How To Open A Cash Based PT Practice In 2024

Show Notes

In this episode, Dr. JJ reverse engineers everything you need to open a cash-based PT practice in 2024. Sharing insights about the hurdles faced when transitioning to cash-based physical therapy. This step-by-step guide will help you excel in the cash-based world so that you can be fulfilled both professionally and personally.

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What is The Dr. JJ Thomas Podcast?

Welcome to The Dr. JJ Thomas Podcast! Here I'll be talking all things physical therapy, raw and unplugged, giving you the unfiltered insights you've been searching for in your cash-based physical therapy business. If you're caught in the grind of the traditional model, swamped with paperwork, or feeling like you're not reaching your full potential as a physical therapist, this podcast was created just for you.

Dr. JJ Thomas: 00:00

All of a sudden, it dawned on me exactly what I said earlier. Like, I needed something that could help me track what to do. And so I realized, oh my god. I do this 10 times a day, 20 times a day with my patients right now. That's all I need to do.

Dr. JJ Thomas: 00:13

I need to reverse engineer it. Welcome to the doctor JJ Thomas podcast. Welcome to the doctor JJ Thomas podcast. I'm doctor JJ Thomas. Thank you for being here as always.

Dr. JJ Thomas: 00:28

I wanna tell those of you that don't know me yet just a little bit about where I am, where I am, who I am, where I come from. Basically, I'm just a PT just like many of you. I, have been a PT for 20 3 years over my 1st cash based practice 10 years ago. And I did so out of a sheer desire to do right by my patients and my family and, since then my practice has grown exponentially in a way that gave me financial freedom that I really never could have dreamed of. So this podcast, all the episodes including this one, are entirely driven to help you guys do the same for you, for your family, for your patients.

Dr. JJ Thomas: 01:10

So hope you like it. Thanks for tuning in. Today's episode, I think it's gonna be a cool one because it deals with a barrier that I really struggled with, and I think was one of the number one things that helped me get over the hurdle of being able to actually take the take the plunge, and go for opening my cash based practice. And what it is is basically reverse engineering your way to a successful cash based practice. This concept of reverse engineering, it's not new.

Dr. JJ Thomas: 01:40

It's something we do all the time. In fact, if you think about how we handle all of our patients, every single patient scenario that we deal with comes down to reverse engineering for them. So you have a young athlete, a young high school athlete come in to your office and, say they're a football player and they come in and they're 2 weeks out post op ACL, and they're like, oh my god. I'm a sophomore. Next year is a big recruiting year for me.

Dr. JJ Thomas: 02:07

I need to get I need to get on the field next fall. I need to do this. I have 10 months. Is that reasonable? Heck yeah.

Dr. JJ Thomas: 02:13

It's reasonable. How are we gonna do it? We're gonna reverse engineer it. That's what we do every single day with all of our patients. Same thing if we have, you know, someone who's gonna run a race or, even someone who, like, let's say actually, I just had somebody interested in running the Leadville 100.

Dr. JJ Thomas: 02:31

So a 100 miles, that's a huge feat. Could be very overwhelming. How do you make it not overwhelming? You reverse engineer it. You get your stats.

Dr. JJ Thomas: 02:39

Right? You have to know 2 main things. You have to know where you are and where you need to go. Right? That's how we reverse engineer for our patients.

Dr. JJ Thomas: 02:48

Turns out, reverse engineering for your Caspase practice is exactly the same way. What you need to do is figure out where you're starting from and you need to figure out where you want to get to. So I'm gonna show you how to do that with some number examples and I think it's really gonna help you. So, let me back up though because I think every every good episode deserves a story behind it. And so I wanna share with you the story of the moment that I realized that this was how I was gonna figure out how to do my pat my cash based practice.

