Aspiring physical therapists who have an entrepreneurial inclination often wonder if they can own their practice. The thought of having complete control over patient care, treatment planning, and business operations is quite alluring.
While owning a physical therapy practice can be incredibly rewarding on many levels—personal, professional, financial—it’s not without its challenges. And the first step in tackling those obstacles is figuring out who can legally own and operate this type of healthcare facility.
“When it comes to owning a physical therapy clinic, the answer isn’t always straightforward. Regulations vary by state and between different entities.”
The rules surrounding private ownership of PT practices are complex and multifaceted, but don’t let that discourage you. With some guidance, research, and a solid business plan, anyone with the right credentials can become an owner/operator—if that’s what they truly desire.
If you’re considering becoming a physical therapy clinic owner, it helps to get familiar with the requirements specific to your area. In addition, it’s essential to know the key steps involved in starting and running a successful practice.
This article aims to provide valuable insights into owning a physical therapy practice, breaking down everything from education and licensing requirements to corporate structure options, financing, and marketing strategies. Whether you’re just getting started or need clarification on certain aspects of physical therapy ownership, this guide will help you make informed decisions moving forward.
Role in Rehabilitation
Physical therapists are licensed healthcare professionals who play a critical role in the rehabilitation and recovery of patients with physical impairments or disorders. They use various techniques such as exercise, manual therapy, and assistive devices to help alleviate pain, restore muscle function, and improve mobility.
Apart from treating injuries and disabilities, physical therapists also provide preventative care services to individuals by analyzing their movement patterns, identifying potential problems, and developing personalized plans to prevent issues before they occur.
The goal of physical therapy is to enhance the patient’s overall quality of life by improving their ability to perform routine activities, reducing the risk of future injuries, and facilitating their return to work and recreational activities.
Importance of Continuing Education
In order to maintain their professional status and ensure that they stay up-to-date with the latest advancements and research in their field, physical therapists must engage in continuing education programs throughout their career.
Continuing education courses allow physical therapists to sharpen their skills, learn new techniques for treatment, and gain exposure to emerging concepts and approaches in physical therapy.
Through continuing education, therapists can also earn advanced certification or specialization credentials that demonstrate their expertise in specific areas of practice, such as sports medicine or pediatric physical therapy.
“In order to be effective in providing optimal patient outcomes, it is essential that physical therapists remain current on the latest best practices through continuing education.” – Susan B. O’Sullivan, PT, PhD, FAPTA
The rigorous training programs required to become a licensed physical therapist already impart many of the necessary skills and knowledge needed for effective patient care. However, given the constantly changing nature of healthcare, continuing education is crucial for ensuring that physical therapists stay abreast of the latest developments in their field.
Physical therapists play a vital role in the recovery and rehabilitation of patients with physical impairments or disorders. By utilizing their expertise and knowledge to develop personalized treatment plans, engage in continuing education, and stay up-to-date on emerging concepts and approaches, they are able to provide optimal care for their patients.
A physical therapy practice is a healthcare business that can be owned by either an individual or corporate entity. A corporate entity may consist of multiple individuals who own and operate the business together, or it may be owned and managed by one person alone.
Types of Corporate Entities
In general, there are four types of corporate entities that can own a physical therapy practice: sole proprietorship, partnership, limited liability company (LLC), and professional corporation (PC).
- Sole Proprietorship: In this type of corporate entity, the owner operates the business as an individual without forming any formal partnership or LLC. It is the simplest form of business ownership where the owner is personally liable for all the debts and obligations incurred by the business.
- Partnership: In a partnership entity, two or more owners share the profits, liabilities, decision-making responsibilities, and risks associated with operating the business.
- Limited Liability Company (LLC): An LLC is a hybrid form of business ownership that combines the limited liability protection of a corporation with the pass-through tax advantages of a partnership. Owners of an LLC are referred to as members.
