Many Physical Therapy owners envision having a form of cash-pay or cash-based service, something with higher profit margins and void of documentation, regulation, and the insurance game. Stephen Rapposelli has spent the past two years developing StretchPlex to do exactly that and has learned some lessons along the way. In this episode, he sits down with Nathan Shields to discuss not only how he set up his program but also what he learned along the way and what he would do differently, so other PT owners can learn from his mistakes. Tune in to learn the pros and cons of cash pay, why hiring the right people is essential, how a coach can help you, and so much more! Let Stephen’s experience guide you to success.
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Lessons Learned From Starting A Cash Pay Service With Stephen Rapposelli Of StretchPlex
I have multi-time guest and platinum artist Stephen Rapposelli with me again. Stephen, it’s great to have you.
As always, thank you for having me.
It’s great to have you. If people haven’t tuned in to Stephen’s previous episodes, go back and do that. He’s doing some cool stuff with a company he started on the side of his PT clinic called StretchPlex. We will get into the beginnings of that and what that is later in the show. He also has some thoughts about the PT industry in general. He has been a many-time guest, a long-time listener, and the number-one fan of the show. Go back and tune in to those episodes. You can learn a little bit more about what Stephen is doing. He wants to give us an update on what he has been up to. Tell us. What are you up to?
First of all, I want to tell you that I’m upset because there is not going to be enough time together. There’s so much to talk about. The intention here is that this is going to be a little shocking, entertaining, and educational. Your audience is going to learn something that they can have an immediate effect even if it’s in your PT practice.
If you are like me and you are tuning in to this show while you are on the recumbent bike or the treadmill, open up your notes app now and get ready to write some things down because this one is going to be juicy. When Nathan and I get together, it’s part church revival and part Starsky & Hutch. It can go in many different directions.
Nathan is always a good sport because he has no idea what I’m about to say. The main thing I want to tell people is if you are contemplating cash-based services because that’s a buzzy thing these days, I’m going to offer you my perspective and my experience with it. This is my experience. I’m sharing with you what has happened to me over the last few years. Yours may be different, but I hope that it will either push you, the PT owner, into a heck-yes or heck-no scenario about cash-based services.
I think that my opinions have some weight to them because I have been in PT my whole life. It’s in my DNA. It’s woven into me. I have been a PT since 1987. I had my practice for 31 years. My mom was my first employee. Thank God because I didn’t pay her, but she was my receptionist and my biller. She brought me lunch. It was one of those practices back in 1992.
Fast forward to a lot of lessons learned in 2000. We were getting sick and tired of discharging patients with lots of musculoskeletal issues to continue their workouts at the local fitness center. We decided, “Why don’t we open up our fitness center?” We did. That was going on for 21 years, and then COVID hit, which changed everything. What a blessing COVID was in some ways because it opens up your mind. I’m sure it opened up all of our minds in one way or another.
Over those years I had, for example, a total knee patient and you are stretching them out. I know we have all had this experience. They look up at you and they go, “I would pay for you just to stretch me out after I’m discharged.” You are like, “We don’t do that.” After about twenty years of hearing that, it finally dawned on me. Maybe I had some validity to it. The real a-ha moment came sometime in 2019. I forget the exact year, but some of your audience were there with me. I’m sure it was at a Graham session. Two things happened at that Graham session.
A young guy, I wish I knew his name because I like to send him flowers or at least an Italian hoagie or something. He got up and he goes, “I want everybody to take out your phone, and I want you to put it in the browser StretchPlex.” One hundred twenty people did that, and you could hear a collective gasp. I looked around the room and you could see people’s jaws were dropped open because there was a business that offered stretching by a flexologist.
Your gut reaction is a PT, I don’t need to tell you. People were horrified and outraged and all those other negative feelings. I shared that too. He said, “It is the future.” I don’t even remember what the guy said after that because my brain shut down. Next speaker. It might not have been the next one. Young gal, an influencer on social media. I can’t even remember if she was a PT, but she was showing screenshots of her content online on Instagram or whatever, and how she’s selling fitness and exercise services.
I’m looking and I’m like, “I don’t look like that in a bikini.” You let yourself be upset. As I’m sure we all do when we are scrolling through our feeds, and you see people who have no business, probably. They are probably not doctors or physical therapists, but they are selling all kinds of stuff to people. That was my next a-ha moment. I said, “I can be that cranky old man and complain about the world, or knowing how the rules of the planet are, I can optimize them.” I don’t want to say take advantage, but you have to adapt. I did. Maybe your audience knows this. You scroll through your feed and you see something called spinal decompression. You go, “I wonder what that is,” and you look at it as a chiropractor and you say, “That’s traction. I do traction. I have done traction for 30 years.” There’s a lesson learned.
