Starting a physical therapy business is a rewarding venture that combines clinical expertise with business savvy. The industry is worth tens of billions of dollars, driven by a steady demand for services that help with everything from post-surgery recovery and sports injuries to chronic pain management.
This guide will take you through the practical steps of obtaining necessary licenses, securing funding, selecting the right location, and acquiring equipment to help you launch a successful physical therapy business in the U.S.
Step 1: Create your business plan and validate your idea
Understand your local market
Start by analyzing your local demographics. You can check U.S. Census Bureau data for age groups and income levels in your target zip codes. The American Physical Therapy Association (APTA) also offers valuable market reports that can help you identify underserved populations.
Next, map out your competition. A simple search on Google Maps for "physical therapy near me" is a good start. Look at their services, patient reviews, and online presence to find gaps in the market you can fill. This will help you define your unique value proposition.
Calculate your startup costs
Startup costs typically range from $70,000 to over $150,000, depending on your location and scale. A frequent misstep is to underestimate the initial cash needed. Many new owners focus on big-ticket items and forget to budget for three to six months of operating expenses.
Here is a rough breakdown. Expect to spend $50,000 to $100,000 on equipment like treatment tables and ultrasound machines. Rent and renovations might add another $15,000 to $40,000. Also, set aside funds for licensing, insurance, and marketing from day one.
Here are 3 immediate steps to take:
- Download demographic data for three potential neighborhoods from the U.S. Census Bureau website.
- Create a spreadsheet that lists five local competitors, their specialties, and average patient review scores.
- Draft a preliminary budget that includes equipment, rent, and six months of operating expenses.
Step 2: Establish your legal entity and secure licenses
You should consider forming a Limited Liability Company (LLC). Some new owners choose a sole proprietorship to save on fees, but this leaves personal assets like your home vulnerable. An LLC creates a legal wall between your business and personal finances.
An LLC also simplifies taxes. It uses pass-through taxation, so profits are taxed as your personal income. This structure helps you avoid the double taxation that C-Corporations face, where the business and the owner are both taxed.
Navigate licensing and permits
Your state physical therapy license is the most important credential. The Federation of State Boards of Physical Therapy (FSBPT) handles the national exam, but each state has its own application. This process can take two to three months, so start early.
You will also need a federal Employer Identification Number (EIN) from the IRS website, which is free. In addition, check with your city or county for local permits like a Certificate of Occupancy. These typically cost between $50 and $400.
Here are 3 immediate steps to take:
- File for an LLC with your state's Secretary of State after registering your business name.
- Apply for a free Employer Identification Number (EIN) directly on the IRS website.
- Contact your state's physical therapy licensing board to get their application packet and timeline.
Step 3: Secure your insurance and manage risk
Protecting your practice from day one is non-negotiable. You will need several types of insurance, and it is a frequent oversight to only purchase professional liability. This leaves your business exposed to common accidents that can happen on your property.
Key insurance policies for your practice
Your primary policy is professional liability, or malpractice insurance. This covers claims related to patient care. For coverage of $1 million per incident, expect to pay $500 to $1,500 annually. Ensure your policy explicitly covers all services you offer, like dry needling.
Next, you need general liability insurance for non-clinical incidents, such as a client who slips in the waiting area. This often gets bundled with property insurance, which protects your equipment from theft or damage. Combined, these policies can cost $600 to $2,000 per year.
If you hire staff, you must have workers' compensation insurance. State laws dictate this requirement. You might also want to consider providers like HPSO, CM&F Group, or Berxi, as they specialize in healthcare and understand the specific risks of a physical therapy practice.
Here are 3 immediate steps to take:
- Request quotes for professional and general liability from two specialized insurance providers.
- Create a list of all your planned clinical services and confirm your policy covers them.
- Check your state’s workers' compensation board website to understand your obligations as an employer.
Step 4: Select your location and buy equipment
Find and lease your clinic space
Look for a space between 1,200 and 2,500 square feet. This provides room for a reception area, two or three private treatment rooms, and a small gym. Check that the property is zoned for medical office use to avoid permit delays with the city.