- Professional Corporation (PC): A PC is similar to a traditional corporation but is only available to certain licensed professionals such as doctors and lawyers. The primary benefit of a PC is personal liability protection for its shareholders against malpractice claims made against their respective professions.
Benefits of Forming a Corporate Entity
Forming a corporate entity offers several benefits over operating as an individual owner. These benefits include:
- Personal Asset Protection: Corporate entities separate an individual’s personal assets from those of the business, thus protecting them from lawsuits and legal judgments.
- Limited Liability: Business owners are only liable for the debts and obligations incurred by their company to the extent of their investment in it. The liability protection offered by a corporate entity shields individuals’ homes, savings accounts, and other personal property if the practice is sued for malpractice or debt-related issues.
- Tax Benefits: Depending on the type of corporate entity and its location, there may be tax advantages available for reducing the overall tax burden on the business.
- Raising Capital: Corporate entities can raise capital by issuing stocks or equity shares to investors.
Legal Considerations for Corporate Entities
There are several key legal considerations that prospective physical therapy practice owners must take into account when forming a corporate entity. These include:
- Registration and Legal Documentation: All corporate entities must register with local state governments and obtain proper licensure as per the state’s regulation.
- Taxes and Governance: Corporate entities must comply with federal and state tax laws, regulatory guidelines, and governance requirements. This includes filing annual state and federal tax returns, obtaining appropriate insurance coverage, and following established protocols while running the healthcare operation, among others.
- Shareholder Agreements: Shareholders agreement outlines how the firm will be operated, including decision-making processes, allocation of responsibilities between shareholders, what would happen if one shareholder departs for any reason or passes away, how ownership interest will change, and so forth.
- Professional Regulations: The healthcare industry is heavily regulated at both state and federal levels. Corporate entities seeking to operate a physical therapy practice must obtain proper licensure, comply with various regulations pertaining to patient records, medical malpractice, HIPAA compliance, among others.
“Incorporating your business remarkably minimizes risk for the entrepreneur,” says Cynthia Sharpe, Owner of Innovative Outcomes Group Inc.
Owning a physical therapy practice can be done either as an individual or by forming a corporate entity. Forming a corporate entity offers benefits such as personal asset protection, limited liability, tax advantages, and raising capital. However, there are legal considerations that prospective owners need to take into account when deciding to form a corporate entity. It’s always wise to seek professional guidance from attorneys and certified public accountants before making any significant decision regarding business ownership.
A physician-owned practice is a medical business where one or more doctors hold ownership. Physician-owned practices have become increasingly popular in recent years, especially among rehabilitation specialties like physical therapy.
Collaboration between Physicians and Physical Therapists
One of the primary benefits of physician-owned practices that specialize in physical therapy is the collaboration between physicians and physical therapists. When a physician owns a facility, they can work closely with physical therapists to provide patients with personalized care plans that address their unique needs and goals. This level of collaboration can result in better outcomes for patients and reduce the risk of complications or recurring injuries.
“In my experience, having physical therapists collaborate directly with physicians who are owners of practices results in higher quality healthcare because everyone is working together towards common goals,” says Dr. Robert J. Zalenski, MD Chief Medical Officer at STATMedCare LLC, a national occupational medicine firm.
Challenges of Physician-Owned Practices
While there are many benefits to physician-owned practices, there are also several challenges that come along with owning a medical business. One of the most significant hurdles is maintaining profitability while providing exceptional patient care and adhering to federal regulations. Additionally, physicians who own practices may be required to manage staff, handle billing and collections, and oversee marketing efforts – all tasks that take time away from treating patients.
“Managing a physician-owned practice requires an extra skill set beyond what we learn in medical school; business acumen is critical,” says Dr. Lauren Elson, MD, professor of radiology at Harvard Medical School.
Benefits of Physician-Owned Practices for Patients
Patient benefits extend beyond just improved communication between physicians and physical therapists when it comes to physician-owned practices. Some other benefits of these practices include:
- Faster access to care
- Increased convenience (such as extended hours, weekend appointments or telehealth options)
- More personalized care plans
- Lower healthcare costs in some cases
“For patients who are looking for more individualized treatment that is specific to their needs and goals, a physician-owned practice can be a positive option,” says Maggie Bertram, Vice President of Marketing at Solutionreach, a company that provides patient communication software for healthcare providers.