Dr. JJ Thomas: 03:18

I was in the insurance based world, as I said. I was there for 13 years before I decided to move on and and make some decisions about moving on with my life and doing things things that were important to me, like treating patients the way they deserve to be treated. And this one night, I'd I'd treated like, it was like 35 patients that day. It was a rough one and I still had notes that I hadn't finished from the day before and my husband I got home late. My husband had already put the kids to bed so I missed them and I still had notes to do.

Dr. JJ Thomas: 03:46

And, man, I was a I was sour face, you know. I was, like, bummed and unhappy and unfulfilled and so I'm sitting on the couch and I'm doing my notes and I'm bitter at the world and I'm frustrated and, I was like, I gotta do something about this. Like, I can't keep doing this. I'm not even fun to be around, and I'm missing time with my kids. So all of a sudden, it dawned on me exactly what I said earlier.

Dr. JJ Thomas: 04:09

Like, I needed something that could help me track what to do. And so I realized, oh my god. I do this 10 times a day, 20 times a day with my patients right now. That's all I need to do. I need to reverse engineer it.

Dr. JJ Thomas: 04:21

So I pulled out the numbers. I use I'm a Mac. I'm a Mac user. So I pulled out the numbers section of the, of the computer, and I just started cranking some numbers. And I just started, like, well, what would it look like if I did this?

Dr. JJ Thomas: 04:33

And what would it look like if I did this? And how much money do I need to actually bring in so that I'm financially in the same place I am now or better? And so all these questions started coming up and with those questions came answers. And this is the structure of how we do this. Okay?

Dr. JJ Thomas: 04:47

So first the first thing you have to ask yourself well, let's actually say this. The first equation you need to think about is essentially you need to reverse engineer. We need our starting point and our finish point. Right? So you know where you're starting from.

Dr. JJ Thomas: 05:06

You know you're living comfortably. You know that the salary you're currently making is helping you pay your bills at work and at home, and this is maybe a comfortable place for you. But your finished place is a place of happiness. Right? And so maybe your monetary, maybe your financial goals are going to be pretty similar here.

Dr. JJ Thomas: 05:23

Not sure. But ultimately what we need to do is figure out how we're going to get here. And so whatever this number ends up being, essentially our finish is going to be net income is gonna equal our gross income minus our overhead. Right? Very simple math.

Dr. JJ Thomas: 05:47

Very simple math. This is literally how I did it. All of a sudden I was like, okay. I need to figure this out. How much money do I need to be able to make?

Dr. JJ Thomas: 05:56

How much money do I need to be able to bring home to make basically, to make me able to justify this move to my husband, right, and for my family. And so this number I had to come up with, speak with my husband about what does this number look like? It had to at least at a very minimum be what my current salary was at the time. The next pieces we are gonna fill in are your gross income and your overhead. Right?

Dr. JJ Thomas: 06:20

Let's start with overhead because overhead is like an obstacle. Right? So let's think about overhead. Overhead examples of overhead, the big ones in a very simple cash based practice model are 1, rent. Right?

Dr. JJ Thomas: 06:34

You're going to have to be somewhere. You're going to have to have a location. That's that's a biggie. Right? Number 1, rent.

Dr. JJ Thomas: 06:45

Number 2, equipment or supplies and or supplies. Right? We have to know that we're gonna be able to give our patients what they need in terms of equipment or supplies. We have to be able to perform a service. So we need a place to perform a service.

Dr. JJ Thomas: 07:00

We need equipment to be able to perform a service with. We're gonna talk about this expectation in a little bit. The other thing I think bare bones that you actually really need in a cash based practice, you do need web you need a website. You need a website and you need someone to manage your SEO, SEM, because no matter how good you are, if they can't find you, you're not gonna be productive. You're not gonna have patience.

Dr. JJ Thomas: 07:26

Right? So you could be a kickass therapist in this beautiful space with some great equipment, and if nobody knows you're out there because in today's world, everybody's searching like, who's this JJ chick? And if I don't come up on social media or on the web on the Internet, then, then I'm no good. So that's the last one, and then that's the third one. And the very last one, which we need in our profession in particular is an EMR system.

