Physical Therapists’ Guide to Starting an Outpatient Clinic

If you’re a physical therapist looking to start your own private practice, then you’ll have to learn how to don your business cap—as well as your therapist cap.

Starting a physical therapy private practice isn’t the right career path for everyone. In fact, it’s not even the right career choice for most. There’s more risk, more stress, more responsibility, and less free time than if you simply worked for someone else. Not only will you have to focus on providing great patient care, but you’ll also have to hone your business skills—and they don’t teach you much about the latter in PT school. But, as physical therapist and clinic owner Kaci Monroe explains in this article, opening a practice doesn’t have to be complicated as long as you’re willing to roll up your sleeves: “Everything’s out there that you can imagine. It’s much easier starting a business nowadays than even 10 years ago…Everything is online. You can get everything that you need to start. You just have to do the work.”

So, do you have what it takes? Do you possess enough motivation and internal drive? Are you ready to get your hands dirty? If you’re still serious about starting your own private practice therapy clinic, read on to learn more about deciding on a management strategy, finding the right location, purchasing equipment, selecting software, and choosing a specialty.

What kind of practice do I want?

Solo Leadership or Partnership

One of the first things you should consider when thinking about opening your own practice is whether you plan to run it on your own or with a partner. According to the American Physical Therapy Association (APTA), there are many benefits to bringing in another party. In fact, the APTA goes go so far as to say that “partnership is often what makes ownerships possible.” Partners can often provide what you’re missing—whether that be money, experience, relationships, or business acumen. In other words, bringing in a partner may fill a critical gap and in turn allow you to achieve even greater success than you could accomplish on your own. Plus, you’ll have someone with whom to share the risk and the reward, because we hear it can be pretty lonely at the top. Even science backs up the importance of having a partner: the APTA cites research from the Center for the Study of Entrepreneurship at Marquette University that found that 94% of high growth companies were founded by partners (out of a total sample of 2,000), whereas only 6% were founded by individual owners.

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So, the old saying is true: two heads are better than one. Well, most of the time anyway. There are some definite risks associated with forming a partnership, like loss of control (as the APTA points out), differences of opinion, and the dangers of mixing business and pleasure (if you go into business with a friend or family member, that is). That’s why entering into a partnership is not something to take lightly—especially considering that getting out of a partnership is always much harder than getting into one. In fact, the APTA strongly recommends seeking legal counsel prior to entering into any business arrangement.

If going solo still feels like the right business decision for your new practice, you’ll be happy to know there are some benefits to go along with your increased risk—like having the freedom to make your own decisions and receiving all the profits. But then again, you also deal with all the debt and, according the APTA, all of the “administrative burden.”

If neither going solo nor partnering up sounds quite right for you, you could always join a group practice and benefit from the experience of other savvy business/therapy professionals. Plus, in this case, you won’t have to invest in space or equipment, and you’ll get all the perks of an already established—and hopefully, successful—practice.

Looking for some more guidance on how to choose? The APTA suggests asking yourself the following questions (and we suggest being really honest with yourself about your answers):

  • Do you prefer working with a team or on your own?
  • Do you enjoy having people around to interact with regularly?
  • Are your skills well-balanced? In other words, in addition to being an excellent clinician, are you also good at building relationships, communicating clearly and consistently, handling complicated finances, launching successful marketing campaigns, and implementing and maintaining technology? If not, could you hire to fill the gaps?
  • Do you focus on the big picture or the day-to-day details? If your answer isn’t “both,” who’s going to focus on the other one?
  • Do you know exactly what you want your practice to be like? Will it be difficult for you if things don’t turn out just as you pictured?
  • Are you confident enough to pull this off on your own?

If you’re already an APTA member, check out this article on structuring your business for tax and liability purposes. If you’re not yet a member, consider joining. Professional associations provide excellent educational resources and networking opportunities for new entrepreneurs.

Alternative Business Models

1. Multidisciplinary Care Teams

This model is designed to improve patient experience, increase satisfaction with healthcare services, and reduce the overall cost of care. Here are some added benefits of integrated care teams:

  • They create a more well-rounded approach to care;
  • They reduce patient healthcare spending;
  • They allow for more efficient referral processes; and
  • They improve health outcomes through provider collaboration.