Impact of Physician-Owned Practices on Healthcare Costs
The topic of healthcare costs is one that affects everyone to some degree – including physical therapy patients. According to a report by the American Medical Association, physician-owned specialty hospitals tend to have lower rates of admissions, shorter lengths of stays, fewer readmissions, and often perform better on quality measures than other types of facilities.
“Our research shows that physician-owned practices can ultimately lead to improved outcomes among patients,” says Dr. David C. Norris, MD FACOG, Senior Vice President of Clinical Affairs at Atrium Health.
“A potential advantage of physician ownership is that these practices may enjoy greater clinical autonomy and control over resource utilization regarding the delivery of services to patients. This heightened level of control has been associated with lower healthcare expenditures and improved health outcomes,” says Ann-Marie Rosland, M.D., an assistant professor of internal medicine at the University of Michigan Medical School.
Owning a physical therapy practice can be a rewarding experience for physicians who are passionate about helping patients recover. By improving collaboration between physicians and physical therapists, providing faster and more convenient access to care, and potentially lowering healthcare costs, physical therapy practices owned by physicians can play an important role in improving patient outcomes.
Types of Investors in Physical Therapy Practices
Physical therapy practices require significant capital investment to start and grow, making them attractive to many different types of investors. The most common types of investors in physical therapy practices include:
- Individual investors: These are individuals who invest their own money into a physical therapy practice.
- Venture capitalists: Venture capitalists are typically institutional investors who invest large amounts of money into high-growth startups with the aim of achieving significant returns on their investment.
- Private equity firms: Private equity firms buy stakes in established businesses or provide financing for growth opportunities.
- Angel investors: Angel investors are generally wealthy individuals who invest their own funds in startups or early-stage companies.
Benefits of Investor Involvement
Investor involvement can bring numerous benefits to a physical therapy practice, including:
- Access to more capital: With investor involvement comes access to additional funding that can be used to expand your practice, upgrade equipment, hire staff, or acquire new office locations.
- Better decision-making: When you have multiple investors involved in your practice, you benefit from diverse perspectives when it comes to making important business decisions.
- Growth acceleration: With added financial resources, your practice can grow faster than if you were relying solely on organic revenue growth.
- Networking opportunities: Many investors have extensive networks within the healthcare industry, which they can leverage to help connect your practice with new patients or referral partners.
Risks of Investor Involvement
While there are certainly upsides to bringing on investors, there are also risks that you need to be aware of. These include:
- Reduced control: One of the most significant drawbacks of bringing on investors is that you may have to give up some degree of control over your practice in exchange for funding and strategic guidance.
- Conflicts of interest: Investors may have objectives or priorities that conflict with yours as the owner of a physical therapy practice. This can lead to disagreements or tension within the company.
- Financial costs: While investors can provide access to more capital, their involvement does come at a cost. In addition to receiving a share of ownership in your practice, they may also charge fees or require repayment at certain intervals.
Impact of Investor Involvement on Patient Care
One of the concerns that many medical professionals have about involving investors in healthcare businesses is how it will impact patient care. Fortunately, there is evidence to suggest that investor involvement doesn’t necessarily harm patient care. According to an article published in Forbes, “studies indicate that there’s no measurable difference in either quality or efficiency between investor-owned hospitals and not-for-profit hospitals.”
“Studies indicate that there’s no measurable difference in either quality or efficiency between investor-owned hospitals and not-for-profit hospitals.” -Forbes
This isn’t to say that there are no risks involved when it comes to investor involvement in physical therapy practices. However, if done carefully and strategically, it is possible for investors and owners to work together to create successful, profitable practices that still prioritize excellent patient care.