Dr. JJ Thomas: 07:52

Right? Because we have to be compliant. We have to be able to take notes on our patients. We have to do it in a way that's HIPAA, approved, HIPAA qualified, and we have to be able to document these things. Now, luckily to in today's world, a lot of this also includes your billing avenue.

Dr. JJ Thomas: 08:11

So they're kind of lumped together. So the overhead expenses are 4 main big things. Right? We have our rent. We have our equipment supplies, our website, and our EMR, which also will include billing.

Dr. JJ Thomas: 08:23

Let's take a look at what that financial expectation is gonna be, that financial picture. Rent's a big one, but to be honest, the cost for rent is gonna vary greatly. If you signed up to receive our free our free book online, you can if you haven't, click the description the description and the link below. We talk about ways to minimize the cost of a location. Right?

Dr. JJ Thomas: 08:46

Subleasing from other places. Maybe you join in to, like, a, like a CrossFit community. Maybe you, sublease space from another clinician, maybe a different doctor's office, a massage therapist or chiropractor. Find ways to the ebook describes ways that you can keep costs low. So that could be anywhere from $500 per month to really about 6,000 per month.

Dr. JJ Thomas: 09:15

That's a 6. Is probably a reasonable range to expect for cost for, rent or location. Just to give you my own example, when I started 10 years ago, I did exactly what I say in my book. I I chose 2 locations because I was feeling out different markets, essentially. I was feeling out different locations, and I was fortunate enough to make some good networking with 2 great options.

Dr. JJ Thomas: 09:40

1 was a personal trainer who was established in the area. He's actually local to here, and well respected great great, trainer and he had a great space. And I said to him, look, I'm just getting started. I'd love to be able to sublease space from you when you're not busy if that's okay. I'll bring my table.

Dr. JJ Thomas: 09:59

We'll talk about equipment in a second. He was like, absolutely. Our deal was I paid him $20 for every patient I saw that day. So the cool thing about that cost setup is that I only paid him for, time that was financially productive for me. So if I didn't have patience and I wasn't there, I wasn't paying.

Dr. JJ Thomas: 10:19

If I had patience, then I paid them a portion of that. So that's one structure that might really benefit you if you're just starting out in your own cash based practice. The second option that I had in my own cash based practice was a friend of a friend had, was a golf a tennis pro. I'm sorry. At a golf and tennis club.

Dr. JJ Thomas: 10:38

And this guy was trying to boost the morale and the community and really just trying to offer good services for his customers, for his, members. And so what we worked out is he was an hour away, so I didn't wanna be there a lot, but it was such a great deal. He offered me $200 a month to come in once, once a week, so 4 days in a month. I could stay as long as I wanted. I could use all the equipment.

Dr. JJ Thomas: 11:03

I could set myself up wherever I wanted. It was so low cost that I took them up on it. So essentially, I was essentially around that $500 per month part initially, which was great. If you can find something like that, excellent. Most people, when you're just starting out, even if you're subleasing, you may find that you're around 1,000 to $1500 per month is probably where you're actually gonna end up falling.

Dr. JJ Thomas: 11:27

So let's just use that for our math equation. Okay? We're gonna use it as this one, 1500 per month. The next expense we're gonna talk about is equipment and supplies. As I mentioned, what you wanna do is make yourself so efficient and you wanna capitalize on your unique strengths as a therapist.

Dr. JJ Thomas: 11:45

So really when you're choosing your equipments and supplies early phase of your opening your cash based practice, you want to choose equipment and supplies that really highlight your needs to get people better, but you don't want excess. Right? You wanna be very deliberate. And in the book, if you download the book, if you click the click the link in the description and download the book, you'll see I go through this in greater detail, but essentially, you really wanna go minimal here. Only the equipment you need you need to do your job.