I look in a catalog with fancy stuff in it like the little LED projection that you can put on your bedroom, the fuzzy slippers, and all kinds of stuff. What can you buy there? Electrical stimulation machine and infrared. You can probably even buy an ultrasound machine. My point is as PTs, in some ways, we are our own worst enemies. I know at least I am with my thought process.PTs, in some ways, are their own worst enemies. Click To Tweet
We need to think about what the marketplace values and not how to protect our terms. I said, “If somebody has back pain, they may not care if I’m a PT or not. They just care about whether I can help them with their back pain. Maybe I should lead with that.” The gal in bikinis, they are reaching out to them and they are selling $500 programs cash online, pay instantly, download the PDF, and good luck. Come on, people. We are PTs. That’s a full side note.
I said, “I don’t know any PT who’s doing it. I’m going to make some of this stuff up.” We decided to start a business for stretching services and I made up the name, StretchPlex. I said, “What am I going to call these people who do this?” I don’t know what a flexologist did, so I’m going to make up a name, body coach. I made it up. It doesn’t mean anything.
Before everybody gets all bent out of shape, we train them. We put them all through their paces with a very robust onboarding program they have to pass the test. They usually have a personal training certificate, but the key point is these are not physical therapists. We started in our office, but that’s a little bit later in the story and we gave it a go.
I probably was on your show several years ago and now I have another year’s worth of experience under my belt. I want to share that with your audience. If they are contemplating it, they can know some of the pros and cons. The first question is, “Should you start cash-based services?” Right now, let’s say, I don’t care what it is. It could be anything. They can be burning incense. It’s whatever but it’s cash-based. What are the pros of that?
In my experience, almost every obstacle that you encounter in physical therapy is removed from cash-based services. There’s no prescription. No billing department. There’s no EMR and there’s no hiring PTs. I can say that because I’m a PT. No insurance companies, no pre-authorizations, and no verifications. You know all that stuff. You can increase your rates whenever the heck you want. How about that?
You set the prices.
That will stop you in your tracks. You can do crazy referrals and it’s okay. You are limited by your imagination and it’s a blue ocean. Very few companies are out there doing this. PTs should do this. I’m painting a rosy picture. There’s got to be some cons to this and there is. There’s no doubt about it. Let me tell you, just so you know, you have to learn retail marketing. We are not good at retail marketing. Likely, you don’t know how to advertise, like really advertise.
It’s not like knocking on physicians’ doors advertising. We are talking about marketing strategies.
It’s different from PT. I have a PT business separate from the cash-based business. These two companies are running in the same direction, but they are separate. We run Google Ads and we run Facebook Ads. I didn’t know this but I can tell you, the business responds 100% inversely to those advertising platforms. It’s fascinating. I can’t get Facebook Ads to work on the PT side. On the cash-based side, we’re crushing it. We are getting $9 a lead. It costs us $9 a lead and we are offering an intro at $19. We are collecting $19 before they come in cash online. It costs us $9 to get to $19. What do you think our ad budget is?
As big as you want to make it.
It’s unlimited. I’m like, “Am I reading these numbers right?”
Do you recognize a con that might be out there as well? As I look at it, you are a seasoned owner who has a lot of your policies and procedures dialed in. You have sufficient admin time to run your PT practices. If one of the cons would be starting a cash-based service could be a distraction to getting your crap in order on the PT side, or if you don’t already have your crap in order on the PT side, this could be a serious distraction, and both ships could go down at the same time because you are not paying appropriate attention.
That’s one of my first tips for success. You should not be running both businesses. I have had PTs calling me and a lot of them say the same thing. “They are doing this. We have an extra room. We are going to start cash-based businesses and I will run them.” I’m like, “That’s a bad idea.” Could you? Probably not. Should you? Absolutely not. People need to be educated on your services in general when you do a cash-based service. That’s why Google Ads don’t work as well for this business as it would PT. We have fantastic leads with Google Ads.
I don’t do the Google Ads. I don’t know if you know my buddy Justin Gilligan. He’s a ninja. If anybody wants to know how to do Google Ads, Justin Gilligan is a master. I say, “Justin, here you go.” He does that. People Google search for back pain, knee pain, and neck pain. That’s why Google Ads are good in physical therapy versus Facebook.
