It's no secret times are tough. From shattered housing and automobile industries to high unemployment rates and floundering banks, the economy has been pretty bleak for a couple years now. On Oct. 9, 2007, the Dow Jones Industrial Average (DJIA) closed at a record level of 14,164. The shockingly precipitous drop that followed did not bottom out until March 9 of this year, when the DJIA closed at a stunning low of 6,547, losing more than half its value in a span of 17 months.

Fortunately there have been signs of revival in the battered economy since then, with the Dow crossing the symbolic 10,000 barrier last month for the first time since Oct. 6, 2008. In fact, some economists say the recession has technically ended. But it could still be months or even years before the economy recovers its bustle from the not-so-distant past.

For proof of that, just ask the millions of unemployed Americans who continue to frustratingly search for limited job opportunities.

PT Perspective

So how have private physical therapy clinics been hit by the debilitating recession? ADVANCE sought an answer to that question by talking with four practice owners in different parts of the country. The responses were generally positive, or at least as encouraging as could be expected. The overriding message? A clinic that sets itself apart from the competition can ride out even the most damaging of economic storms.

"I have not experienced any downturn in clients [because of the recession]," said Brady O'Mara, MSPT, owner of Seven Summits Physical Therapy & Fitness, an outpatient orthopedic practice in Wayne, PA. "I've actually been pleasantly surprised by that."

In fact, O'Mara's practice has experienced growth every year since opening in 2005.

"The first year my client base increased about 80 percent, but of course I was starting from scratch so it could only go up," he added. "The next two years I grew by 20 percent and this year I'm up over 30 percent. So there's definitely been a positive upward trend and I'm to the point now where I'm ready to add another therapist."

O'Mara acknowledged, however, that economic uncertainty prevented him from adding staff until now.

"That's one aspect where the economy has slowed things down a little for me," he explained. "I was probably ready to hire somebody last fall but figured I'd better put the brakes on, keep things close to the vest and see what was going to happen. So that's delayed my growth by about a year in terms of hiring another therapist. You don't want to add that payroll expense, then find out your numbers are going down or staying flat instead of heading up."

Patient Visits

Even if O'Mara has seen no decrease in his number of clients, the economy has had some impact on the frequency of their ­visits.

"I think going into the recession, nobody really knew what to expect," he said. "We all knew it was bad and people were talking about whether it was actually a depression. In those circumstances, you think about which patients can postpone therapy. If they have a bad shoulder, maybe they'll just live with it for six months. Or they might come once a week instead of three times a week. So you're worried about those things really affecting your business. It happened a little but fortunately not to a great degree."

Parley Anderson, DPT, expressed similar thoughts. He is part-owner of Physical Therapy Partners Nevada, which was established in 2004 and now has three locations in Reno, Fernley and Silver Springs, NV.

"Looking at the number of patients this year compared to last year, I haven't seen a lot of drop in any of our clinics," Dr. Anderson told ADVANCE. "But there has been some decline in the financial side and I think part of that is due to patients stopping PT sooner than they otherwise would."

If people don't believe their injury or condition affects them greatly, they might actually choose to skip therapy altogether, he added.

"But I would say it has been more common for patients to come to therapy fewer times per week than might be indicated, because their insurance co-pays are too expensive or they have a high deductible. They'll decrease either the frequency or duration of treatment. Instead of going six weeks, they might go four weeks and then stop because of financial reasons."

Insurance Impact

The population at Physical Therapy Partners Nevada is primarily insurance-based, and Dr. Anderson believes rising rates have had at least as much of an impact on patient spending as their own employment status.

"I think a lot of people are struggling with co-pays, which seem to be increasing over time. Whereas before they didn't have to pay very much, now I think insurance has been squeezed too and they're asking people to pay more money out of pocket. Those co-pays and deductibles are rising to put some of that cost onto the patient."

Climbing insurance costs were also cited by Matt O'Neill, DPT, owner of Alpha Rehabilitation in Kearney, NE.

"As a business owner, I provide health insurance to our employees, myself included," he said. "And we just had a sizable increase in our rates. The reason for that is insurance companies know whatever legislation is coming from Washington will have a clause stating they can't discriminate against preexisting conditions. Because of that, pretty much anybody will be able to get insurance at any time, which is going to raise costs for insurance companies. They don't have equations to work that out, so instead of waiting for it to occur, they're just raising rates on ­everybody."

The increases have begun to affect local businesses and will likely impact potential patients in the future, he added.