Dr. JJ Thomas: 12:14

As I said, I rented space from a gym owner, and the country club that I rented space from, they both had gym equipment, so that made it really easy for me. All I needed was a table, which ran me about $300, my needles, and a disposal service. Some gloves and cleaning equipment too, but very bare bones. So you can get away with very low cost that can run you about 6,000 a year. If you're a hands on therapist that can really hone in on your hands on capabilities and give patients bodyweight exercises and utilize a space that has gym equipment with it.

Dr. JJ Thomas: 12:52

The next overhead piece that we're gonna talk about is the website. The website, as I said, is important because patients today will Google search you, and they'll search on the Internet for you once they've heard about you. Once you're building your brand and your reputation, when people go to search you, they have to find you. Because if they search you and you don't come up, then that's a that's that's a lost patient opportunity. So this is one that it will run you a little higher than, say, your equipment and supplies, but it's really important.

Dr. JJ Thomas: 13:20

Most websites I find through I found through my initial research that most websites can be built pretty well, in like 6,000 for startup, and then you're gonna need them you need to pay a maintenance. So that runs you about a1000 a month, which puts you at 18,000 a year. 18.18,000 per year. The other one I want you to consider is that EMR. It's very important.

Dr. JJ Thomas: 13:45

This one is very low cost. This is in fact, I'm gonna bundle this into a miscellaneous cost because this EMR billing, all those systems really will only run you like a 100 a month. So that's like just a little over a1000. The other the other piece that's gonna be considered in this miscellaneous thing is liability insurance. Make sure you're gonna want that.

Dr. JJ Thomas: 14:08

That runs you about a1000, per year. Okay? So if we're gonna total all these things to plug into this overhead piece, we're gonna do 1500 per month. Essentially puts you at 18,000 for rent, 6,000 for equipment, another 18,000 for the website, and then miscellaneous. I actually go there's a 1,000 for liability, a 1,000 for EMR.

Dr. JJ Thomas: 14:38

I'm gonna put an extra 18,000 in there just for good measure because you're gonna wanna go market to docs. You're gonna wanna bring them lunch. You're gonna wanna do, you're gonna find that you have to buy a carpet for the bathroom potentially. You're gonna have to buy certain things. So we're gonna give an extra 18,000.

Dr. JJ Thomas: 14:53

So I'm gonna put this whole miscellaneous category at 20,000. Okay? All of that 18 1,000, 18,000, 6,020,000 will put you at 63,000. So 63,000 is a pretty good expectation of a expectation of a decent overhead for a cash based practice startup, okay, for physical therapists. Assuming you can keep the rent down to, like, 1500 a month, which as I said, is very doable.

Dr. JJ Thomas: 15:19

Mine was close to 500. So now we have this. This is 63 k. Okay? I'm gonna make some room for the gross income part of this.

Dr. JJ Thomas: 15:29

You got it? 63 k. That's our overhead. So we're gonna make room. We're gonna talk about the gross income.

Dr. JJ Thomas: 15:37

What you need to do to figure out your gross income is number 1, you have to figure out what you're worth. Okay? Now I will say I've I've had too many friends that are afraid to charge what they're worth. You have to really do the research so that you're comfortable with the number you come up with, and by do the research what I mean is look around to the area that you're in. Look around to other cash based clinicians.

Dr. JJ Thomas: 16:01

It doesn't have to be physical therapists. It could be a cash based chiropractor. Most massage therapists and acupuncturists are cash based. Look at rates they're giving and compare yourself in terms of your value. What what service not only what services you're offering them, but your ability to make changes, move the needle for them in their goals, in their in their ability to move, in their physical injuries.

Dr. JJ Thomas: 16:25

And so with that information you're gonna come up with a rate for yourself. I will say that when I first started 10 years ago, my rate was about 1.70 an hour. Pretty average now is 200 an hour. Ours is you're always welcome to go to our website at primalphysicaltherapy.com and and look at our, our rates now, but but I would say a pretty decent startup for most physical therapists on average is about 200 per hour. Okay?

