Owning your own PT practice could be a dream come true. But if you aren’t sufficiently prepared, the process might end up feeling more like a nightmare. A crucial step in the planning process is determining your ownership approach and business structure. You’ll need to decide whether to start a clinic from scratch, partner with a colleague, or purchase an existing business. In its practice administration guide, the American Physical Therapy Association (APTA) emphasizes the importance of choosing the right business structure: “Your decision to own all or part of a physical therapy practice will be one of the most important decisions of your career. Practice ownership can result in wonderful rewards and tremendous satisfaction whether you practice with others or by yourself—but only with lots of hard work, careful planning, and learning from your mistakes.”
Whether you want to start, partner, or buy a practice, consider the following:
1. The Startup
So, you want to go it alone? According to the APTA, “The values, ethics, mission, and strategic direction of the practice is all in your hands. If you have a clear vision of the practice that you would like to build, you may want to consider going it alone. You will only have to negotiate with yourself!”
Benefits
- Business setup is less complicated than that of a partnership or pre-existing practice purchase.
- You can work like a boss—literally. You’ll have control over every aspect of the business—from your work hours to daily clinic operations.
- Picking your PTs ensures that all of each of your employees is a good culture fit for your clinic. You also have the option to not hire at all—instead covering all operations yourself.
- The profit is all yours. You won’t have to share your earnings with a partner or other stakeholders.
Risks
- The pressure is on. The success—or failure—of your business is entirely on you.
- You bear the burden of all business debt—and risk.
- You’re responsible for everything—yes, everything. The onus of being in charge of all the administrative tasks—along with treating patients—could prove to be unmanageable.
2. The Partnership
According to Physio 1 2 3, “Most Physical Therapy practices (approximately 70%) operate as a sole proprietor or partnership.” So, if you don’t want to take on opening a clinic solo, you have the option of forming a business partnership. As with starting your own clinic, partnering comes with its own unique benefits and risks. The US Small Business Administration (SBA) warns: “Although partnership agreements are not legally required, they are strongly recommended and it is considered extremely risky to operate without one.” It’s important to seek legal counsel before forming any type of business partnership.
Benefits
- The weight of owning a practice is not solely on your shoulders. You and your partner will share risks, costs, and other burdens of business ownership.
- A good partner’s skills will complement yours, and as the old adage goes, two heads are better than one.
- Both you and your partner are equally invested in the success of your practice, and you can pool resources to grow your seed money.
Risks
- If the partnership doesn’t end on good terms, it could take years of litigation and thousands of dollars in legal bills to come to a resolution.
- Two talking heads can lead to arguments—which can give way to major business disputes.
- There’s a possibility of unequal contribution. Because both partners share in the success of the business, any sense of unequal effort can cause a rift between partners.
3. The Buy-In
According to this APTA article, “Knowledge of business ownership structures is also essential for a physical therapist who is considering partnership opportunities with an existing physical therapy business. Because the ownership structure of a business can affect issues of liability, taxes, and compensation, it is essential that a new investor have a basic understanding of these structures in addition to obtaining competent legal and tax advice.” Furthermore, the SBA urges buyers to perform thorough due diligence when purchasing a pre-existing practice: “For some entrepreneurs, buying an existing business represents less of a risk than starting a new business from scratch. While the opportunity may be less risky in some aspects, you must perform due diligence to ensure that you are fully aware of the terms of the purchase.”
Benefits
- The startup cost can be dramatically lower than that associated with building a practice from the ground up. Chances are good that current owners have made several years’ worth of investment into the practice, which means you get to bypass the beginning stages.
- Everything you need will already be in place, from the necessary equipment to the practice space itself.
- It’s likely the clinic already has a steady patient stream, an established marketing plan, and a somewhat efficient workflow process—which means you can step in and have immediate cash flow.
Risks
- An existing clinic might have debt you can’t collect on or other financial woes.
- Depending on this practice’s situation, the acquisition might end up costing more than you had anticipated.
- Staff and clients could turn on you. Regardless of the previous owner’s reputation, you have shoes to fill and expectations to meet, which means you might not receive the welcome you’d hoped for.
Owning your own business comes with benefits and risks—no matter which structure you choose. If you’re independent, creative, and ready to take patient care into your own hands—and clinic—owning your own business might just bring your dream to fruition. All this being said, always, always, always get appropriate legal advice before making any business decisions.
Do you own your own clinic? What benefits have you experienced? Comment below.