When you negotiate your lease, you might want to ask for a Tenant Improvement (TI) allowance. This is money from the landlord to help pay for your build-out. Also, confirm the lease requires the landlord to handle exterior ADA compliance.
Purchase your physical therapy equipment
Equipment costs can add up quickly. A frequent misstep is to buy everything new. You can save 30-50% on major items if you look at refurbished equipment from a reputable dealer. This frees up cash for other startup needs.
Here are some typical price ranges for core equipment:
- Treatment tables: $500 - $2,000 each
- Therapeutic ultrasound machine: $2,000 - $5,000
- Commercial-grade treadmill: $3,000 - $7,000
Suppliers like MeyerPT and Patterson Medical offer starter packages. They usually do not have minimum order quantities for individual supplies, which helps you manage inventory as you start.
Here are 3 immediate steps to take:
- Identify three potential locations zoned for medical use with at least 1,200 square feet.
- Ask prospective landlords about their Tenant Improvement (TI) allowance policy.
- Get quotes for a starter equipment package from both a new supplier and a refurbished dealer.
Step 5: Set up your payment systems
Handle patient payments
Most clinics collect co-pays and deductibles at the time of service. You should also create a clear policy for self-pay patients. Consider offering package deals for multiple sessions to encourage commitment and improve cash flow.
A frequent mistake is to choose a payment system with high monthly fees or long-term contracts. Look for transparent pricing. While many providers charge between 2.5% and 3.5% plus other fees, better options exist.
For a practice that needs to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone. Just tap and you are done.
At just 1.99% per transaction with no hidden costs or extra hardware needed, it is particularly useful for collecting co-pays at the front desk or during home-visit sessions.
- Get Started: Download the JIM app for iOS.
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
- Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers.
Here are 3 immediate steps to take:
- Compare transaction fees and monthly costs for two different payment solutions.
- Draft your clinic's payment policy for co-pays and self-pay packages.
- Download the JIM app to see how it could work for your front desk.
Step 6: Secure your funding and manage finances
Explore your funding options
SBA 7(a) loans are a popular choice for physical therapy clinics. Lenders often approve amounts between $50,000 and $150,000. You will need a credit score above 680 and a detailed business plan to qualify. Interest rates typically sit 2-3% above the prime rate.
You might also consider equipment financing. This type of loan is secured by the equipment itself, which can make it easier to obtain than a traditional bank loan. This frees up your other capital for operational needs.
Plan for your working capital
A frequent oversight is to secure funds for equipment but forget about day-to-day costs. You should have enough cash to cover at least six months of operating expenses like rent and payroll. This buffer ensures you can focus on patient care without financial stress.
Here are 3 immediate steps to take:
- Contact an SBA-preferred lender to discuss the 7(a) loan application process.
- Calculate your total operating expenses for a six-month period to set your working capital goal.
- Research two equipment financing companies and compare their interest rates and terms.
Step 7: Hire your team and set up operations
Build your clinical and admin team
Your first hire is often a front desk coordinator. This person is the face of your clinic, handling scheduling, patient intake, and co-pays. A great coordinator can make or break your patient experience. Expect a salary between $35,000 and $45,000.
When you expand your clinical team, you might consider a Physical Therapist Assistant (PTA). They can manage patient exercises under your supervision. PTAs need an associate's degree and state certification, with salaries from $50,000 to $65,000.
Many new owners hire too quickly, before patient volume can support the payroll. A good financial benchmark is to keep total staff salaries between 45% and 55% of your gross revenue. Start lean and hire as you grow.
Choose your practice management software
Your clinic's efficiency will depend on its Electronic Medical Record (EMR) software. This system integrates scheduling, clinical documentation, and billing into one place. It is the operational hub of your practice.
Look at industry-specific platforms like WebPT or Clinicient. They are designed for physical therapy workflows and help you maintain HIPAA compliance. Monthly costs typically range from $50 to $150 per user, so factor this into your operating budget.
Here are 3 immediate steps to take:
- Draft job descriptions for a front desk coordinator and a Physical Therapist Assistant.
- Check your state board's website for PTA certification and supervision rules.