Dr. JJ Thomas: 16:54

So what we need what I want you to reverse engineer here, we're on the gross income piece. Right? You've come up with a rate. I'm gonna use 200 per hour as a general rate because I know a lot of friends that started that. So 200 per hour, and then we're going to reverse engineer.

Dr. JJ Thomas: 17:11

We have we will have to get back to this net income. Right? So what we're going to do is we're going to say, how many patients do I have to see in order to come up with a gross revenue? Gross income, that's income. With a gross revenue that once I take away my overhead puts me where I need to be or better.

Dr. JJ Thomas: 17:29

And so let's just start this is literally what I was doing on my couch 10 years ago when I was trying to figure this out. Let's say at 200 an hour, let's see I can let's say I can fill my book with 15 full hours per week of patient time. Okay? Only 15. How many patients are you seeing now in your insurance based practice?

Dr. JJ Thomas: 17:49

Right? How many hours of treatment are you seeing? At least at least 40. Right? And you're probably seeing multiple patients at that time.

Dr. JJ Thomas: 17:57

So imagine a scenario now where at $200 an hour, you're seeing 15 patients per week, not per day, per week. So really good quality one on one time where you're making a difference in those patients. And let's say that you're gonna do that for 48 weeks. Okay. Because I like vacation.

Dr. JJ Thomas: 18:16

I wanna go away with my family. I'm gonna give myself 4 weeks vacation. That equals a 144,000 gross income. Not too shabby. Right?

Dr. JJ Thomas: 18:27

Compare that so that's 15 hours of productive time with patients. Compare that to your 40 hour work week. Now remember, we don't have benefits in our cash based practice. Right? Necessarily.

Dr. JJ Thomas: 18:38

We have to account for that. That's another piece that could go into overhead. But even if you take out the benefits you're getting from your current in insurance based salary, you're not coming close to that. And that's at productivity of 15 hours a week. Very doable.

Dr. JJ Thomas: 18:53

Let's see what happens if we take this now from 200 hours and we let's say, you know what? I'm doing great. I've built a good brand. People in the community are getting to know me. They're understanding what I'm about.

Dr. JJ Thomas: 19:04

They're getting better. They're telling their friends and family. I now have 25 productive hours a week. I'm gonna work 48 weeks because I still wanna go visit my family and go away for holidays, and now I'm at 240,000. 240,000 gross income at a 25 hour a week productivity time.

Dr. JJ Thomas: 19:31

Pretty damn good. So let's plug this in now. So this was 63,000. Right? So if I work if I'm able to be productive with patients for 25 hours a week and I have the overhead we talked about.

Dr. JJ Thomas: 19:48

We have 240k minus 63k. That equals 177k. Well, shit. Why aren't we all doing this? Right?

Dr. JJ Thomas: 20:02

When you see that number, it takes away the fear a little bit. I can get 25 hours worth of patients in a few years. Right? I can surely get 15 hours worth of patients in, you know, if it takes me a year, I'm still that number is gonna get a lot better. It's not gonna take me a year to get 15 hours patients because I'm a damn good therapist.

Dr. JJ Thomas: 20:20

If you heard my last episode, what I talked about who is cash based practice right for? It's right for those of you that are damn good therapists and it's right for those of you that wanna give your patients good care and it's right for those of you that are tired of getting paid shit for what you do even though you're working your ass off. Now all of a sudden the the numbers make sense. Now you're getting paid for how hard you work and and the product, the delivery, the result that you're actually bringing to your patients. When you see this, you're like, oh my god.

Dr. JJ Thomas: 20:49

I can actually have my cake and eat it too. I can actually get my patients better, spend 1 on one time with them, do things the way I was originally trained to do it in physical therapy, and fulfill my dream and passion of helping people in a way that's, relational, right, and feeds both of our relationships, and I can actually bring enough money home to feed my family and pay my bills both at work and at home. What the heck? Now, yes, this is amazing, and if you're considering it and you have all those things that I've talked about in other episodes, 100%, you should do it. But I would be remiss if I didn't talk about some of the obstacles.