2. Subscription-Based or Concierge Services

While many practices offer subscriptions to wellness or gym services, some are taking the subscription model a step further with concierge care. That means these practices provide patients immediate access to all services in exchange for a monthly or annual fee. This model works because it:

  • reduces long-term healthcare spending on preventable illnesses;
  • helps health-focused patients avoid hefty copays and long waits; and
  • creates a steady revenue stream for providers.

3. Gym Partnerships

Rehab therapists can also use their vast understanding of anatomy, physiology, and neurological conditions to serve individuals in a gym setting, helping to connect those individuals who have neuro or mobility issues to gym routines that meet their needs. Got a specific niche? This model isn’t exclusive to the traditional gym setting. Many specialty gyms—such as “neuro gyms” and “autism gyms”—benefit from the expertise of a physical therapist. And of course, splitting the rent with a gym is definitely a budget-friendly option.

Legal Considerations

If you decide a gym partnership is the best option for you, there are a few things to consider before you dive in head first. Therapists working in gym settings must take extra precautions because, as we mention in this post, “if the therapist’s qualifications include the skills necessary to administer aid in an emergency situation or detect early risk factors for certain health issues, then he or she could be held legally accountable for failing to do so.” That said, non-medical professionals—like massage therapists and personal trainers—do not hold the same liability. So, make sure you’ve covered all of your legal bases before you commit to partnering with a gym.

4. Corporate Office Settings

Many large and forward-thinking companies have their own onsite clinics, which often include physical therapists. Not only does this approach offer a lot of flexibility for providers, but it’s also incredibly convenient for patients. Not only that, but on-site clinics eliminate the need for patients to travel to and from their appointments (thus saving them time), and it typically results in lower-than-average copays (thus saving patients money).

Compensation: Cash-Based or Insurance-Based

Traditionally, physical therapists—like other healthcare providers—enter into contracts with most major insurance companies to provide services to beneficiaries at a specific, agreed-upon reimbursement rate. In this model, the financial burden for most services falls to the insurer (aside from a nominal co-pay). However, as reimbursement rates decrease and the cost of simply staying in business increases, more and more PT practices are opting to go “out of network” and into a cash-based physical therapy practice.

As this Advantage Medical article points out, “Add the hassles and paperwork associated with insurance and Medicare reimbursements, and it’s no wonder that the idea of running a cash-based physical therapy clinic sounds very appealing.” But it’s not all sunshine and rainbows. In this article, physical therapist and cash-based clinic owner Ann Wendel writes that her documentation and billing practices are not that different from an in-network provider: “The advantage of being cash-based is that I enter into a contract with the patient to provide physical therapy services in a manner that I have determined will help them reach their goals most efficiently. The thorn on the rose is that my documentation and billing practices must ultimately lead to the patient getting reimbursed from their insurance or they won’t be able to continue treatment with me.”

Even with proper documentation and billing practices, you may find that not all patients are willing, able, or—as is the case for Medicare patients—legally allowed to put up the money for physical therapy services and then wait for reimbursement—especially if there’s a provider who accepts their insurance down the road. That’s why the APTA recommends seriously considering whether your services are “sufficient to convince patients to choose to come to your practice despite the out-of-pocket costs” by asking yourself these questions:

  • Do your patients trust and value the care you provide?
  • Are many of your patient referrals from family, friends, or trusted healthcare providers?
  • Do your location, hours of operation, and availability meet your patients’ needs?
  • Do you provide a level of clinical expertise and/or service that your patients cannot get elsewhere?

According to the APTA, you should also consider your community demographics and how other cash-based businesses and healthcare services—such as massage therapy, chiropractic, acupuncture, and fitness businesses—are performing. This can be a great indicator for your own success and can help you identify gaps in services that you can fill. The APTA lists teen sports rehab, chronic disease management, complex orthopedic condition management, hand therapy and splinting, women’s health, and cancer rehabilitation and management as possibilities. (See “Choosing Your Speciality” below for more on this topic.)

