-based one back at the time. So I did all that. I went to the APTA private practice sections, meetings, like how to start a business, that sort of thing. I did a course, they had a home study course that you could do. And again, somewhat helpful, not that great.
I did hire several coaches. Because again, I’m maniacal. So we hired a PT coach, I hired a fitness coach, and I hired a business coach in addition to our accountant, but probably more so our attorney. Our attorney’s, great. Our attorney is a physical therapist. One of our attorneys, we have many attorneys. So the longer you’re in business, the more attorneys you need for various things. But for us, our main business attorney is a physical therapist. So he gets that and he went back to school and he actually teaches a lot for the private practice section.
So yes, I totally put myself within that world. But one of the biggest coaches I think I hired was fitness-related. So Pat Rigsby was a big resource for me along the way, but I was also growing at the same time that a lot of our peers were, like Eric Pressing, Mike Robertson, people like that. There was this evolution 10 years ago where everybody was kind of growing and learning from each other. So I think we had that. So there’s some cash-based PT things out there now.
So I would just… My only comment on that is I know there’s some good guys out there trying to help. Just make sure that they were successful before you start taking their advice. Because business advice might be the easiest thing to regurgitate from the internet without actually doing it. So keep that in mind. As business owners, Lenny and I see a lot of things online that we just chuckle about that you wouldn’t believe. So yeah, that’s a good question, Kevin.
Then I would just end with this. The one thing I think we haven’t talked about. You want to talk about success with the cash-based practice? I think it all comes down to customer service. And I think that’s what’s different. Sure, you have to understand the business. Everything we talked about is probably one, you have to understand business stuff, you have to be an expert at what you do.
For me, it’s selfless customer service. In the last 12 hours, it’s the morning, I’m texting a mom, I’m texting a new patient, I’m texting a doctor. I have two doctors about patients, about stuff. It’s selfless customer service. It’s a service-based industry. There are too many people, especially young students getting out of college now and starting to do this and they’re doing it to make money or they’re doing it for the business. They’re doing it for themselves. That’s not why we got into this profession. So this is the difference between insurance and cash-based. If you don’t want a phone call after 4:00 PM because you’re off duty, it’s not the right move for you. If you don’t want to be texting people at 10:30 at night. Sure, sometimes it’s fantasy football-related, but there’s another one. If you don’t want your patients in your fantasy football league, then you shouldn’t start a cash-based practice. Stuff like that. It is about customer service and it’s about being there for people. They can text me years after and I’m still there for them. It’s almost Christmas-time. All of our college athletes are coming home right now and texting all of us and saying, “I need to see you. I need to check in.”
So you have to have that selfless customer service. You’re there for them. And that’s an important thing here. And in the insurance-based world, it’s a little different and I hate to say it, but you got a boss, you got workloads. You’re trying to do criteria for insurance companies. So much crap that you’re dealing with, it’s a little bit different.
So anyway, that was a big episode,. So kudos to you guys on that, I think that’s going to be a good episode for a while on this. But great answers for everybody. Hope we haven’t talked to you out of it. But I hope what we did was help you take a step back to just say, think this through a little bit here. So that way I think if you know all these things going into it, you’re going to be more set up for success. Okay?
So great question. If you have anything like that, head to MikeReinold.com. Please keep asking away and please subscribe on Apple Podcasts, Spotify, and we’ll keep doing these episodes for you. Thank you so much.
