Improving healthcare through entrepreneurship speaks to the core mission of Vantage Clinical Solutions. Our mission is focused on providing solutions which foster an entrepreneurial spirit within the healthcare arena in order to support the success of businesses with a healthcare focus.
An article in the June 2011 edition of PT in Motion, titled “Good Business: When it comes to the business of physical therapy, a little analysis can go a long way,” by Chris Hayhurst, tells of how Vantage successfully supported two of their clients, Ric Baird, PT, DPT, of Interactive Physical Therapy & Wellness Center, and Scott Wacker, PT, DPT, CSCS, of Movement Physical Therapy, in their journeys as entrepreneurs.
An excerpt of the article follows:
Scott Wacker, PT, DPT, CSCS, always has known he would run his own practice one day. It’s in his nature, he says, to do his own thing. Now, 8 years removed from school and with 8 years of clinical experience, he’s set to take the plunge. “I’m tired of working for someone else,” says Wacker, who at the time he was interviewed for this story was negotiating the terms of a lease on a 1,000-square-foot space in Edwards, Colorado, that he hoped would become his new clinic. “I’m ready to be in charge.”
While it’s too early to know for sure, Wacker’s new venture – his maiden professional foray into the uncertain world of self-employment – has a good chance to succeed. Not only because he has a DPT plus 8 years of experience. And not, for that matter, just because he’s ambitious or confident or passionate about his profession. Chances are, if Wacker’s business makes it – if he signs that lease, hangs that shingle, and his clinic eventually thrives – it will do so in part because he did his homework. You see, Wacker ran the numbers.
“It really has been a process,” he explains. “I had a very basic understanding of things such as financial projections, of the need to know your start-up costs and to have a business plan so you knew exactly what you were getting into. I knew all this stuff was out there, but I had no idea how to formulate everything or put it all together.” So, he says, he hired a company, Vantage Clinical Solutions, and its principal consultant, Tannus Quatre, PT, MBA, who Wacker happened to know through his wife – to show him the ropes.
”A lot of what I did was just answer their questions about what I wanted my clinic to be,” says Wacker. “I want it to be a very small outpatient orthopedic practice with one or two therapists. I want it to be highly specialized – my main service will be trigger point dry needling. I want to have lots of time to spend with my patients, and I don’t really care about having aides or assistants. I don’t want a ton of equipment. “So I gave the consultants the overall feel that I wanted. From there it was like, ‘Here’s how you can do it. Here’s how you can’t do it. This is realistic. That is not. If you think you’re going to spend an hour and a half with each patient, you’re not, because you’re going to lose money. If you want to do this, it means you can spend only so much on equipment and so much on your lease.’
“We figured out where I should put my money, how large a loan I should take out, and then what my investments would mean projection-wise, down the road. For example, I’m not going to actually start making money for a year or a year and a half.”
By the time they were done, says Wacker, he had an impressive collection of spreadsheets. And he had a plan – his path to future success. “There was definitely some stress involved, but it had to be done,” he says. “Now I want to get started.”
Limiting the Risk
Scott Wacker isn’t the first physical therapist that Quatre has helped to start a practice. Quatre, in fact, has been doing this for years, traveling around the country giving novice and seasoned PTs alike the tools they need to optimize their investments.
Last year, at the APTAs 2010 Combined Sections Meeting in San Diego, Quatre gave a presentation titled “Decision Making by the Numbers: Using Financial Projections and Cost-Benefit Analysis to Guide Business Decisions in Physical Therapist Practice.” It wasn’t a talk for everyone but, if Quatre had his way, it would have been. “It’s outside the comfort zone of a lot of PTs, but it’s not rocket science. You don’t need a background in business or financial analysis to understand it.”
A cost-benefit analysis (CBA), explains Quatre, determines the cost of a course of action (an equipment purchase, for example) and then weighs that cost against its benefits (the money the equipment should bring in). In the end, he says, a CBA helps answer the question, “What should I do?”