If you’re ready to transition out of network, it’s time to start thinking about setting fees, collecting payment, and discontinuing insurance contracts. This APTA article is a great place to start. If you’re not ready to go all the way out of network, you could consider providing cash-based supplemental services—like medically-oriented gym memberships, pilates or yoga classes, nutritional supplements, or durable exercise supplies—to generate additional income. Think of this as an opportunity to stick your toe in the cash-based services waters.

Insurance Credentialing

If your practice is entirely or partially insurance-based, then you’ll need to be credentialed with payers. Credentialing is the process of becoming accepted into an insurance provider’s preferred network. This process is important because:

  • it helps insurance carriers determine if you’re qualified to serve on their panels;
  • whether you take a specific insurance will factor into most patients’ decision to come to you for services; and
  • it helps insurance carriers determine if you’re qualified to serve on their panels, and the insurances you’re contracted with will factor into most patients’ decision to come to you for services.

While there are plenty of things to consider when it comes to the credentialing process, these are some essential steps you can take to get the ball rolling, as adapted from this resource:

  1. Secure your own tax ID number.
  2. Get malpractice insurance.
  3. Obtain a National Provider Identifier (NPI).
  4. Have a license to provide services in your state.
  5. Establish a clinic location.

Learn more about insurance credentialing—and how to navigate potential pitfalls—by downloading our free guide to starting an outpatient practice.

How should I determine my location?

Sure, that open office space you drive by every evening might be calling your name, but before you go putting down an offer, you better do your homework. After all, your location can make or break your success, so it’s time to start scouting out the community by answering the following questions:

  • What direct access services can you legally provide in your state? (Find out in our state-by-state lists here: Alabama-Hawaii, Idaho-Mississippi, Missouri-Pennsylvania, Rhode Island-Wyoming.)
  • What are the tax implications and fees for small businesses in your state, city, and county?
  • How many people live or work in the community? Realistically, how many of them will seek out your care?
  • How many referral providers work in the area? How many of them routinely prescribe physical therapy?
  • How many other physical therapy providers are there in the community? Is the area already saturated or can you identify a gap in services that you can fill?
  • How do you become a preferred provider for payers in your area? Will it be difficult?
  • What is the typical reimbursement rate for providers in your area? What should you expect to write off as a result of denied reimbursements or failure to collect?
  • Is your building easily accessible by foot, car, or public transportation? Will signage be visible from nearby streets?

Not sure where to begin? You can start by reviewing the community demographics in the US census data or on your city’s website.

Once you’ve conducted your market research and you have a feel for the area, it’s time to start browsing real estate, either alone or with the help of a leasing agent. As this article points out, though, “Most commercial real estate brokers work for property owners and represent the owners’ interests.” If you’re looking for someone to advocate for you, try retaining the services of a tenant broker. He or she—along with a real estate attorney—will help you negotiate your contract so you get what you need in terms of lease length and landlord renovations.

Per the APTA, here are a few other things to consider when looking for the right spot for your practice and defining the terms of your contract:

  • If your patient population is mostly baby boomers, consider how accessible the building and restrooms are as well as how far the parking lot is from your office.
  • If you’re the first PT moving into your building, ask your landlord if he or she would be willing to include an exclusive use clause in your lease so no competitors will call your address home.
  • If you plan to offer after-hours services—like gym memberships—be sure to tell your landlord exactly what you’re thinking so you can be sure it’s acceptable within the terms of your lease.

One more thing to consider: How much space do you really need? In this article, PT and clinic owner Jack Sparacio suggests asking yourself if you really need “the 3,000 square foot office and [to] pay rent for space you are hoping to grow into? Or can you get your practice up and running in the 800 to 1,000 square foot office for one-third the rent?” In his opinion, growing too big for your office space is a much better problem than throwing money away on office space you’re not using. Not quite ready to nail down your own space? Sparacio offers up the following advice: “Subleasing space from other health professionals or health clubs can also be an affordable alternative.”

Which specialty should I choose?