Non-Physical Therapist Owners
A physical therapy practice is a profitable business that requires investment in both time and money. While registered physical therapists may own and operate their practice, non-physical therapist owners can also invest in and manage physical therapy practices. In this article, we examine the roles of non-physical therapist owners in practice management, challenges faced by them, impacts of non-physical therapist ownership on patient care, and legal considerations.
Roles of Non-Physical Therapist Owners in Practice Management
The role of a non-physical therapist owner in practice management is to oversee the financial aspects of the business, such as accounting, billing, and insurance reimbursement. They work collaboratively with the licensed physical therapy staff to ensure efficient operations and a high level of patient satisfaction. Additionally, they are responsible for marketing, ensuring quality control, and hiring administrative personnel or support team members.
“As a successful practice owner said, “It’s important to find people who will take ownership of their area of responsibility within the organization.”
Furthermore, it isn’t uncommon for non-physical therapist owners to assume responsibilities outside their expertise by undertaking operational tasks like purchasing equipment and supplies, lease negotiations, or creating policies and procedures. A person investing in a physical therapy clinic should possess an excellent sense of business acumen, strategic thinking skills, leadership ability, self-motivation as well as have clarity about when to delegate tasks appropriately.
Challenges Faced by Non-Physical Therapist Owners
Like any other medical practice, owning a PT clinic comes with several unique challenges for non-physical therapist owners. First, maintaining regulatory compliance across different jurisdictions and tax codes can be challenging. Licensure requirements vary from state to state and background checks for hiring healthcare professionals add to the complexity of maintaining compliance. Another challenge is overcoming a lack of familiarity with clinical processes and industry-specific infrastructure, tools and software relative to other businesses. Finally, non-physical therapist owners must find competent staff who are accredited and licensed physical therapists who share their values and vision for the practice.
“You need to make sure that your values align as without a shared vision and purpose, running the business during an uncertain environment could be difficult.”
Impact of Non-Physical Therapist Ownership on Patient Care
The patient’s perspective regarding ownership structure impacts the perception and acceptance of care. Patients place a high value on a particular style of interpersonal relationship inherent in traditional PTs – which can impact conversations or promote long-lasting relationships between Providers, patients, and family members. Studies indicate that one’s comfortability with aspects like personality, communication, trustworthiness over accreditation affects the decision-making process of where to receive healthcare services. Therefore, if there isn’t enough emphasis placed on the hiring of qualified staff by non-therapists owners, this would invariably affect how patients feel about seeking treatment at such facilities.
“Patients may have different concerns when considering whether to select a new provider to see such as location, facility state, availability, affordability, health insurance acceptance, etc,. But, more or less, people base their final decisions primarily on emotion, feeling respected, confidence in being healed with good rapport, compassion, honesty and having a resourceful relationship they can rely upon”
Legal Considerations for Non-Physical Therapist Ownership
In some states, laws govern physical therapy practice ownership structures, while others do not play a significant role in regulating them; it’s important to review existing policies to ensure compliance before operating or investing in a physical therapy clinic. Additionally, to operate successfully, individuals interested in buying and managing a clinic should consider legal procedures such as selection of the ideal business structure, tax implications, HIPAA compliance and securing effective liability insurance. A lack of lawful knowledge can lead to loss of assets or fines under applicable laws governing healthcare facilities.
“To appropriately function in today’s highly regulated environment requires more from us than skills related solely to therapy applications; it necessitates compliance know-how too.”
To conclude, anyone can own a physical therapy practice, even if they are not licensed therapists. However, potential non-physical therapist owners must be conscious of challenges present for PT clinics and develop concrete plans to overcome them before investing. Equally important is understanding what responsibilities each role entails to best serve patients, hiring competent staff members that share their vision, and staying abreast of rules and regulations.
Physical therapy practices can be owned by individuals or groups, including partnerships. A partnership is a business structure where two or more people share ownership and management responsibilities.