It’s the opposite for cash-based services because people aren’t usually Google searching “Infrared near me.” People don’t do that. When they scroll through their feed, if they have a short video of a very attractive person like me, for example, that’s going to stop them in their track and they are going to say, “I want some of that.” That’s the difference between Facebook and Google Ads. I don’t want to get too tangential, but there’s a definite difference between these two services.
Could you start cash services? You have to think a little bit about what kind of PT owner you are. Are you more of an entrepreneur or are you more of a franchisee person? Let me explain that a little bit more. Would you be apt to say, “I want to make the playbook versus I want to follow the playbook?” An entrepreneur says, “I want to make the playbook.” It’s cool. I talked to a PT owner about it. He said, “I want you to help me. I want to franchise your StretchPlex into my businesses.” I’m like, “Cool.” He is like, “I love this.” He goes, “I want to change all the services. I want to change the prices and I want to change the name.”
That’s not a franchise.
I say, “I think you want to do it yourself.” That’s an entrepreneur and that’s okay. There’s nothing wrong with that versus more of a franchisee concept which is, “I don’t want to reinvent the wheel. I want the proven process. Teach me how to do it. I don’t necessarily want to spend time writing out processes and org charts. Let’s set it up. I will follow it. I know it’s going to yield a certain amount of cash.” You need to decide in your head which one are you. For most of us, running our PT practice is about enough, unless you have a whole bunch more time to do that.
As you are looking and talking to some of these owners, you recognize the successful ones are the ones that probably have some form of leadership team on the PT side already. They can leave the day-to-day services with them. This other organization, if you are going to do another cash-based service, requires a separate organizational chart. It requires its own policy and procedures.
There aren’t two businesses under one business. They are two distinct businesses and you have to treat them completely separately. We recognized the same thing as we started implementing EMGs into our practice. It wasn’t getting anywhere because we tried to put it into the PT practice, and it was going perpendicular. We had to run them horizontally next to each other and have separate organizations, tasks, policies, and procedures to make sure they were running appropriately.
You can do it for a short while but It’s going to butt heads. That’s why they make the desks in first grade so small because you are not supposed to be there when you are twenty. You are going to leave the house and you have to. I highly recommend you do that. From a legal standpoint, there are no physical therapists. We don’t talk about physical therapy. It has nothing to do with physical therapy. That’s the way we like it, with the exception of one thing.
I will shoot down some of the lessons that I learned and some of the assumptions that turned out to be wrong. When I did this, I thought, “Listen to this. Every discharged patient is going to go right over to StretchPlex and get the stretching. They are going to want to do it. We also do compression and personal training. They are going to love it.” The reality of it is it was the reverse. People were coming into the StretchPlex side.
The body coaches were seeing these people and going, “You need physical therapy.” We have a non-insignificant amount of business referred to the PT side from StretchPlex. If you lament the fact that certain physician professions own physical therapy and refer to themselves, now you are that person. That’s okay. There’s a part of me that likes that and it’s totally fine. The customers love it and it’s a win-win.
Have you recognized why it hasn’t gone the other way as much, or why they haven’t gone from PT discharge to StretchPlex for maintenance programs per se?
Number one, we get distracted because there’s so much to do that we haven’t optimized that. You are constantly looking at what the constraints are in my business and going after the biggest constraints. When you do that, there are so many big fish that you forget, “What about all those PT patients that we are discharging? Now that we are out of the office, how do we even let them know that we are there?” There are not enough hours in the day and you could probably devote a period of time to optimize that and automate it, which I highly recommend. It’s one of those things where “I will get to that in a minute.”
It’s something that if you spent a couple of months focusing on, maybe a discharge email that includes a free visit or discounted consult after they are discharged. If the PT didn’t have the conversation, there’s some automation like you are talking about or telling the PTs on how to have that conversation.
We do that in our CRM. I am certain. It’s one of those things where almost every process that you do, we all tend to do it about 80% of what it should be and we stop there because we are like, “That’s good enough.” When you go from 80% to 85%, sometimes that’s all the difference between okay and abundance. That’s what we are recognizing. Just get 1% or 2% better and keep reiterating that and that’s where the magic happens. I will go back to our CRM and I will look at our email automation and I will be like, “It says massage and we don’t offer massage anymore.” It’s messed up there. It’s those types of stuff that it’s never done.
That is a major lesson. The other lesson that I learned simply through our mistakes is that processes and procedures are pretty darn sexy. They didn’t use to be. When you get to a certain level, you are like, “Process managing.” That’s titillating almost because you know that if you can document those processes and procedures, and then you can ensure that they are repeatable, that’s why McDonald’s is so successful. You know what a Big Mac is going to be. Spending the time to write down your processes and documenting them in multiple platforms and then training people. It is not sexy in the beginning, but trust me, that is sexy.