If you haven’t already considered your new practice’s niche, now’s the time to do so. What services can you provide that will set you apart from your potential competitors? In a whitepaper titled, “Build Your Practice by Finding Your Physical Therapy Niche,” Jeff Worrell has a few suggestions for physical therapists looking to identify a specialty—be it sports, pediatric, or post-surgical rehabilitation: “Take some time to jot down your experiences on a piece of paper…be as specific as possible. Look for similarities and highlight the experiences that are similar.” He also recommends that you ask yourself the following questions:

  • What type of physical therapy work do you enjoy doing?
  • What is the market potential for your specific area of interest?
  • What type of patients do you enjoy working with?
  • What experience do you have that can help you achieve success in your chosen niche?
  • Are there other physical therapists who have built a successful practice in this niche?

For tips on marketing your niche, download this free guide to marketing your outpatient rehab therapy practice.

How can I get financing?

This is probably one of the first questions that comes to mind for anyone planning to start an outpatient practice—and it’s often the obstacle that keeps folks from making the leap in the first place. However, with a little proactive effort—and maybe just a tiny bit of luck—you can obtain the funding you need to get your practice-ownership dreams off the ground. Here’s how to make it happen in four steps:

1. Take stock of your expenses.

Determine how much money you’ll need for your venture by looking at your projected monthly expenses. Once you have those numbers, you’ll know how big of a loan you need (if necessary). Generally speaking, providers who are launching a new business can allocate their expenses into three categories:

  1. Fixed costs (e.g., rent, equipment, and software)
  2. Variable expenses (e.g., utilities, supplies, marketing, and continuing education)
  3. Labor costs (e.g., employee salaries and benefits)

2. Get the essential documents in order.

Before you head to the bank, make sure you have the following documents in hand (so the review process is as quick and painless as possible):

  • A business plan;
  • Financial projections;
  • A personal financial statement; and
  • Professional references.

3. Pick a lender.

When it comes to picking a funding source, be choosy. We recommend:

  • picking a bank that has experience working with healthcare providers or working with the US Small Business Administration (SBA),
  • avoiding the temptation to go with the first offer, and
  • considering a local bank for funding.

4. Make that money talk.

The whole point of a loan is to generate enough revenue to not only pay it back, but also cut enough of a profit that you can continue growing your business. (You might consider incorporating cash-based wellness services to boost your revenue cushion.)

For more insight into funding your new practice, download our guide to starting an outpatient practice.

What do I need to know about purchasing equipment?

Once you know who and where you want to treat, it’s time to think about the how. What kind of equipment will you need to provide exceptional care for your patients? Before you become overwhelmed by the mere thought of such a large purchase, consider this advice from PT and clinic owner Jack Sparacio’s post on opening an outpatient private practice for less than $8,000: “Buying equipment for your office does not need to break the bank. And with the Internet, you can quickly compare prices to save significant amounts of money.” So, before you drop thousands of dollars on expensive equipment—or make any other major purchases for your practice—heed the following advice:

  • Shop online. Sites like eBay and Amazon are great places to find deals on new and used equipment. And if you’re a WebPT Member, you have access to the WebPT Marketplace, where you can purchase clinical supplies and equipment for up to 25% off wholesale.
  • Get creative. Some pieces of equipment will always be pricey. But sometimes, you can work around buying that big-ticket item until you have the resources to do so. As PT and clinic owner Jack Sparacio writes, “Why spend $3,500 on a high-end Ultrasound-Electric Stimulation Combo Machine when you can buy separate portable ultrasound and electrical stimulation units for about $100 each?”
  • Do more with less. If you’re practical and resourceful, you can find alternative ways to meet your therapy equipment needs. Sparacio explains, “when designing an exercise program for a patient, they are not going to have access to that expensive exercise equipment at home. Giving them exercises in your office utilizing sport cords and resistance bands ensures that those exercises are reproducible and practical in a home environment.”
  • Consider renting. Instead of doubling down on a costly machine, therapy business owners may find that leasing is preferable to buying outright. It gives you the ability to use the latest and greatest machinery while making budget-friendly payments.

