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Clinical Solutions Blog

How to Choose a Good Location for a Physiotherapy Clinic

Posted by Paul Moon on May 9, 2019, 7:00:00 AM

How to choose a good location

7 Time-Saving, Expense-Cutting Tips for Where to Start Your Next Clinic

To start a private practice as a physiotherapist, chiropractor, or massage therapist, you must first decide on its location.

Pretty obvious, right? But, as they say, the secret to a successful business is location. This will always be true for any business that provide a service, even in the age of the internet. Patients still have to come in person, and that’s not going to change in our business.

But location isn’t just about proximity to major roads, doctor’s offices, and a Starbucks. They are definitely key factors to keep in mind when choosing a good location for your clinic. But as this story will show you,  a lot can still go wrong. 

How I Started a New Multidisciplinary Clinic and Then Lost $20k per Month 

My name is Paul Moon. I’ve started a lot of multidisciplinary clinics in the last fifteen years. My most challenging start-up happened in Hamilton, Ontario.

A Good Start

On paper, the location was perfect: 5000 square feet in a new suburb, in a city with plans for population growth. It was in a newly constructed building, with 15 family doctors working to set up their own practices. This location had tons of upside in terms of a growing community and medical referral possibilities right in the same building.

I was also in contact with the building’s developers, and had the option to buy a unit. Owning the space, rather than renting it, was appealing, and, though I could have stretched myself to afford the down payment, I decided not to risk it and chose to rent instead. At the time, this was going to be the largest physical therapy practice I had started.

I hired two front desk employees, two physiotherapists, a chiropractor, and a massage therapist. When opening day arrived, we were very excited. 

 

 
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Plus: 7 Must-Have Features of ANY Physio Table
 

 

And Then…Crickets

For the first four weeks, we averaged only 2-3 new patients per week. With four full-time clinicians, two staff, and a big rent check of $13,000 coming due, I was starting to panic. I had only budgeted for two months of rent and HR, but a number of unexpected expenses burned through the cash.

Where were all the patients? What were these 15 doctors doing all day?

When I started digging, I realized the problem. Only three doctors were in the building, and the other twelve would be setting up their offices over the next couple months. It would be six full months before all the doctors arrived, with an additional three months of marketing needed on our part to forge referral partnerships and earn their trust.

By the end of the year, I had spent more than twice the planned budget just to keep the new practice afloat and was losing $20,000 per month.

It ended well though. By the end of the second year, the clinic’s location finally began to bear fruit, as I had anticipated. In fact, it exceeded my expectations, and I was able to pay off the debts and start growing. But I went through a period of intense stress and uncertainty.

 

How I Overcame Such a Bad Start 

The good news for me was, this wasn’t my first time starting up a new location, so I was able to put strong business practices to work. I knew how much it costs to open a physical therapy practice. I knew how to start a clinic and make it profitable. Do you? Watch this video – Compare the Old and New ways of running a clinic

 


 

I used effective referral marketing and profit-producing call metrics. And in the early stages of the clinic, I implemented culture-building activities such as high-five Fridays.

My mission for the clinic was to serve and impact this new and growing community by making this practice the very best it could be. 

I had hired good people, and knew my investment should pay off in the long run, giving me the confidence and the freedom that comes with successful clinic ownership. Watch video to hear the risks vs rewards of clinic ownership.

 

7 Things We Learned about Choosing a Location for a New Practice

There are seven things you should know before starting a new physical therapy clinic. Use these to help avoid getting caught in a risky situation when choosing the location for your next practice.


1. Establish a Local Presence Before You Arrive

Certain key people should already know you exist before you even get there. Reach out to doctors and get the referral and marketing process in motion. Find other clinicians who have existing caseloads and recruit them to work at your new practice. 

If you find an extraordinary candidate, consider offering them a partner. This helps reduce risk two ways: an established partner will split your costs and will bring an existing caseload to ensure a strong opening. We sure could have used that! 

Be careful about jumping in too eagerly with a potential business partner. Watch out for these perils and pitfalls that can come with bad partnership.  Check out this article written by Rick Lau for the Canadian Physiotherapy Association (click here)


2. Find a Location with Lots of Traffic and Good Signage

The internet is great, but nothing beats a good clear sign. All the SEO in the world can’t beat someone passing your clinic and deciding to call you when they need care. 