That was the whole concept behind The E-Myth Revisited, one of the most popular business books out there. It’s not specific to the PT space. All the small business owners, if they want to get out of the grind and experience some freedom from their practices, they have to develop policies and procedures. If they want any expansion outside of themselves, whether it’s one clinic or multiple clinics, it’s going to require the systems, policies, and procedures to say, “This is how I expect things to be done. This is how we train people to get those things done, and this is how we hold you accountable to those things.” It has to be done.
PTs think that we are special, but our business is like every other business. You can’t fight physics. There are certain laws of business that happen and they apply to us as well. As PTs, we like to think of the ego talk. We think that we are special as PTs. “I got my special magic sauce that when I see a patient, they must stay with me. Isn’t that great? I got my fan base. I got my groupies and they got to have their PTs.”
What you’ll find out is you run out of bandwidth eventually. There are only so many hours in your day. You sit down and write out what your special sauce is. You might say to yourself, “I can’t write out that special sauce. It’s special. It’s me,” but it’s not. We have written down what the special sauce is and I’m telling you, here’s some of it.
When a patient walks in, look them in the eye and say hello. Call them by their last name unless they are eighteen years or younger. Say hello, goodbye, and thank you every time. If they brought somebody else into the room, introduce yourself to that person. Include them in the conversation. I know I sound like an old man. I know I sound like your dad right now, but people don’t have the skills. That’s the special sauce. The special sauce is a soft skill. It’s not where the sartorius is, it’s whether that person feels like you are listening. We are getting tangential, but PT is the same thing that applies in either one of those businesses.
It’s all about systems and procedures, especially as you are developing something at your scale where you want to franchise something. I’m expecting a full list of policies, procedures, and systems. You name it.
Here’s the next big one. You are limited by your people. It’s finding the right people. Always underline it and put it in quotes. In December, we had two studios. By May we had four. We were starting to open them up because there were all these opportunities. I told you, it’s a blue ocean. We are opening up these studios and taking them out of our PT offices.You are limited by your people. Find the right people always. Click To Tweet
We created 4 physically separate studios in 4 months and hired people. The wheels then started falling off because we made a mistake. We didn’t slow down and hire the right people based on our values, then be crystal clear as to what the key characteristics are of that ideal employee, and then train them, coach them, and hold them accountable. We spent the last three months firing the wrong people. That’s a cautionary tale. Now we are coming back down to that and now we regrouped. We said, “We are not going to open up anymore for a while until we get this thing down the pad.” That’s a huge lesson. It’s a big lesson in your PT business as well.
Every experienced owner has gone through that. What you are saying is you have lost a lot of time and money by hiring the wrong people who you thought were the answers. You see it a lot as I talk to young owners who are single practitioners and office owners. It’s just them practicing and they are saying, “I need to hire somebody.”
It’s easy for me to look back on it because we were in that boat back in the day. I just need somebody. If you can fog a mirror-like, “I’m hiring. Let’s go.” Knowing the state of physical therapy right now, every owner out there needs a physical therapist, but it’s so difficult to coach them into pumping the brakes.
“I have these two people available and they are nearby,” and all these great things. There’s nothing to do about value alignment, personality fit, and cultural fit, you name it. That’s where things fall short. You lose time and a lot of money. We have that happen as well. They could do a lot of damage during the time that they are there to the people who are aligned with you.
That’s a hallmark of your growth as an executive because the pressure is enormous. “I got to get somebody in here.” Our COO on the PT side said, “I interviewed someone. They came into shadow. I didn’t like the way they talked to patients. They were interrupting and I don’t think it’s a good fit.” Inside, I could feel my stomach turning into a knot. I was like, “It’s probably the right call.” If you get through that, you always make the right choice. In your gut, you know it’s no. You have to go back to your values and say, “If these values don’t resonate or that person doesn’t get it or want it and doesn’t have the capacity for it and share a value, they are not the right person. It’s not worth it.”
I’ll highlight what you said because some young owners might not necessarily have taken the time to sit down and spell out their values, which I recommend you do. If you need some help, reach out to a coach. You also said they job shadowed. I can’t stress job shadows enough. During an interview for 30, 45, or 60 minutes, put on a facade of who they are and present that in their best light to you as the interviewer.