What’s the right software for me?

As of January 1, 2014, all physicians must adopt EMR, and there’s a really good reason for that: compared to paper charts, EMRs are better equipped to provide patients, providers, and payers with legible, accessible, and defensible documentation. With an EMR, your documentation will clearly communicate your and your patients’ experiences—and your days of sorting through chicken-scratch notes will be long over. Here are just a few more benefits your new clinic will get with the right EMR:

Compliance Support

Every reporting regulation—MIPS, the 8-minute rule, and the therapy threshold—has its own challenging set of requirements. But the right EMR will provide the support you need to remain compliant with all of them. Simply follow the built-in prompts and alerts, and you’ll fulfill all the necessary requirements for every patient, every time.

Safety and Security

Choose a true web-based (not web-enabled) EMR, and your patient data will be safe and secure—forever. You’ll have all the benefits of the world’s leading data centers—like protection from natural disasters, digital video surveillance, biometric screening, and round-the-clock guards—and none of the cost or responsibility.

Patient and Referral Marketing

Referrals drive a lot of new business for most physical therapists—whether they be from physicians or other patients. With an EMR, you can maximize those referrals by tracking how many you receive and from which sources. It’s a great way to identify those referral sources in your network that need a little more attention. With the right EMR, you can also display your clinic’s logo on all of your digital documents, so every note you send reminds prospective referrers of your clinic. (Free marketing, anyone?)

Plus, if your software touts robust patient relationship management (PRM) features, (e.g. automated email marketing campaigns, patient satisfaction surveys, and online review generation), you’ll have plenty of tools to attract new patients, engage with current patients, and reactivate past ones.

A Paperless Front Office

With an EMR, you’ll have total visibility into the scheduling operations of your entire clinic—even if you have multiple locations. Plus, the built-in scheduling tool automatically links your patient records with your clinic’s calendar, so you can review notes with the click of a mouse and send automatic appointment reminders via the patient’s preferred method. The scheduling tool also enables you to:

  • track missed appointments;
  • easily book or reschedule appointments;
  • manage therapists’ schedules;
  • view the schedules of your other clinics (if applicable); and
  • color-code patient appointments based on insurance type.

Outcomes Reporting

In this era of performance-based reimbursement and payment reform, tracking your patients’ functional outcomes is more important than ever. That’s why your software should have robust outcomes tracking capabilities that not only help you stay on top of your patients’ functional progress and clinical results, but also compare them to national averages.


Consolidation is on a lot of practice owners’ minds these days. With larger health systems snapping up the little guys, it can be difficult to remain independent while also communicating with other providers seamlessly. Fortunately, if your software can integrate with other software platforms, you can:

  • ensure your data transfers smoothly;
  • save time by not getting bogged down with multiple platforms; and
  • attract referral sources who know your system integrates seamlessly with theirs.

End-to-End Revenue Cycle Management

If you’re still using paper claims, you’re leaving a lot of room for error—not to mention wasting time filling out claim information by hand. But if your EMR has fully-integrated revenue cycle management (RCM), you can rest easy knowing your claims will have fewer errors—and that means you get paid faster. On top of that, be sure your RCM provider’s features include:

  • credit card processing,
  • auto-eligibility verification,
  • an integrated clearinghouse, and
  • a patient portal.

Still not sure why you should invest in the right EMR for your outpatient physical therapy clinic? Check out this article or this one.

Start your new practice right with the industry’s best physical therapy software.


How do I write a business plan?

Once you’ve got at least a rough idea of how you plan to run your physical therapy practice, it’s time to take it one step further and prepare your business plan.

What is a business plan?

A business plan is a formal document that contains every detail about your business—including market assumptions; operations, sales, financing, and hiring plans; and your values and goals. This document will serve as the foundation for your business as well as the driver. It will act as a baseline for monitoring your growth.

Who should write a business plan?

Anyone who plans to run a business should write a business plan, especially if you’re working with other people—investors, partners, or employees. According to this article on, “…anybody beginning or extending a venture that will consume significant resources [money, energy, or time]…and that is expected to return a profit, should take the time to draft some kind of plan.”