"We already see it with different companies around here switching insurance providers more often because of raised premiums. And I think next year we will see people's pocketbooks start to tighten up more. As a clinic, we have already paid this year's worth of health insurance. But next year will be tighter if it goes up again. And if it increases similarly the following year, who knows if we'll even be able to continue offering that insurance? It's just a numbers game."

Calm Waters

Fortunately to this point, Dr. O'Neill has seen little economic impact on client numbers or visits at his clinic, which was established in 2004 with a focus on adult and pediatric ­neurology.

"Nebraska is pretty shielded in that respect because it has one of the lowest unemployment rates in the country," he related. "Another factor is probably 90-95 percent of the population here has some form of health insurance. So generally speaking, we haven't been affected much by the economy because our clientele is not here for elective therapy. They need this to get back to life and have the insurance to cover it."

One common theme expressed by the clinic owners was the importance of offering distinctive services. O'Mara, for example, believes his certification in augmented soft-tissue mobilization (ASTYM) makes Seven Summits a destination no matter what the economic circumstances.

"About two-and-a-half years ago, a patient called to inquire about ASTYM," he related. "He had just read an article about it in Trail Runner magazine. At the time, I wasn't familiar with the treatment but after speaking to him, I obtained a copy of the article, did research online and then took a course to become certified. I've had tremendous results with it."

O'Mara described ASTYM as basically a scraping technique that is very effective for soft-tissue injuries such as chronic tendonitis.

"Any type of tendonitis has really become my specialty," he said. "From Achilles tendonitis to plantar fasciitis and tennis elbow. It's my niche now because I'm the only ASTYM provider within a 20-mile radius. Since I've been doing the technique, I've had a 90 percent success rate. When the word gets out to doctors and patients that we're seeing those kinds of results, it really helps grow the practice."

Standing Out

The services provided at Alpha Rehabilitation make it stand out from the crowd as well, said Dr. O'Neill.

"No other PT clinic within 150 miles specializes in the neuro population," he said. "Finding those niche markets is always advantageous because that's what physicians are looking for. In fact, we just did an in-service at a physicians group and told them about our perspective, mentality and how we treat. Since then, we've been flooded with patients from them. Physicians want to know who can do the best job in the fastest and least expensive way."

The floundering economy also hasn't deterred Amy Cafer, MPT, who employs a nontraditional business model at Amy Cafer Physical Therapy in Columbia, MO. A therapist since 2001, Cafer started her clinic in July after spending four years as a full-time mom. But in these difficult economic times, she only risked establishing a new practice because of an ideal opportunity.

"I was taking classes in the spring at a studio called Pilates for Everybody and getting personal training from the owner, Jennifer Drewing," Cafer explained. "She just asked me one day, 'Have you ever thought of opening your own practice?' I thought about it and said it would depend on the circumstances."

Soon afterward, Drewing made Cafer the proverbial offer she couldn't refuse.

"Jennifer said she would provide me with a fully equipped Pilates studio and no overhead costs except for 20 percent of what I charge clients. If I didn't see a patient, I wouldn't have to pay her."

Feeling ready to get back into the field, Cafer accepted Drewing's proposition and opened her practice inside the Pilates for Everybody studio.

"It's a pretty darn good deal," Cafer said with a laugh. "That's the only reason I decided to do it."

Innovative Operation

She works about 20 hours a week, setting hours around her family responsibilities.

"My schedule is limited in the afternoon and evening because of my children, so I sometimes offer clients weekend appointments and I think that's helpful."

The business is entirely fee-for-service, consisting of one-on-one manual therapy.

"Many of my patients are from the studio," she explained. "They pay a Pilates instructor $65 an hour to train them. So most of them are also willing to pay $80 an hour to see me for manual therapy if they have pain or other issues."

Considering her modest expectations and the clinic's recent opening, Cafer has been pleased with its progress.

"I don't want a large business and am happy with the number of clients I have. My plans are to keep it simple now and then as my children grow older to expand. But right now I like what it is. I don't see patients all day. I work a couple hours and then have time to be there for my kids in the morning and afternoon."

Like the other clinic owners, she credited distinctive services for helping her to find a market share in this economy.

"Just the fact that what I do works and is different from other places in Columbia," Cafer explained. "Most therapy clinics, you see a PT, get passed on to a PTA and then go through exercises independently if there's a gym. So you may be there a long time, but are you really getting a hands-on approach? That's what I offer, with one-on-one treatment. And being fee-for-service is the only reason I can provide it. The results are definitely different when you're with a therapist 100 percent of the time and using Pilates equipment that helps you engage the right muscles."

