Physical Therapy Profitability | Staff Compensation Strategies – Part I

By Yuval Lirov, PhD, Dave Macolino, and Kevin McGovern, DPT

“It’s ten minutes past eleven at night…Where is Peter?” Alicia asked herself as she woke up from dozing in front of the TV with their daughter, Jessica. She was pleased to hear the sounds of an unlocking door and Peter walking in. He looked exhausted but was happy to carry Jessica to bed. After all, it was a Saturday and he should have had the day off.

Alicia was proud or her husband. He worked tirelessly without counting hours, evenings and weekends, so that he could accomplish his goal of owning his own physical therapy practice and give Alicia the freedom to dedicate herself to raising their two children and continue pursuing her MBA.

Peter opened his physical therapy practice two years ago and built his business from the ground up. Referrals were growing rapidly and he was now seeing 100 patient visits per week. He recently hired a PTA in addition to his administrative staff to help him with his growing case load. His passion was treating patients but his current priority was building his practice and achieve physical therapy profitability. Peter was telling Alicia that in a year or two, he could pull in more than $600,000 a year, perhaps making $6,000,000 over ten years.

“Pete, Jessica was really upset that you missed her soccer game again. All of the other Dads were there.” Alicia said disapprovingly. Peter worked every evening and weekend over the past 3 months. “I don’t understand why you spend every night and weekend in the office,” she said. “Isn’t your staff supposed to be doing most of this work while you are treating? Do they stay late to help you?” she asked.

“I really don’t need this extra stress right now,” he replied. “I can’t pay them overtime to help, and I really can’t sit there and watch what they’re doing all day.”

“You know, Peter,” pressed on Alicia, “It’s clear to me that you’re not managing your staff properly.”

Peter felt like he was punched in the stomach. He wasn’t going to challenge Alicia. For the past two years, she managed to take care of Jessica while pursuing her MBA. Peter started getting a headache.

“You are heads down all day treating patients and not paying attention to what is going on with your staff.” she added. “Last month, you had to replace both your front office person and two months ago, you replaced your biller.”

“You’re paying your administrative staff $12 and hour and you just hired a PTA for $45,000 a year but you’re doing most of the work anyway.” Alicia continued, getting more agitated. “You have to be losing money because of the turnover and salaries and on top of that, you’re never home anymore. If you are going to see 100 patients a week and then spend every night and weekend doing business administration, why have staff at all?” Alicia asked.

“Good question, I don’t know” Peter reluctantly replied.

“Katherine called the other day.” Alicia said.

** to be continued :  Physical Therapy Profitability | Staff Compensation Strategies – Part II