And while CBAs are obviously a great tool for practice owners, he says, they’re also handy for anyone in a decision-making role. “It could be the business owner considering the purchase of new exercise equipment, but it could just as easily be a team leader or department head in a hospital.”
Financial projections are different, explains Quatre. Projections are designed to help answer the question: “What should I expect?” “You might do a cost-benefit analysis on one piece of equipment. With financial projections, you’re often a little further down the road. When you make projections, you’re looking at the viability of an entire business or the viability of the department as a whole. They give you something you can refer to over time to see whether you’re headed in the right direction.”
Ultimately, says Quatre, whether you’re considering the introduction of a new program, about to expand your practice or department, about to expand your practice or department, or – like Wacker – starting a new practice, cost-benefit analyses and financial projections are used for the same basic reasons: “What you’re really trying to do is limit risk,” he says. “You’re taking a hard look at all the pertinent factors, and their financial implications, before you take that next step.”
Know Where You’re Going
One physical therapist who did take that measured next step is Ric Baird, PT, DPT, owner of Interactive Physical Therapy and Wellness Center in Topeka, Kansas. Baird’s outpatient orthopedic clinic is in the same building as his separate 24-hour wellness facility. The wellness center includes exercise machines, a cardio floor with treadmills, elliptical machines, stationary bikes, and other equipment, and a separate space devoted to scheduled exercise classes. Today, says Baird, his business employs 3 physical therapists, one PTA, an exercise physiologist who manages the wellness center, and several front-office staff.
But things were different at the start. “When we opened in 2003 we were an outpatient orthopedic clinic only, in a space of about 1,000 square feet. Within a year I’d added another physical therapist, we’d expanded to 7,600 square feet, and we added wellness. I quickly became overwhelmed with the accounting, the taxes, the billing, the collections, the day-to-day operations, the staff issues, the payroll, and everything else that goes along with running a business.”
Baird says he struggled for several years thinking he could do it all on his own. “I figured I’d learn as I went,” he recalls. Finally, in 2007, he had an epiphany: “I was just so busy and blinded to the future. I was in the ‘here and now’ and was just barely keeping my head above water. Financially we were doing just fine, but I wasn’t really thinking about what I could do better or how I could use those dollars more effectively. I was leaving a lot on the table.”
The solution, recalls Baird, was to get organized. “We created a roadmap that laid out where I wanted to go, where I wanted to be in 1 year, 3 years, and 5 years. We put a new business plan in place that was a little more detailed than what I’d done initially. We put a marketing plan in place and did some basic budgeting. And then the biggest thing was we set up a financial tracking and monitoring system so we could plug numbers into an Excel spreadsheet on a monthly basis for a complete financial picture of where we were and where we were going.”
The system, explains Baird, helps the business meet its goals by highlighting areas that might need refinement, or even outright change. “One thing that became clear was that the physical therapy services were making the money and the wellness side was not really supporting itself.”
But it also was clear that the wellness center could survive, he says. The numbers said so. “I was treating it as a nice adjunct to physical therapy. It needed to be more than that.” Now, says Baird, the center offers a variety of membership levels to satisfy the needs of a varied population. Personal training plays a much larger role in overall revenue. Physical therapists from the clinic now spend more time at the wellness center helping patients with their exercise programs, for example, and conducting assessments. And finally, says Baird, he recently incorporated a cash-based service – an evidence-based weight-loss program – into the wellness concept. “It’s really taken off,” Baird says.
If he were starting from scratch today, says Baird, he would definitely do it differently. “I went in blind. I just was fortunate that reimbursement was good enough and I had enough desire and passion for what I was doing that I could make it. But times have changed. Now you’ve got to know where you’re at, where you’re headed, and what revenue streams you need to develop in order to maintain a healthy practice. If you think, ‘Hey, I can do this because I’m a physical therapist,’ you’re going to be in trouble.”
To view the entire article, please visit the APTA PT in Motion website (registration required).
If you would like to learn more about Vantage consulting and management services, please visit Vantage Clinical Solutions online or call us at 866-259-0264.