To Grow Or Not To Grow, That Is The Question

image_print
plant bed

Tips to determine whether or not to expand your practice

By Charles R Felder, PT, DPT, MBA

During my 20-plus years of owning a physical practice, I went through multiple stages of either wanting to grow and expand my company to many locations or being very content running a single office. I’ve seen this same conundrum in many of the clients I’ve had the good fortune to coach over these last 20-plus years. My experience is that most owners go through this internal struggle several times during their ownership career

I have worked with physical therapy clinic owners in multiple capacities, including doing benchmark studies, business coaching, and revenue cycle management. I’ve conducted benchmark studies of 1,192 companies in 2,124 locations, and among these, the typical practice had 3-4 FTE-licensed providers and averaged $800,000-$900,000 in annual revenue. In my role as a business coach, I have worked with smaller practices of single practitioners up to 30 FTE-licensed providers and multiple locations. A common question I am asked by my clients is “Should I expand, stay the same, or contract?” And I have learned that this is a decision driven less by the numbers than is usually thought. The primary driver is actually what is important to that individual. Working out the answer to such a question is a very personal decision and requires a great deal of introspection and focus. My goal for this article is to share my experience in assisting owners as they determine which path is best for them, their families, and their team.

Most of us have heard the saying “If you are not growing, you are dying.” I don’t believe that is necessarily true. You can maintain the status quo for quite some time. The last few years have been particularly challenging, with most practices abruptly contracting, and then growing at a rapid pace. Most of the owners I have been working with have now surpassed their pre-COVID-19 visits, and revenue numbers are still climbing. The majority are having difficulty finding all types of staff. We don’t yet know what the new normal will be, but my belief is that we will continue to see more growth before things stabilize. Factors such as our aging population, generally high physical activity levels, and the desire to have a vibrant lifestyle, combined with some spendable cash, have empowered consumers to seek care and be a bit discerning about who provides it. I believe this can be a powerful growth force for our niche of the healthcare industry and those private practices providing an exceptional customer experience.

Clearly, growing a successful, well-run practice into multiple locations with lots of licensed providers can be a rewarding endeavor personally, professionally, and financially. Yet it is important to recognize that this type of growth is not for everybody. Before embarking on this path, be confident that it is truly what you want. I recommend taking the following steps to help you discern whether this path is right for you:

  • Get feedback from those close to you.
  • Closely examine your motives, energy, and the resources available to you.
  • Be prepared for the challenges ahead, as well as the significant risk factors involved.
  • Set firm boundaries about how much risk you want to take.
  • Finally, get your resources in place so that you can expand with a controlled, focused plan.

Single-provider niche practices continue to have a place in our industry, but I believe that space is being narrowed. Due to all the changing and demanding regulations, it is becoming almost overwhelmingly difficult to operate an insurance-based single-licensed-provider office. Added to this is the very real stress of the aggressiveness of payers in lowering payment while making it harder to get paid. Cash-based single provider practices continue to be a viable option, but typically this is more like creating a job for yourself than a business. While it can be rewarding personally and professionally, the financial side is limited, and it can have a negative effect on your work-life balance.

Smaller single-location practices with up to five licensed providers can be a solid business, but they face many of the same operational issues with contracting and compliance as single-provider locations. This size practice can generate significant financial rewards for the owner and allow a better work-life balance than single-licensed-provider practices. Moving up to this level involves developing reasonable systems for patient care, marketing, personnel recruitment and development, personnel management, and financial management. At the four-or-five-licensed-provider levels, the owner often needs to reduce clinical care time, perform more management functions, or hire and supervise skilled and trusted managers.

Practices with five or more licensed providers, whether with a single location or multiple locations, move into the realm of needing stronger systems for clinical care and marketing. Personnel recruitment, development, and management become bigger challenges. Finely tuned and consistently monitored financial and key metric management systems are mandatory at this stage to keep the business running smoothly and avoid drowning in details or mismanaging the practice. At this level, owners typically reduce their clinical care time and spend most of their time working “on” their business rather than “in” their business, as this is where they can have the biggest impact.

Once an owner thinks about their personal and professional goals and their ideal situation, they should consider the above issues and formulate a plan for reaching their goals. There is no right or wrong answer. Each individual needs to consider what makes them happy and look closely at their strengths. I’m a firm believer in focusing on your strengths and building those rather than putting lots of effort into shoring up your weaknesses. Obviously, some weaknesses need attention, but most of us do better, as do our businesses, when we focus on improving and using our strengths.

When I am coaching owners on whether to grow, the physical therapy practice owner and I typically discuss the following for each of the areas listed:

I believe it is critical for owners to think through and speak with key people in their lives about the above issues to help them reach the best decision for the current stage of their life. Each situation is individual and requires thoughtful consideration and a good plan to execute correctly. When you conduct an examination of what is important to you with focus and intention, it will bring clarity to your decision — and then you can begin planning the future you’ve always imagined. 

action item
Chuck Felder, PT, DPT, MBA

Chuck Felder, PT, DPT, MBA, and his team provide business coaching and revenue cycle management services through the PT Central Business Office. Reach him at chuck@ptcbo.com, and learn more at www.ptcbo.com.

Copyright © 2018, Private Practice Section of the American Physical Therapy Association. All Rights Reserved.

Are you a PPS Member?
Please sign in to access site.
THANK YOU
Enter Site!