Types of Partnerships in Physical Therapy Practices
There are several types of partnerships that physical therapy practices can choose from when structuring their business:
- General Partnership: In this type of partnership, all partners have an equal say in managing the business and share liability for any debts or obligations.
- Limited Partnership: This type of partnership has one general partner who manages the business and limited partners who invest money but do not take part in management decisions or assume liability beyond their investment.
- Limited Liability Partnership (LLP): An LLP offers personal liability protection to partners against lawsuits or debts incurred by other partners or employees of the practice.
Benefits of Partnership Structures
Partnering with others in a physical therapy practice can offer several benefits:
- Diversification of skills: Each partner brings unique expertise and knowledge to the practice, which can enhance the quality of patient care and overall success of the business.
- Increased capital: With multiple partners investing in the practice, there is access to more financial resources for equipment purchases, renovations, and expansion projects.
- Shared workload: Partners can delegate tasks and responsibilities, reducing individual workloads and burnout while ensuring optimal productivity levels.
- Fostering collaboration: Partnering offers opportunities to collaborate on research projects, participate in mentorship programs, and share continuing education resources.
Challenges of Partnership Structures
While there are benefits to partnering in a physical therapy practice, challenges also exist:
- Disagreements: With multiple partners comes differing opinions and management styles, which can cause tension and conflict within the partnership.
- Unequal workload distribution: Partners may have different levels of commitment or availability to the practice, leading to unequal workloads and resentments among partners.
- Legal liability: Any debts or lawsuits brought against the practice affect all partners, even if they were not involved in the incidents.
- Exit strategies: Failure to anticipate changes such as retirement or transfer of ownership can lead to problems later on regarding equity interests and buyout options for departing partners.
“A good partnership is one where each partner thinks about the needs of the other.” -Barry Checkoway
Physical therapy practices can benefit from partnerships by diversifying skills, increasing capital, sharing the workload, and fostering collaboration. However, potential challenges include disagreements, unequal workload distribution, legal liability, and exit strategy planning. It is important for individuals considering partnerships to carefully evaluate their compatibility with potential partners and seek guidance from legal professionals to ensure all aspects of the business structure are thoroughly evaluated and planned for in advance.
Frequently Asked Questions
What qualifications are required to own a physical therapy practice?
There are no specific qualifications required to own a physical therapy practice. However, the owner must have a license to practice physical therapy in the state where the practice is located. Additionally, the owner must have a thorough understanding of the business aspects of running a practice, including finances, marketing, and management.
Can non-therapists own a physical therapy practice?
Non-therapists can own a physical therapy practice, but they cannot provide physical therapy services themselves. Instead, the practice must be staffed by licensed physical therapists who are responsible for providing patient care. The non-therapist owner would be responsible for the business aspects of running the practice, including finances and management.
Are there any restrictions on who can own a physical therapy practice?
There are no specific restrictions on who can own a physical therapy practice, but the owner must have a license to practice physical therapy in the state where the practice is located. Additionally, the owner must comply with all state and federal laws and regulations related to owning and operating a healthcare business.
What legal considerations should be taken into account when owning a physical therapy practice?
Owners of physical therapy practices must comply with a variety of legal requirements, including licensing and certification requirements, insurance and liability coverage, and employment laws. In addition, owners must comply with state and federal laws related to healthcare privacy, billing and coding, and fraud and abuse prevention.
Are there any ethical considerations to be aware of when owning a physical therapy practice?
Owners of physical therapy practices must adhere to ethical standards of practice, including maintaining patient privacy and confidentiality, providing high-quality care, and avoiding conflicts of interest. Additionally, owners must comply with ethical guidelines related to advertising and marketing, billing and coding, and professional relationships with other healthcare providers.
What are the benefits of having a physical therapist as the owner of a physical therapy practice?
Having a physical therapist as the owner of a physical therapy practice can provide a number of benefits, including a deep understanding of patient care and the ability to provide leadership and guidance to the clinical staff. Additionally, a physical therapist owner may be better equipped to understand and navigate the complex regulatory environment that governs healthcare businesses.