Where to start?

According to this article, you should start with a plan for the plan: “One of the most important reasons to plan your plan is that you may be held accountable for the projections and proposals it contains. [This is] especially true if you use your plan to raise money to finance your company.” Here are some questions (also courtesy of to get you started when it comes to thinking about your business goals and objectives:

  1. How determined am I to see this succeed?
  2. Am I willing to invest my own money and work long hours for no pay, sacrificing personal time and lifestyle, maybe for years?
  3. What’s going to happen to me if this venture doesn’t work out?
  4. If it does succeed, how many employees will this company eventually have?
  5. What will be its annual revenue in a year? Five years?
  6. What will be its market share in that time frame?
  7. Will it serve a niche market, or will it sell a broad spectrum of goods and services?
  8. What are my plans for geographic expansion? Local? National? Global?
  9. Am I going to be a hands-on manager, or will I delegate a large proportion of tasks to others?
  10. If I delegate, what sorts of tasks will I share? Sales? Technical? Others?
  11. Is it going to remain independent and privately owned, or will it eventually be acquired or go public?

After you’ve fully answered these questions, you’ll probably have a pretty good idea of the direction you wish to take your clinic. Now it’s time to figure out how you’re going to make your goals a reality. Drum roll, please: it’s time determine your marketing plan. Whether you’re hoping to find new patients or hire all-star talent, how you present yourself and your practice to the local community—and the physical therapy community as a whole—is quite important. In fact, Chief Executive Officer of EMSI Public Relations Marsha Friedman strongly recommends that you include a marketing budget—taking into consideration both time and money—in your business plan from the get-go.

Now that you’ve got your plan for the plan complete—you’ve considered your staffing needs, nailed down your financing options, and identified your business goals as well as how you plan to reach them—it’s time to start writing. For more information on how to write a solid business plan, check out this WebPT blog post.

Anything else I should know?

Almost done! But before you open your doors, there are a few final legal to-dos you need to take care of first:

  • Meet with an attorney who is well-versed in private practice law. He or she will help you ensure you have all your legal ducks in a row.
  • Set up a business entity. Here are the various entity types that could be appropriate for a PT practice:
    • LLC
    • PLLC or PC
    • Sole Proprietorships
    • Partnerships
    • Corporations
    • Non-profits
  • Claim a business name. (Check out this WebPT Blog post for some inspiration.) Don’t forget to consider the online availability for your business’s name!
  • Open a business bank account (and keep your books well organized).
  • Double-check your lease agreement (ideally, with the aid of a real estate attorney) and make sure you nail down details like:
    • lease length,
    • prior building renovations,
    • building accessibility,
    • proximity to competitors, and
    • zoning.
  • Apply for an Employer Identification Number (EIN).
  • Check your state’s website for any additional requirements for starting and operating a business.
  • Select a tax year. You can either pay based on:
    • calendar year: the period of 12 consecutive months from January 1– December 31, or
    • fiscal year: the period of 12 consecutive months ending on the last day of any month other than December.
  • Put together a winning team—if you plan on hiring staff—and make sure you adhere to all applicable hiring laws. To hire employees, the US Small Business Administration (SBA) explains that you must:
    • Verify employment eligibility.
    • Report newly hired and rehired employees to the state.
    • Get workers’ comp insurance.
    • Display the required posters that explain employee rights and labor laws.
    • File your taxes according to federal and local regulations.
    • Stay informed and get organized.
  • Hire for cultural fit. While having the right skills is crucial, bringing on someone who doesn’t mesh your clinic’s culture can end up costing more in the long run. So, as you move through the hiring process, be sure you:
    • have a multi-step interview process;
    • ask interviewees experiential questions;
    • hire candidates who share your goals and values; and
    • strive for cognitive diversity among your team.

Curious about how others got their start in private practice PT? Check out this article or this one.

Disclaimer: Please note that this is general information only and we do not intend for you to use any of it as legal advice or guidance. Nor do we intend for you to use it in lieu of seeking appropriate legal counsel.

By Heidi Jannenga

February 12, 2019