- Schedule a demo with an EMR provider like WebPT to see its features and pricing.
Step 8: Market your clinic and attract patients
Build your physician referral network
Physician referrals will be your most consistent source of new patients. Start by identifying 10 to 15 primary care, orthopedic, and sports medicine practices in your area. These relationships are the bedrock of a successful clinic.
Many new owners just drop off brochures and leave. You can stand out if you call and ask to schedule a five-minute introduction with the office manager or a physician. This personal connection makes a significant difference for future referrals.
Establish your digital footprint
Your website is your digital front door. It should clearly list your services, location, and insurance information. Also, claim and optimize your free Google Business Profile. This is how patients find you on Google Maps and in local search results.
You might want to encourage every patient to leave a review. Positive reviews on Google can improve your local search ranking significantly. This visibility is key to attracting patients who look for care online without a direct referral.
Consider targeted online ads
Once you have a steady patient flow, you could explore Google Ads. Target keywords like "physical therapy for back pain" in your specific zip code. A typical Customer Acquisition Cost (CAC) for a new patient from these ads runs from $75 to $200.
Here are 3 immediate steps to take:
- Create a list of 10 local physician offices to contact for introductions.
- Claim and fully complete your clinic's Google Business Profile with photos and service details.
- Outline the five key pages for your clinic's website: Home, About, Services, Insurance, and Contact.
Step 9: Set your pricing and billing strategy
Establish your cash-pay rates
Your cash-pay rates are what you charge patients without insurance. A typical price for a one-hour session falls between $125 and $250. To set your rate, you can call a few local competitors and ask for their "self-pay" price for an initial evaluation.
You might also offer package deals. For example, you could sell a block of five sessions at a 10% discount. This encourages patient commitment and gives you predictable revenue. It is a simple way to improve your clinic's cash flow from the start.
Navigate insurance reimbursement
If you accept insurance, your payment is determined by contracts with payers. You will bill using specific CPT codes for each service, like 97110 for therapeutic exercise. Reimbursement for the same code can vary from $30 to over $50 depending on the insurance company.
Some new owners wait too long to get credentialed with insurance networks, which can shrink their potential patient pool. The application process for major payers like Medicare, UnitedHealthcare, or Blue Cross can take 90 to 120 days, so it is smart to start before you open.
Here are 3 immediate steps to take:
- Call three competing clinics to find out their self-pay rates for an initial evaluation.
- Create a fee schedule for your top five cash-based services, including single sessions and package deals.
- Identify the top three insurance providers in your area and find their credentialing applications online.
Step 10: Monitor quality and scale your practice
Maintain high standards of care
To measure quality, you can track patient outcomes with a Net Promoter Score (NPS). Use a simple survey to ask patients how likely they are to recommend your clinic. An NPS score above 50 is a great benchmark for a healthcare practice.
You might also encourage your team to pursue advanced credentials. The American Board of Physical Therapy Specialties (ABPTS) offers certifications like the Orthopaedic Clinical Specialist (OCS). This signals a high level of expertise to both patients and referring physicians.
Use data to guide your growth
Many new owners wait until they are overwhelmed before they hire. A better signal is your therapist utilization rate. Once a therapist's schedule is consistently 80-85% full for a month, it is time to start the hiring process for another PT or PTA.
Your EMR software, like WebPT, has reporting features to track these metrics. In addition to utilization, monitor your patient waitlist. If new patients must wait more than a week for an evaluation, you could consider expanding your hours or physical space.
Here are 3 immediate steps to take:
- Set up a quarterly patient satisfaction survey to calculate your Net Promoter Score (NPS).
- Review the Orthopaedic Clinical Specialist (OCS) requirements on the ABPTS website.
- Create a weekly report in your EMR to track therapist utilization rates and patient wait times.
You now have a clear path to open your physical therapy clinic. Beyond the business plan and licenses, remember that patient trust is your true currency. Focus on building that from the first interaction. You have the expertise, now go make your vision a reality.
To help you focus on patients, keep your operations simple. JIM turns your phone into a card reader for a flat 1.99% fee, with no extra hardware. It is a straightforward way to handle payments. Download JIM to get started.
