Multi-unit ownership and growth insights from FYZICAL’s own franchisees and CEO!
Building a multi-unit physical therapy business is a dream of many, but a reality of few. According to WebPT’s The State of Rehab Therapy 2021 Report, only 14.9% of practice owners surveyed own 10+ locations. Most private practice owners just own a single location, however, the physical therapy industry is ripe with opportunity to change this trend. Read on to learn more about multi-unit ownership in the physical therapy industry.
We interviewed some of FYZICAL’s experts on multi-unit ownership and narrowed down what it takes to scale a physical therapy business and how to get started. Many private practice owners experience challenges and make mistakes by trying to grow without taking the necessary steps needed for success. These experts have been through it all and know exactly what to plan for and how to be successful as large, multi-unit businesses.
The following insights have been provided by FYZICAL franchisees Marc Phillips, Mike Graves, Dawn Hesse, PTA, CCCE, Director of Franchise Operations, R.J. Williams, PT, DPT, Franchise Regional consultant, and FYZICAL CEO, Brian Belmont.
How Do You Know You're Ready to Grow Your Physical Therapy Practice?
If you have the desire to grow your physical therapy practice into a large multi-unit business, how do you know when you’re ready to make that leap? The first things you need to know are the risks and pitfalls of what opening another location will look like, understand the most important benchmarks and key performance indicators to determine you’re ready, and understand what the costs of opening another location will look like.
Where to Start Your Physical Therapy Business Empire
You must start somewhere: location #1. “The best way to get into multi-unit ownership is to be successful in your first location,” says CEO Brian Belmont. Being successful in your first location will allow you to step out and focus on scaling the business. Franchisee Marc Phillips agrees, “One of the most important things is having a good base. You can’t build from a weak foundation. Once you build your foundation and have all your business systems in place, opening another location is much easier.”
What You Need to Succeed in the Physical Therapy Industry
Franchisee Mike Graves explains that many entrepreneurs often underestimate the time and capital needed to grow, “I avoided this mistake by increasing my market share and improving the systems and processes that drove performance in my single unit. My original center became my largest practice by volume because I focused so much on that location in the beginning. It fed my growth and gave me the capital I needed to scale.”
In addition to building a solid foundation in your original clinic, time, and capital, you need a leadership team in place. “If you don’t have leadership and you try to grow, you won’t be able to do so successfully,” says Phillips. Having a solid leadership team in place that is aligned with your goals and vision will help support you in your growth and give you the flexibility to drive your business.
Lastly, keep your eyes open for opportunities, even when you don’t expect them. Graves advises, “Open your heart and mind to possibilities. Do your due diligence and spend the necessary time looking for opportunities. If you wear the CEO ‘hat’, it’s your responsibility to do that. Knowledge is key.”
Challenges to Expect with Multi-Unit Physical Therapy Practice Ownership
Risks and Pitfalls
Some common risk and pitfalls that can come from opening a second location can include:
- Not understanding how it fits into your long-term strategic plan
- Overextending financially by only considering best-case scenario
- Overvaluing a professional relationship or area of town
- Lack of talent bench
- Business operations are person-centric, not system-centric
- You are the business, and the business follows you
It’s important for to forecast the next three to five years for your business, and it’s essential to define and decide what that looks like. This will help you make good business decisions, because it allows you to say ‘no’ to things when you aren’t sure if they are a good decision. This will aid in not overextending yourself and the business financially. If your first location is overspending money for example, opening a second location can mean the issue will just compound, giving your businesses exponential issues.
“Who is your team around you and what does that team look like?” R.J. Williams asks. “I need to be able to wind down on some of my day-to-day involvement, so who am I going to rely on and who can I count on from my team to really pass the torch to?”
“Almost exclusively, the challenge is staffing and building a team that’s aligned with you,” says Belmont. Belmont also explains that he overcame this challenge by encouraging his team to drive the value and remain invested in the future of the company. He did this also by sharing earnings to create a financial incentive for his management to stay long-term with his company.
4 KPIs to Measure Growth in Your Physical Therapy Practice
Here are a few key metrics that we’ve seen within our system that highlight key metrics to analyze in your current daily operations:
- Achieve annual revenues of $1 million with no more than five clinicians, counting PTs and PTA's.
As you assess both your current team and your clinical team, check to see if you are hitting that number. When we refer to five clinicians, we are considering them all to be full-time employees. If you had two part-time people, you could add them together to count for one valuable clinician.
- Generating over $1 million dollars when you have a 2,000 square foot facility, adding an extra $500,000 for every 1,000 square feet that you have.
Looking at this as a footprint analysis, are you making use of your four walls to the fullest potential that you have?
- Your administrative team shouldn't be more than 80% of the size of your clinical team.
That percentage decreases further as you start to partner with outside services that reduce some of the internal pieces that you need. For instance, if you outsource billing and collections with a service that does billing and collections for you, then that's a team member that you no longer need to employ.
- Your business should have cash reserves that cover at least the next two months of expenses.
Physical Therapy is a Growth Market: The Opportunity Ahead
Physical therapy is a growth market with a lot of fragmentation and consolidation. If you’re thinking about getting into multi-unit ownership, this is the industry to do it in and this is the best time to get ahead of the curve. “I see tremendous change coming into our field. I see the physical therapist providing a greater role in healthcare and continued downward pressure on reimbursement. Growth is the only option,” says Graves.
The future of physical therapy will likely see a trend towards preventative care rather than the traditional episodic care. “It’s the vision we have at FYZICAL. We are a solution for many of the rising costs in healthcare, such as opioid addiction and increased falls,” Belmont explains.
Overall, building a physical therapy empire is possible for anyone willing to create and stick to a plan and do it. But you don’t have to do it alone – and from the advice of these experts – you’ll be better off having robust support throughout your journey in physical therapy business growth.
FYZICAL is a complete physical therapy business model for growth-minded private practice owners and entrepreneurs. No matter what stage you’re in, FYZICAL develops customized solutions for private practitioners to help you reach your goals as a business owner. To learn more about the FYZICAL franchise model and how you can build your FYZICAL empire, request a call with a FYZICAL Advisor today!