It’s hard if you make them job shadow for 2 to 3 hours with a bunch of contemporaries who they don’t necessarily need to impress. Many times, those people have come in for a job shadow who I thought were great interviews. This guy is going to be amazing. This woman is going to be perfect for this position, and then the job shadow happens. I get the feedback from the team. They are like, “They were on their phone the entire time. They didn’t engage with the patients. They were scared. They took a personal phone call during the middle of the job shadow.” Those things don’t work.
You can’t draw a line with a slope from one data point. You need multiple data points and then you can see where the line is going and what that slope is. That’s what that is in your onboarding funnel. You have to have multiple data points. Ideally, you shouldn’t be drawing every one of those points because you come with your own biases and then you can fool yourself.
The wrong people will hamper you. If you are the visionary, your first hire needs to be the integrator. The operations person. The person who’s going to say no to you. The person who is going to question you. The person who makes the trains run on time. If you are a PT owner, that’s probably the person that you need the most. That would be almost your first hire, your operations person, and let them run it.
You can give them some guidelines, but let them develop it. If this is something that you are considering doing, you have to start with hell yes. If you aren’t saying hell yes, it’s no. That’s okay. It’s okay to say no. It’s hard to say no, but it’s okay to say no. Meaning that you have to be all in and ready, “I will do whatever it takes to be successful,” that’s what yes is. If it’s not, then don’t.
The next number one tip I can give people is to get a coach. They are worth every penny. I know I’m speaking to the choir here, but as Alex Hormozi would say, “A coach helps you learn the lesson without the scar.” It will save you so much time. That’s where the value comes in. Get a coach. Start slow and don’t grow until you have that foundation.Get a coach. They are worth every penny. Click To Tweet
Word of mouth is everything. If you do not have a valuable service, no amount of advertising is going to help you. Whatever it is that you want to do, whether it’s stretching, compression, or burning incense and chanting, make it super valuable. Spend 80% of your time making that a bomb diggity dog service that people are going to say, “I have got to get my Aunt Judy in here. This is so good.” That means you got something. Otherwise, you have a lousy business and you will just dump money into it.
It was on a podcast recommended. I have done it a couple of times since. That was mind-expanding. Imagine your service that you are going to provide this cash service. Think of it in terms of the Airbnb, VRBO, and five-star service. What would a three-star service look like if I provided this cash service? What is three-star service?
The transaction happens and they get what they paid for and that’s baseline. What does a 4-star or a 5-star service look like? Maybe they get a little bit extra. They get a free add-on. Maybe they get a note. Maybe they get a follow-up, “How did it go?” Provide feedback, “Here are some other resources that you can also look into. If you like this, you could also try this. There’s one on sale over here right now.” Maybe that’s a five-star service.
Push it a little further. Now that I think about it, these were the Airbnb guys who said, “What would an eight-star service look like? Maybe none of that has to happen in person. You can order through our app on the phone or through Facebook Ads and make the purchase there so you never have to get out of bed. It gets shipped to you with a thank you card. Get some coupons in the box and maybe some incense as well.”
What can you do to push value? You and I were big Alex Hormozites. He’s all about adding more value. At the very beginning, when you are new and you are starting slow, and you are trying to develop word of mouth, it’s getting as much feedback as you can from those people, even if you have to provide that service for free so you can get the feedback.
Honestly, when it’s your first iteration, you suck. How can you suck less and suck less so that you can eventually be worth what you are charging? If you continue to do better and suck not at all, then you can charge more for those services because people are willing to pay for them. You provided such value. You have gotten to 8 and 10-star service that people will pay double for what you are offering versus the guy down the street.
You bring up a fantastic point. Let’s stay on that for one second. I’m going to give you two stories and one that your audience can use and try to see what happens. Robert Cialdini is a very famous marketing guru. I forget the name of his book but he’s incredible. He was telling a story about how he did a study. He had people in a restaurant and the server brought him a bill. He calculated the tip.
They then have the server put a mint on the receipt and give it to the customer. The tip went up. They then had the server put two mints on the receipt. The tip went up 30% more. Low-cost item, but high perceived value. Now let’s apply that to PT. Let’s forget about the cash-based. Let’s just use it. How can you use that in your PT practice to your advantage?
Let’s say your front desk person has to give Mrs. Jones her bill, “Here’s your bill.” “I don’t have it.” We all get that. How about if your front desk person is in the mint first? “Mrs. Jones, here, have this little mint.” The rectangular chocolate and they got mint, and everybody feels fancy when they have them. “This mint is for you.” “Thank you very much.” On the other hand, she’s got the bill, “Here. I’m going to let you take care of this.”