Looking Ahead

The economy may truly be showing signs of recovery. New unemployment claims have decreased and the DJIA finally climbed above that 10,000 mark again. Those are certainly welcome indicators. But no doubt it's still a lot harder out there than it was just a couple short years ago.

Dr. O'Neill offered some final tips for private practice owners trying to navigate a course to prosperity.

"It's about fiscal responsibility," he concluded. "Don't wait to react to the coming health care change. Be preemptive. Contact those insurance companies, your Medicare and Medicaid providers, and start setting up processes now to improve quality of care. All the while reducing the cost to everybody involved. Focus on getting people better as quickly as possible and I think we'll all weather the storm a lot better."

Brian W. Ferrie is managing editor of ADVANCE and can be reached at bferrie@advanceweb.com

Business Consulting for Physical Therapy Practices

By Tannus Quatre, PT, MBA

From strategic planning to financial analysis to marketing plans, there's a lot to know about how to position and operate a successful physical therapy practice. Because of the vast, yet specialized scope of services for which business consulting is used in private practice physical therapy clinics, we believe the due diligence process to be extremely important to identifying a consulting firm that will provide PT practices with the most appropriate consulting services available. 

We've found the following criteria useful in evaluating the expertise and resources available from business consultants in this area, and we recommend that they be used if you are considering such services:

1. Always request a non-disclosure agreement (NDA). NDAs should outline the way in which information you share with the consultant may be used, as well as what is prohibited. Consultants are exposed to some of the most intimate details of financial structure, marketing strategy, and referral networks, and this information must always remain confidential. NDAs aren't difficult to produce, and if a consultant doesn't have one, or doesn't want to use one, this is a red flag.

2. "Try before you buy." Consultants should have a plethora of knowledge in many areas of business and private practice, and it shouldn't hurt to give some helpful information away for free. I personally like to make sure that clients not only get a feel for the core competency of our services, but that they get a feel for our personality and way of doing business as well. Good client-consultant relationships are very close and require a good working relationship, so if you aren't 100-percent comfortable with your consultant or consulting firm, you probably aren't going to have a great experience.

3. Check references. Always, always, always check references. As stated above, there is a lot to know in the world of private practice physical therapy consulting, and knowing what you're getting upfront is difficult unless you really do your homework. Checking in with references provided by the consultant is a good way to do this. Also know that consultants will naturally guide you toward those clients that have had an especially good experience with the consulting firm, so it is also prudent to set some of the criteria yourself. Asking a consultant for references in a certain geographic location, or that have received a specific area of consulting service (e.g., marketing strategy, brand development, financial projections, business planning, startup) is a good way to lessen the selection bias of the consultant.

4. Know the deliverables. Understanding the expectations are key to finding value in the services provided by a PT business consultant. Even the best consultants that provide services that weren't contracted for or that provided unclear value come away with disappointed clients. In the proposal or statement of work provided by the consulting firm, make sure you understand exactly what will be provided, how the process will work, and all of the fees associated with the project. If you like all of the above and it is delivered by the consultant, chances are you'll be a satisfied client.

5. Understand the fee structure. Consultants are generally paid based on the time to provide their service. As the scope of consulting projects can vary drastically, so can the fees charged to a client.  A good consultant will be able communicate how fees are determined very quickly and very clearly to a potential client. It is typical for there to be a range of hourly fees associated with varying level of expertise required (e.g., legal and financial consulting will commonly dictate higher fees than projects that are more general in nature, such as marketing strategy or competition analysis), and fees will naturally be higher the more "hands-off" the client wishes to be during the project. Projects that require more data mining, research, concept development, and copywriting by the consulting firm will be more expensive than those in which the consultant is acting in more of an advisory role.

Unfortunately, some of the smaller health care markets such as physical therapy sometimes lack the geographical availability of specialty consulting, and practices often employ the services of general business

consultants. 

While in some circumstances this can work out well, the specialty nature of the physical therapy profession often benefits most from the business expertise provided by specialty consulting firms, and always requires a high level of due diligence to find the right fit.

Tannus Quatre is a principal and consultant with Vantage Clinical Solutions, Inc., a practice management and consulting firm located in Bend, OR and Denver, CO. He can be reached at tannus@vantageclinicalsolutions.com.