Top 10 Tips in Money Matters

By Brian Gallagher

In this Money Matters issue, I would like to take a broader view and simply share with you how you can make the most of your money and make more of it.

I don’t deserve the credit for all of these tips because many of them have come from your fellow physical therapy practice owners and managers. Over the past 10 years I have traveled to over 300 physical therapy offices all around the country, allowing me to take note of the best money management and operational strategies that actually work.

I have adopted many money management tips over the years, but here are the top 10 that I have seen work quite well for many owners. (Take note that I am not an accountant and therefore not trying to provide financial advice, so run these by your financial advisors.) I’m just sharing what I have seen successfully implemented in hundreds of offices.

It typically works best to get paid a low base salary, in the area of $60,000, with the rest in distributions and owner add backs. You will save on the matching employer portion of Social Security with the distribution payments. Cars, car insurance, life insurance, gas, car repairs, cell phones, American Physical Therapy Association (APTA) dues, and conferences may all be items that you can fund from your practice, thus reducing your taxable income. (Check with your CPA; it depends on how your company is set up.)

I have seen many owners get a company credit card that gives them cash back with every purchase. Then at the end of the year they use accumulated cash to purchase gift cards for their key employees for the holidays. Once again you are going to want to confirm with your CPA to see if this qualifies as a “de minimus” fringe benefit according to the IRS. Here is what you will find on the IRS website regarding this topic:

In determining whether a benefit is de minimis, you should always consider its frequency and its value. An essential element of a de minimis benefit is that it is occasional or unusual in frequency. It also must not be a form of disguised compensation.

Whether an item or service is de minimis depends on all the facts and circumstances. In addition, if a benefit is too large to be considered de minimis, the entire value of the benefit is taxable to the employee, not just the excess over a designated de minimis amount. The IRS has ruled previously in a particular case that items with a value exceeding $100 could not be considered de minimis, even under unusual circumstances.


I shudder when I hear owners tell me that they are paying a percentage of their newly hired therapist’s salary to the recruiter who found them, sometimes equaling $16,000 or higher; if you are paying that much, it’s definitely too much! Several years ago I owned a staffing company and was successful at negotiating flat rate recruiting fees, for any new physical therapist that I hired, of $4,500. You too should be able to do this!

Try looking into a health co-op. These are nonprofit organizations that are set up and function similar to a health insurance company but for much less money.

Check and see if your state is one of the many states that are deregulated. That means you don’t have to buy your electric from your local energy provider, but instead you can purchase it from a third party, often being able to lock in an annual fixed rate, so your bills won’t be subject to hikes throughout the year.

I am constantly coaching owners that their business finances are distinctly different than their household finances. Keep your cash and use your line of credit (LOC) when appropriate. If you don’t have an LOC, then get one tomorrow! Trust me, when you need it, they most likely won’t give it to you. Increase your available LOC whenever you are financially strong. It’s cheap money, and the interest portion is often tax deductible.

The average clinic I have seen is losing between $43,000 and $71,000 each year at their front desk alone. Worst of all, they don’t even know it. The first step in fixing this problem is getting your front desk staff to understand how to be a professional patient care advocate. This is far superior to talking to them about good customer service. Cluster booking, daily confirmations, percentage of prescribed visits, tracking cancellation/no shows, policy enforcement, efficient patient registration/verification, tracking prescribed frequency’s ratio, and weekly action planning are all vitally essential. The front desk position is by far the most important position in your company, and unfortunately not many owners I meet have mastered this.

Routine monthly ordering from one or two vendors who offer you the best pricing will save you time and money. I have met my fair share of owners who are running all over the place just to save $5 or $10, and they fail to factor in the cost of gas and time away from the office.

Never buy bottled water ever again! You can go to a store or buy online a direct feed water cooler with filtration system for about $200. After you have a plumber install it, you’ll never have to store, lift, or carry heavy water jugs ever again.

I saved the best for last. Basically, what you are doing is the opposite of what every bookkeeper has ever told you to do regarding how to move cash through your business each week. Here is how it works: You get paid first! The total cash that came in for the week gets logged in, and the first deduction coming out is to you, in the form of a distribution. You then set aside for your fixed reserves before your bills get paid, and last you plan for your future bills. Now, this sounds simple (and it is), but there is much more to it. It does require a full understanding, with discipline, to make it work. You will be amazed at the amount of cash you will be accruing, with very little effort.


Brian Gallagher is the chief executive officer of MEG Business Management, LLC. With more than 24 years of experience in the field of rehabilitation and 19 years in business, he specializes in physical therapy practice billing and coaching nationwide. Brian supports the APTA through lecturing, writing articles, and performing webinars. He can be reached through his website at or via email at

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