Some of the problems in the Hamilton clinic happened because it was such a new community. There was little drive-by traffic and no foot traffic the first few months. Look for a location that’s visible to lots of people. This is called passive advertising. once the sign is up, it does its work forever. No updates required.

Eventually, the traffic materialized, but those first few difficult months, it was very quiet.

Since then I have also learned to look for locations near a Starbucks - because there is a lot of overlap between their clients and ours in terms of key demographics. 

3. Be Near Referral Sources

Our clinic was in the right place – from experience, I have a preference for being in medical buildings or athletic centres, and this place fit the bill. 

In retrospect I think I just jumped the gun a bit. The clinic opened before most of the doctors who could refer patients to us had arrived at the location. However, because of the nature of real estate, if I hadn’t snagged the location, someone else would have.

But eventually, this location strength paid off as expected.  

4. If You Can Afford It – Buy, Don’t Rent

Easily our biggest error. Had we bought the place when we could have, our mortgage would have been about $6k per month. Our eventual landlord charged us $13k. More than twice as much! I’ve been regretting that decision ever since.

Yes, it would have been a financial pinch to invest so much in ownership up front, but we would have saved so much more in the long run.

To be clear though – only buy if the numbers and your risk tolerance make sense. It has to be a good location, or you’ll be stuck with an overpriced mortgage and no way out.

If you do end up renting, make sure you negotiate for the best possible lease agreement. For a physical therapy, chiropractic, or dental practice, this is about far more than just the dollar amount. You must protect yourself from actions your landlord could take five, ten, twenty years later, such as demolishing the building and/or selling to a new developer. That would be bad for business! 

Check out these 10 fatal flaws to avoid when negotiating a lease

5. Know Your Square Footage Requirements

The size of your facility determines the limits of your revenue. Here’s my rough guide for how much square footage your location will need, depending on what size of clinic you plan to operate:

Start up clinic: 1500 – 2000 sq ft
$750,000 - $2,000,000 annual revenue clinic: 2000 – 3000 sq ft
$2,000,000+ or more annual revenue clinic: 3000 – 5000 sq ft

 

 
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6. Live Near Your Location

Problems arise. Things go wrong. And as the owner, you are responsible, and will have to take action. This could be as simple as a sudden illness or a bigger item like covering for someone while on maternity leave. But if you live 40 minutes from the location, you have a monster commute, and it will get old fast. 

I can’t stress this point enough. Unless you have a very strong organizational structure that allows you to manage people from far away, living close by is critical.

7. Plan for the Unexpected

The most important lesson learned wasn’t a new one. I had ignored the wisdom and lessons of history. Always budget for more than you need. Always. 

Unexpected costs and expenses will arise from somewhere, and you’ll have to deal with them. Whatever amount you’re budgeting to start your new private practice, increase it above your projected costs. You’ll need it. 

Suppose you open your clinic, and then you learn about a hot new technology that would be a good fit for your patient demographics. You want to offer it to your patients right away, to differentiate your clinic from others in the area. For example, you might have learned about shockwave therapy and decide to purchase a machine. There has been an increasing demand for this treatment over the last several years. You might not have planned for the purchase. But once you learned why shockwave therapy is good for physical therapy patients and good for your clinic, you might decide it’s worth the unexpected extra investment. Having the financial room to make these types of decisions is good practice.

 

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Get Prepared Before Buying or Starting a Physiotherapy Practice

Accelerate Live 2019 is a once a year opportunity to meet me and many more presenters, experts, and attendees with clinic ownership experience. It’s the largest clinic owner family reunion on this planet. 

Unfortunately, Accelerate Live 2019 is already sold out! But you can still get on the waiting list

Don’t miss your chance to sign up early for the next AccelerateLive and seize this once-per-year chance to learn about clinic ownership, buying a practice, starting a practice, increasing revenue, using call metrics to increase profit efficiency and reduce costs without spending more on marketing, and so much more.

ABOUT PAUL MOON

Paul-Moon

Spent 15 years as Chief Operating Officer at PT Health, one of Canada's largest rehab companies with over 1400 employees. Paul is one of the most sought-after mentors for clinic owners in Canada where he helps clinic owners double, triple, and even quadruple their revenue while having more freedom than they ever thought possible.  You can follow him on Linkedin  

 

Topics: Clinic Startup

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