The Law of Reciprocity says, “You do something nice for somebody, as a reflex, they are going to likely do something nice for you.” The key is before you give them the bill. Don’t give them the bill and give them the mint. Give them the mint, then give them the bill. Life is one giant experiment. Is it worth the cost of a mint to try it and see if you can increase collectibles at the front desk? Using psychology. That’s a little bit separate.
Here’s one of our ideas that’s so insane. I could never do this as a PT, but we do it on the cash-based side. If I did this as a PT, I’d be out of business. I went to a local school. I talk to the faculty. It’s August at the time of this. School is about to start. I go to the faculty meeting and say, “Here’s an idea. Identify somebody in your faculty who’s going to be a faculty member of the month. I don’t care who it is. Do a raffle. I don’t care, but this is what they get.”
“They have been teaching all week. Standing, following kids around. They are tired. They are achy. Their legs are swollen. It’s Friday. They can’t wait. Directly after school, they come right to StretchPlex. There’s a table waiting for you. You come in. You get 25 minutes stretch. I put you in the lounge after that. My sports pump compression boots are on you. Squeeze your legs for fifteen minutes. While you are there, I’m going to offer you a complimentary glass of champagne. How would you like that?”
The faculty went crazy. I said, “No charge. It’s our gift to the community every Friday. That means four Fridays in a row. That one teacher whom you identified every Friday can come in and get this treatment. Start your weekend right. Would you like that?” They went crazy. That’s wild. A bottle of champagne in my neighborhood, I can get a cheap bottle for $12. I can get four glasses of champagne out of it. $2.50 a glass. Low cost and high value. That’s a wow factor. Do you think a teacher won’t feel good about themselves and your business if you do that for them? You can’t do it in PT. I can do it here. That’s an idea.
That’s a great idea. I had plenty of patients that I asked if we could have a happy hour. Get a little buffet bar in the middle of the gym. Have a cash bar at the side.
It wasn’t my idea. You go to these fancy hair salons and they give you a complimentary glass of wine. You and I don’t know that, but I know that they do. Why should my business be different? Why can’t I do that? Why can’t we do that? Why can’t we give value at a low cost at a high perceived value so that you become irresistible in the marketplace, where people say, “I’m not going anywhere else.”
You are focused on the customer experience so much. We talk about what we need to do as PTs to be compliant, follow all the regulations, bill appropriately, get out our charges, and make sure that people are coming in. Maybe we don’t spend enough time on the customer experience. What are the patients experiencing in the front room, at the front desk, and on the decorations on the walls?
How were they treated while they were there? How were they greeted? As you talked about, do they get a goodbye as they are leaving the office or is it quiet? Is it crickets as they are walking away? Does anybody care? Soup to nuts. From the first phone call to the last bill that they get, how can you improve it and take it from a 3-star experience to a 5-star experience? That’s where you start to generate a patient culture and word of mouth like you are talking about, where people will drive past the other physical therapy clinics to get to yours.
Word of mouth, you might say that’s old school. It’s the number one indicator of long-term success and the obstacle kills you faster than anything else unless people are compelled to come to you, but there are very few businesses where that’s the case. The marketplace does dictate your value, whether you have PT after your name or not. You might hate that I said that, but it’s still true. It doesn’t make it untrue because we lose patients all the time to the people in bikinis on Instagram. You can hate it all you want but it’s probably true, and they make it super easy.
“Click here, download this PDF, and put your credit card in.” How can we do that? I did it. I just created a separate business. You can do it if you want to do it. I have proven it. I want everybody to have their minds open to the possibilities. You have to readjust your thinking a little bit. There are obstacles. A coach will help you navigate some of those obstacles because it will stop 99% of the people out there not talking about it. Plenty of people are at the annual conference. They are like, “I’m thinking about doing exactly what you are doing.” I’m like, “Good.” “Now I got it.” “Great. See you next year. How are you doing?” “Still thinking about it.” I’m like, “Okay.”
I have got a mentor. His name is Scott Fritz. Will and I used them quite a bit as we were growing our practices. He calmly says, “You can keep doing what you are doing. Just don’t expect different results.” You could try something new, especially from someone who’s been there and done that before. Invest in yourself and see a completely different world. Don’t sit there and do nothing and complain about it.
