1

Shapeshifting Your Business Model

oragami paper crane

How a mindset to thrive will help the future of private practice ownership

By Steven McLean, MSc

The world is changing inside and outside of physical therapy.

So, how do we protect our businesses against the external environment? How do
we pivot and grow despite the challenges? This is precisely what must be done
to support your clients, team, family, and business. Your business can not
only survive through sweat and tears but can also thrive.

And let’s be clear: small businesses, particularly physical therapy clinics,
are currently facing unprecedented obstacles. We must adapt and change to
serve this challenging landscape as a profitable business. So, how do we add
more income or become more productive with less labor costs? We came through
COVID-19, and we then had the threat of a recession, low consumer confidence,
inflation, energy price rises, and, the hardest of all, a labor shortage that
won’t change anytime soon.

It’s simply not sustainable.

This is changing the balance of our business models. If you don’t change, you
won’t survive; it is as simple as that. Cash reserves are slowly eroding, and
meeting payroll every month is getting more stressful. Medicare and commercial
insurance benefits are changing, making it harder for you, the clinic owner,
and you can do nothing to change it.

Or is there?

CHANGE THE BUSINESS MODEL

We need to increase our level of service and care and change our business
model. Before that can happen, our mindset needs to change. We must value our
clinical skills and unwavering belief that we can do it.

Marketing our clinics should be centered on outcomes, using data, and making
sure we are getting people back doing what they love. Some clients will be
able to pay cash upfront for your service, but some won’t, which will be
emotionally hard reconciling the effects of personal finance on healthcare
access. I’ve done it in my own clinics, and we run a successful, profitable
hybrid clinic, but the change created a lot of turbulence.

Diversifying into wellness is another sensible option; massage, cryotherapy,
red light therapy, shockwave therapy, cold water therapy, stretch therapy,
Pilates classes, and strength and conditioning classes are all viable options.
To achieve this, you must become an expert and find a niche that suits your
target market. The more niche you are, the more you can charge.

For example, if you can help a golfer add ten yards to his drive, keep him fit
and healthy to play all year round, and outdrive his buddies, then you will
easily be able to charge him more than someone just helping him get out of
back or elbow pain. Once this niche has been clearly defined, investment in
consistent marketing activities will be key. The clinics that market using
smart messaging and tactics will outshine those using a less customized
approach, and those clinics will promote a diverse range of services and
likely be able to charge higher cash-based fees.

CASH CLIENTS

Transitioning to cash clients takes work. It takes a mindset shift, and you
must take your team with you. Training them and providing support in handling
difficult conversations is vitally important. Ensuring they follow up on every
phone call, every email inquiry, and every lead can make all the difference.
To do this, you need to build suitable systems.

We compete with the National Health Service (NHS) in Scotland, a free access,
free treatment healthcare system for everyone. It has some great therapists,
but it now has long waiting lists (16+ weeks), which gives us a clear
opportunity — if we can have the capacity and recruit the staff. It is a
process, but you owe it to your business to do what is needed; having a coach
to help you through this period might also be worth serious consideration. I
have used one for the last five years, and it has helped give me the
confidence and mindset to make some big decisions in my clinic, raise my
rates, and manage my own development as I transitioned from a solo
practitioner to a business owner with 10 employees.

INSURANCE CLIENTS

This does not mean you need to stop all insurance clients. You can and should
look at your numbers and see which insurance providers pay the best rates, pay
on time, and have the highest out-of-network benefits. We have kept five
insurance providers and use them as a marketing cost to transition those
clients onto wellness and maintenance packages at the end of their successful
physical therapy treatment plan. This increases the client’s overall value and
turns them into a returning client. We drive referrals and reward clients for
doing so, lowering client acquisition costs and adding more value to the
business.

Suppose we can make sure our client acquisition cost is below the lifetime
value of a client and we can keep the revenue-to-labor ratio at 2:1. In that
case, you can have a profitable and thriving business (please note this ratio
is probably most reliable for clinics under $1 million in revenue).

To do this takes creativity and marketing. You will have to review all your
systems, website, and marketing materials and invest time and energy in
starting your business again. It won’t be easy, but it can work; it can be
much more profitable, and it is a valid alternative to the slow death of being
100% dependent on insurance clients.

THE NEXT GENERATION

To keep your best therapists or attract the next generation, you will need to
pay them a market rate. People like security, flexibility in working hours, a
clear development path, and a supportive working environment. To afford the
staff and provide the level of service, you need to be able to control your
rates or produce other income streams. This may mean an athletic trainer,
massage therapist, or physical therapist assistant could be employed at a
lower rate to ensure your model works.

If it can’t work on paper, it will never work in reality!

Shifting to new technology and improving efficiency is essential as we adapt
to a new age. New software exists which can reduce your billing fees to 4% and
not incur a monthly charge. If you’re paying five, six, or 7% plus a monthly
fee, you can easily add thousands of dollars to your clinic’s bottom line by
changing your billing processes. This one decision might offset any reductions
in reimbursements for this year, but it won’t be the answer every year going
forward.

But you can’t just keep cutting. Eventually, you’ll cut off a limb!

You can also add other income streams without labor overheads. For example,
you might outsource your call-handling service to a virtual assistant with
lower costs. There might be better solutions than this, but it is certainly
better than not having the phone answered at all while you are busy in the
treatment room. This will incur fewer costs, such as taxes and benefits, as
part of the overall package but still allow your business to function.

ONLINE COURSES AS OPPORTUNITIES

You might also consider developing an online course and shifting to a model
that is beyond your local town and can help more people. We have all seen the
benefits of remote therapeutic monitoring (RTM) and telehealth appointments
over the past three years, which can be an additional income beyond your
current offering. You might also sell your abilities to help clinically mentor
other therapists or coach other business owners.

Or you may develop a new product or service to make life easier, save time, or
save money. I managed to do that by helping to develop a new clinic management
tool specifically for physical therapists with some AI magic added in. This
was implemented in my clinics to help my team become more efficient and
productive and reduce administrative and non-income-producing tasks, like
calling insurance clients. We now use preauthorization and insurance
verification in the clinic and know in seconds what a patient’s in and
out-of-network benefits are. This allows my team to spend more time with the
clients, create a better experience, and charge higher fees for our cash-based
clients.

Once you start thinking about your clients’ needs and solving their problems,
you will be able to create a business that truly works and provides you with
the lifestyle and opportunities you want for you and your family. But it all
started with your mindset and your belief in yourself. Why can’t we help our
patients live a pain-free, healthy, active lifestyle and make a profit at the
same time?

After all, is that not why we do it? 

action item


Steven McLean, MSc (Hons) Physiotherapy

Steven McLean, MSc (Hons) Physiotherapy,
is the owner of Optimal Physio Ltd located in Clarkston and Largs,
Scotland. He is also a co-owner of SPRY practice management software. He can
be reached at steven@optimalphysio.co.uk.