Dr. JJ Thomas: 21:22

So I'm gonna leave I'm gonna I'm gonna I'm actually gonna leave that up there because it's just too good. So I I wanna I wanna keep you reminding of that. But let's talk about why some of the obstacles that we still do need to consider. Really, there's 2 big ones. Okay?

Dr. JJ Thomas: 21:40

I think I'm gonna use this. Can you we'll see this up here. There's really 2 big obstacles that we need to consider. One is, I mentioned to it earlier, like the business learning curve. Right?

Dr. JJ Thomas: 21:52

Whoop. The business learning curve, I'm gonna call it. That's my curve. Like I said, businesses, physical therapists, some of them are very business minded and come out business minded and they have both. Many of us are really kind of patient centered minded and the business side is scary.

Dr. JJ Thomas: 22:11

And so what you need to realize in order to get from from the scary place of being a business owner to being able to take the plunge and actually going for your dream of owning a cash based practice is you have to recognize that guess what? If you're not great at business, there are tons of people you can hire to help you with this. Right? There are lawyers you can help. There are consultants you can hire to help.

Dr. JJ Thomas: 22:32

There are tons of avenues. You just have to, as I said in the beginning of the episode, you just to be a problem solver and a leader in order to tackle those problems. Reverse engineer it, just like we do with our patients. We have a start and an end and we reverse engineer it. How many of you recognize, I know you do, that there's hiccups along the way?

Dr. JJ Thomas: 22:51

There's speed bumps. We know how to deal with those speed bumps with our patients. On the business side of things, we don't always know how to deal with every speed bump, but there are tons of resources out there. You have an extra 18,000 in our business model for miscellaneous funds for overhead. You can pay people to help you problem solve through the business problems.

Dr. JJ Thomas: 23:10

So you don't have to worry about that. The second thing that you have to consider before you take this plunge is that you really do need to be a rock star physical therapist. Now I built my practice out of purely, as I said, a desire to help patients, and luckily, I'm a very successful clinician. That helps my brand. That helps the word-of-mouth, patient after patient, telling their patients, wow, you're gonna get, if you wanna get better, go there.

Dr. JJ Thomas: 23:37

So you do need to make sure that your clinical excellence is on par with the expectations of the patients that are going to come and pay you cash. And so again, this is just something you problem solve through. It's okay if you're not there yet. What you need to do is you need to get there. And just like with this, you can hire con you can contract people to help you with it.

Dr. JJ Thomas: 23:58

If you need help boosting your clinical excellence, you could there are tons of resources out there. You can go to our we have primal university, so we have primalhq.com, and you can sign up for our continuing education courses. There's tons of other avenues. Clearly, you guys, if you found this episode, you're resourceful people and, you'll find your way. But the point is don't think that just because these numbers are what they are, yes, 15 hours of productive time is not that hard to get.

Dr. JJ Thomas: 24:28

But to keep this consistently for years years and build it to this, you're gonna need clinical excellence. So clinical badassery is what we're gonna call it. Clinical badassery or clinical excellence. That's what that is. That's how you get from here to here, and you get 10 years down from down down the road from now, and you're still a thriving, cash based practice.

Dr. JJ Thomas: 24:51

So that's it. Those are my tips. I hope this spelled it out easily for you. Like everything in life, it's simple but not easy, But if you have the tools to do it, it can be both. Thanks for tuning in.

Dr. JJ Thomas: 25:02

Again, action items for you. If you wanna take the next step and boost your level as for clinical excellence, check out our website. Primalhq.com is our educational website. And if you wanna hear more about the cash based practice tips that I give, they're more than tips. They're really must do's, and how I chose my space, my overhead list, like how to choose space, all of those things.

Dr. JJ Thomas: 25:26

They're all clearly lined out in the free ebook that you can have access to by clicking clicking the link in the description. Look looking forward to catching up with you again. Talk soon.