That’s priceless to have that mindset. That’s why it’s great to be in peer groups, masterminds, and coaches because it elevates your game. Otherwise, you are that cranky old person barking at the moon and complaining and throwing your pillow at the TV screen. I don’t want that. I’m a PT. I want PTs to be successful. We are steak, but we don’t get a lot of sizzle. It’s okay to have a little sizzle.It's great to be in peer groups and masterminds and have coaches because it elevates your game. Click To Tweet
What you see especially with the movement for many clinics to go strictly cash-based is they have learned what we were not forced to learn in the traditional in-network outpatient ortho clinics. That is how to market ourselves. The cash-based services are wholly reliant on word of mouth like you are talking about, great customer experience, and selling a plan of care. These are all things that we don’t necessarily focus on in the in-network space. The more you do that in the in-network space, you will see the possibility of dropping some of those low-paying insurances, and your numbers will stay the same if not better. There’s real value.
Didn’t you have a show on fulfilling a plan of care? That’s a good one.
Yeah. It’s a different mindset. As people are looking at cash-based services, they can’t take their PT mindset and shift focus, and think that what they did in PT worked, “Now I can do this and it will work there too.” No. It’s a different mindset because there are different players.
It allows you to be creative in a good way. What we train our employees to say, first thing out of their mouth is, “What problem can I help you solve?” Every word is important there. Think about Donald Miller, “I am not the hero in this story. I’m the guy. The customer is the hero. What problem can I help you solve?” That’s powerful. Every PT should ask that when a patient is in the door, “I know you have a knee replacement, but what problem can I help you solve?” None of my patients come in and say, “I lack three degrees in full extension.” They say, “I can’t get off the toilet.” We all know that intuitively but that’s for example. It’s something that we need to train the next generation to be able to think like that because it is important. That’s where you show your value to the marketplace.
Hopefully, this is very eye-opening to everybody. I’m still, to some extent. I’m not trying to be glib about it. We are making it up as we go along. We are evolving. We are thinking of what valuable things we can offer people and we listen to our customers. Sometimes they say, “You blew that one.” I’m like, “That didn’t work. Okay.” We then pivot off of that because the reality is in three months, not many people are going to remember that you played rock music in the studio or something.
It’s a completely different arena that you are playing when you are talking about cash-based stuff because you need to stay on top of the customer feedback. You need to hold that feedback and get it more often than you do on the insurance-based side because that is cut and dry. The changes that happen there are going to be generally slow-moving over time. How we are treated now compared to 25 years ago isn’t significantly different.
It’s different but not as different as it could be in other industries over 25 years. The IT industry is completely different now than it was 25 years ago, whereas the physical therapy industry is not. We have gotten some technology improvements and some data points on how to treat better, but it’s very similar to what we were doing. If you are going to do a cash-based service, you have to stay on top of things on a regular basis. You have to know what the population wants. When things fade out of popularity, they fade out of your clinic as well. You don’t keep doing the same things.
In both businesses, it takes some courage to ask your customers how you are doing and why they are here. Send out a one-question survey. Why do you come to us and wait for those responses to come back? You might be shocked because what I tell people is, “It doesn’t matter what I think. What do you think? You tell me,” and then I focus on that. If my customers said, “I’m here because I think it’s going to make me taller,” I would start a height improvement program and see what I could do.
How do you change around the words of spinal decompression to make them think that traction is going to make them taller?
You sneaky little buggers. Do you see how they did that? That’s all fizzle.
Change the words. Traction doesn’t tell you what is happening. Spinal decompression is like, “I need my spine decompressed. It feels like it’s all smashed together.”
Generally speaking, a PT would never think to offer that as a cash-based service. You have stuff in your clinic that you could probably offer for cash-based service.
I had people all the time while they were laying on heat and steam tell me, “If I could just get, come in, and do this, that’d be fine.” I’m like, “We are more than the heat and steam.” They are like, “Whatever. You don’t have to touch me. Just give me the heat and steam.” Now you can do it and charge them cash for it. Why not?
You forget this part. I did that years ago and I called the program a napatorium. You come in after work, put on heat and steam for fifteen minutes. We will close the door, turn the lights off, and nobody will bother us, and people love it. I’m like, “Come on.” That’s how it is.
It’s been over a year since we did the first episode and you introduced StretchPlex to my audience. What would you say where you have been very successful? Have you met projections with your cash services? Have you been more than successful? Have you been happy that you have done it?
It has opened up a whole new world. We’re looking at a comparison year over last. We are up 38% in gross revenue. We are concentrating right now on market share. What we want to do is I want to see that slope going up of engagement and customers and revenue going up, and then on the backside, we turn around and then we try to make it efficient.
That’s the step that we are taking. As any business grows, there’s that constant struggle between capacity production, getting the lead, and serving the lead. You are always doing that. That’s where we are now, trying to get down a formula where we know exactly this amount of square footage, this amount of production yields, this much revenue with this much overhead, returns this much back to the company, and then go. It’s hard to imagine that those words can even come out of my mouth because I don’t think I’m that smart.
We know you are that smart and sexy. The thing that I wanted to ask is and correct me if I’m wrong in your situation, but I think a lot of people look at these cash-based services because we know the profit margins in PT suck. The average is 8% to 10%, maybe 11% nationwide.
Sometimes it’s 0%.
Why do you have a clinic at that point? There are people out there who are 15% to 23%. In general, the profit margins are bad. We are looking at cash-based services because the profit margins we are assuming are better. I will have an overall question. You don’t have to share specifics, but would you say that’s the case?
Yes, I would. How about that?
I want to make sure because you don’t want to be jumping into something and find out, “I’m doing this new thing and I’m still at 10% profit margins. That’s not worth my time and energy.”
Let me give you one final analogy that would help your audience conceptualize it, and it works in your PT clinic as well. Think of it as a restaurant that has tables in it and waiters serving customers. It depends on how you view it. You can say, “How close to full am I with a table in my restaurant?” If you have a big restaurant and only have one table, it doesn’t matter if that table is full of customers all day or not, you are losing.
If you put a bunch of tables in there, you don’t have to have them full all the time and you are still going to money. The tables and the waiters are your clinic and your staff and how close the capacity they are. It’s always trying to make sure that you have as many tables as you can in that restaurant and you have as many waiters serving all those tables as possible. That’s a way to view not only cash-based services but PT as well. If you have a big old restaurant and you have one table, you are not going to do well.
It goes back to in order to make this most efficient and profitable, you need to have a separate business that’s dedicated to it. You can have separate financials that you can assess separately.
From a liability standpoint, it has nothing to do with physical therapy.
It needs to be a separate LLC. The whole structure needs to be completely different.
The accountability chart.
You want to see productivity standards like you do on the PT side. Your marketing budget is going to be completely different and significantly greater on a cash-based service than it is on the PT side.
That’s why he probably shouldn’t be CEO of both companies. The CEO of Coke isn’t the CEO of another company. Now you might say, Elon Musk. I’m like, “Come on. You can name people in one hand that you know. There are only so many Richard Branson. That’s why they stand out and you are probably not it.” You only have so much bandwidth, but finding an operational person to run it would be a best practice. I would highly recommend it.
Getting leadership in place. We recognize the same thing as Will and I grew up with the EMG stuff. He had to take over the day-to-day PT services. I had to take over the day-to-day EMG services in order to get it going. Once we did that, that’s when we saw growth on both sides.
When you are distracted, even though you can do 4 or 5 things, you are not doing them at an intensity to make a difference, and anybody can beat you. If my competition owned four different businesses, I’d love that. I’d beat them easily because they can’t focus.
Anything else you want to add about your experience over the past year-plus on your cash-based services and StretchPlex?
I want PTs to be successful. I want you to think outside the box. I don’t want you to look at these other complimentary businesses and say bad things about them, “How dare they do that?” You can do that or you can say, “I will do that.” It can be that simple. You can’t fight gravity. If anybody wants to talk to me, they certainly can. You can find me online. Just Google search it. My last name is Rapposelli. It’s like wrapping it up and selling it. They will find me, and I will be happy to talk to anybody.
Are you on LinkedIn?
You can find me in all those places.
StretchPlex has a website if people want to check that out.
StretchPlexNow.com, and you can steal whatever you want. It’s okay.
People can check that out and reach out to you through that as well. Thank you so much for taking your time. It’s always awesome to be in touch with you.
It’s always the highlight of my day to be with you.
That’s awesome. It’s great to have you. Thank you so much.
- Stephen Rapposelli – LinkedIn
- Stephen Rapposelli’s Previous Episodes
- The E-Myth Revisited
- Becoming A Better CEO Via Masterminds, Books, And Expanding Your Vision – Q&A With Stephen Rapposelli, PT – Past Episode
About Stephen Rapposelli
Stephen opened his private practice in Delaware in 1992, at the tender age of 26, because he was told by his former employer that he couldn’t afford to buy into that existing business. He has since grown to 3 clinics, and has been voted best PT business in his state for numerous years. He also serves as Vice President of the Delaware PT Association, as well as sitting on the IMPACT editorial board. Stephen plans on devoting the rest of his career to promoting independent practices across the country.
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